Yield Guide Games Agree to Merit Circle Buyout

Yield Guild Games and Merit Circle DAO have opted for an out-of-court settlement, ending the Simple Agreement for Future Tokens (SAFT) between them.

In a joint statement by the two entities, YGG said both parties decided to settle to prevent the time-consuming and uncertain legal process. “None of the parties had to settle, but both parties chose the constructive path to help Merit Circle move forward,” the statement added.

The dispute between the YGG and MC DAO started after a member of Merit Circle DAO proposed the cancellation of YGG SAFT, removing their seed tokens, and refunding their initial investment. The DAO members passed the proposal with an overwhelming 106 to 16.

In the proposal, the member claimed YGG hadn’t provided enough value to match its tokens allocation. But YGG disagreed, stating that providing value wasn’t part of the investment agreement.

However, the guild pointed out that it has provided value in various ways for the DAO and considered the proposal a breach of the contractual agreement.

On its part, the core team of Merit Circle said it could do nothing about the proposal. “We would like to honor all agreements, however… the DAO holds the ultimate power,” the team.

Merit Circle tried to resolve the issue while maintaining the DAO’s supremacy. It eventually submitted a new proposal to renegotiate the agreement.

The new proposal allowed Merit Circle to buy the over 5 million MC tokens held by YGG for $0.32 with legal enforcement of buyout. MC DAO community voted unanimously for this new proposal.

Although the MC is currently trading around $0.70, YGG also accepted the decision of the DAO. This means it’ll be losing more than half the value of the tokens.

Some stakeholders have criticized the decision claiming that it sets a dangerous precedent. According to Tim Connors, the CEO of 101dotxyz, this move could discourage other investors from entering the Web3 scene, knowing fully that the DAO could void their agreement.

He said the claim that “Decentralization is about freedom. The freedom to do as one desires, unbound by anything and everything” is wrong.

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