An incident this summer involving Merit Circle DAO and Yield Guild Games showed how the the law of the land is likely to clash with the law of the DAO, raising risks for investors, says tanvi_ratna. Opinion.
Tanvi Ratna, a CoinDesk columnist, is the founder and CEO of Policy 4.0, a research and advisory body working on new policy approaches for digital assets.
On June 9 of this year, the community of Merit Circle DAO voted out Yield Guild Games as their seed investor. By doing so, the community canceled the SAFT agreement binding Merit Circle Ltd., its parent entity, and its investor, YGG. This vote was the first incident where decentralized autonomous organization governance overturned a legal agreement, and in its aftermath sent shockwaves across the investor ranks.legal agreement used in financial deals for early stage crypto projects.
The inability to publicly express concern over such an incident is already an odd compulsion for investors in the space. From a legal perspective, YGG did have grounds to enforce the terms of the SAFT and win back its governance rights and capital gains as accrued over the five-year period in the agreement. But most VCs admitted that they would not have taken such action either and would have reached a settlement like YGG did.
Nitin Sharma, General Partner and Global Web 3 lead of VC firm Antler Global, believes that value-add to crypto projects can either come from global institutional investors or investors with specialized knowledge in crypto. While crypto specialists bring in domain expertise for product development, global investors bring in new relationships, advisors, and employees from all over the world.
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