In the late 2021, two defi daos – FEI protocol and Rari Capital – began with what should be a change. The idea is simple: FEI, along with its algorithmic stablecoin, will join the force with Rari, a pioneer in unauthorized pools, to create a defi powerhouse managed by a single DAO. Their communities approved the integration with excessive support, and in December, the Dao tribe was born.
Nine months later, it’s dead.
FEI-Rari’s collapse sent shockwaves by ecosystem, but it was not the only Dao M & A, even in 2021. Gnosis and XDAI (a qualified success), Aragon and Vocdoni (a middling failure), desire and cream/sushi/pickle (hard to say) all together. Since 2020, more than 65 deals have been implemented by Daos seeking size, combining or combining. Today, The state of the dao m & a is more vibrant than before.
Traditional M&A has clear playbooks. Corporate boards are organizing deals, financing the structure of investment banks, and legal teams to ensure compliance. But Daos operates in unspecified waters. Management is chaotic. There is no CEO to sign off on a deal, and token holders vote, often with unpredictable outcomes. Or they learned about it after the truth, like the Aragon community.
As we discovered in writing The State of dao m & a Report: Values are furious, as Dao tokens change wildly, making it difficult to priced fairies or to satisfy the token owner’s expectations, such as the evidence in FEI-Rari and the GNOSY-XDAI. Regulation is a landmine. The absence of standards for legal binding DAO transactions prevents potentially important agreement from implementation.
Instead, DAOs return to token transfers and change contracts as workarounds in regulation uncertainty. Security concerns remain difficult for DAOs, as hacks can erase billions -billions of amounts overnight. Just ask the FEI token holders, who need to cover $ 80 million in the exploitation of the Rari.
And sometimes the “fusion” is not integrating at all: the advertising finance of finance with aspiring, pickles, cream, sushiswap, and acropolis are actually a series of loose partnerships that have developed significant confusion in management and responsibility.
In all that said, we believe that M&A can be a DAO superpower. That is, Daos can do M&S as better and identify more synergies than any traditional organization. Imagine substitutes and obtains of contracts, platforms for discovering M&A, or protocol conglomerates that create a richer, more integrated on-chain ecosystem.
Despite the challenges, here is Dao M & A to stay. If anything, increasing the complexity of web3 ecosystems will not prevent integration. But, for future deals to succeed, Daos should think about how they approach M&A. Better management of management is important, as DAOs require structured frameworks to align stakeholders in incentives and prevent pregnancy with fei-rari.
More thoughtful values are required because a token swap is not the same as a cash buyout; Appreciation models should account for token liquidity, power of management, and future income potential. Security should be a top priority, with a strict intelligent contracting and stress tests to prevent both disasters. And Dao should be involved in these complex dynamics rather than waving them-and invest in infrastructure and partnerships to perform them.
If Daos can be noted from these early experiments, M&A can be a critical tool for the development of elastic and measured decentralized organizations.
But we haven’t. Daos’s combination is not just about the inclusion of two treasures. It is about the integration of communities, management structures, and technical systems in ways to enhance – not undermine – the value of these organizations.
The whole state of Dao M & A (February 2025) Daostar, Areta, and Emory University reports are available Here.
