Author: Nancy, PANews

A DeFi project called Across Protocol, which has been operating for four years and raised tens of millions of dollars, recently made an unexpected decision to dissolve its DAO and transform into a private company.

This long-established protocol leading the "defection" is not just about a restructuring but rather reflects the existing dilemmas in DAO governance models and token economies.

Plans to transform into a U.S. company, token holders to receive equity or USDC exit options

On March 11, Across released a temperature check proposal, planning to shift from a DAO structure to a U.S. C corporation. This is a significant shift in governance structure for the Across protocol, and it is the first such instance in the crypto space.

After the proposal was released, the price of the ACX token unexpectedly surged. According to CoinGecko data, ACX rose by 94.9% in the past 24 hours, although it is still down about 96.2% from its historical peak. However, based on monitoring by on-chain analyst Ai Yi, the largest holding address of the ACX token is still expected to achieve a 5.66 times increase to break even.

As a leading player in the cross-chain race, Across has been operating for four years. During this time, Across raised approximately $51 million through two funding rounds, bringing together star institutions such as Paradigm, Coinbase Ventures, Bain Capital Crypto, Multicoin Capital, and Hack VC. So far, the protocol has handled over $58 billion in cross-chain transaction volume.

Despite this, Across decided to embark on this transformation path. According to the proposal, the new entity AcrossCo will become the operating company behind Across Protocol, taking over all protocol intellectual property, and will be responsible for development, partnerships, and commercialization. Generally speaking, registering as a C Corp is the mainstream choice for most startups with funding plans, pursuing rapid growth, aiming at VC/institutional investment, and considering future IPOs or acquisitions.

To complete this transformation, Across plans to exchange or acquire through ACX tokens and equity.

This proposal provides two options for ACX token holders: one is equity exchange, where users holding ACX tokens can exchange them for equity in AcrossCo at a 1:1 ratio. Users holding more than 5 million ACX tokens can exchange directly, while holders below this number can participate through a free special purpose vehicle (SPV) structure; the second option is token buyback, where ACX token holders can exchange ACX for USDC at a price of $0.04375, which is a 25% premium over the market average of the past 30 days, with a redemption window of 6 months, and it is expected that the exchange will begin within three months after the proposal is approved. This exchange plan may present an arbitrage opportunity for crypto investors, leading to a rush to purchase, which in turn pushed the ACX token price to surge temporarily.

According to the proposal plan, the community will hold a conference call on March 18, release the final proposal on March 26, and vote via Snapshot on April 2.

If the proposal is formally approved, Hart Lambur also revealed that in the future, Across will focus on developing two main businesses: one is stablecoin bridging, Across's innovative cross-chain intention framework, which is currently the only viable solution unifying numerous L2s, sidechains, and alt L1s in the crypto world, and it is expected that by the end of 2026, free cross-chain will become standard for all stablecoins. Currently, besides Hyperliquid, Across has two unpublished collaborations, both of which will enable users to achieve free fund transfers; the second is AI agent payments, allowing users to declare needs and letting competing Solvers automatically execute, thus achieving automated and personalized services.

The dilemma of DAO and attempts for self-rescue amid the token crisis, considering equity tokenization in the future

The decision to dissolve the DAO by Across is not only a desperate attempt for the protocol itself but also reflects the common predicament faced by the majority of DeFi protocols at present.

From Across's statement, it is evident that the DAO model has evolved into an invisible shackle hindering the protocol's expansion in real business collaboration. Hart Lambur tweeted that as Across deepens its partnerships with institutions/enterprises, the token and DAO structure have substantially affected its ability to achieve cooperation and integration.

He further stated that although Across has products aimed at consumers, it is essentially a payment infrastructure. For years, Across has signed contracts with many top crypto projects, but due to the lack of a legal entity, Across has been unable to sign agreements directly and must go through the Risk Labs Foundation for mediation. When Across approached more traditional financial institutions, this "mediated" structure hindered cooperation, making it more difficult to push its infrastructure into traditional finance (TradFi) or crypto-related companies. Especially in the future, as more third parties take on transaction fees on behalf of users, signing contracts outside the agreement becomes increasingly important. After the transformation of Across's DAO model into a traditional legal entity, it will significantly enhance Across's ability to sign executable contracts, build revenue agreements, and create value for stakeholders.

The case of Across's transformation further reflects the existing challenges of DAO governance structures. After years of large-scale practice, issues such as power distribution, accountability, and sustainability of the DAO model have come under criticism. In addition to projects like Across that find it difficult to expand due to legal and compliance uncertainties, there are also issues within the DAO, such as concentration of voting power, inefficient decision-making, and low community participation. These issues, especially in a business environment that requires rapid decision-making, have become significant factors hindering the further development of DeFi projects.

As Stani Kulechov, founder of Aave, who is experiencing governance turmoil, recently stated, the current way of operating a DAO is extremely difficult; the decision-making process is slowed down by forum discussions, temperature checks, and multiple rounds of voting, and DAOs can easily become politicized, with participants forming political alliances, ultimately leading to "politicians" rather than builders winning. Kulechov advocates that the DAO governance model needs reform, focusing on areas that truly require collective participation, such as significant protocol changes and treasury strategies, while the rest should belong to the execution level, requiring leaders to drive.

In addition to governance issues, Across also faces the challenge of low token valuation. Hart Lambur stated that although he is a strong supporter of tokens, opposing the "high FDV low circulation" token issuance strategy and having issued the Across token at a very low valuation long ago, the current macro environment has changed. The Across token is currently severely undervalued and has not received sufficient attention. For Across, the reality is that the disadvantages of holding a token often outweigh the benefits it brings.

Compared to the volatility and uncertainty of tokens, Across, after transforming into a private company, may provide a more stable financing channel and market valuation by adopting traditional equity incentive mechanisms.

However, Across's approach has also sparked controversy in the crypto market, with some seeing it as a betrayal of the decentralization spirit that could marginalize individual crypto investors, while others view it as a return to realism in DeFi.

It is worth mentioning that Across co-founder Hart Lambur revealed that future plans will consider tokenizing equity. However, these plans will be advanced in phases, first focusing on traditional equity and later considering tokenization options.

As for the future direction of this DeFi pioneer experiment at Across, perhaps only time will tell.

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