Ethereum

The BitClout Grifter wants to take your Ethereum via a DAO

The BitClout Grifter wants to take your Ethereum via a DAO

Key points to remember

  • Nader Al-Naji, the entrepreneur behind BitClout, is launching a new project called (DAO,DAO).
  • (DAO,DAO) declares that it wants to facilitate the creation and execution of DAO by offering an intermediary service.
  • The project was heavily criticized on social media when it was announced on March 9.

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Nader Al-Naji, the entrepreneur behind the tumultuous BitClout project, has announced a new platform called (DAO,DAO). The project aims to streamline the process of creating and running a decentralized autonomous organization, while siphoning off money from fundraising DAOs on the platform.

What is (DAO,DAO)?

The BitClout scammer is back, with a DAO project called (DAO,DAO).

In the marketing material for (DAO,DAO), its creator Nader Al-Naji calls out two of the biggest crypto companies, Coinbase and OpenSea, slamming them with an angry red text label that reads “centralized.” In comparison, (DAO,DAO) is adorned with the friendly green word, “decentralized”.

This silly pictograph basically sums up what Al-Naji is selling to potential investors (DAO,DAO) – the nebulous promise of decentralization. (DAO,DAO) aims to make creating a DAO as easy as creating a Facebook account. In the project’s 14-page “one pager,” Al-Naji explains his new project’s use cases, most of which involve collectively raising funds for various causes, goals, and investments.

The platform will use decentralized token governance, allowing DAODAO token holders to have a say in how the platform operates. However, although (DAO,DAO) can be called decentralized, the operation of the project paints a different picture.

(DAO,DAO) appears to be a glorified middleman designed to siphon money from DAOs and put it back into the pockets of DAODAO token holders. While most DAODAO tokens will be sold to the public via a method eerily close to an initial coin offering, Al-Naji and his anonymous founding team will automatically receive 10% of all tokens purchased by the public. If this percentage-based payout for the developer team wasn’t dubious enough, (DAO,DAO) also offers the option to purchase Early Access NFTs, which allow investors to keep 100% of their purchases from DAODAO tokens.

DAODAO token holders can expect to receive 1% of all funds raised by DAOs using the (DAO,DAO) platform. This raises the question of how the Securities and Exchange Commission will view the DAODAO token. In its current state, it seems likely that the SEC will view the token as a security since it promises to accrue profits that come solely from the efforts of others.

Nader Al-Naji’s awards

Al-Naji has had issues with the SEC in the past. His first project, a decentralized price-stable cryptocurrency called Basedstopped when it became apparent that it was attempting to publicly sell tokens with the hallmarks of securities.

The overarching question that comes to mind with (DAO,DAO) is why do we need it? Several DAOs have already succeeded in raising millions of dollars for various causes. Recent examples include AssangeDAO, which raised over $41 million in early February, and UkraineDAO, which continues to raise funds to support those affected by Russia’s invasion of Ukraine.

One way (DAO,DAO) states that it will improve the current DAO infrastructure by allowing DAOs to fundraise across multiple networks rather than just Ethereum. Admittedly, this is a potential selling point as gas fees on the Ethereum network eat away at DAO contributions and make refunds an expensive undertaking.

However, (DAO,DAO)’s answer is to run everything on DeSo, the renamed shell of Al-Naji’s previous project, BitClout. Instead of creating useful DAO interoperability between different networks, Al-Naji seems to be trying to start DeSo users through his new project.

Other minor criticisms of (DAO,DAO) include the name of the project. The formatting borrows from the (3,3) meme associated with token rebase projects such as OlympusDAO, which are often decried as Ponzi schemes due to their highly inflationary tokenomics. Moreover, the name “DAO DAO” already belongs to a project involved in building DAO tools on Juno Network.

When Al-Naji announced (DAO,DAO) to his Twitter followers on March 9, many key members of the crypto community were quick to question the project and its creator’s questionable track record. The Autism Capital Twitter account was one of many to weigh in (DAO,DAO), advising subscribers of “Stay away from Nader projects and that and don’t waste your money and get (REKT, REKT).” Others like Edwin den Boer Underline the trail of failed projects that led to (DAO,DAO) and warned followers not to trust Al-Naji.

BitClout Failures

Aside from Al-Naji’s failed Stablecoin venture between 2017 and 2019, he is arguably best known for BitClout. The divisive crypto social media platform emerged as interest in digital assets reached new heights in 2021, offering users a way to buy and sell custom “designer coins” based on the reputation of their subjects. It effectively symbolized social clout, with the likes of Elon Musk and Katy Perry considered the most valuable personalities on the platform.

BitClout has attracted several prominent investors to Silicon Valley, including crypto-curious mammoths Andreessen Horowitz and Sequoia Capital. However, once the initial hype died down, it quickly became clear that the project could not live up to user expectations. It was renamed DeSo in September after failing to gain significant traction.

The unregulated nature of the crypto space allows innovation and development to occur at breakneck speed, but the environment also carries major risks. Scammers have a much easier time separating high profile investors and the public from their money with big promises and buzzwords that taste of the week. While it remains to be seen whether (DAO,DAO) will succeed, its creator’s track record of failed projects such as Basis and BitClout should make potential backers think long and hard before investing.

Disclosure: At the time of writing this article, the author owned ETH and several other cryptocurrencies.

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