I am querying the warning on new crowd sales where minted tokens are made as per this guide: https://www.ethereum.org/crowdsale which reads as follows:

Once you published the crowdsale contract, get its address and go into your Token Contract to execute a Change Ownership function. This will allow your crowdsale to call the Mint Token function as much as it wants.

Warning: This opens you to the danger of hostile takeover. At any point during the crowdsale anyone who donates more than the amount already raised will be able to control the whole pie and steal it. There are many strategies to prevent that, but implementing will be left as an exercise to the reader:

Modify the crowdsale such that when a token is bought, also send the same quantity of tokens to the founder's account so that they always control 50% of the project Modify the Organization to create a veto power to some trusted third party that could stop any hostile proposal Modify the token to allow a central trusted party to freeze token accounts, so as to require a verification that there isn't any single entity controlling a majority of them

Am I correct in understanding that the reason behind this is based on the assumption that a DAO will have by default a 50% majority vote to alter the DAO constitution?

  • 1
    You are correct in your assumption. – Matt Swezey May 16 '18 at 18:29
  • Therefore a constitution requiring 99% consensus (where I retained control of say 2%) would provide protection, as would having no dao, just tokens & crowdsale contract (not sure if the second is possible)? – Mr T May 16 '18 at 18:37
  • 1
    Correct - in theory - but you would need to define a consensus model in such a way that does not include inactive token holders, who don't ever vote, in the calculations. Else nothing will ever get passed. This could allow a whale (in certain edge cases) the ability to do a hostile take over. A DAO is not required - and most projects do not have a DAO. This would totally prevent a take over from happening. – Matt Swezey May 16 '18 at 18:52
  • Thanks for clarifying. Makes sense in theory now. Off to test! – Mr T May 16 '18 at 21:00

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Browse other questions tagged or ask your own question.