Monetalis Group, a firm that manages almost $1.5 billion worth of US Treasuries on behalf of stablecoin issuer MakerDAO, has survived an ouster vote prompted by missed deadlines and an underwhelming return on its investments.
The two-week voting period ended Monday, with almost 59% of votes in opposition to Monetalisâ ouster. Supporters led for part of the voting period, but several votes from major MakerDAO delegates swung the contest in Monetalisâ favour last week.
Nevertheless, the proposalsâ author has called the outcome a âmoral victory.â
On Friday, Monetalis furnished several long overdue reports and said it had scheduled an overdue audit for July. Additionally, it said it would cede its reporting responsibility to another firm, AccountAble.
âWe thank Monetalis for acknowledging the communityâs concerns and proactively arranging for handover of duties and compensation to AccountAble in an orderly fashion,â MakerDAO delegate GFX Labs, which led the effort to oust Monetalis, wrote in MakerDAOâs governance forum Friday.
In DeFi, delegates are people or entities that vote on governance matters on behalf of holders of a protocolâs tokens.
Maker issues the DAI stablecoin. It was the fourth-largest DeFi protocol Monday, with more than $7.7 billion in user deposits.
DAO controversies
The struggle over Monetalisâ stewardship of MakerDAO investments is the latest controversy to roil crypto cooperatives known as decentralised autonomous organisations, or DAOs, and to highlight the power that protocol founders wield â indirectly or otherwise â in the DAOs they were supposed to cede control to.
MakerDAO founder Rune Christensen is a principal investor in Monetalis, according to the investment managerâs website. He is currently pursuing a major, controversial revamp of the Maker protocol, in part to combat voter apathy in the DAO.
Monetalis didnât immediately reply to a request for comment.
The firm manages a pair of investments in US Treasuries on Makerâs behalf, dubbed Clydesdale and Coinbase Custody.
GFX proposed Monetalisâ ouster after the firm failed to meet several reporting deadlines, as well as a promised audit. Furthermore, Clydesdale never returned more than 4% to MakerDAO, despite the 5% yield on US Treasuries.
BlockTower, another firm managing US Treasury investments on MakerDAOâs behalf, returned about 5% in that same period, according to GFX.
âMonetalis has a long pattern of failing to produce reports as required, failing to ensure their accuracy when they do, and its Clydesdale vault has dramatically underperformed both its underlying assets and Andromeda, which shares the same investment mandate,â GFX wrote on May 7, referring to the BlockTower-managed investment.
Monetalisâ response
Responding in MakerDAOâs online governance forum, Monetalis said, âThe standards for reserve reporting and structure were materially increasing for stablecoinsâ and it had âunderestimatedâ the time it would take to improve its own reporting.
The firm also denied that mismanagement of its Treasury investments had cost MakerDAO millions of dollars in foregone revenue.
Among other things, the investmentsâ Swiss-based management faced higher costs, according to Monetalis.
âBut these costs come with benefits derived from having varied transaction structures, relationships with a wider set of service providers, diversification of jurisdictional frameworks and access to different rails,â the company wrote.
Several companies jumped in to offer their own services, including Mountain Protocol and Superstate.
Shortly after voting began on June 10, several large delegates cast votes to oust Monetalis, and it seemed as though GFXâs proposal would succeed.
âMonetalis underperformed as an Arranger and failed in its duties to report the results, despite several calls to action from the community at large, and didnât provide a plausible justification for it,â pseudonymous MakerDAO delegate StoneWill wrote after casting its vote.
Delegates against GFXâs proposal
But several large delegates cast votes in opposition to GFXâs proposal last week, tipping the scales in the companyâs favour.
One pseudonymous delegate, Vigilant, said it wouldnât fault Monetalis for attempting to overhaul its reporting structure or for the additional costs of operating out of Switzerland.
Nevertheless, Monetalis furnished many of the overdue records on Friday, and said the reports would be prepared by AccountAble in the future.
âWe accept responsibility for the missed reporting,â CEO Allan Pedersen said. âWe will note that we acted in absolute good faith throughout this process and period.â
GFX said it would still advocate for Monetalisâ removal, but called Pedersenâs announcement a win.
âGFXâs original demands have been met,â GFXâs pseudonymous MakerDAO delegate, PaperImperium, wrote on X.
âFailure to produce these documents by a May 15th deadline is what prompted the offboarding proposal.â
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