Ethereum Gaming decentralized autonomous organizations (DAOs) Yield Guild Games (YGG) and Merit Circle’s are reportedly in a dispute over funding after a member of Merit Circle proposed ousting YGG as an investor last week.
It is worth noting that last year, Yield Guild invested in Merit Circle’s seed round in exchange for its MC tokens at a discounted rate.
So what led to the tussle ?
The controversy started when on May 20, a member of the Merit Circle DAO under the name HoneyBarrel released a proposal asking the community’s vote on refunding Yield Guild’s original investment. The proposal also asked for cancelling the Simple Agreement for Future Tokens (SAFT) between the DAOs, and also remove its share of Merit Circle tokens.
The member also claimed that YGG has ‘not provided enough support to Merit Circle’ and sees the latter as a ‘competitor’.
HoneyBarrel further went on with the details of how other investors have been more actively engaged with Merit Circle, and have done more to help it grow.
Thus, the proposal further read that Merit Circle can show their well-wishing investors that their support hasn’t gone to waste, by taking action against those who do not provide the same level of input. As per the proposal, this will add more value from investors and also improve the DAO.
The proposal also claimed how YGG claimed to provide Merit Circle media exposure but that included only ‘two articles’. HoneyBarrel further claimed that by removing an investor that provides ‘zero value’, the DAO can ‘trim the fat’, and ensure only those who want to see Merit Circle succeed remain!
The proposal gained a lot of support from the DAO and Merit Circle Ltd replied, “Needless to say, the proposal has not just taken the Web3 space by surprise, but has also taken us by surprise.”
The firm further said that cancelling SAFT could have serious adverse effects on the Merit Circle’s reputation, but that it also wants to agree to community-led governance. They suggested, “The DAO holds the ultimate power here.”
After the initial proposal, the DAO creators have asked for a ‘two-week’ delay in the proposed actions. Additionally, they have requested for a week to create a counter-proposal for ensuring a “resolution for all parties in a timely manner after the vote.”
YGG gave out a statement saying that its agreement with Merit Circle did not include any conditions regarding “value-add” services,” only the “investment of capital.”
The response claimed that YGG has helped Merit Circle secure exposure in editorial publications and introduced the team to potential additional investors, in addition to other support.
YGG also asserted that it worked with Merit Circle Ltd to come up with a response that it thought would “quell public pressure, provide meaningful context to the DAO, and fulfil its obligations to YGG.”
However, Yield Guild implied that the response lacked its ‘suggestions’. The implications were made in the view Merit Circle Ltd ‘appears open to the DAO’s wishes’ on the proposal, as hinted by the above quotes.