The price of the DigixDAO (DGD) token rallied recently as the team is closing their decentralized autonomous organization (DAO) DigixDAO this quarter and promising to buy back DGD at a higher price.
Since talks about the dissolution of the DAO started in November, the price more than doubled and trades against ethereum (ETH) at c. ETH 0.182 (13:42 UTC), or almost the same price at which DGD should be bought back (ETH 0.19).
Against USD, DGD, ranked 83rd by market capitalization, is up 1.4% today, 11% in a week, almost 80% in a month, and trades at c. USD 32.
As reported, DigixDAO, a platform created to encourage the growth of projects and ecosystems around the Digix Gold Token (DGX) (a gold-backed stablecoin on the Ethereum network) by leveraging the DGD community, proposed the introduction of a dissolution mechanism to DigixDAO in late November. The dissolution of DigixDAO is impartial to DGX and Digix. DGX and Digix will continue to remain.
Meanwhile, DAO is a blockchain-powered virtual organization that operates independently of any central authority based on a set of predefined coded rules.
The proposal, called ‘Project Ragnarok’ is a result of dissatisfied DGD holders’ comments, wanting to “make a clean break from DigixDAO.“ While DGX is the core product at Digix representing gold bars, DGD that was offered on DigixDAO gave voting rights on projects submitted on the platform, explains a Project Ragnarok FAQ document.
Furthermore, DigixDAO has voted to liquidate its USD 64 million treasury and will be returning all ETH to initial coin offering (ICO) investors. This will involve unstaking and giving back ETH 0.19 per DGD. The remaining DGD in circulation will be destroyed.
‘Not able to bear fruit’
Digix said that the Digix ecosystem has benefited from and was strengthened by the support of the DigixDAO platform, adding that they are proud of the platform’s achievements and are against its dissolution, but that they will adhere to the collective opinion of DGD holders on the platform’s future nonetheless. Hence Digix abstained from voting.
“While we felt strongly that the full vision of DigixDAO was not able to bear fruit, we are uplifted that the merits of the DAO model, where token holders are able to direct the proceeding course of action for a blockchain organization and be able to exit such an organization if they chose to,” said Kai C. Chng, CEO and Co-Founder of Digix.
Besides a full dissolution of DigixDAO, other community suggestions included transferring ownership of DGDs, as well as a smart contract to allow DGD token holders to ‘burn’ their DGD in return for a proportion of ETH in DigixDAO.
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But as to why the holders were dissatisfied in the first place and wanted to cut ties with the DAO, Digix referred a blog post, saying that “Digix understands that participation in DigixDAO platform may not be for everyone, especially for those who cannot put aside time to actively vote and create projects on DigixDAO.”
Commenters online have mentioned a number of alleged issues with DigixDAO, such as that investors from many countries, the U.S. included, couldn’t participate in the governance. Another Redditor, u/hhh2hhh, claimed that c. 50% of the current DigixDAO holdings had been disbursed with almost no results, saying that nothing will be left at that pace. As DGD doesn’t have a use, says the post, but carries extra fees, when most of the ETH in the DAO is spent, DigixDAO would lose its purpose, the fees would still be extracted, and DGX’s competitiveness would decrease. Furthermore, while DGD holders risk to lose all the ETH, company Digix can’t lose what they’ve received, claims the poster.
4/ with the option to “burn” DGD tokens and claim back your share of ETH, this would immediately jump the price of ETH back to it’s NAV.
all DGD holders would immediately see a ~100% price appreciation!
of course, if everyone did this, the DAO would be drained. so now what? pic.twitter.com/VslQGnWleb
— 찌 G 跻 じ ⚡️ 🔑 (@DegenSpartan) August 27, 2019
As for the possibility of another DAO in the future, “if the team sees enough feedback from the community to create another DAO in the future,“ the FAQ states, “Digix will be open to explore all options that will both benefit the community and further develop the DGX ecosystem.“