Mango DAO Embraces SOL, Rejects BTC With $1M Treasury Investment

The governing body behind Solana’s Mango Markets overwhelmingly rejected calls to invest even a sliver of its nearly $700 million treasury in bitcoin.

AccessTimeIconMar 22, 2022 at 8:11 p.m. UTC
Updated Oct 12, 2022 at 12:47 p.m. UTC
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Mango DAO, the governing body for Solana-based crypto trading hub Mango Markets, on Tuesday approved a $1 million treasury investment in Solana-linked tokens just hours after overwhelmingly rejecting calls to do the same for bitcoin.

Mango DAO’s nearly $700 million treasury will now diversify beyond USDC stablecoins for the first time. And it will do so not in bitcoin – the eponymous crypto asset that software company MicroStrategy made famous as a treasury reserve – but in mSOL, a token tied to SOL that pays out staking rewards.

Mango Markets is a borrowing, lending and trading decentralized finance (DeFi) protocol on Solana. Its Mango DAO governing body is one of Solanaland’s more built-out decentralized autonomous organizations (DAOs). MNGO token holders vote on everything from token listings to party funding; they also oversee Mango’s hulking treasury, which is funded through trading fees.

Plenty of DAOs have embarked on treasury diversification campaigns before. There have been governance token fire sales and partnerships with investment managers. More rare is the up-or-down community vote to swap stablecoins for volatile assets like solana.

Brian Smith, a Mango DAO contributor who helped spearhead the treasury proposals, told CoinDesk the mSOL proposal was successful because it “hedges out some of the future price risk” that Mango Markets incurs by operating its trading rails with SOL. Plus, mSOL, the Marinade Finance-issued liquid staking token, offers the benefit of staking yield.

“We were holding 100% USDC and not earning any interest on that capital,” he said in a Telegram message.

Smith is now tasked with executing the mSOL purchase via a delegated account that he said Mango set up.

DAOs dabbling in bitcoin

MNGO holders’ strong rejection of bitcoin (that vote ended with 99.5% against) stands in contrast to recent pro-BTC movements elsewhere in the crypto-sphere.

Do Kwon, the founder of Terraform Labs and the chief figurehead of the Terra blockchain, is barnstorming a plan to backstop Terra’s UST stablecoin with up to $10 billion in bitcoin.

As of Tuesday, that is decidedly not the path for Mango.

“The people have spoken and no one wants BTC,” Smith wrote on Mango’s Discord channel Monday after the bitcoin proposal went down in flames. “Only 26k yes votes has got to be the least support for any serious proposal in Mango DAO’s history.”

Part of the community's wariness with bitcoin was the security risks of buying a wrapped asset, Smith said. And the version of bitcoin they would have to buy will soon lose support on Solana, he said. Plus, there’s the optics: “Some people may not think BTC is a good fit for a Solana DAO.”

Still, there were signs Tuesday that Mango voters might come around to investing in bitcoin. Some members of the project’s Discord said mSOL was a more practical test case for Mango’s first treasury diversification vote than bitcoin. Mango co-founder Daffy Durairaj advocated for going with mSOL first.

Operating decentralized governance can be a challenge for Solana-based projects. Despite its growing prominence in DeFi circles, Solana has nowhere near as much DAO activity as Ethereum does. That’s partly because it lacks the governance infrastructure that Ethereum projects have.

But that’s beginning to change, Smith said.

“Solana governance tools are being developed at a fast rate [with a lot of contributions from the Mango developer team], and I’m hopeful governance become much more effective in the future," he said.

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Danny Nelson

Danny is CoinDesk's Managing Editor for Data & Tokens. He owns BTC, ETH and SOL.


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