Mango Markets Buyback Plan Sparks Community Dispute

A controversial buyback plan for MNGO tokens, proposed to the Mango Markets DAO on April 7, has ignited accusations within the community. Critics allege that the plan benefits an anonymous buyer of FTX's MNGO stash, with speculation that the buyer may have acquired the tokens at a low price before proposing the buyback. Despite opposition, an amended version of the plan was approved on April 24, prompting debates on the implications for token holders and the protocol's financial future.

Community Contention Over Mango Markets Token Buyback Plan

Prelude

On April 7, 2023, a proposed token buyback plan within the decentralized autonomous organization (DAO) governing Mango Markets, a Solana-based Web3 lending and borrowing protocol, sparked controversy. The plan, proposed by Mango DAO member DonDuala, entailed the DAO repurchasing 275 million MNGO tokens from its current holders, offering 9.995 million CHAI stablecoin derivatives in exchange. The implied buyback price of $0.032 per MNGO token significantly exceeded the market price of $0.02324 at the time.

Community Concerns

Scrutiny arose when it was discovered that a mysterious account had received a large quantity of MNGO tokens from the estate of bankrupt crypto exchange FTX shortly before the buyback proposal was introduced. Community member Donderper expressed concerns that this account may have acquired the tokens through an over-the-counter deal at a significantly lower price than the proposed buyback price, potentially netting a substantial profit.

Allegations of Collusion

Further suspicions were raised when some community members suggested that DonDuala and another DAO member, Maximilian, might be affiliated with the FTX-related account. These accusations were based on the account using its tokens to vote in favor of the buyback proposal. DonDuala, however, sidestepped questions about potential connections and instead emphasized the benefits of supporting the proposal.

Proposal Failure and Resubmission

The initial proposal was rejected by a majority vote, leading DonDuala to resubmit it with amendments. The revised proposal reduced the buyback amount to 156 million MNGO and expanded the distribution of options to all users who had interacted with the DAO's governance system.

Opposition and Legal Issues

Despite these adjustments, opposition to the plan persisted. Mango Markets co-founder Daffy Durairaj alleged that DonDuala and Maximilian were acting in their financial self-interest and engaging in manipulative behavior. Additionally, Durairaj pointed to the recent legal troubles of Avrham Eisenberg, who had been found guilty of fraud and possession of child pornography in connection with the Mango Markets exploit in October 2022.

Proposal Approval and Execution

Despite the objections, the amended proposal ultimately passed on April 24, with over 67.9% of tokens voting in favor. Subsequently, the DAO purchased approximately 73 million MNGO tokens for 2.3 million CHAI.

Ongoing Concerns

While the proposed buyback plan has been executed, concerns persist within the Mango Markets community. Members have expressed dissatisfaction with the perceived lack of transparency and potential conflicts of interest surrounding the buyback process. The fallout from the Mango Markets exploit and the legal proceedings against Eisenberg continue to cast a shadow over the protocol and its governance.

Implications for Community Governance

The Mango Markets token buyback episode highlights the challenges and complexities of decentralized governance in Web3 projects. The incident has raised questions about the transparency, accountability, and potential for conflicts of interest within DAO decision-making processes. It remains to be seen how the Mango Markets community will address these issues and rebuild trust moving forward.