Gitcoin DAO gaffe sees $500,000 in GTC tokens lost forever

Gitcoin tokens worth almost $500,000 meant to fund a governance work stream were mistakenly sent to the crypto fundraising protocol’s contract address, rendering the funds forever unrecoverable.

On-chain data from Etherscan shows 521,436 GTC tokens sent from Gitcoin’s treasury to the protocol’s contract address on September 29. GTC is Gitcoin’s native token.

The fund transfer came after an on-chain governance vote in early September to approve funding for Gitcoin’s merchandise, memes, and marketing — or MMM — work stream.

The vote passed, but human error in the execution saw the funds sent to the contract address instead of MMM’s multi-signature wallet.

Gitcoin contributor Jonathan Miller called the mistake an unfortunate situation on the DAO governance forum, while outlining steps to prevent a recurrence.

“Large token holders and multisig signers have a responsibility to be extra diligent when it comes to handling funds that do not belong to them, myself included,” Miller said. “Unfortunate as this incident was, I hope it can serve as yet another lesson for many of us.”

Gitcoin researcher Umar Khan said on the forum that the DAO could consider the lost tokens as a reduction in the GTC supply rather than a case of funds being lost.

GTC has a total supply of 100 million tokens and Khan pointed to the fact that Gitcoin’s treasury is the largest GTC token holder.

The Gitcoin treasury holds about $55 million in crypto assets, according to data from DAO analytics tracker DeepDAO. The bulk of its holdings are in GTC currently worth $32 million, but it also owns $10.5 million in Ether and $8 million in USDC stablecoins.

Gitcoin co-founder Kevin Owocki pointed out that the protocol does have the ability to inflate the token supply by 2% annually.

“Not that I’m advocating for that at this time, I’m only noting it is an option baked into the GTC smart contract,” Owocki said.

“I’ll be curious if this narrative of ‘it’s actually GTC burned’ is seen as legitimate,” Owocki added, referring to Khan’s suggestion.

Not everyone was sympathetic towards the main DAO actors responsible for the mistake. One community member expressed disappointment at the organisation wasting funds in a “reckless manner.”

The mistake also means MMM is without funding for its activities until October and had to use leftover funds to fulfil some of its outstanding obligations.

Miller said a new proposal has been created to request needed funds for the DAO sub-group. The new request is for half the previous ask.

Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. To share tips or information about stories, please contact him at osato@dlnews.com.