In the Ethereum Community Conference 5 in Paris, France, a presenter explored decentralized autonomous organizations (DAO) and just what countermeasures they might employ against hostile takeovers.
Hilary Kivitz, a Web3 consultant and former partner at a16z crypto, discussed protective concepts in traditional finance that may potentially be used within DAOs to assist combat the growing chance of hostile takeovers.
Within DAO governance, Kivitz contended there are risks including election buying to manage the votes to ensure that attackers can exploit the DAO. Based on Kivitz, these may allow exploiters to raid DAO treasuries and place their locked assets. She also reveal empty voting, explaining:
“The mechanics are the exporter would borrow the token, execute around the election and pay back the token the borrowed funds around the token.”
Due to these risks, Kivitz noted that traditional finance toolkits accustomed to combat these risks may also be applied inside the context of Web3. Among the solutions she presented is “poison pills,” a mechanism in traditional finance that may raise the price of acquisition and make other disincentives for hostile takeover attempts.
Kivitz stated these poison pills might be embedded in to the smart contracts and governance documents so they can not be removed via a election. This might “create massive dilution for that exploiter,” she stated.
Aside from poison pills, the speaker also spoken about voting cutbacks. With this particular, limits about how much voting power is going to be put on holders regardless of how much they own inside the network. This helps to ensure that voting is going to be fair for other holders with lower possession.
In Feb, the Republic from the Marshall Islands started to formally acknowledge DAOs as legal entities. Due to this, with each other owned and managed projects within blockchains could be registered and established within the Marshall Islands.
Earlier in This summer, crypto author Alex Tapscott told Cointelegraph that developments in DAOs are among the major stuff that investors should look out for throughout the crypto winter. Tapscott stated that DAOs have the possibility to supplement corporations like a way of resource organization.