Totally agree, right on point and sharing the sentiment, it’s been enough of 0-value seeds.
Voting YES on this topic.
Totally agree, right on point and sharing the sentiment, it’s been enough of 0-value seeds.
Voting YES on this topic.
Naturally, thank you Honey for formulating this thread and starting a perhaps well-needed discussion.
The arguments you bring are fair and if these are the only aspects that YGG would add to MC, then obviously they underperformed heavily and pale in comparison to the other seed investors. I am in agreement with you there.
However, I have to assume there are reasons that MC has taken on YGG as a seed investor. This is an aspect we might not get to see (easily), but it is a perspective we need to take into account. As the MC team, even though we are a DAO, they are an integral part to the DAO. Other reasons YGG may be taken on as a seed investor is as a strategic partner. This could be in the form of advice or a sparring-partner; how to spot opportunities, discussing certain projects/opportunities, perhaps advice on how to handle a certain situation, or whatever they might YGG for. I would like to hear the perspective of the team to hear about the value they might derive from it.
@BambinoValue does raise a very good point as well. We have to explore what cutting YGG loose means for MC in the long-term. If this perception about YGG gets out, it will naturally be bad for them as well, but we need to be looking out for ourselves. No, YGG has not met the standards of adding value that is being set for seed investors. If the DAO decides we want to cut YGG loose, then it shall be done, but it has to be done within the possibilities we have.
That being said, if the aspects Honey addressed is all YGG has done; the social media posts, the “co-investing”; the possibility of lending NFTs. Then of course, they have not pulled their weight. Especially as a strategic partner “whose values are deeply aligned with ours”, considering their limited transparency and split-focus of their own DAO with the subDAOs.
To conclude: No, they seemingly have not pulled their weight and have not lived up to the promises made. However, I would like to hear the team’s perspective on how they have derived value from YGG and if it is still a strategic partner.
Thanks, Honey Bee for the detailed proposal and continuous contribution to Merit Circle DAO.
Appreciate your input and research done in this case. I don’t know the SAFT details but clearly can see that such value add from YGG is not only disappointing but actually embarrassing for such big project and the capital involved. It sounds like an amateurish runaway, extracting value from VCs that likely have no clue what they invest in. While I might respect their hustle, it certainly goes against our principles and our commitment to the space. As some people mentioned here I was surprised to see YGG as an investor in MC as they are direct competitors. But here we also have the CEO of YGG investing almost the same amount as YGG. Which is very weird in my opinion.
I’m coming from the 2017 class of crypto where I started as a bounty hunter as I had 0 capital to start with. And retweeting, creating tweets, and providing cross-marketing for projects and advertising are very easily achievable with the army of accounts at a very low cost. A lot of our community members are influencers or have Twitter accounts and they constantly contribute to the success of Merit Circle DAO (or at least we trying to be active). If a few retweets and tweets are the only value add from a huge capital fund I don’t know what to say here - it is even lesser than the bounty hunter level of value add. But they can extract more than 5mln tokens for such amateurish behavior.
I fully support this proposal and I will be voting YES for YGG seed refund (few thousand compensations on the articles? perhaps)
Also, I would suggest using extracted tokens and burning them to reduce the total supply.
This is an unprecedented case in DAOs history (2nd so far for Merit Circle DAO) which I’m excited about to be quite honest. I do believe all seed investors, angels, and VCs should stay accountable for their value added to the investment. Otherwise what is the point of them if any?
Thanks for my Ted talk and see you on the voting field,
Yours truly diamond hands bagholder Speedy
The choice of YGG as seed investor might be wrong. From another side the question is: what were the commitments of seed investors ? Were they written somewhere, maybe formal agreement ? If yes and if they are violated - no doubts, I vote “yes”.
But if not or with vague wording - then we are talking more about expectations than commitments. And in that case it would be a slippery slope to take their tokens back. Not even mentioning lawsuits which are probably possible.
Very thorough examination of the major seed investors, thanks for writing it up. After reading all of the above one can only conclude that there is an entity here (YGG) which has added little to no value and are attempting to present a version of events which is disconnected from the reality of the situation.
For me personally, the no value add is a key factor for assessing such a large investor which is indeed a disqualifying factor, but further, the even bigger point for me personally is that their credibility as a legitimate entity appears to be on a sharp downslide. They’re not transparent about their funds at all and they are launching several sub-DAOs each with their own LBP/raises. What could possibly be the reason for them to need to branch out to countless sub-DAOs and collect countless more funding? For me, those actions are predatory and harmful, they appear to be running cash grab after cash grab. Such an unethical entity doesn’t belong in association with Merit Circle in any way shape or form, as Merit Circle is a fully transparent, honorable, professional, and ethical entity whose reputation shouldn’t be tarnished by associating with filth like cash grabber / no value add YGG. All of this is made worse and is especially bad since they’re also technically a competitor of MC.
Vote is a hard YES for removing YGG from seed, they can tarnish their own reputation and run their cash grabs without MC association, without being able to use the MC brand for legitimizing themselves.
Thank you Honey Barrel for this latest proposal.
Over the past 7 months, Sad Cat Capital has made a conscious effort to be as publicly active as possible within the Merit Circle DAO. Our public activism has included posting self-made Merit Circle content on Twitter, publishing proposals (MIP-6 and MIP-7) for the DAO, and even helping to moderate the unofficial MC Trading Telegram group. Our ongoing work with Merit Circle has led to Sad Cat Capital being added to the list of DAO Core Contributors.
We committed to this level of activism because we believe investors should seek to add value to the DAO, not extract it. Merit Circle will only succeed as the top Gaming DAO, if everyone within the DAO works together to make it so.
Our firm holds a strong belief in decentralization. The ability for the DAO to act in its own best interest, without being controlled by any single centralized authority. To date, this belief has been exemplified by the Merit Circle DAO, and we are proud of how far the DAO has come since its inception almost 7 months ago. Sometimes, the DAO will need to make difficult, yet important, decisions, to ensure the best going forward. We believe this could be one of those times.
Like many others, we have been glad to see the Accountability and Transparency posts from seed investors. We believe it is important that investors are transparent about their role in the DAO, and how they have contributed and added value. We enjoyed reading threads from Maven11, DeFiance Capital, and Mechanism Capital, about their contributions to the DAO and suggestions for the future. We hope other angels and VCs continue to follow your lead!
Unfortunately, we were also disappointed with YGG’s response, as it demonstrates how little value they have added over the past 7 months. We agree with Honey, that none of the 5 points YGG included in their response can be considered as adding value to the DAO.
It was correctly pointed out that there has been nowhere near enough social media activity from YGG for that to be considered as beneficial to the DAO. Likewise, anyone can become published in Yahoo Finance and Coindesk by using similar services to what Honey linked in the proposal.
Unless YGG can expand on “introduced Merit Circle to other helpful early stage investors”, then we also agree that this is far too vague. This could be due to the fact that there is nothing to expand on here, or no helpful introductions were actually made. We also do not consider ‘co-investing’ as contributing to the DAO, nor offering to lend assets which were never actually lent.
As projects and DAOs, the differences between YGG and Merit Circle are staggering. Merit Circle shares our love for decentralization, transparency and honor. Sadly, we cannot say the same for YGG, for all the reasons that Honey has mentioned. Today those traits, that Merit Circle embodies, will be tested to see how far the grasp of our DAO truly reaches.
Ultimately, as a VC firm ourselves, we take pride in the activism we do for projects that we love. The purpose of seed investing isn’t just to provide capital to projects - especially in the crypto space where there is an abundance of capital - it’s to provide ongoing support to ensure continued success. In our opinion, if a seed investor doesn’t do this, then they have failed in their role.
For that reason we will be voting YES to this proposal, and hope that we see continued efforts from all Merit Circle investors going forwards.
Signed with right paw,
Sad Cat Capital
Thank you Honey for your never ending activism and contribution to our great DAO. I think the concept of canceling a the SAFT is an interesting one and I would be all for it, given that YGG has thus far contributed nothing to the Merit Circle DAO. I am a mere dev and not a lawyer, so I do not know if the SAFT allows Merit Circle to refund the SAFT, but in either case I would vote to proceed with this.
I am also a little bit shocked and confused why Gabby had a personal investment of 75k. I wonder if he does this for more projects with YGG.
I would like the MC team to let their opinions be known about this and shine some light on the details of the SAFT. Preferably, this happens as soon as possible, so we can continue to pass this on for a vote and be done with it. Don’t want more YGG powered Yahoo articles that could fulfill the contribution clause.
My vote will of course be: YES
I love this proposal by @HoneyBarrel. Maybe we should hold the tokens in escrow, pending legal challenges. I like Pumpson’s point about seed investors signing on to decentralized control, though. If we are just a security, YGG can do nothing and get paid, and that’s fine. If we are a DAO, big holders at discount entries need to make big contributions.
If we are prepared to make an example of YGG, however, we should be prepared for our investment projects to make an example out of us. That is, by revoking our distributions for dumping tokens and/or not providing value to their projects.
With that in mind, how is our infrastructure for giving those projects playtesting and other support? I think we are providing MASSIVE value to our game projects through building Sphere, but there is always more we can do.
Very well write-up. Thanks Honey. Love.
Anyway someone above mentioned the team “handpicked” them because they promise (or suppose?) to bring value to DAO.
My question:- What was the promise (s)? Did the team specify any KPI - or given any specific expectation prior the seed round? Is it written in the contract? How can we measure the success or saying “they are not meeting expectation”, if we don’t set any?
If the Core team did not set any specific neither expectation nor KPI, then should DAO set the expectation now - give them time to deliver/prove their credibility - subsequently only penalize them in case they still fail?
Hope we can hear feedback from the Core team.
Regardless - I’m happy to vote “YES” to incompetent VC(s) with my 50$ MC bag.
As always, big thanks to Honey for their relentess activism and for providing a clear outline regarding just how useless YGG have been compared to other seed investors.
I believe every major point has already been discussed above, so I have very little further to add to the discussions besides stating that I will also be voting YES
I disagree about needing to recognize the risk they took as seed investors. Given the founding team at MC and the sector, there was almost zero risk at buying in at 3 cents cost basis. These are sweetheart deals for people who are connected, and the implicit expectation is that they use those connections to help the project. If that hasn’t happened, then there’s nothing really owed. If terms allow it, we should refund the investment. I’ll vote YES.
You are welcome to disagree with me. I think we should all be free to share out opinions. HOWEVER, I think what is more important than our opinions is what you said: “if the terms allow it”
Putting aside my opinions (I agree with the reasons for this proposal), it is better to learn from mistakes than retroactively break contractual obligations made by the DAO. @HoneyBarrel themselves said they have not seen the SAFT note. Others such as @AdmiralErik say
While I agree that YGG has not added value, I would like someone with actual first-hand knowledge of the SAFT note to tell us what is in it (or share it with us) and actually prove that the DAO is within its rights to take this action.
Today we all have an easy target (YGG) where a majority will certainly vote “Yes”. But there are going to be issues in the future where it is not so simple. What if the DAO signs a contract with an outside game developer (paid 50% upfront / 50% on final delivery) and a majority of the DAO decides it hates the end-product / didn’t do what they said so it votes to cancel the final payment? Is that ok just because a proposal passed?
Clearly, I am in the minority here but I would like to argue that unless the SAFT note makes it very clear that YGG has not met defined milestones for ‘adding value’ in order to receive their tokens OR that a majority DAO governance vote can change the economic terms / cancel tokens / refund the investment then I think this is not a good idea.
Yes, this is a decentralized organization, but we entrust the core team to operate in our best interest. Nothing will go 100% to plan. If the SAFT lets us do this then let’s do it. But if it does not, then let’s learn from this, let the core team incorporate the disapproval vote of the DAO into future contracts with 3rd parties, and let’s keep supporting the core team (the ones who ultimately drive the most value creation).
p.s. - Here is an example SAFT note per the U.S. SEC. There are definitely clauses in it that are similar to what people are suggesting are in MC’s SAFT notes. But no one on this thread has yet to tell us what is 100% in the MC / YGG note.
Edit / Update: It is clear my constructive push back is very unwelcomed here based on what some individuals are messaging me. For the record, I am an individual investor, I have no affilation with any groups or YGG, and members of the core team have met me before. Good luck to the DAO and the core team navigating this.
The above message is crucial in the future of decentralised anything anywhere and thank you Bambino for pointing it out. We cannot just vote that we as the DAO think that they have not provided value and therefore they are punished. I think this has to be compared to the current legal system as well as having to be within the bounds of the current agreements. If it were a legal case, we couldn’t just say that YGG has not added value, sue them, and pronounce them guilty and punish them as we please. As Bambino pointed out, this concept is very important to the proceedings. If we were to take action, we need to know which action that is, and more importantly, know that we are in our rights and that other agree with us. A DAO may be a new concept, as is the blockchain space, but that does not mean we can be judge, jury and executioner.
Just a small echo to emphasise the legal aspect and protect ourselves in the process.
Thanks for the reply BambinoValue. I think we are basically in agreement - DAO votes cannot nullify a legal contract. I would love to see this proposal modified to something along the lines of “Evaluate options for refunding YGG seed investment”. Maybe a small engagement undertaken by outside counsel and the deliverable a report to the DAO. If we went that route, then the findings would need to be respected. Just my 2 cents, and love the active discussion and debate here.
Thanks for writing the post. I will be voting NO. Please let me explain why;
First of all before the DAO was created the team made an agreement with all investors. Understandably some people in the DAO feel that YGG is not upholding their end of the deal and there is good reason to act on that. When a contract is signed in good faith both parties should be in communication with eachother during the time the deal is active or valid. If one party feels the other party is not delivering what they should be a conversation should be had and steps / actions should be taken for the party to improve their performance.
If that does not bring the desired results next steps could be to signal that there is still a perceived lack and if there is no improvement steps will be taken to bring the agreement to an end.
While i agree with you the value add might not be there, I also see that a discussion to come to a better understanding have not been taken. I would like to propose a process to be followed where we give YGG the chance to improve their value add and if they do, fine. If they dont then we could move to a process to unwind the agreement.
In my opinion this would be a process that could be used as a template for other deals the DAO has / makes as well. Also it would limit the risk for the DAO from a legal standpoint as well and it would be perceived by the outside as proper governance as well. If such a process or discussion with YGG would not result in better value add you have my vote as well. Untill such steps have been gone through it’s a no for me.
P.S - I am an individual investor. MC is my biggest investment to date. I hold a small amount of YGG but personally wrote it off as zero (I am disgusted by their DAOs lack of transparency and value dilution antics.). I am proud to have invested in MC. I feel bad that I ever invested even a small amount in YGG.
I totally agree with the sentiment that YGG has so far added nothing of/negligible value to MC.
But what @BambinoValue is saying is supremely important.
A contract signed has value. We cannot retrospectively go back and rescind contracts unless there is such a clause in contract do to so.
If we stop respecting contracts signed then it’s a slippery slope that will come back to bite us because we sign a lot of contracts with other games. Ex - Some game we invested in can come back and say their DAO members don’t like us and cancel our investment contract.
I think the sensible thing to do here is see if the SAFT mentions any specific deliverables from YGG and whether it has some recourse to what can be done if YGG doesn’t deliver the same.
If nothing like that is mentioned in the SAFT, what I think we should do is give YGG a list of deliverables now that we want them to deliver in the next few months.
After that , if they still don’t deliver we can take some legal opinion on our options then.
Hello fellow DAO members, and especially, thank you @HoneyBarrel for the diligent effort you have put into crafting a topic critical towards the future health and relevance of the DAO, Merit Circle, and its community at large.
First off, allow me to preface …
As an investor-first in this space, I like Merit Circle, both itself (the overall project & folks behind) as well as ROI-prospect wise (hence investor). Continuing, I don’t mean to project onto others, but I would imagine it to be a fair assumption that many in this space are also here for similar reasons, although some may be driven primarily by other incentives.
This said, although many of us may contribute to this space with the notion of return-on-investment top of mind, I would also like to imagine many of us do so with a clear moral compass in mind. Simply put, why not make a profit, while also doing well by others at the same time - both on an individual level as well as in community we surround ourselves?
On the issue of poor ethics, DAO values, predatory VCs, transparency & governance…
Continuing with this mindset, and in the context of partnerships, to me, this is certainly moreso an issue of ethics, as well as alignment of morals in regards the MC DAO vs ’ value-add ’ (however much it may be suspect).
As you aptly put, YGG, in recent past has elected to postpone a live LBP (see YGG SEA ’ fair launch ’ copperlaunch). An LBP, or liquidity bootstrapping pool, is meant to be an algorithmic token disbursement mechanism, whereby token price is met at an agreed-upon level with open community demand - completely fair and without interference. Compromising a community ’ fair launch ', whereby instead of being fair, resembles something more like a rigged carnival game is just one example of poor ethics. These sorts of actions against community represent the sort of character that is the antithesis of MC, its DAO, and community as a whole.
Why was this done? Was this communicated ahead of time to the community? How about the notion of the YGG SEA token itself? Why not a singular token, integrated inside the YGG token itself? Was it a cash grab all along? Are these issues ever even considered in an open, a public debate, a fair discourse perhaps? I think you know the answer.
As many of us are all too aware that have been in the crypto space long enough, the issue of morality, or more specifically: money / cash grabbing, lying, cheating, stealing, rugging (not hugging), and all in all, profiting via wronging others in any way is all too prevalent in crypto still in 2022.
One of the big things I (& I’m sure most) of us saw different in MC is a change in model vs various many projects preceding it - It’s true, Transparency, Open dialogue, Ethics, Empowerment and allowing voices to be heard from all sides is a new trick for crypto. It shows a maturation of the space, and one I think should be actively fought for, both for the long-term health & for adoption alongside other much more mature / regulated industries. MC can be one of the few in the space leading by example at the forefront of this new movement.
On SAFT Reversion
Let me repeat, by reverting a SAFT, at least in this case, it isn’t a ’ rug ’ of anyone (see low ethics). It’s a vote towards furthering what MC & its DAO stands for → transparency, morality alignment (in project, partners & community), ethics, fairness, as well as long-term soundness.
In my humble opinion, and in light of recent actions / overall track record of YGG, I do think they pose more harm vs help remaining an active partner of MC, and I would vote in favor of removal.
In summary, it is important to remember, ’ value ’ is a subjective metric by any measure, and although considered, I do think the notion of ethics (& alignment therein) weighs more highly than ’ value ’ - especially important as various VC’s, funds, partners, angels, & individuals provide value in different ways, many of which are hard to measure. We can easily make the case that, although YGG provided ’ some value ', their lack of morality in the space is far enough a more important consideration, especially as Merit Circle has continued to show time again, even at such an early stage since inception, a champion of transparency, fairness as well as governance (& associated processes); Continuing with this leadership, cutting ties with a partner whom chooses the opposite approach I believe would be beneficial. The mere fact we are all here having this discussion on a public forum, prior a DAO vote (which comprises -all- sorts of varied opinions, both in favor & dissenting), proves the character of MC, & also highlights the disparity between it & YGG.
Thank you Honey,
This is exceptionally thorough analysis of current added value of YGG as seed investor to Merit Circle DAO. I agree to all given arguments that their position as VC has to be reviewed.
However, before we go for hard Yes or No vote of proposed removal of YGG, I think we need to hear first core teams’ opinion and give YGG a chance to provide their comments as well.
I would propose amendment to this proposal to have a vote in general for removal of YGG from VCs. If this vote passes, we continue with further proposal on form and conditions this removal process will take. Similar to how we are treating Staking v2 decision making.
I believe this is great precedent in DAO history on requesting accountability and added value from VCs and we should treat it with great care as we do with future of Merit Circle DAO. I hope this will help not only this DAO but industry in general.
With all my best wishes,
P.S. This DAO has an exceptional community members and we all play important part in its future, so thank you to all of those who put their valuable time in developing this project! And thank you again Honey for your great effort you put to address VCs accountability!
Shouldn’t we burn the tokens instead of giving them back to the DAO. We lose a large investment + extra tokens in circulation. These are 2 negative things for the price of MC and so the DAO. Burn them
First of all I want to thank @HoneyBarrel for the ongoing engagement and for being a strong asset and vocal voice in the community. Your views and thoughts regularly encourage me to think (and rethink) important matters concerning the MC DAO, which I am thankful for.
A lot of good points have been made from both sides (both here, TG, Twitter, etc.), and I will not echo them all here.
One obvious question in this discussion is whether MC actually can cut-off YGG’s right to receive tokens. Technically, the answer is – to my knowledge – yes. Obviously YGG has already (and is continuously at this point) receiving MC tokens, which to my knowledge they have also informed publicly that they will be staking for 12 months at a minimum, but I assume the proposal refers to the tokens that have not yet been distributed (i.e. those that are still subject to vesting).
The next important question that arises is whether MC can do it without facing any adverse repercussions. This question potentially has both a legal and a commercial side to it.
First, the legal. I think @BambinoValue raises some important points here that we not necessarily should shrug off so lightly. The DAO as such is decentralized, not incorporated under any specific jurisdiction and not recognized as a legal entity. Enforcing a claim in contract (for specific performance or damages) or in tort (damages) towards the DAO directly is therefore a difficult (or even impossible) road to take.
However, not being privy to the actual terms and conditions concerning the seed deal between MC and YGG, it is not possible for me (and I assume most/all token holders, apart from those directly involved) to determine whether YGG (or potentially any stakeholders of YGG) could e.g. take direct action (in contract or tort) against MC team members etc. This should naturally be assessed by those that are actually privy to all information concerning the matter. The point is however that even if you are operating through a DAO, you are not automatically shielded on the legal side by referring to that the operations are conducted by a DAO – the picture is often broader (to what extent will depend on the actual circumstances in the specific situation).
Some in here argue that YGG has not fulfilled its obligations towards MC either, which may be correct; as I do not have knowledge of what was agreed between YGG and MC, I cannot conclude on whether YGG has actually not fulfilled its obligations towards MC (nor whether that is actually relevant for this particular topic). I am curious to hear from @YGG here (noting e.g. that they have stated that they going forward will work on “providing deal flow” to MC, ref. their post in the Accountability thread), and also from the MC team, as those two parties are the ones sitting on most info regarding this.
Second, the commercial. Should the unvested tokens end up taken away from YGG, MC will definitively be setting a precedent in the space (which may or may not have adverse legal repercussions to parties involved on the MC side, ref. above). Whilst I do see the points made by @HoneyBarrel and others (a lot of which are good and important), I also share the worry raised by a few (e.g. @BambinoValue and @tyghh), that this type of decision may strike back on MC as well. One of the main revenue streams of MC will come from taking part in seed investments, where MC will be subject to cliff and vesting periods. Based on the circumstances, there may e.g. be a risk that other projects in which MC are investing in pull the similar move on MC, or use the threat of such move as leverage to make MC carry out specific actions (e.g. make MC increase its advisory role in a project and to provide additional value, and by that moving the goalpost in terms of what was actually agreed). This is just one example, and similar situations may occur where MC is interacting with third parties and where MC is dependent on third parties actually delivering a specific performance.
Based on the above and the input so far from others in the discussions, a question one should ask is if the potential upside is worth the potential downside. One obvious upside for other existing investors is that more tokens will likely be taken out of circulation, against a price far below the current market price. A second upside could be that this sets an expectation in terms of standard that is to be delivered from seed investors. However, we have already seen a lot of MC seed investors provide info on what their contribution has been and is contemplated to be going forward, so the upside may be more limited for MC specifically in this respect. Several other potential upsides could be mentioned (see Honey’s initial post and others). The potential downside on the other hand is more unknown (potentially legally and commercially).
For token holders voting, it think it is paramount that we have sufficient information on the topic before voting on the matter. Therefore, I will await to hear from both YGG and MC to shed some more light on the matter prior to making a decision.