With its token market capitalization significantly lower than its treasury reserves, Gnosis DAO is embroiled in a redemption proposal controversy.

Written by: Protos

Compiled by: Chopper, Foresight News

A group of activist investors (or treasury "plunderers") are proposing a treasury redemption plan targeting GNO token holders.

GIP-150 proposes a one-time, voluntary, pro rata redemption scheme for the Gnosis DAO treasury. If the proposal is adopted, supporters will share a portion of the more than $220 million in reserves within the treasury.

This proposal comes less than six months after Gnosis DAO voted to remove former treasury manager KPK. Proposal initiator Wismerhill stated that the GNO token's market price has long been trading at a discount to the net asset value of the Gnosis DAO treasury, and this discount is widening. He added that despite the DAO recently allocating $22.5 million to Gnosis Ltd, the discount relative to net assets has actually increased, resulting in negligible value gains for GNO.

Voting on the proposal is now open and will close on May 12. Although the initial votes for the proposal were significantly higher, 65% of the 330,000 votes cast so far have been against it.

The redemption amount will be calculated pro rataly based on 1.3 million eligible GNO tokens; tokens held by Gnosis Ltd are not included in the redemption. The proposal rationales that the entity has long received funding from the DAO.

Based on this calculation, the redemption value of a single token is approximately $170, which is nearly 30% higher than the current market price of $131 for GNO.

Reactions from all sides of the DeFi community

DeFi commentator and GNO holder Ignas admitted, "The logic behind RFV does have some merit," but also pointed out, "This is purely an arbitrage transaction and has no moral justification whatsoever." He has personally voted against it. (Note: RFV is short for risk-free value.)

ivangbi, head of DeFi at the Ethereum Foundation, holds a similar view: since Gnosis has never publicly claimed that the treasury assets underpin the token price, holders have no moral right to claim a share of the treasury.

Many others, considering Gnosis's contributions to the industry ecosystem, disagree with the proposal. Gnosis owns core infrastructure projects such as Safe, CoW Swap, Gnosis Pay, and Gnosis Chain.

Gnosis founder Sebastian Bürgel bluntly stated, "When did the most respected ecosystem builder in the industry become a target for hedge funds to exploit?" Jito's ecosystem head, Nick Almond, directly characterized the proposal as a blatant act of financial fraud and absconding with funds.

Anthony Leutenegger, a representative of the Aragon team who was targeted by similar forces in 2023, offered a more moderate and rational perspective. He called on the industry to improve the rights and interests mechanisms for programmatic token holders in order to better coordinate incentives for all parties and resolve such disputes.

Past RFV sniping cases

This group launched similar treasury arbitrage operations multiple times in 2023, earning them the label of "RFV predators" within the industry, though the group does not endorse this label.

Projects targeted at the time included Rook, FEI/Tribe, and Aragon. Aragon was eventually forced to adjust the use of its treasury funds, transforming them into an ecological donation grant program.

Just recently, after Beefy Finance's token BIFI fell below its net asset value in April, the DAO quickly launched a buyback mechanism to avoid being ambushed and profited from by RFV forces.

Regarding the Gnosis incident, Wismerhill, the initiator of the proposal, had previously stated that he had always admired the Gnosis DAO and had even predicted that after removing KPK, Gnosis would make more business-oriented decisions.

This vote will ultimately test whether GNO holders value short-term commercial arbitrage gains or long-term ecosystem development value more.