At the end of 2021, two Dos Defi – Fei Protocol and Rari Capital – embarked on what was supposed to be a transformative fusion. The idea was simple: Fei, with its algorithmic staboritrinin, would unite forces with Rari, a pioneer in loan pools without permission, to create a deficued power governed by a single DAO. His communities approved the merger with overwhelming support, and in December, the DAO tribe was born.
Nine months later, he was dead.
The collapse of Fei -rari sent shock waves through the ecosystem, but it was not the only M&A Dao, even in 2021. Gnosis and Xdai (a qualified success), Aragon and Vordoni (an average fault), yearn and cream/sushi/pickle (difficult) everything. Since 2020, Daos has executed more than 65 agreements that seek to climb, merge or consolidate. Today, the state of Dao M&A is more vibrant than ever.
Traditional M&A have clear plays books. Corporate meetings negotiate agreements, the financing of the structure of investment banks and legal teams guarantee compliance. But Daos has been operating in unknown waters. Governance is chaotic. There is no CEO to sign an agreement, and Tokens holders vote, often with unpredictable results. Or learn about it after the fact, as with the community of Aragon.
How we discover when writing the Dao M&A Report: The valuations are murky, since Dao tokens fluctuate greatly, which makes it difficult for justice acquisitions or to meet the expectations of tokens, as evidenced in Fei -rari and Gnosis-XDAI. Regulation is a land mine. The absence of standards for legally binding DAO transactions prevents potentially valuable agreements.
Instead, DAOs are resorting to tokens migrations and exchange contracts as solutions to regulatory uncertainty. Security concerns are still challenging for DAOs, since hacks can erase billions of value during the night. I just ask fei tokens headlines, who had to cover $ 80 million in the exploit rari.
And sometimes, the “mergers” are not mergers: the announced mergers of Andiven Finance with yearning, Pickle, Cream, Sushiswap and Akropolis were really a series of loose associations that generated a significant confusion about governance and responsibilities.
That said, we believe that M&A can be a Dao superpower. That is, Daos can feasible more efficiently so feasible and recognize more synergies than any traditional organization. Imagine standardized exchange and acquisition contracts, platforms for the discovery of mergers and acquisitions or conglomerates of protocol that create richer and integrated ecosystems in the chain.
Despite the challenges, Dao M&A is here to stay. In any case, the growing complexity of web3 ecosystems makes consolidation inevitable. But, for future agreements to succeed, damage must rethink how they approach M&A. A better governance alignment is crucial, since DAOs need structured frames to align the incentives of interested parties and avoid the internal struggles that condemned Fei-rai.
More reflective assessments are needed since an exchange of tokens is not the same as a cash purchase; Assessment models must take into account the liquidity of the token, the power of government and the potential for future profits. Security must be a priority, with rigorous intelligent contract audits and stress tests to avoid both catastrophic exploits. And the DAOs must commit to these complex dynamics instead of stirring them by hand, and investing in infrastructure and associations to execute them.
If you can learn from these first experiments, mergers and acquisitions could become a critical tool to build resistant and scalable decentralized organizations.
But we are not there yet. Merging damage is not just about together two treasure bonds. It is about integrating communities, government structures and technical systems so that they improve, do not undermine, the value of these organizations.
The full DAO state report (February 2025) of Daostar, Areta and Emory University is available here.
