- Delegates at 1inch DAO aim to redirect protocol revenue to the DAO’s treasury.
- 1inch Labs, the for-profit developer, currently holds most control over revenue streams.
- Delegates say the DAO lacks funds to sustain operations and fulfill governance.
- Efforts to fund DAO operations face pushback, with concerns about disrupting core services.
- The DAO could run out of funds within two years unless revenue flows change.
Delegates at 1inch DAO are seeking to restore a steady stream of revenue from the 1inch protocol back to the DAO’s control. The push comes as current treasury reserves dwindle, and delegates warn they cannot effectively govern without financial resources.
Representatives from Arana Ventures and StableLab co-wrote a proposal for the DAO to receive a portion of fees generated by 1inch, a decentralized exchange aggregator on Ethereum. According to the proposal, the 1inch protocol generates about $5.3 million annually, but revenue redirected to the DAO was stopped two years ago. 1inch Labs and the 1inch Foundation now oversee how these funds are spent.
“The DAO has effectively become a front for portraying a sense of decentralisation,” said Abdullah Umar, governance head at Arana Ventures. Delegates say a lack of incoming revenue is depleting the treasury and limiting the DAO to spending only, without a sustainable financial model.
The current system allows entities called “resolvers,” who match user trades, to keep any extra funds (known as surplus) from a transaction. For example, if a user agrees to swap one Ether for $4,200 and someone matches it for $4,150, the resolver keeps the $50 difference. Delegates want some of these surpluses, as well as fees from limit orders, to be returned to the DAO. The aim is to balance resolver incentives with the DAO’s need for funds.
Though 1inch Labs and the Foundation state they support a financially independent DAO, they say shifting revenue could disrupt services. A spokesperson told DL News, “There are other potential revenue sources that can be explored without undermining the ecosystem’s performance and the ability of its current providers to keep functioning.” They argue the DAO does not oversee key technical operations and has not outlined how it would use additional funds.
Delegates counter that recent spending, such as the development of a hardware wallet and sponsorships like a partnership with Bruce Lee’s family company, comes from the DAO’s treasury—with no matching inflow, creating a “one-way flow” out of funds.
Unless revenue allocation changes, Arana Ventures and StableLab estimate the DAO will be unable to fund itself within two years. While some community members have already opposed further spending proposals due to low revenue, discussions about realigning incentives and restoring treasury flows remain ongoing.
For full details on the DAO’s recent proposals and discussions, refer to this financial revitalisation plan and this governance forum discussion.
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