Author: Nancy, PANews
Across Protocol, a DeFi project that has been operating for four years and raised tens of millions of dollars, recently made a surprising decision to dissolve its DAO and transform into a private company.
The fact that this established protocol led the "defection" is not just due to adjustments in its corporate structure, but more so to the existing dilemmas of the DAO governance model and the token economy.
The plan is to transform into a US company, with token holders receiving equity or USDC exit options.
On March 11, Across released a temperature detection proposal, planning to transform from a DAO structure to a US-based C-type company. This is a significant shift in the governance structure of the Across protocol, and is unprecedented in the crypto space.
Following the proposal's release, the price of the ACX token unexpectedly surged. CoinGecko data shows that ACX rose by 94.9% in the past 24 hours, but is still down approximately 96.2% from its all-time high. However, according to on-chain analyst Ai Yi, the largest holding address of ACX tokens is expected to need a 5.66x increase to break even.
As a leading player in the cross-chain technology field, Across has been operating for four years. During this time, Across has raised approximately $51 million through two rounds of financing, attracting prominent institutions such as Paradigm, Coinbase Ventures, Bain Capital Crypto, Multicoin Capital, and Hack VC. To date, the protocol has processed over $58 billion in cross-chain transactions.
Nevertheless, Across has decided to embark on this transformation. According to the proposal, the new entity, AcrossCo, will become the operating company behind the Across Protocol, taking over all protocol intellectual property and being responsible for development, partnerships, and commercialization. Generally, registering a C Corp is the most common choice for most startups with funding plans, pursuing rapid growth, targeting VC/institutional investment, and considering a future IPO or acquisition.
To complete this transformation, Across plans to do so through ACX tokens and equity swaps or acquisitions.
The proposal offers ACX token holders two options: First, equity swap, where ACX token holders can exchange their tokens for AcrossCo equity at a 1:1 ratio. Holders of more than 5 million ACX tokens can directly participate in the swap, while those with fewer can participate through a free special purpose vehicle (SPV) structure. Second, token buyback, where ACX token holders can exchange their ACX for USDC at $0.04375, a 25% premium over the market average of the past 30 days. The redemption window is 6 months, and the swap is expected to open within 3 months of the proposal's approval. This swap plan may have created arbitrage opportunities for crypto investors, leading to a rush to buy and contributing to a short-term surge in the price of ACX tokens.
According to the proposal plan, the community will hold a conference call on March 18, release the final proposal on March 26, and vote on it via Snapshot on April 2.
If the proposal is formally approved, Hart Lambur also revealed that Across will focus on developing two major businesses in the future: one is stablecoin bridging. Across's pioneering cross-chain intent architecture is currently the only feasible solution for unifying the numerous L2, sidechain, and altchain L1 cryptocurrencies. It is expected that by the end of 2026, free cross-chain functionality will become standard for all stablecoins. Currently, in addition to Hyperliquid, Across has two other unannounced partnerships, both of which will enable users to transfer funds for free. The second is AI-assisted payment, which allows users to declare their needs and have competing solver networks automatically execute them, thereby achieving automated and personalized services.
DAO's predicament and token crisis: an attempt to save itself; future considerations include equity tokenization.
Across's decision to dissolve its DAO is not only a desperate measure for the protocol itself, but also a common predicament faced by the vast majority of DeFi protocols.
It's clear from Across's statement that the DAO model has evolved into an invisible shackle hindering protocol expansion in real-world business collaborations. Hart Lambur tweeted that as Across's partnerships with institutions/enterprises deepen, the token and DAO structure have substantially impacted the ability to achieve collaboration and integration.
He further stated that while Across offers consumer-facing products, it is essentially a payment infrastructure. Over the years, Across has signed contracts with many top crypto projects, but due to the lack of a legal entity, it cannot directly sign agreements and must go through the Risk Labs Foundation as an intermediary. This "intermediary" structure hinders cooperation when Across approaches more traditional financial institutions, making it more difficult to extend its infrastructure to traditional finance (TradFi) or crypto-related companies. In particular, signing contracts outside of direct agreements will become increasingly important as more third parties handle user transaction fees. Transforming Across's DAO model into a traditional legal entity will significantly enhance its ability to sign enforceable contracts, build revenue agreements, and create value for stakeholders.
Across's transformation case further reflects the existing dilemmas of DAO governance structures. After several years of large-scale practice, the power distribution, accountability, and sustainability of the DAO model are now being criticized. Besides projects like Across that struggle to scale due to legal and compliance uncertainties, DAOs also suffer from issues such as centralized voting power, inefficient decision-making, and low community participation. These problems, especially in business environments requiring rapid decision-making, have become significant factors hindering the further development of DeFi projects.
As Stani Kulechov, founder of Aave, recently stated amidst governance turmoil, the current way DAOs operate is extremely difficult. The decision-making process is slowed down by forum discussions, "temperature checks," and multiple rounds of voting. Furthermore, DAOs are prone to politicization, with participants forming political alliances, ultimately leading to the victory of "politicians" rather than builders. Kulechov argues that the DAO governance model needs reform, focusing on areas that truly require collective participation, such as major protocol changes and treasury strategies. The remaining aspects should fall under the execution level and require leadership impetus.
Besides governance issues, Across also faces the challenge of a depressed token valuation. Hart Lambur stated that although he is a staunch supporter of tokens and opposes the "high FDV, low circulating supply" token issuance strategy, and issued the Across token at an extremely low valuation a long time ago, the current macroeconomic environment has changed. The Across token is currently severely undervalued and has not received enough attention. For Across, the reality is that the disadvantages of owning the token often outweigh the advantages.
Compared to the volatility and uncertainty of tokens, Across's transition to a private company and adoption of a traditional equity incentive mechanism may provide the protocol with more stable financing channels and market valuation.
However, Across's approach has also sparked controversy in the crypto market. Some believe it is a betrayal of the spirit of decentralization and may marginalize crypto retail investors, while others see it as a return to realism in DeFi.
It's worth noting that Across co-founder Hart Lambur revealed plans to tokenize equity in the future. However, these plans will be implemented in phases, initially focusing on traditional equity before considering tokenization options.
As for the future direction of Across, this pioneering DeFi experiment, only time will tell.
