Merit Circle DAO terminates investment contract with Yield Guild Games

Participants in Merit Circle DAO approved a proposal to cancel the SAFT, entered into with the GameFi guild Yield Guild Games (YGG). The DAO will buy out the latter’s stake for 1.75 million USDC.

The following is the official joint statement from YGG and @MeritCircle_IO outlining the contributions of YGG during the partnership.

Yield Guild Games will continue to support and grow the whole ecosystem as we have always done💪https://t.co/mpeG9VY3Se

— Yield Guild Games (@YieldGuild) June 14, 2022

Under the SAFT, in October 2021 YGG invested 175,000 USDC in Merit Circle and was entitled to receive 5,468,750 MC tokens — about $3.82 million at the price at the time of writing, according to CoinGecko.

MIP-14 proposes that YGG will pay only 45% of the amount provided for in the agreement. Earlier in the community, a proposal suggested reimbursing the guild only the initial investment; however, Merit Circle participants did not back this idea.

In a joint statement, YGG and Merit Circle’s core team said they disagreed with the DAO’s decision, but accept it.

“Together, Merit Circle Ltd and Yield Guild Games have reached an agreement. The proposed solution ends the official relationship between the parties. The sector would not be what it is today without YGG and Merit Circle,” the press release states.

The justification for canceling the SAFT was YGG’s low involvement in developing the DAO. Tim Connors, founder of the educational platform 101, noted that, according to the guild, the agreement originally envisaged only investments, not any other assistance.

Meanwhile the investor in question, @YieldGuild aka YGG, made a post basically saying:

““UH WTF. This was an investor agreement. We’re not required to give you anything except money. You can’t just change the rules and push us out.”” pic.twitter.com/hkNLJcPlb2

— Tim Connors 🎒 101 (@itstimconnors) June 14, 2022

Connors stressed that the Merit Circle community had created an industry-unfriendly incident. He described the DAO’s approval of the MIP-14 proposal as a breach of the investment contract and “a terrible stain on the reputation of Web 3.0.”

Merit Circle DAO may not need outside support anymore, but many other projects do

And now they’ve made it harder for earlier projects to get the capital they need.

Investors might rightfully ask “what if your DAO decides to fuck us”

— Tim Connors 🎒 101 (@itstimconnors) June 14, 2022

“We cannot build the future we want without help from the outside world. […] Now they have made access to capital more difficult for early-stage projects. Investors might rightly ask: ‘What if your DAO decides to ditch us?’”, wrote Connors.

In March 2022, Merit Circle backed the developer of the blockchain game Lava Lab in a $10 million round.