Juno’s DAO Votes To Confiscate $35M in Tokens From Whale

Work from Home Secrets

  • Proposal 20, which passed over the weekend, is expected to take effect on May 4
  • Over 3 million JUNO tokens will be transferred to a community-controlled wallet

Juno, a smart contract platform that runs on the Cosmos blockchain, is on the verge of resolving a two-month-old governance conundrum.

An upgrade, slated to be executed Wednesday, will strip some three million JUNO tokens from a single wallet, belonging to an organization alleged to have exploited a loophole in the token’s initial distribution.

Juno’s token was distributed to stakers of the native Cosmos asset ATOM, but the team implemented a 50,000 “whale cap” — and deliberately excluded centralized exchanges, such as Kraken and Binance, which offer staking services.

In March, 40% of token holders signaled their intent to remove tokens that were distributed to a collection of wallets that were later determined to belong to a single entity, in contravention of the stakedrop rules.

On-chain sleuths discovered, in October 2021, that multiple recipient wallets of the initial drop were pooled together, implying that they belonged to the same owner or organization.

But stripping the JUNO assets from the wallet was controversial.

Some viewed the idea of confiscating tokens as a property rights violation of sorts. But centralization of governance power was broadly considered a risk to the long-term prospects of the whole platform.

The owner of the wallet in question came forward to explain that they were a team that managed assets on behalf of clients. In the ensuing community discussion, a new consensus emerged. The wallet had not gamed the airdrop, but was instead ineligible for the stakedrop on account of being a virtual currency exchange service.

Before any concrete action could take pace, the blockchain had to be upgraded to allow Juno governance to execute smart contracts. Then, a subsequent proposal could implement the voter’s intent on-chain.

Meanwhile, the rogue entity, known as CCN, made a proposal of its own, offering to split the funds equally with the DAO. It then used its tokens to vote in favor of the compromise. But the proposal was overwhelmingly rejected.

CCN tried once more, offering to distribute the JUNO proportionally to its clients following a know your customer (KYC) process from an independent auditor. That, too, was resoundingly defeated, with just 3.6% voting in favor.

The latest proposal, 20, gave the community a vote on an upgrade that will remove CCN’s disproportionate token ownership and voting power. It passed April 29 with 71.2% of the vote.

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  • Macauley Peterson

    Macauley has been an editor and content creator in the professional chess world for 14 years. He is a graduate of Bucerius Law School in Hamburg, Germany (Master in Law and Business 2020), where he researched stablecoins, decentralized finance and central bank digital currencies. He also holds an MA in Film Studies and his film credits include Associate Producer of the 2016 feature documentary, “Magnus” about World Chess Champion Magnus Carlsen. He is based in Germany.

    Contact Macauley via email at [email protected]

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