Community governance update #6 - September 2023

Dear community,

We are happy to share the sixth community governance update for Merit Circle DAO. This community governance update will seek to provide the community with a summary of the latest, and most notable governance related events, within the DAO since 6 June 2023 and until today.

Updates on DAO related activities and operations can be found in the bi-monthly DAO progress update newsletters via Substack.

The latest monthly Merit Circle treasury report, which provides a breakdown of the DAO’s treasury as of 30 June 2023, can be found here. Going forward, treasury reports are intended to be posted as quarterly reports, rather than monthly reports.

In order to avoid overlap between newsletters and updates, these community governance posts only focus on the governance and community aspects of the DAO, and will only be posted on the governance forum.

MIP-26 - Cancel all future v2 & v3 staking rewards and unlock all v2 stakers

On 27 June @JGdog23 initiated a discussion where he proposed to cancel v2 staking and future staking rewards, and to unlock all currently locked v2 stakers. It was proposed that the remaining unallocated tokens of v2 staking would be burned. Part of the rationale for the proposal was to free up a substantial amount of tokenholders’ MC tokens in anticipation of the launch of Beam. Beam is a sovereign network where MC tokens are used to validate transactions and secure the network.

The proposal quickly became a popular topic within the Merit Circle community, with multiple community members participating in discussions both on the governance forum and in other channels. The proposal was well received, as most of the participants in the discussions were in favor of what was proposed. Much of the discussions related to how to best execute the staking cancellation, both technically and strategically. The discussions were moved to the proposal category of the governance forum on 30 June.

Following a discussion period of 14 days, the proposal proceeded to a vote, where a record breaking amount of MC tokens participated in the vote (voting power equaling approximately 48 million MC tokens divided across 162 voters). The voting period ended on 14 July, with 93.48% of the votes cast in favor and 6.52% of the votes cast against the proposal.

The rewards distribution was halted immediately upon the proposal being approved, and the smart contract upgrades that made it possible to withdraw v2 staking tokens were implemented on 17 July.

MIP-27 - Beam development and ecosystem funding

On 14 August @daocorecontributors put forward a proposal that sought tokenholder approval to utilize up to 75 million MC tokens from MC DAO’s treasury for the purpose of providing liquidity, grants to games / game developers (used to cover gas fees on Beam), and validating and securing the Beam network. It was specified in the proposal that any use of MC will be transparently disclosed in the treasury reports and possible to track on-chain. Furthermore, the proposal requested funding of up to 2.7 million USDC from MC DAO’s treasury to develop Beam and certain ecosystem products as further specified in the proposal, and for liquidity purposes on the AMM on Beam.

After a 7-day discussion period, the proposal proceeded to a vote on 21 August. The voting period ended on 23 August, with all voters voting in favor of the proposal. This was only the fourth time to date that all votes were in favor of a proposal (previously happened in relation to MIP-25, MIP-16 and MIP-10).

Proposal and discussion regarding treasury diversification

Recently the topic of treasury diversification has been a recurring topic. At the time of the previous community governance update, there were ongoing discussions about treasury diversification in this thread. A separate thread was later opened up by @moss and Ainsley (from Avantgarde Treasury) on 13 June, building on the discussions in the initial treasury diversification thread.

The more recent thread covered diversification options such as various stablecoins, US treasury bills and the two largest crypto assets by market cap, BTC and ETH. Additionally, the discussion thread put forward ideas on how the Merit Circle DAO could adopt the use of an automated agent operating the treasury (or certain parts of it) within predefined smart contract rules, minimizing the need for human input.

On 17 August, @tmfbernd proposed to allocate 26.7 million stablecoins across three Maple pools. As the proposal concerned deploying more than 20% of MC DAO’s treasury, it required a discussion time of 14 days, in accordance with the constitution. There was not too much feedback to the actual proposal, as the topic of treasury diversification had been discussed more broadly several times during the last months. As the proposal failed to obtain the required threshold of 25% poll votes in favor of it at the end of the discussion period, it did not proceed to an official vote.

Based on the various discussions relating to treasury diversification, there doesn’t appear to be much appetite to deploy MC DAO assets in DeFi yield farms or similar, namely due to the perceived high risks and low potential yield.

Three other discussion threads

Since the previous community governance update, three other discussion threads (apart from the ones mentioned above) have been opened, as summarized below.

1. Grant Request - Understanding and improving the governance participation in Merit Circle DAO

On 6 June @aman opened up a discussion thread putting forward an idea on how to potentially improve governance participation in Merit Circle DAO, and requested a grant in this regard. The author was quickly pointed in the direction of Merit Circle’s grant system and discontinued the discussions on the governance forum.

2. Binance - What to do?

On 31 August @JGdog23 initiated a discussion regarding challenges currently faced by Binance. The discussion thread is still active. It should generally be noted that any third party exchange may choose to list MC tokens (equally as they, for instance, may list assets such as BTC or ETH). MC tokens are not “controlled” by anyone (apart from the tokens owned by an individual person of course), and consequently, it is also up to any third party exchange to decide on whether the assets should be continued to be listed or not.

3. Automated workflow for DAO

On 7 September, @como opened up a discussion thread where ideas to automate certain workflows within the DAO ecosystem based on SyncVote technology were represented. This topic is the most recent on the forum and has yet to be subject to any discussions.

Closing remarks

The above illustrates that Merit Circle and community members continue to be engaged in discussions, proposals and voting rounds with respect to a variety of topics. Looking back at the period since 6 June 2023, it is fair to say that our DAO has continued to have a relatively active governance platform. Hopefully, we will continue to see high governance activity with the launch of Beam mainnet and possible expansions of governance use cases (for instance in relation to governance of certain smart contract systems on Beam on-chain).

Since our last community governance update, it should also be noted that the constitution is now stored on-chain as an ERC-1155 token on Ethereum, and any changes to it are subject to governance. The text of the constitution is embedded into the metadata, which is viewable here. In case a proposal suggests changes to it and such proposal passes, the smart contract will be upgraded and metadata amended in accordance with the governance proposal. Anyone may mint their own copy of the constitution for free (apart from any gas fees) here. There is no need to mint a new version in case of upgrades/changes.

We hope that the wider Merit Circle DAO community appreciates these updates. Please feel free to leave a response to address any information that you believe was lacking or that you wish that we shed more light on. As we intend to continue to provide such updates going forward, let us know if there is anything you want done differently in the future. We welcome all feedback.



Individually, we observe several critical points that do not appear to be taken seriously enough, so we decided to share our views here rather than on Telegram.

  1. The constant requests by DeFi projects or their B&D/marketeers to enable our treasury to deploy stable coins into their yield contracts are tiring. We find the summary of the response fairly soft. It’s quite apparent people are fed up with DeFi hacks for a few % of yield - yield which often distributes ‘shitcoins’ as rewards that nearly always go to zero. It’s a no-go as has been discussed on Telegram, Discord, Twitter and more. Fidelity gives over 5% APY, safely. Coinbase, nearly the same via USDC. There’s no need for exposure to easily hacked DeFi protocols. The shills should really just stop.

  2. The concern around Binance is growing, and so far not many people seem to be paying attention at all. It’s becoming a risk to the DAO (users) for having such size deposited in a CEX under scrutiny. When the accusations are resolved or cleared, this might be different, but not now. With all due respect, what are you hoping for? That everything is going to be okay? If unlucky, you’ll end up as a meme sticker.

  3. We believe that the utilization of the treasury funds and expenditures thus far has been excessively liberal. Without a significant upgrade of the quality of investments, we believe that treasury usage should likely start being limited in scope, if not outright paused. The team has been given near daily market updates for the past two years by a variety of advisors. With this information in mind, one would assume investment frequency and -size would go down rather than up, for most non ‘AAA’ quality games. But in our view this has not been the case. This specific point will likely require further attention by us in the near future through a dedicated forum post.

Signed with left paw,

Zheng Yi Sao
Sad Cat Capital


Completely agree re. point #1; these constant attempts to put our treasury at risk for a few % is laughable but getting to the point where it is borderline suspicious. Point #3 should also be a focal point moving forward; hard balance to find especially if things start kicking off in the coming 1-2 years, but it would be great to see a significantly higher level of scrutiny in investments made by the DAO so that no more Flappy bird fiascos occur. Any further expenditures into poor quality games / projects will just continue to hurt the legitimacy of the MC brand. Look forward to hearing the forum post regarding this so it can be discussed further, as it is not an easy balance to find.