The crypto fundraising platform DAO Maker is seeking to raise funds for new Web3 projects in 2024. However, victims of a hack in August 2021 claim that the project failed to reimburse them for their losses, despite promises from the development team. The hack was allegedly the result of a compromise of a private key due to the developers’ negligence. The hack resulted in the theft of approximately $7 million in users’ funds.
The development team initially offered partial compensation to investors in the form of an immediate airdrop of 500 USDC per person. The remaining compensation was supposed to be paid through an IOU token called USDR, which would become redeemable for the protocol’s native coin, DAO, at prevailing prices within one year. However, victims claim that USDR redemptions were never allowed and that they have not been compensated for their remaining losses.
SOMA Analytics, a decentralized finance researcher, has claimed that DAO Maker forced through a proposal to cancel the reimbursement plan using its large token supply to ensure the vote’s outcome. The proposal was later deleted, allegedly in an attempt to remove evidence of the team’s failure to reimburse victims.
DAO Maker is a separate entity from the MakerDAO stablecoin protocol. It is a fundraising platform for technology startups, with a focus on Web3 protocols governed by decentralized autonomous organizations (DAOs). The platform offers various systems for investors to participate in token offerings, including a Strong Holder Offering (SHO) where investors purchase DAO tokens to allocate DAO Power to a specific offering.
Following the hack, victims claimed that the promise to redeem USDR for DAO was not honored. They received 500 USDT and later received 1,500 USDR, but the USDR tokens were never allowed to be redeemed as promised. A liquidity pool for USDR existed at one point, but it was shut down, leaving holders with no means to cash out.
SOMA Analytics also claimed to have evidence of a cover-up by the DAO Maker team. They alleged that the team created a proposal to abandon the USDR redemption process, which was passed and then deleted. The researcher claimed that the team used its own tokens to outvote tokenholders and distributed tokens to new wallets to obfuscate its role in the proposal’s passage.
The victims of the hack acknowledged that they can use the USDR tokens to gain DAO Power within the DAO Maker platform, but they claim that the tokens are not valuable because they do not guarantee earnings. The DAO Maker team has not responded to requests for comment.
Despite these issues, DAO Maker continues to provide fundraising services to Web3 startups, and its DAO token has a market cap of $153 million.