Altcoin Daily Marketing Proposal Drama

What’s going on with the twitter war and content marketing war which appeared to be started based on the Altcoindaily proposal?

Have not had a chance to look into with alot of detail, but here is what I gathered. Appears that a whale in DOT has in essence been controlling proposal passes/fails based on his/her share of DOT (which to be fair is how Polkadot OpenGov works). Many folks appear not to agree with the whales decisions and have stated they would sanction him/her. This sanction has been interpreted as forcing the accounts balance to zero (although I am not sure I saw this exact statement). People seem to be confused on if this can be done and the legality. Here is my take:

  1. This is fully possible to do via the use of force transfer. It can be proposed by anyone. It does NOT require approval from the fellowship. Requiring the approval from the fellowship would defeat the whole point of a decentralized system. This approval can be created through “Main Agenda”, which to be fair does require a large amount of DOT to be put up.

  2. Regarding legality, I am not a lawyer, but have worked around alot of them for more than a decade. Legality would be tricky based on jurisdiction. However, most jurisdictions in my opinion would likely uphold the legality of a force transfer (let me be clear, I am not suggesting the use of). Why? Because when one buys DOT and enters into the ecosystem, one in essence enters into a legal contract agreeing with the protocols rules. The rules are NOT hidden and are open to all since the code is in fact open source. If individuals actually vote, they are in essence forming a partnership (whether they intend to or not). This is how the CFTC went after Ooki DAO (to be clear, Ooki DAO was running an illegal commodites exchange and also got hacked). CFTC was clear that if you are a voter (especially one with significant voting power), you are in essence running the entity (a partner). Which means you have legal liability as well as a Fiduciary responsibility. Many partnerships have force out rules of other partners. This would likely be no different (via the use of force transfer). On a side note, I doubt small voters have anything to worry about. Regulators will generally go after whales, VCs, founders, and any bs legal entity playing shell games if there was fraud or breach of fiduciary responsibility within a partnership. With that said, obviously no one should commit fraud or breach their responsibilities. Most regulators believe it or not do try to protect small investors and they do cost/benefit on any case (they go after millionaires; not jane doe with $1,000 to their name). Again, this is my opinion. I am NOT a lawyer.

  3. Here is my general opinion without having dived into the details (this applies to all proposals, all whales, and all participants). The threat to use force transfer should generally not be used as it has significant repercussions. With that said, whales also need to be aware that when they vote they are likely considered partners or even managing partners according to most legal systems and therefore are subject to Fiduciary responsibilities. So they should be VERY careful on how they vote. And if they abuse the system (let me be clear here, I am NOT saying that is the case here as I have not looked into all of the details), they could be voted out by the other partners. This is a REAL risk an any partnership. There is a reason that many whales do not vote. They know the legal grey area they would be operating in if they did. In the end, each voter (more so whales, VC, founders) needs to decide are they passively investing or actively managing because there could be different consequences.

Would be interested in others thoughts?

Many great points and the breakdown is on point. Any and all whales actively voting should know the liabilities they take on, especially if they are voting against and changing the decision against the community. If those decisions are proven to be harmful, self serving and negatively impacting the organization or community, they stand to lose substantially more than just their tokens. Most whales, VCs and institutional investors require insurance coverage (directors, E&O, or general liabilities) or will have their own policies. But no policy covers or protects collusion, abuse of power or actions for self-dealing/personal gain.

I think the Altcoindaily proposal was a good idea to promote Polkadot to a wider audience and increase its adoption. However, I also respect the right of the whale who voted against it, as he/she owns a large stake in DOT and has a say in the governance. I don’t agree with the threats of force transfer, as I think they are unethical and illegal. Force transfer is a last resort measure that should only be used in extreme cases of fraud or malicious behavior, not for personal disagreements. I hope the community can find a peaceful and democratic way to resolve this issue and move forward.

Having a leader to get everyone moving in the same direction is a fantastic development for Polkadot. Our whale is a hero that is saving Polkadot from a slow death spiral. This is how the system is designed to work. The people that make the best decisions are able to accumulate the most capital (DOT) and have the most influence in both light and dark governance. Because the whale(s) owns a lot of DOT, their interests are naturally aligned with the interest of other DOT holders, people that actually have skin in the game.