Malicious Circumstances

Here is a rundown of a few malicious circumstances that could happen in the DAO.

Scenario 1

A malicious actor decides to purchase 35% of the total outstanding FrankenPunk collection and push through a proposal to liquidate the treasury to their wallet.

Circumvention

Since FrankenPunks (FPs) are a freely tradeable asset, anyone can attempt this type of forced takeover. However, this type of takeover would be thwarted by our initial proposal process.

To pass the initial stage, a discourse proposal must be passed. This requires more upvotes than downvotes AND each individual member only receives one vote. If this proposal was put forth, it can be rejected before it even starts by members of the DAO.

With that being said, well over 500 FPs would be required to get over 35% of the outstanding voting power inside the Franken DAO. At the moment of writing this, there are only 411 FPs listed. The cost of acquiring 500 FPs would make the advent of a liquidation of the treasury less appealing.

Scenario 2

A group of malicious actors gain control of over 35% of the total outstanding FrankenPunks and try to take over the DAO. They then begin pushing through proposals that do not benefit holders.

Circumvention

Similar to "Situation 1", to pass the initial stage, a discourse proposal must be passed. This requires more upvotes than downvotes AND each individual member only receives one vote. If a proposal like this was put forth, it can be rejected before it even starts by members of the DAO.

This is a legitimate problem and members of the Franken DAO should be aware that this is a possibility. However, the cost of acquiring over 500 FPs, or enough to get over 35% of the outstanding voting power would disincentivize a group of people from attempting this.

Scenario 3

A good faith proposal is submitted and reaches the final governance stage, it is then found that the proposal can be exploited or the proposer can't be trusted.

Circumvention

The Franken DAO has an active committee. This committee is there to ensure that the DAO is operating in the best interests of its holders. If a proposer or proposal is found to have a malicious edge case or a malicious proposer. They can step in and block the successful proposal's execution command from completing. This safety net will be used only in extreme cases but can be used to cancel proposals to investigate the proposal or proposer. The proposal will then be re-submitted to the final governance stage.