Understanding the Controversy: The Bankless Backlash Explained

• Bankless HQ and BanklessDAO Contemplate Separation
• Dialogue in Parameterizing Phase
• Understanding the Fallout
• Unpacking the Crypto-Specific Concept of DAOs
• Bankless Entities: A Closer Look
• The Implication of Separate Entities
• A Lesson for the Crypto World
• The Future of Bankless

Bankless HQ and BanklessDAO Contemplate Separation

Bankless HQ, a renowned media brand in the crypto world, and BanklessDAO, a semi-associated entity, are exploring the possibility of a separation, a turn of events that is largely attributed to a misunderstanding among their followers. The discussions currently underway are not expected to be contentious; David Hoffman and Adam Sean Adams, the creators of the influential Bankless brand, initiated this dialogue with the decentralized autonomous organization (DAO) that bears the same name.

Dialogue in Parameterizing Phase

Hoffman stated in a video call that they are currently in the "parameterizing phase" of discussions. The main point under consideration is whether or not BanklessDAO will retain its current name after the fallout from a recent fundraising and education initiative that was proposed without their knowledge. This initiative inadvertently created conflict, causing serious backlash within the crypto community.

Understanding the Fallout

The BanklessDAO sought 1,818,630 ARB funds to support a year-long education initiative aiming to introduce people to the Arbitrum network. This proposition triggered a backlash from the sector, with critics likening it to a 'treasury raid'. However, BanklessDAO has launched similar initiatives in the past, and the interpretation of this situation as a treasury raid is highly subjective.

Unpacking the Crypto-Specific Concept of DAOs

DAOs, essentially group chats with a bank account, have become a staple in the crypto world. They often oversee major financial operations or function as social clubs with Discord channels and tokens providing access to the club and acting as seed funding. The founders of Bankless are now engaging in damage control both on Twitter and the Bankless Discord, amidst criticisms of being hands-off since the inception of the DAO.

Bankless Entities: A Closer Look

The Bankless media brand, covering the niche DeFi sector, employs about 20 people and produces podcasts and newsletters. The brand also manages relationships with advertisers and has a software arm. Founders Hoffman and Adams also run a separate VC entity that raised $35 million. BanklessDAO, founded in 2021, is an entirely separate entity with around 30,000 members on Discord.

The Implication of Separate Entities

While the relationship between Bankless and BanklessDAO has been fluid, the distinction between the two entities is clear. DAO members have no voting rights over Bankless and no Bankless employee is a member of the DAO, as stated by Hoffman. The Bankless founders have recognized their lack of involvement in the DAO's operations as a mistake and believe that separating the organizations may be the solution. Adams has announced plans to submit a governance proposal to BanklessDAO to clarify this separation.

A Lesson for the Crypto World

This situation serves as a lesson for crypto startup founders about the risks associated with granting an external organization partial control over their business or reputation. It also highlights the importance of leadership within DAOs. The proposal by BanklessDAO to educate about Arbitrum may be reasonable, yet it underscores the significance of clear and effective communication.

The Future of Bankless

Hoffman and Adams believe in the concept of decentralizing their media operation. The separation of the DAO could allow Bankless to grow without actual expansion. Despite the potential conflicts of interest and an overly positive bias, Bankless has successfully established itself as a reputable source of crypto information. Irrespective of the challenges, Bankless continues to be a dominant player in the crypto media landscape.

Edited by Jonathan Stoker