DigixDAO token holders vote to liquidate the project's $64 million ETH treasury

After integrating a dissolution mechanism last month, DGD holders have voted to liquidate DigixDAO’s ETH treasury which currently holds almost 386,159 ETH worth $64 million. The DAO will cease to exist, however, Digix Global and the DGX gold-backed token will still operate.

DigixDAO raised around $6 million in 2016 to build a self-sustaining network for the tokenization of physical goods. Token holders could vote on proposals for spending the treasury funds which were intended to help build the ecosystem. However, as the price of ETH increased, the treasury funds quickly surpassed the value of DGD. Rather than have a war-chest for spending, DGD holders opted to receive their pro-rata share of ETH signaling their negative views for the future prospects of the DAO.

Why it matters

• Prior to the announcement, the total value of the liquidated ETH was worth more than the total market cap of DGD. This made for an arbitrage opportunity since the ETH received will be worth more than the token value, although since the vote passed, the gap narrowed as DGD increased 15% to a market cap of over $62 million.
• This liquidation has implications for ETH as it introduces substantial potential selling pressure once the ETH gets distributed. That being said, it is difficult to predict the behavior of DGD holders, and they are just as likely to put it to productive use staking in ETH 2.0 or providing liquidity on decentralized exchanges and lending pools.