By MAKOTO TAKAHIRO , DAO Times
Compiled by: Felix, PANews
DAOs have garnered significant attention and investment in the crypto space, with several of them managing billions of dollars in their respective treasuries.
However, not all DAO participants have noble purposes. Certain contributors are trying to manipulate the system and extract money from the treasury without providing any corresponding help.
The participants in these actions, known as money grabbers, use a variety of tricks and tactics to deceive and manipulate other DAO members, administrators, and representatives. They often make proposals that sound appealing but are vague, impractical or costly. They also try to build prestige and networks within the DAO to gain trust and influence. They may even collude with other scammers to bribe representatives, managers, or collusion administrators to get their proposals approved.
After The DAO Times previously published an article about the dark side of The DAO, an anonymous person contacted The DAO Times claiming to be part of a group of money grabbers. He agrees to answer some questions and explain how they work.
Q: Can you introduce some personal situation and how to get into DAO?
Answer: Of course. I'm a marketer with some working experience in cryptocurrencies and DeFi. I got into DAOs about a year ago when I saw that they were raising and managing a lot of money. In addition, I am also interested in learning about the DAO system.
Q: When did you decide to become a scammer (money grabber) ?
A: Well, I wouldn't call myself a liar, per se. I prefer to think of myself as an opportunist or pragmatist. I realize that there is a lot of inefficiency and waste of money in the DAO space. Many proposals are poorly written, poorly executed, or poorly evaluated. A lot of money sits idle or is underutilized. A lot of the members are naive or ignorant of what's going on... I just see an opportunity to make money by exploiting those perception gaps and weaknesses.
Q: Can you give an example of how you operate?
A: My team and I know that money grabbers are working on creating content and tools for The DAO, planning to craft great proposals, and marketing campaigns through paid channels like media, KOLs, and Twitter spaces.
It's like doing the same thing for promoting ICO, IE0, NFT issuance and others who are going to Rug Pull. Some of them just juggle errands to get the job done and don't care about the project's reputation. For example, if you make a tool that brings more utility to the DAO token, in order for it to work well, you need to put a lot of effort into promoting it and perfecting it. But why do you want to do this? You present technical results and walk away without being accused of being a liar.
Q: So you basically don't create any valuable content or tools for the DAO?
A: Yes, almost. But make sure the surface is good enough so it doesn't raise too many questions.
But there is a catch, if you want to get funding on a regular basis, you have to demonstrate that you can present results in a high quality way, and in the case of creating any kind of content or tools, means spending a lot of money from grants ...so we're not really going to build something of good quality. Our main goal is to receive regular funding from the treasury and keep the flow of funds increasing without losing our representatives. It's like playing a political game without much responsibility. And the rewards are higher compared to the effort put in.
Q: Can you explain your strategy to infiltrate The DAO and extract funds from its treasury?
A: First, we need to enter a DAO and participate in discussions on all platforms. Users have to trust that we are good people. So we have to invest time and resources in building trust. We are connecting with admins, social media managers, reps and other contributors.
This is followed by brainstorming and proposals that meet the criteria of low effort, cheap help that is easy to adopt, and having clear metrics to measure our productivity... which is why an administrative or management role is perfect for us. Ensuring regular "paychecks", our activity can be faked and we don't have to report specific production metrics. We gain power in the DAO, which helps us drive more proposals. The influence will snowball...more and more.
But we won't stop there. We dig into the governance models of DAOs and figure out how they make decisions. We study the voting process, quorums, delegated matters, and incentives for voters... looking for any loopholes or weaknesses that can be exploited. It's actually a tough job.
Q: What kind of vulnerabilities are you looking for?
A: There are many. For example, some DAOs have low participation or quorum thresholds, which means we can easily influence voting results with a few supporters or bribes.
Some DAOs have weak authentication or anti-sybil measures, which means we can create multiple accounts to influence voters and audiences. Some DAOs rely heavily on admins and it is easy to bribe them one way or another... We also try to use our reputation and network to gain approval from members or representatives. We sometimes offer them a portion of the profits or some other favor in exchange for their support...for example, we can promote or support their proposals in Twitter spaces if they are willing to publicly vouch for us.
Q: Did you encounter any challenges in implementing this strategy?
A: Of course. A few times our proposals fell through because we were too greedy, but you have to constantly "reflect and grow" in practice, right? We get better and better over time. We also came up with a trick to replace proposals that were hopeful. By constantly monitoring potential new proposals, refining them, and then releasing our own version within the same DAO. We're asking the admins to put the original proposal on hold and let our proposal get a vote first. We can also throw some negatives in their discussions so it looks like their proposals are less mature...but in general, looking for managerial positions and "education" crap. People love to be governed and directed, even in a DAO, so we are giving them what they want and deserve.
In one DAO, we even used a fake KYC to become an admin role. This is actually controlling at least a decent treasury.
Q: So you can influence admins and even elevate your members to such roles. Can you elaborate on how that affects social media managers?
A: Of course you can. Having the DAO's social media manager on our side is like hitting the jackpot. If they do what we say, everything will be a lot easier. In addition to the aforementioned underlying effects, we even paid him to keep tweeting about our event in a positive way and simply ignore other similar requests. This strategy also helped our election a lot.
Q: How much money did you make by defrauding the DAO?
A: I can't give you an exact number, but we've been doing it for over a year and we've made over $1 million. Making money was slow at first, but then it got faster and faster. Our goal is to control one or two treasuries and transfer funds to our wallets bit by bit. The best case scenario is when the members really thank us for it.
Q: Do you feel any remorse or guilt about defrauding the DAO?
A: I'm just exploiting the system and the market. I didn't hurt anyone or steal anything. Again, don't call me a liar. We play governance games with them, they owe us.
Q: Do you think a DAO can block or deter contributors like yourself?
A: I don't think so. DAOs are inherently fragile and flawed because they depend on human trust in cooperation. But humans are greedy, selfish, irrational and emotional. They are easily manipulated. It's kind of funny, but our team is more decentralized than any DAO out there lol. We're just a bunch of random people collaborating.
Q: How would you justify your actions? Are there any moral or ethical principles that can guide you?
A: I don't need to defend my actions...but I believe in the idea of encryption being permissionless and trustless. I'm not breaking any laws, I'm just taking advantage of them.
This interview fully demonstrates the challenges DAOs face in ensuring their security and integrity. While DAOs bring many advantages and opportunities for innovation and collaboration, they also bring many risks and threats for manipulation and deception.
As DAOs become more popular and powerful, ways need to be found to prevent or stop scam contributors like him from draining DAO funds. Otherwise, DAOs may end up losing trust, reputation, and value. Unfortunately, this is happening.
