A blockchain community has voted to take more than $100 million worth of tokens in a controversial governance vote.
The community of Juno Network, a Cosmos-based network that lets different smart contracts interact with one another, will revoke millions of $JUNO from a wallet which “gamed” a stakedrop.
As its name implies, a stakedrop involves staking assets in exchange for an airdrop of another asset. In this case, the Juno Network offered an opportunity to stake Cosmos ($ATOM.X) in exchange for $JUNO.X tokens. The network imposed a max reward for the stakedrop at 50,000 $JUNO.X per wallet.
However, the keyword there is per wallet. A well-seasoned investor took advantage of that distinction – they staked $ATOM.X across two dozen wallets to “game” the stakedrop. By doing so, they ended up with over 3.1 million $JUNO.X in the distribution. As of today, that represented a nine-figure reward – and over 7% of the circulating supply of the token.
So this enterprising, and fairly kniving, investor managed (maybe unknowingly) to turn about $1.3 million worth of $ATOM.X into a nine-figure payday by exploiting the very nature of the stakedrop.
Alas, the community didn’t see it as “enterprising” or “smart” at all – they saw it as a risk. By owning 7% of $JUNO.X, the unknown investor would be in a position to control Juno governance – they could affect meaningful changes in the blockchain system’s, influence policies, and potentially even destroy the price or liquidity of the network.
As a result, community members backed Proposal 16, a governance proposal which would revoke 2,450,000 – or 98% – of the wallet’s $JUNO.X tokens and return them to a community pool.
Before the proposal passed, the so-called “Juno Whale” claimed to be an investment group rather than an individual. They argued that the tokens received from the airdrop belong to the clients, and the user manages clients’ properties.
However, that argument did not win over members of the ecosystem – 40.85% of them voted in favor of moving forward with the proposal.
However, now that it’s passed, it won’t necessarily be a cakewalk to take those funds away. The change will require a hard fork, which is a pretty large change to a network – one of the most famous hard forks in crypto history involved Ethereum’s DAO hack, which a user exploited to steal millions of dollars. They ultimately “rolled back” that hack – and in many ways, this is similar to what the Juno community is doing now. They’re treating this like an exploit, or an engagement of wrongdoing.
However, some members of the community – presumably representing the other 33.76% of votes which voted “No” and the 3.59% which voted “NoWithVeto” – say that the real wrongdoing is taking money from people. Developers pointed out that such a step could undermine community members’ trust and defeat the purpose of blockchain technology.
Perhaps the discourse around Proposal 16 is more interesting than the financial and social ramifications – it demonstrates that even if transactions are “immutable” on blockchains, on-chain governance can disrupt the “uncensorable” and “immutable” nature of the tech. Or, in this case, they can take over $100 million from an investor.
For the Juno community members, the challenge is not over yet. The next step will be to vote again on the software that will implement the proposed changes.