The oldest ICOs have treasuries worth more than their tokens’ market capitalizations. Should those projects give some of that money back?

That was the essential question raised by DigixDAO, which is offering its DGD token holders an all-or-nothing option: completely dissolve its treasury or keep making grants to enhance the ecosystem.

Digix CEO Kai Cheng Chng wrote on the DigixDAO blog that Digix has received a lot of feedback since its early-2016 token sale.

“One recurring comment was for a mechanism for dissatisfied DGD token holders to make a clean break from DigixDAO,” he wrote.

The post detailed an approach the organization would take henceforth: Token holders will now be able to vote on keeping the DAO’s ETH treasury intact. In response, the token price nearly doubled since the announcement came out on Nov. 29. The price was around $13 just before; it’s nearing $19 as of this writing.

Which means the market cap went from $27 million to $37 million.

Digix is a project that holds physical gold and represents it with tokens on the ethereum blockchain via its DGX token. The governance token relevant here, however, is DGD, and its current market cap of $39.1 million is significantly below what the 386,000 ETH Chng wrote that DigixDAO has in its treasury. That ETH is currently worth roughly $56 million.

DGD raised 466,648 ETH in the token sale in March 2016, according to Smith + Crown. At the time, the amount raised was worth between $6 million and $7 million. The value of ETH has since gone up significantly.

Wider implications

The DigixDAO decision has prompted discussion across the industry as to whether more projects should follow suit.

“The space needs a Carl Icahn–like personality to call these teams out and propagate a culture in our industry where it’s not OK to just sit on tens and even hundreds of millions of dollars in investor capital,” Ryan Zurrer, an investor who founded Dialectic, a Swiss-based crypto-asset firm, told CoinDesk.

Zurrer said he’s researched the topic. Many of the best known ICOs that ran sales prior to the peak of the bull market in 2017 are sitting on vast resources as the underlying crypto raised has appreciated significantly since then, he said.

Zurrer would like to see a world where projects delineate clear roadmaps with clear budgets and then explore what he called “right-sizing” their treasuries as necessary.

Nic Carter of Castle Island Ventures agreed. “I’ve been waiting for ICOs with a big balance sheet to do this for a long time,” he said. “This is quite mature of Digix I think.”

But Ricky Li of the token trading firm Altonomy didn’t see it quite the same way. “ICOs are not really keen on buying back the tokens with their treasury holdings since they raise money to develop, not speculate on the token price,” Li said.

And in fact, this squares with Zurrer’s observations. Zurrer noted it’s not really an all-or-nothing option. A company could redistribute part of its treasury if it has more than it really needs, but continue to do its work. “A lot of these projects are priced as if this is not going to be the case. As if the price is not correlated to the underlying capital pool at all,” he said.

Others aren’t so sure the move by DigixDAO would be widely replicable.

“It’s hard to generalise on whether this would be a good or bad thing for the space as each situation has its own unique characteristics,” Mona El-Isa, CEO of Avantgarde Finance, said via WhatsApp. El-Isa’s prior company developed the Melonport protocol then turned it over to its community in the form of a DAO.

“Some of these tokens will become very interesting token-activist opportunities. It’s a little bit surprising that we haven’t seen much of that yet,” El-Isa said.

Path forward

In a statement to CoinDesk, Digix noted it encouraged the community not to wind down DigixDAO but would abstain from voting its DGD holdings either way.

“All projects should maintain a strong commitment to staying true to their word to their community – throughout the life cycle of the project,” Shaun Djie, Digix COO, said. “The digital asset sector has much to owe to active communities spread across the globe, it is important for the success of the industry that these communities continue to be heard.”

Zurrer told CoinDesk that the projects best suited to go to their holders to discuss unloading some of their capital are the ones that both have valuable treasuries and a decent token governance model.