failure family
token transferability defect
- Lockup versus token economic flexibility tradeoff: Hardcoded lockup periods can protect token holders against supply side induced devaluation, but they also decrease the token economic flexibility the
- retroactive-restriction-on-nonconsenting-shares: Transfer restrictions cannot be imposed on shareholders who did not consent: Delaware refuses to allow them unless the holders are parties to the agre
- app-specific-token-lock-in: App-specific tokens exert less influence over value from other projects and typically fail to support a broader user market, because their limited use
- transaction-value-exceeds-fee-base: No consensus protocol can guard against Byzantine faults when a single transaction is worth more than the promise of all future fees for the entire pl
- traceability breakdown at the smelting stage: Complete supply chain tracking is particularly difficult in the mineral industry because of the prevalence of smelting during processing, which is why
- lockups erase the early liquidity advantage of ICOs: By 2019 the ICO market had lost its defining advantage over venture capital: because most ICOs between 2018 and 2019 imposed one to three year lockups
- Reputation Exit Illiquidity: Exit by selling reputation tokens is more problematic for reputation than for other cryptocurrency tokens, because reputation is less fungible: a toke
- Forced RNFT Liquidation On Undersubscription: In a firm commitment underwriting deal whose public portion does not sell out, a member is forced to sell reputation non fungible tokens on the over t
- Capital reputation duality dilution: The basic VC DAO model mixes fungible cryptocurrency investment with minted non fungible reputation, and this duality prevents the full benefits that
- Fungible token governance as common failure denominator: The absence of proper decentralized governance built on non-fungible tokens is a key common denominator across DAO failures and rug pulls.
- vote-buying: Fungible governance tokens expose a DAO to vote buying and other forms of manipulation.
- vote buying through tradable governance tokens: Fungible governance tokens deliver liquidity and transparency in DAO voting rights, but because they are tradable they simultaneously create exposure
- purchasable governance token attack surface: Low attack resistance in DAOs is typically caused by the use of easily purchasable or transferable governance tokens, which leave the organization vul