Rook DAO, a decentralized autonomous organization (DAO) operating in the decentralized finance (DeFi) space, made headlines recently as it executed a “rage quit” that resulted in a significant price surge for its native token, ROOK.
The move saw the token’s value skyrocket by a staggering 475%, making it one of the best-performing DeFi tokens this year. But the concept of a “rage quit” is not new in the world of DAOs.
It refers to a situation where a member or group of members decide to leave the organization and withdraw their funds suddenly and dramatically. This can happen for a variety of reasons, including disagreements over governance decisions, conflicts of interest, or even outright fraud.
Exploring The Rook DAO Phenomenon
In the case of Rook DAO, the split was sparked by a dispute over the distribution of rewards. Some members felt that the rewards were being unfairly distributed to certain individuals, while others believed that the system was working as intended.
After a heated debate, a group of members decided to execute a rage quit, withdrawing their funds and splitting the DAO into two separate entities.
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According to the researcher under the pseudonym “DeFi Ignas”, as part of the split, IncubatorDAO received 60% of the treasury, which was valued at $25 million.
However, instead of holding onto the assets, IncubatorDAO decided to sell them for USDC, a stablecoin pegged to the US dollar. This move was aimed at providing liquidity to the token holders of both Rook and IncubatorDAO, as well as allowing for greater flexibility in terms of future investment opportunities. But there is a catch.
1/ Quick update on ROOK DAO: tokenholders get 57% of the treasury ($25M) in a spinoff DAO. If rage quit process is adopted by the spinoff DAO, RFV will be $40.43.
— Wismerhill (@0xWismerhill) April 4, 2023
The USDC received from the sale of treasury assets can only be redeemed by Rook token holders until July 12th. This means that if you hold ROOK tokens, you can exchange them for pROOK, a redeemable ERC-20 token that is equivalent to USDC. After the deadline, the USDC will be locked and inaccessible, effectively becoming worthless.
The aftermath of the split has been nothing short of fascinating. On one hand, the price of ROOK has soared, making it one of the best-performing DeFi tokens of the year.
On the other hand, the split has created a new DAO, known as the Fair Launch Initiative, which aims to promote fair and equitable distribution of rewards in the DeFi space.
As DeFi Ignas highlights, RooK DAO’s recent split and subsequent distribution of USDC has raised a speculative question in the DeFi community; what percentage of ROOK token holders will redeem their tokens for USDC before the July 12th deadline?
While the fair value of ROOK is estimated to be $40, the current trading price of $59 suggests that speculators are putting a 50%+ premium on the price, likely betting that some holders will forget to redeem their tokens.
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However, there is still $17 million worth of USDC that remains unclaimed from the contract. This has led to further speculation about the potential actions of major players in the DeFi space, such as Polychain Capital.
Polychain invested a “seven-figure sum” in ROOK tokens back in 2020 and recently moved 100,000 tokens, worth $5.8 million to a new address, possibly to sell, according to DeFi Ignas.
Furthermore, Ignas believes that the decision of whether to sell or redeem the tokens is a strategic waiting game for Polychain, as redeeming the tokens by July 12th could result in a base payout of 4 million USDC and an additional $4.7 million for their pROOK, assuming no other redemptions. However, if they choose to sell on the open market, they could potentially drive down ROOK’s price.
Featured image from Unsplash, a chart from TradingView.com