The evolution of decentralized finance (DeFi) took an intriguing turn recently when key players behind the tokens Magic Internet Money (MIM) and SPELL started advocating for a centralized legal structure to supersede the traditional DAO (decentralized autonomous organizations) which currently manage their stablecoin with a market cap nearing $700 million.
Based on a forum post by one of the leading figures of the project, the plan was put forth to the Abracadabra DAO for a “transition of power” which would introduce a centralized body furnished with lawyers, jurisdictions, and trustees. That said, such advancement to a conventional corporate approach appears to counteract the values of a DAO, where decisions usually land on token holders.
Despite the shift, commitment to decentralization remains strong. The move to initiate a mild form of centralized legal structure aims to protect the DAO’s decentralized attributes, not disrupt them. Such a blend of centralized control but with a decentralised spirit is a first in the crypto world.
Abracadabra DAO follows suit in joining the leagues of SushiSwap and other crypto projects that have chosen a path of tempered centralisation. The motives behind these transitions are multifaceted, from addressing regulatory concerns to managing mundane business matters.
In the case of Abracadabra DAO, their justification for stepping towards centralised governance is more traditional. The newly formed centralized body is intended to oversee DAO’s intellectual property alongside managing server expenses, yet uphold the control and decision-making power within the community of SPELL token holders.
The governance token holders of SPELL have the power to steer the project through three stages of change. The first stage involves choosing a jurisdiction for the new body, with options including Switzerland, Singapore, Malta, and Bermuda.
The subsequent stages would be dedicated to defining the roles of the newly established entity and outlining its operational procedures. Such a critical move implies a trade-off between advantages of decentralization and the need for regulatory conformity.
At the time of this report, the SPELL token’s trading had dipped by 2.8% over the last 24 hours.
Source: Coindesk
