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DAO Maker Faces Backlash Over Unfulfilled Compensation Promises Following $7M Hack

DAO Maker, a crypto fundraising platform focused on Web3 projects, is distinct from the MakerDAO stablecoin protocol and aims to raise significant funds in 2024.

Despite this initiative, the platform is under scrutiny from victims of a 2021 hack who claim they have not been fully compensated for their losses, despite promises from the development team.

The hack, resulting in a loss of approximately $7 million, was attributed to a compromised private key, which victims allege stemmed from developer negligence.

Initially, DAO Maker responded to the August 2021 breach by distributing 500 USD Coin per affected user and promising further compensation through a new IOU token named “USDR,” scheduled to be redeemable within a year for the platform’s native DAO token at enhanced rates.

However, victims told Cointelegraph that they were never able to redeem their USDR tokens, and the promised redemption process was reportedly canceled following a governance vote influenced by DAO Maker using its substantial token holdings.

Adding to the controversy, a decentralized finance (DeFi) researcher from SOMA Analytics reported that DAO Maker might have manipulated the governance vote to abandon the USDR redemption and attempted to erase evidence of this decision.

Victims of the hack remain uncompensated, and the USDR token has become nearly worthless, with no active market or exchange possibilities.

One investor, speaking under the pseudonym “Red Drac,” described receiving 500 USDT immediately after the hack and 1,500 USDR later, which they were unable to redeem or sell at full value.

They discovered a liquidity pool that offered the USDR tokens at a substantial discount but chose not to sell, leaving the tokens in their wallet.

Another affected user, “Zztelecom,” also highlighted the inability to redeem USDR, buying them at a discount in the hope of future gains that never materialized.

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SOMA Analytics further detailed how a specific proposal on the DAO Maker platform to adjust the USDR redemption terms was passed by just six wallets, suggesting potential manipulation.

This proposal reduced the redemption value of USDR significantly, contradicting earlier commitments.

Despite the DAO vote favoring a 50% redemption rate, no compensation was distributed, and the tokens were made unredeemable for anything other than DAO Power on the platform, effectively rendering them useless in the secondary market.

The situation has left many investors with tokens that offer little more than the potential to participate in future token offerings without guarantee of profit.

As DAO Maker continues to operate, servicing Web3 startups and maintaining a significant market presence, the unresolved issues from the hack raise ongoing concerns about governance and compensation practices within the platform.

Cointelegraph’s inquiries to DAO Maker for comments remained unanswered at the time of publication.

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Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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