A DeFi protocol just proposed to go private because its managers believe the current DAO structure is creating obstacles to completing institutional transactions.
Across Protocol’s ACX token jumped 80% to $0.06 on Thursday after the team behind the cross-chain bridging platform issued a “temporary check” proposal to dissolve its token structure and transform into a traditional U.S. C-corporation.
“As Across deepens our work with institutional and corporate partners, the token and DAO structure have a significant impact on our ability to work closely together and integrate,” the proposal reads. “The transition to a traditional legal entity will meaningfully improve our ability to enter into enforceable contracts, structure revenue agreements, and provide more value to our stakeholders.”
“At current ACX valuations, we believe Across Protocol is significantly undervalued. The proposed structure gives us the opportunity to explore new ways to foster growth while acting in the best interests of the broader Across community.”
A drop-in check in DeFi governance is essentially a non-binding poll used to gauge community sentiment ahead of a formal vote. It lets the team know if there is enough support to proceed as an official governance proposal, which is then voted on by token holders.
The move will give token holders two options: exchange their ACX for equity in the new company, or sell the tokens for USDC at $0.04375, a 25% premium to the previous 30-day average trading price.
Before the proposal went into effect, the token was trading at around $0.033. The price immediately surged to $0.07 before settling around $0.06, reflecting market pricing on the takeover floor, although the current price is already well above the proposed $0.04375 takeover, suggesting traders were betting on a higher offer or that the stock options were worth more.
In comparison, Bitcoin is currently trading flat, according to CoinDesk market data. The CoinDesk 20, which measures the performance of the largest digital assets, also had a lackluster performance.
The mechanism is simple. A new entity called “AcrossCo” will own all protocol IP and manage development. Over 5 million ACX token holders can be converted directly into equity.
Small shareholders can acquire equity through a no-fee SPV structure with a minimum holding of 250,000 ACX, which is approximately $10,000 at current prices. Regardless of size, everyone is treated equally with a 1:1 token-to-stake ratio.
Those who don’t need equity can acquire USDC at a 25% premium. The acquisition window will open within three months of proposal approval and last six months, funded by the agreement’s liquid assets.
A community call is scheduled for March 18, formal discussions will continue until March 25, and snapshot voting will take place on March 26. If approved, the conversion would begin in early April.
Is The DAO Vision Dead?
DeFi proponents have argued for years that tokens and DAOs are superior to traditional corporate structures when it comes to building decentralized infrastructure.
Cross was one of the first protocols to publicly advance the opposite view, that the token structure was actively inhibiting growth and that C-corporations would provide more value to the same stakeholders.
Risk Labs acknowledged that the token is “significantly undervalued” and described the proposal as an opportunity to “double down on investment across” with a structure that institutional partners truly understand.
The 24-hour trading volume of $149 million is approximately 3.5 times the token’s market capitalization, reflecting the intensity of speculative interest surrounding the proposal.
Whether this interest translates into support for the conversion, or simply a deal to acquire a premium, will be determined by governance discussions over the next two weeks.
