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DAOs Will be Ready the Next Time Washington Comes After Crypto

It didn’t take long for DeFi’s rank-and-file to mobilize after the U.S. Senate ran roughshod over the community’s concerns last week. An array of players in decentralized finance are now marshaling forces to stand up for the industry.

On Friday, August 13, the decentralized autonomous organization behind yield maximizer Yearn Finance authorized a transfer of 1 million DAI to the LeXpunK Army, a new legal task force devoted to protecting the decentralized finance ecosystem from legal threats.

DAOs Joining Forces

It appears that Lido, the staking derivative DAO, and the Curve DAO, which runs the automated market maker, are apt to shortly do the same. More DAOs will also float joining the push to their members, LeXpunK insiders told The Defiant.

If Lido and Curve go through, they will each put up another $1M in cryptocurrency from their treasuries, giving the nascent effort a respectable starting budget.

And there’s more. Moves are afoot to form something like a political action committee and use NFTs to put pressure on candidates and influence decisions in Washington.

Ryan Selkis, the CEO of the crypto intelligence firm Messari, drove a lot of conversation this week with a Twitter thread about the need for crypto to get serious  about politics. He was incensed by what he saw as an ill-informed conversation about the industry in the U.S. Congress during the bill writing process on the Infrastructure Investment and Jobs Act. That led to the Senate passing a measure that calls for all manner of crypto players to collect and report transaction taxes to the Internal Revenue Service. The legislation awaits consideration by the House of Representatives.

“The tendency is that some people in politics have to lump the industry in with money launderers,” Selkis told The Defiant in a phone call. “Those are the folks who I think are going to find how expensive it is to remain in office.”


Selkis said that he isn’t necessarily planning to start anything himself, but he wants to instigate the founding of an organization that speaks for and mobilizes individuals who benefited from cryptocurrency.

“There are a lot of very serious people across the industry who are actively mobilizing behind the scenes right now,” Selkis says. “We need an individual, membership-driven lobbying and advocacy coalition.”

A tech entrepreneur who only goes by Gerrit in DeFi is one of the lead organizers behind another initiative that’s heading in a similar direction. It’s called PACMAN DAO.

“It seems to me where we are at a point where bullies like to pick on the powerless, but the crypto community is no longer powerless. We’re powerful,” Gerrit said on a phone call with The Defiant. “There’s a fixed cost to buy a House or Senate seat and some people spend as much on JPEGs.”

Politics have clearly captured people’s imaginations across DeFi. Some DAO members have been having conversations in D.C. and reddittors are articulating regulatory theories for this new world of internet-native money.

“It seems to me where we are at a point where bullies like to pick on the powerless, but the crypto community is no longer powerless.”


Most of the government action in the United States around blockchain and cryptocurrency has taken a legal avenue, via regulatory action primarily conducted by the U.S. Securities and Exchange Commission (SEC).

For anyone around during the 2017-18 initial coin offering (ICO) era, we all learned far too much about citrus groves. That’s because the case that defined our current definition of what is or isn’t a regulated security came out of a court case about oranges: SEC v. W.J. Howey Co of 1946.

Blunt Instrument

But without new legislation, Washington has little at its disposal for dealing with the $2T crypto industry, Haxxor Birdman, a LeXpunK DAO member told The Defiant in a Telegram chat conducted alongside his collaborators.

“Regulators may continue to lead by enforcement in the near term and will be a blunt instrument in terms of dictating a path forward (i.e. the belief that everything is a security and therefore every platform is dealing with securities is about as nuanced as it is accurate in our opinion),” Birdman said. 

The implications of that approach are no longer theoretical. One ICO-funded project announced last week, called Props, said it was giving up on its token loyalty program in light of the regulatory environment.

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Senators Ron Wyden, Pat Toomey and Cynthia Lummis tried in vain to amend the crypto tax bill.

And yet token economies have continued to proliferate, though their means of distribution have considerably changed. Nevertheless, Sen. Elizabeth Warren (D-Mass.) calls token makers “shadowy super coders.”

LeXpunK aims to combat misguided narratives. “We are focused on advocating for projects that amount to worker collaboratives, to represent the builders,” Birdman wrote.

To do so, it’s adopted a new model of legal work called autonomous lawyering, that eschews attorney-client privilege and endeavors to make legal memos function something more like open source code.

Some early moves might include filing amicus briefs in important cases, publishing best practices primers for DAOs, writing model legislation, and they specifically mention getting out ahead of issues around liquid staking derivatives.

Agile Offense

Naturally, it will function as a DAO, but the current plan is something unique: Its L3X governance token won’t be transferable. Once you’re in, you’re in. L3X is not for resale.

Most Americans who follow the news have heard about  political action committees, or PACs, a widely used tax designation for organizations in the U.S. that influence who does and doesn’t get elected to office. That should give you a clue about PACMAN DAO’s intentions.

“The goal of PACMAN DAO is to prove we can convert crypto wealth into issue-based activism,” Gerrit explained.

Plans are all very nascent right now but the current thinking is that PACMAN DAO will issue NFTs that will represent members of the U.S. Congress, and these NFTs will also serve as the governance tokens in the DAO.

Anarchistic Solutions

These NFTs will double as way for crypto’s supporters to quickly check which legislators are on the industry’s side, and which aren’t.

Later, they may issue other specific NFTs around particular issue campaigns. For example, they might issue an NFT to raise money to run an ad campaign against a piece of legislation. The advantage of NFTs is they allow members to prove they’ve been active, potentially gamifying political action.

“I think the thing that excites me most is this idea that we could probably raise funds into smart wallets that the DAO could unlock with certain objective criteria,” Gerrit said. So donations to a fund could support a legislator if they vote with crypto or, just as easily, support a challenger if they vote against.

Still, for all the energy and creativity at play here, Messari’s Selkis expressed some doubts about the crypto-native approach to political action.

“I know there is real interest in dogfooding our own products, but I’m a little worried some of the results of those DAOs are going to go toward anarchistic solutions and really counterproductive language,” Selkis said.

But Gerrit believes the very innovations of DeFi can be harnessed to save the proposition from political opponents. “When there is money at play it’s amazing how fast the finance teams on all these various organizations can dance,” Gerrit said.