On October 28, the on-chain identity protocol ARCx announced that due to recent market changes, its token ARC lacks liquidity, and the current overall valuation of ARC tokens does not reflect the actual value recognized by the team, so ARCx decided to "privatize" All ARC tokens on the market.

Specifically, the buyout contract will take effect from October 31 to November 30. During this period, ARC tokens will not be transferable, and holders have two options:

1. Continue to hold ARC tokens, but trading of ARC tokens will be suspended immediately after the buyout period ends, and contract-level transfers will be disabled.

2. In the next month, the team will repurchase ARCx at a price of 0.071 USDC.

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1. After buying out the contract, can the user's previous pledge rewards and the purchased DeFi passport be redeemed?

Before answering the first question, let's understand ARCx first.

ARCx is a decentralized credit market on the Polygon network, which can provide dynamic maximum LTV loans based on ETH collateral based on the borrower's DeFi credit score (Note: LTV, loan value = grantable loan amount / total asset value) . DeFi credit scores are assessed based on the on-chain lending and lending activity in the history of individual wallets. In its V3 version of the product, users can generate DeFi Passports based on the lending activities on the wallet chain to represent your credit on the chain for mortgage loan activities.

At first, if you want to get a DeFi Passport, you need to pledge 1,000 DAI and wait in line. Only 100 addresses will be issued in the first batch. Moreover, DeFi Passport can be replaced with an NFT skin, which can be purchased on Opensea. In the later stage, ARCx will also add more scoring dimensions to the DeFi passport, such as yield farming score, airdrop score, governance score, trader score, etc.

The field of on-chain credit has been tepid, and there are no particularly brilliant applications, but it is indeed an industry demand. The novel concept of ARCx in the early stage has attracted the attention of a large number of users and capital, and has received $1.3 million in financing led by Dragonfly Capital, Scalar Capital and Ledger Prime. With the support of capital and traffic, a large number of users carry out lending activities on the ARCx platform and apply for DeFi Passport.However, as soon as the privatization incident came out, corresponding problems followed one after another:

1. Will the tokens currently being staked still have staking income?

Officials did not answer.

2. After the token contract is suspended, will those who still hold tokens still have corresponding rights?

The official explanation is that there is no difference except that tokens cannot be traded.

3. How will the $kerman rewards change? (Note: $kerman is the social token of the founder of ARCx, pledge $kerman, you can receive ARCx tokens.)

Rewards will continue to accumulate but cannot be claimed because the contract is suspended.

4. Can those tokens and skins mortgaged for DeFi Passport be claimed?

The pledged tokens can be withdrawn according to the tutorial, and the skin has not been officially answered.

5. Assuming we keep our allocation and ARCx reissues tokens in the future, will we be vested the same as investors in the future?

Officials did not answer.

The above questions are discussed more enthusiastically in Discord. In the face of users' questions, ARCx is obviously not fully prepared. The few questions answered did not solve the user's troubles. For example, $kerman rewards will continue to accumulate, but they cannot be traded. What is the point of users continuing to pledge?

In addition, although officials have repeatedly stated that the decision to privatize is to allow the project to get rid of its bad evaluation from the market and make subsequent fundraising easier. Then when the time is right and ready to launch again, give the ARCx token a new valuation that matches its actual value.

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2. The team directly issued an announcement and enforced it without going through the DAO governance vote or listening to the voice of the community

From ARCx's white paper, one can clearly see a sentence: "The core function of ARCx Governance Token is to become the governance mechanism of the ARCx protocol itself. The token aims to coordinate incentives among various stakeholders within the ecosystem to promote sustainable growth and equitable governance.”

However, for such an important event as the privatization of ARCx tokens, the official did not issue a proposal to solicit the opinions of the community, but made a public announcement. Does this violate the meaning of the governance token itself?

The team repurchases ARCx at a price of 0.071 USDC, and only 1.77 million USD can recover all the tokens in the market. After reviewing the data, ARCx’s previous financing was sold to investors at a unit price of 7,500 USD before the split (the price of the token after the split was 0.75 USD), and then ARCx also opened IC0 at 6,500 USD. The price of the token has since peaked at $1.71, and for some time thereafter, the price of the token has hovered between $0.3-0.1. Therefore, the cost for most people is higher than the buyback price of 0.071 USDC.

Calculated in this way, ARCx's behavior this time is really a bit "rogue".

There are also users who are confused about the source of funds for repurchasing tokens. Is it from the community treasury or the team treasury? The official answer is that ARCx has only one treasury, namely ARCx Treasury. The user continued to ask who controls ARCx Treasury, but the official did not answer.

It is written in its white paper: "ARCx governance tokens currently allow token holders to vote on the expenditure of the national treasury." It goes without saying.

From this point of view, after a short period of development, ARCx's project itself has not made great progress, but it has gained control of the treasury and "generous" funding from investors. Compared with the progress of the project itself, the team At least it was comfortable.

For a project, its overall valuation is determined by the market, and the market will find a foothold for its value. The real problem cannot be solved by repurchasing and freezing tokens. What's more, the frozen and repurchased assets no longer belong to the team, and the team does not have the right to control these tokens.

In addition, community users chose to provide support and make contributions to the project at the initial stage of the project, but they did not listen to the voice of the community when problems occurred in the project, depriving everyone in the community of their rights by coercive means. It has damaged the original intention of DAO and increased the estrangement between them.

At present, the ARCx buyout contract has begun to take effect, and how it will develop in the future can only be tested by time, and Odaily will continue to pay attention.