A DeFi protocol has just proposed going private because its officials believe the current DAO structure creates a barrier to making institutional transactions.
Through protocols $ACX The token surged 80% to $0.06 on Thursday after the team behind the cross-chain bridging platform released a “temporary control” proposal to dissolve its token structure and convert it into a traditional US C corporation.
“As with all of our work with institutional and corporate partners, the structure of tokens and DAOs has had a significant impact on our ability to enter into partnerships and integrations,” the proposal states. “Transitioning to a traditional legal entity would significantly improve our ability to enter into enforceable contracts, structure revenue agreements and deliver more value to all stakeholders. »
“At present $ACX valuations, we believe Across Protocol is significantly undervalued. The proposed structure gives us the opportunity to explore new ways to foster growth while acting in the best interests of the broader Across community.
A temporary check in DeFi governance is essentially a non-binding poll that gauges community sentiment before a formal vote. This allows the team to see if there is enough support to proceed as an official governance proposal, which is then voted on by token holders.
This move would give token holders two choices: trade them $ACX to obtain equity in the new company, or sell their tokens for $USDC at $0.04375, a premium of 25% over the average price of the previous 30 days.
The token was trading at around $0.033 before the proposal went live. The immediate rise to $0.07 before settling around $0.06 reflects the market price in the buyback floor, although the current price is already well above the proposed buyback of $0.04375, suggesting traders are betting on either a higher bid or a higher value of the stock option.
In comparison, BTC is currently trading flat, according to CoinDesk market data. The CoinDesk 20, which measures the performance of the largest digital assets, is also trading flat.
The mechanics are simple. A new entity called “AcrossCo” would own all intellectual property of the protocol and manage development. Token holders above 5 million $ACX could be converted directly into equity.
Smaller holders could access equity through a fee-free SPV structure with a minimum of 250,000 $ACXabout $10,000 at current prices. Everyone is treated the same with a 1:1 token-to-share ratio, regardless of size.
Those who don’t want fairness get the $USDC redemption with a premium of 25%. The buyback window would open within three months of adoption of the proposal and remain open for six months, funded by the protocol’s liquidity.
A community call is planned for March 18, a formal discussion will continue until March 25, and a snap vote will follow on March 26. If passed, the conversion would begin in early April.
Is the DAO vision dead?
DeFi proponents have spent years arguing that tokens and DAOs are superior to traditional corporate structures for building decentralized infrastructure.
Across is one of the first protocols to publicly argue the opposite, that token structure actively inhibits growth and that a C-corp would provide more value to the same stakeholders.
Risk Labs acknowledged that the token had been “significantly undervalued” and described the proposal as an opportunity to “double down on Across” through a structure that institutional partners actually understand.
The 24-hour trading volume of $149 million represents approximately 3.5 times the token’s market capitalization, reflecting the intensity of speculative interest around the proposition.
Whether this interest translates into support for conversion or simply an exchange on the redemption premium will be determined by the next two weeks of governance discussions.