In the unruly world of decentralized autonomous organizations (DAO), the unraveling of stablecoin project Hector Network seems to have sparked a particular degree of ire from its community. The recent decision by HEC token holders to liquidate came from the scars left by the collapsing Multichain bridge, which slashed the project’s once staggering treasury from $100 million to a mere $16 million.
However, the community is finding that the process of cutting the cord isn’t quite as swift as they had hoped. Documents surfacing from team Discord posts suggest that Hector’s liquidation could take anywhere from six months to a year, involving a chain of lawyers, auditors, and liquidators – an ordeal bound to further diminish the project’s financial remains.
Feeling blindsided, many community members claim Hector’s leadership withheld crucial information during the vote. Their frustration escalated as the group’s Discord channel was abruptly deleted, leaving their questions unanswered and their calls for their returns unheard.
However, the pseudonymous treasury manager, Farooq, argues that the legal complexities and time requirements for liquidating an entity as long-standing as Hector are often misunderstood. Hector’s decision to operate through a “Hector Enterprises Inc.” based in the British Virgin Islands, led to the handling of contracts and partnerships, adding a layer of traditional governance that further complicates the dissolution process. Interestingly, this operation mode seemingly contrasts with the community’s preference for decentralization – an effort they rejected only months ago.
Critics argue Hector’s overreach into endeavors extending beyond the stablecoin vision, including a token launchpad, an NFT marketplace, and an educational “institute” diluted its focus, leading to delays and infighting that drained the treasury further and eventually led to dissenting voices being silenced.
Hector’s financial struggle led to the recruitment of Farooq, who managed to cut expenses by 85% but allegedly failed to protect the DAO and the shrinking treasury. The staggering cost of Multichain’s collapse and legal fees have, therefore, left the treasury in poor shape for distribution.
This is not the first time an Olympus DAO fork like Hector has faced failure, which is often ended by a treasury redemption – a practised coined as a “rage quit”. Some activist investors even identified Hector as a “risk-free value” trade, where governance tokens of projects are bought at low prices and a buyback is orchestrated. Nonetheless, the Hector’s leadership has resisted these investor tactics, viewing them more as pirates than Robin Hoods.
The plans for liquidation in 6 to 12 months, after significant treasury losses, are bittersweet for the Hector community. After all, in the increasingly complex landscape of DAOs, the real victory seems both costly and elusive.
Source: Coindesk
