The Tornado Cash community voted against a proposal to convert TORN to wrapped ETH (wETH) to help diversify the treasury.
Over two-thirds of the Tornado community rejected the proposal to sell TORN-v-1 at a 20% discount to obtain ETH using decentralized exchange aggregator 1inch. The sale of TORN-v-1, a token used as part of TornadoCash’s governance system to generate staking yield, would have been crowd sold under a two-week limit order and locked up for a year before unstaking. Locked-up TORN-v-1 tokens would be redeemable for 1 TORN token at the end of the lock-up period. The minimum TORN buying price would have been fixed at 0.008 ETH.
The proposal was first presented to the community on June 29, 2022, by “ayefda.” It was touted as a way to obtain critical partners which would diversify the DAO’s treasury by buying TORN at a discount. Community member “ayefda” also pointed out that incoming wETH would help shore up liquidity and help the community attract more contributors during the current bear market.
The community chose to reject the proposal with ETH address 0xFfCF0A92A6A8C04b85aB8685ae98b46C243b871c on July 4, 2022. According to the voting page, 68% of 180k TORN holders voted against the proposal.
Tornado Cash implicated in high-profile DeFi hacks
Tornado Cash is a tool to break the link between the source and destination of an Ethereum transaction. It uses smart contracts which accept funds from one address and allow their withdrawal to another. After funds are deposited, users’ assets and transactions are mixed, concealing the transaction’s route.
Tornado Cash has been implicated in anonymizing funds from cryptocurrency hacks. Blockchain analysts have noted a series of transactions involving the recent hack of Harmony’s Horizon bridge, a software component allowing the transfer of tokens between two different blockchains, as having a forensic footprint similar to North Korean money-laundering methods. The hackers sent $100,000 in 100 ETH increments to Tornado Cash.
In March, North Korean hackers codenamed the Lazarus Group are believed to have stolen over $600 million from a bridge used in the play-to-earn game Axie Infinity before funneling much of it through Tornado Cash.
Other DAOs taking steps to strengthen finances
Other DAOs have also taken steps to harden their treasuries against the current market downturn. Staking service Lido Finance will vote on a proposal to sell 10,000 ETH, while Fei Protocol has voted to sell AAVE, Compound, Convex, and others in exchange for the DAI stablecoin issued by MakerDAO.