Disclaimer: I am a DGDb holder and DGD holder.

Carbon Vote 2 is short-sighted and will ultimately be a waste of money unless some changes are made so it is more accommodating to long-time DGD holders.

Let me explain.

Digix wants $20mn of funds from the DAO (ICO raise) to be disbursed to aid in marketing and operations. For those of you who don’t know there are really two Digix entities. There is the DigixDAO and Digix Global, a private company. DigixDAO raised 466,648 ETH in an ICO on March 29, 2016. It was one of the earliest and most successful ICOs intended to run a Decentralized Autonomous Organization. The founding team got a percentage of ICO funds and it was generally considered to be a fair distribution.

Fast forward to November 29, 2017, the DigixGlobal took a seed investment from Fenbushi Capital and Global Brain. These are two VCs who got an unknown amount of equity in exchange for $1.25mn.

DGD holders did not directly benefit from this but it allowed the company to function for a period of time.

Leading up to the DGX launch the understanding was that DigixGlobal would take care of the storage, security, and smart contracts associated with the physical gold until the governance model was introduced which was potentially the only solution to getting the product launched on time.

Now that DGX has launched and been available for four months there is roughly ~$2.2mn in GDX tokens circulating. This is not nearly as much as what was anticipated.

As one would expect the potential investors in cryptocurrency project has probably slowed a bit since the mania period in December/January. So, to me, what Digix is proposing is not aligned with the investors who took the risk backing the company 2 years ago. Here is why:

Digix is not telling us how the $20mn is being disbursed to them. I can only assume it will be a “donation” of sorts. My concern is that money is being handed to DigixGlobal, which has outside investors, with no strings attached. Fenbushi Capital and Global Brain are the real winners here since they get even more burn for their $1.25mn investment. A great deal for them at the expense of early DGD backers. This effectively dilutes the DGD holders and turns ~15% of the DAO into fiat currency. This move is both against DGD holders and ETH holders. First, DGD holders value is being diluted because the Ether war-chest that was raised to fund the future of Digix is being sold. Thus, we can expect a sell order for $20mn of Ether sometime soon after. Digix is trying to weather the bear market by guaranteeing their salaries and running back into fiat currency. What should they do instead? Create more DGX, I’ll explain why a little later. Good businesses take time. The budget laid out is for 2, maybe 3 years of runway. Digix has had delays in the past so what will happen in 3 years? Will the DAO become the ATM if the precedent is set by this vote? If Global Brain and Fenbushi took the leap of faith last year, why aren’t they interested in writing a check this year? This proposal makes DigixDAO a venture capitalist that has no transparency into the company it may invest in. What are the deliverables and what are the risks to this investment? If you, the reader, were a VC would you consider this investment based on what Digix has said? The current Digix employees got 15% of ICO coins at no cost. Now they are voting along their interests — not that of the greater Digix community. I understand we need the company to keep the project alive but are 35 additional employees necessary to market a ~$2.2mn product?

Another point to think about when considering all of this is how the funds will benefit the horizontal growth of the DigixGlobal. If Digix decides to sell their equity in the future to a third party the founders, Fenbushi, and Global Brain will have sold a company largely financed on money they never have to pay back.

So now that I’ve established myself as the biggest complainer in the Digix community let me make a proposal.

Having worked in software products in the past I understand that you need to have a product before you can sell it. DGX at ~$2.2mn is not a product. None of the use cases listed in the Digix Knowledge-base can be achieved with this amount of DGX. From what I understand Maker will still be allowing DGX as collateral for Debt Positions but it is practically unusable as it stands right now.

To fix the situation, Digix should have a much more specific marketing plan with roadmap and considerably smaller budget. Additionally, the funding should include the minting of new DGX tokens so we can see some of the use cases start coming to fruition before using marketing as a force multiplier.