During the 2021 crypto bull run, Harmony — a so-called layer 1 blockchain — found itself suddenly worth billions of dollars. It decided to spread its money around.
As crypto markets soared, Harmony announced a $50 million grants program so more DAOs — decentralised autonomous organisations — could build on the blockchain which Harmony no doubt hoped would enhance the ecosystem.
The bar to apply was low. DAOs applying for grants from Harmony were handed six-figure sums after merely writing proposals. Others were routinely awarded five-figure amounts for hitting lowball goals like 1,000 Twitter followers or 100 Discord members.
“It never really felt like a grassroots crypto movement, but more like a money-grab movement,” Nikita Jerschow, one of several people to receive funds multiple times through the Harmony grants programme, told DL News.
DAOs held the promise of revolutionising the way crypto projects organise themselves. It’s right there in the acronym: decentralised and autonomous.
While some DAO structures work, others have hidden behind the lofty DAO moniker as a way to secure cash with little to no accountability.
‘What is the benefit of this to Harmony?’
Key in deciding where much of the Harmony grant money went were staff teams, several of which included members of Blu3 DAO, a project dedicated to empowering women and non-binary people in crypto. Blu3 itself was greenlit for a $1 million grant from Harmony.
Blu3 DAO co-founder Amy Soon describes herself as a self-made millionaire in a book called “Create Wealth in Harmony,” which Harmony said it paid her to write.
She and her sister Novell Loh and later Loh’s husband — former Harmony staffer Al Cheung — were part of a group of teams that allocated thousands of dollars of Harmony DAO grant money to projects including, in Soon’s case, to a number set up by her friends.
“It’s one big ball of the same people,” Ray Raspberry, a Harmony community member active in the grants forum at the time, told DL News. “If you look into the on-chain activity you’ll find that the same eight to 12 people are receiving the funds.”
While there was a pattern of connected people receiving grants, not all the money allocated from the Harmony treasury went to the same groups. Many other unconnected DAOs applied for and received grants.
But at the centre was Harmony’s unprecedented $1 million grant to Blu3 DAO in February 2022, $75,000 of which was paid out before financial difficulties prevented Harmony from fulfilling the whole amount.
Just one day after Blu3 DAO was approved for funding, Blu3 DAO member Cheung teamed up with 15 other people to ask for another $1 million for a DAO called Environmental Harmony. In the proposal, Cheung requests a $175 hourly rate for DAO work.
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Environmental Harmony, which applied for a main Harmony grant, was rejected. But this didn’t stop Cheung from teaming up with Jerschow, who he reportedly met a month prior, to submit a proposal for another DAO — called Nomad DAO — asking for a smaller amount of $10,000.
Unlike Environmental Harmony, Nomad DAO specifically applied for funding from Project Y — a sub-grants programme where Soon had more control over which projects received funding.
Hours after Jerschow posted the proposal for Nomad DAO, Soon’s team approved it for $10,000 in funding.
But some in the Harmony community questioned the purpose of the grants.
It was pretty crazy for me to see’
“What is the benefit of this to Harmony? Or maybe a better question: why does this even need blockchain?” said a Harmony forum user posting under the name JohnyEnglish in response to Blu3 DAO’s $1 million grant approval.
On-chain records, forum posts, and chat logs between Soon, Cheung, and Jerschow reviewed by DL News show that Soon coordinated with friends to fund projects her friends and other Blu3 DAO members were directly involved in.
In some cases, including Nomad DAO, projects did not appear to spend their grants on the intended purposes outlined in their grant proposals.
‘This shady stuff’
Jerschow told DL News how he was involved in schemes to get funding from the Harmony grants system for two DAOs: Nomad DAO and Piper DAO.
He said he became friends with Soon, Cheung and other Blu3 DAO members at the Ethereum Rio 2022 conference in March last year, around a month before applying for grants.
Telegram chat records viewed by DL News show Soon telling Cheung and Jerschow she would “get funding” for a project called Nomad DAO between March 22 and 27, 2022.
Two days later on March 29, Jerschow presented proposals for both Nomad DAO and Piper DAO on the Harmony grants forum, specifically asking for funds through the Project Y programme Soon was involved in.
For Nomad DAO, he listed Cheung, a member of Blu3 DAO, as one of the DAO’s governors.
Within hours of posting, Soon had approved both projects for $10,000 worth of grant funding.
According to Jerschow, Soon and Cheung were eager for him to apply for the DAO grants.
“I was convinced to apply for both [DAO projects] and ended up getting both without much of an application process, it seemed,” Jerschow told DL News.
‘It seems like poor capital controls on the part of Harmony’
“I really didn’t know until much later that they were doing this shady stuff — it was pretty crazy for me to see,” Jerschow said, referring to his allegation that Soon and Cheung convinced people “tooth and nail” to apply for DAOs because they got bonuses for sourcing these groups.
At no point did Soon or Cheung publicly disclose that they had coordinated with Jerschow to get funding for the projects before he posted them to the grants forum.
“Why is Amy approving Nomad DAO without disclosing a conflict of interest?” Raspberry told DL News. “Her brother-in-law is a signer on the multisig that would receive the $10,000 in funds. It seems like poor capital controls on the part of Harmony.”
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There is no suggestion that Soon, Loh or Cheung benefitted from the grants they supported or helped, though Jerschow believes that Soon and Cheung convinced people to apply for DAO grants because they got bonuses from Harmony for sourcing these groups.
Novell Loh and Al Cheung denied this to DL News and said that neither they nor Soon received any bonus or compensation for the number of DAOs or proposals submitted.
Soon did not respond to a request for comment.
“As key partners, Amy and I were asked to participate in the grant approval process,” Loh said. “There were approximately six approving teams and each team had two members. Amy and I were placed in different teams, each partnering with another Harmony member.”
Loh also told DL News that Soon was not solely in charge of the decision to approve Nomad DAO and Piper DAO for funding, but said she doesn’t remember who else was.
“I was not involved in the grant approval process at ETH Rio and had not yet been employed by Harmony – hence, I do not have any authority to approve or conspire to approve fundings for Nomad or Piper DAO,” Cheung told DL News.
“Neither I, my wife or Amy receive any bonus or compensation for the number of DAOs or proposals submitted. The allegations above are false and inaccurate.”
Harmony ‘didn’t inspire confidence’
On-chain records show that between April 8 and 9, Nomad DAO and Piper DAO received funding from the Harmony treasury. But it soon became apparent the grants these DAOs received weren’t being used for their intended purposes.
In the proposals, Jerschow stated Nomad DAO would use the majority of its grant to reward members who create tutorials on various crypto activities.
For Piper DAO, the proposal said the initial funds would be used to create a peer-to-peer messaging system on the Harmony network.
But on April 29, the funds from Nomad DAO and Piper DAO were transferred to Jerschow’s personal wallet. Both DAOs used multi signature wallets, which require multiple parties to greenlight transactions.
That means both Cheung and Jerschow signed off on transactions to send the funds to Jerschow’s personal wallet. On May 5, these funds were sent to the centralised exchange Kucoin.
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Jerschow told DL News the funds he sent to Kucoin were used to pay for a hacker house at the ETHAmsterdam conference later that year. He shared with DL News an invoice for $2,700 on an Airbnb in Amsterdam. Jerschow said some was used to pay for flights, and that he moved the rest off of Harmony because the chain “didn’t inspire confidence.”
Both Nomad DAO and Piper DAO have since wound down and appear inactive.
Nomad DAO and Piper DAO were not the only DAOs that seemingly benefited from Soon, Loh, and Cheung’s connections.
Several other DAOs started by their friends and fellow Blu3 DAO members also received grant funding from Harmony. Those included Black Leaders DAO, Duel DAO, Vegan Africa DAO, Crypto Mujeres, Omnisig Wallet, and Blu3 LATAM DAO.
Many of these DAOs got grant funding only to later fizzle out and fail to deliver on their initial promises.
Vegan Africa DAO, set up by Blu3 DAO member Rachel Payne, better known online as Sunny Satva, aimed to promote veganism in Africa by launching 10,000 NFTs.
After receiving $20,000 of funding, Payne did eventually launch Vegan Africa DAO NFTs but only 30 instead of 10,000 and on Polygon instead of Harmony. The DAO has since failed to provide updates on any of its other goals and appears inactive.
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Duel DAO, another project set up by Jerschow with help from Soon’s friend Daphne Charles, who later became a core Blu3 DAO member, received $10,000 in funding to build “on-chain chess.”
Although the project received coverage on the popular Bankless podcast, Duel DAO’s domain is now unregistered, and the project has been inactive for over a year.
‘A money grab movement’
In June, the token bridge connecting Harmony to other blockchain networks was hacked for over $100 million by the North Korean crime syndicate Lazarus Group. This, combined with Harmony’s poor treasury management, ended the era of lax DAO funding as money ran out.
Raspberry, who has outlined the Harmony DAO grants scene on Twitter, told DL News that many of those who received grants from Harmony have since moved on to other ecosystems in search of easy grant money, specifically mentioning Polygon and Gitcoin.
In September 2022, Blu3 DAO teamed up with Polygon to run a women-only hacker house at ETHMexico.
A Dework page for Vegan Africa DAO shows bounties for members to draft proposals to get grant money from Cardano, Avalanche, VeChain, and the HBAR Foundation.
More recently, Blu3 DAO member Daphne Charles acted as a judge in a Gitcoin diversity equity and including round. She was criticised for judging the round because Blu3 DAO, as well as other connected DAOs such as HER LATAM DAO, were in the running for the grants, creating what some say was a conflict of interest.
Charles told DL News that judges for the round didn’t review projects they themselves were involved in.
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Jerschow, who now works on projects in the Cosmos ecosystem, is looking back on the episode.
“They were in a unique position where they saw that they could take advantage of something, and acted on it over the course of a year,” he said.