In recent Defi DAO Wonderland collapsed due to 0xSifu who is the co-founder of QuadrigaCX Michael Patryn, a former expert on scamming people, while the founder Gerald Cotten died suddenly in 2018 and took investors’ $250M into his grave. How come a DAO becomes a scam and rug pull investors?
0xSifu is an ex-criminal who ran a scam business and was sentenced to 18 months in federal prison for multiple counts of fraud. The verification process will have to be extensive to exclude bad characters.
Omar Dhanani
Michael Patryn's previous name is Omar Dhanani. He is an expert on the Ponzi scheme. HYIP was the type of Ponzi scam that uses social media to recruit people and ask for their investments. Once a few people receive some rewards in the early stages, they will help to recruit more people. HYIP collapse will generally blame external factors such as a hack, a theft, or even a bad investment. It is a type of typical financial fraud to scam away people’s money.
Sifu’s Rug Pull
It starts with when the community votes away Sifu’s treasury manager power, Sifu starts his money transfer to a coin mixer and then into his own wallet. It brought skepticism around such a move.
Wonderland DAO Is Not Decentralized
Somehow, Sifu got his way to withdraw funds into his own wallet without a multisig voting approval that raised a concern on how DAO can run to prevent rug-pulling from one person.
Decentralized Mechanism
For managing treasury, one needs to decentralize one’s power to fully control treasury funds. Rather, it needs a collective decision on how such funds should be distributed. Verification may also need to be implemented to elect contributors to guard for the community.
In Conclusion
DAO has a long way to go. To be able to become a more decentralized organization, the collective voting process is essential for the community to operate sustainability.
Photo by olieman.eth Unsplash
Note: the post was shared on multiple platformsYou can refer my previous article lists
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2022 Prediction #3: Zero-Knowledge Proofs or ZKPs
2022 Prediction #4: Regulated Defi On-Chain KYC
2022 Prediction #5: Institutional Crypto Adoption
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2022 Prediction #7: NFTs-Based Communities - DAO 1.5
2022 Prediction #8: Metaverse and NFTs
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-------------------------------------------------------------------------------------Disclosure: The article was written by a delusional author who is possibly a nut job without any questions whatsoever about expertise in the subject matters. You should not believe any words this author wrote or you may experience similar symptoms or even possibly become a nut job.
