Yield Guild Games and Merit Circle, two gaming-centric DAO communities that inked a deal in 2021, have found themselves in the midst of a community-led dispute over funding. The decentralized autonomous organizations are into crypto games.
In September 2021, Yield Games invested in Merit Circle’s seed round in exchange for its MC token at a discounted rate. A member of the Merit Circle DAO, called HoneyBarrel, issued a proposal on May 20. He asked the community to vote on refunding Yield Guild’s original investment, call off the Simple Agreement for Future Tokens (SAFT) between the DAOs, and remove its share of Merit Circle tokens.
HoneyBarrel believes Yield Guild has not supported Merit Circle enough. The community member detailed in a thread that other investors have been more actively engaged with Merit Circle. They have done more to help Merit Circle than Yield Guild. As such, the proposal has garnered significant support from the community. It has also prompted a response from DAO creators Merit Circle Limited. The platform stated that has the proposal taken the Web3 space and the firm by surprise. This was inevitable that DAO governance would come to the crossroads between law and the law of code.
Merit Circle pointed out that canceling a seed funding agreement could have serious effects on the DAO’s reputation. Merit Circle wants to honor the agreement but it has to balance the power of the DAO, as it holds the ultimate power. Merit Circle and Yield Guild asked for a two-week delay in the proposed actions. Both DAOs also sought an additional week to create a counter-proposal to allow a resolution for all parties in a timely manner after the vote.
Yield Guild says it worked with Merit Circle Limited to produce a response to quell public pressure, provide meaningful context to the DAO and fulfill its obligations to YGG. However, YGG said the response lacked its input. It said the DAO has always wanted to be collaborative, and not combative with its partners.