Temp Check: Transfer DAO assets to a Multisig Wallet & Custodian?
Summary
Currently, the Lenfi DAO treasury and LP tokens are managed by the Lenfi team. The X account, branding, domain and other assets are also held by the team under their Lithuanian entity. We propose transferring these assets to a 2-of-4 multisig wallet controlled by four key holders (included in this proposal), handing digital keys (passwords) to Neo/Neophyte and signing rights to him as an interim custodian.
The keyholders will authorise the transfer of assets to a final decentralised smart contract once a deployment is complete, or back to the original team wallet. This transition aims to safeguard the DAO’s significant assets, including the substantial liquidity position, while empowering the community to shape Lenfi’s future. This proposal aligns with the DAO’s commitment to transparency and decentralization.
We must emphasize that this is not a change in team; it is intended for the existing team to continue while the DAO gains autonomy to market the V2 relaunch, the token, and make decisions it sees fit.
Problem
The Lenfi DAO’s assets:
- stake1u9hqmm7neuayxpm9962kk09x27yu5kmcx6h9f98tc4r2mzsyaeh40,
- stake1u98ak0va7tgd23rl62tphdare6z602e0vx5m0fw4gdr65kq875eec
and other related assets to the organisation:
are under the Lenfi team’s control. While the team has managed these assets responsibly, this centralized structure introduces potential risks that could be mitigated through a more secure and decentralized approach:
- Legal Liability: By moving control away from the team, especially if the DAO gains its own personhood through a Wyoming DAO LLC, or a Japanese DAO LLC, the protocol can operate with less personal risk to the team & core contributors. This is particularly relevant with Lithuania’s adoption and future enforcement of the Markets in Crypto-Assets regulations. Furthermore, as the team is personally the ultimate beneficial owner of the “Lenfi Related Assets”, any personal legal risks could impact the protocol operations, as these may be seized.
- Security Concerns: Single-signature wallets are vulnerable to threats like hacking, phishing, or accidental key loss. The treasury, containing over 120,000 ADA and 14,370,000 LENFI tokens, and the 358,121 ADA LP position are at risk if a single key is compromised, potentially disrupting Lenfi’s operations and eroding community confidence.
- Centralized Control: The team’s sole authority limits community involvement in governance, diverging from the decentralized ethos of DAOs. Community members cannot directly influence decisions about treasury funds or LP token management or social media management without the Lenfi team’s willingness to honor them, potentially reducing engagement and trust.
- Key-Person Dependency: Relying on the team for asset access creates a dependency that could pose challenges if team members are unavailable due to unforeseen circumstances. A single point of failure in key management could delay or prevent critical transactions, impacting the DAO’s agility.
Transitioning to a 2-of-4 multisig wallet would address these issues by requiring multiple signatures for transactions, distributing control to community-elected key holders, and aligning Lenfi with best practices in Cardano’s DeFi ecosystem. This shift would secure the DAO’s valuable assets and empower token holders to actively participate in shaping Lenfi’s strategic direction, fostering a more resilient and transparent governance model.
Further Overview
Option #1: Transfer Treasury and LP Tokens to a 2-of-4 Multisig Wallet, and transfer key assets to Neophyte
Actions
- Asset Transfer:
- Transfer all treasury assets (ADA, LENFI, and other tokens) from stake1u9hqmm7neuayxpm9962kk09x27yu5kmcx6h9f98tc4r2mzsyaeh40 and LP tokens (45.025% pool share, 358,121 ADA) from stake1u98ak0va7tgd23rl62tphdare6z602e0vx5m0fw4gdr65kq875eec to a Cardano-based 2-of-4 multisig wallet.
- Digital Asset Handover:
- Hand over password access to digital assets (X, domain, GitHub, etc.).
- Legal Transfer:
- Legally sign over assets (brand, trademarks) to be held in trust by Neophyte.
- Governance:
- Elect the proposed community key holders through a LENFI token-weighted vote to manage the wallet, ensuring accountability to token holders.
- Commitment:
- Once the community decides, key holders and the interim custodian will be willing to transfer assets to a final decentralized smart contract or to a new custodian.
Benefits
- Enhanced Security:
- A 2-of-4 multisig requires two signatures for any transaction, significantly reducing the risk of unauthorized access, hacks, or key loss. This protects the treasury and the substantial 358,121 ADA LP position, ensuring the DAO’s assets remain safe even in adverse scenarios.
- Decentralized Governance:
- Community-elected key holders distribute control, aligning with Lenfi’s DAO principles. Transparent, on-chain transactions allow token holders to monitor fund movements, fostering trust and accountability.
- Reputation and Growth:
- This transition positions Lenfi as a leader in secure DeFi governance, attracting users and partners in Cardano’s ecosystem.
Proposed Key Holders
- Mantas Andriuska: Founder of Lenfi.
- Neo / Neophyte: Community manager for Lenfi.
- S₳PIEN: Lenfi and Cardano community member, video creator (YouTube: S-PIEN).
- Micah Kendall: Community member, dRep, previous software contractor for the Lenfi Team.
Option #2: No Action
Actions
- Retain the treasury and LP tokens under Lenfi team control, maintaining the existing single-signature wallet structure.
Benefits
- Preserves operational simplicity and avoids the need for multisig setup or elections, allowing the team to continue managing assets without changes to current processes.
Risks and Considerations
- Security Risks:
- Continuing team control leaves the treasury and 358,121 ADA LP position vulnerable to security threats, such as hacking or key loss, which could have significant consequences for the DAO.
- Community Engagement:
- Centralized management may discourage community engagement and trust, as token holders lack influence over key decisions.
- Competitive Positioning:
- This option misses the opportunity to align with Cardano’s decentralized governance standards, potentially limiting Lenfi’s appeal in the competitive DeFi landscape.
- Legal Vulnerabilities:
- All company assets and brands remain the personal assets of the team and are vulnerable to litigation.
IMPORTANT NOTE: Transferring the treasury and LP does not mean a change of team or project ownership. If this temp check leads to an off-chain proposal and passes an on-chain vote, the transfer will proceed only after completing the multisig setup.
Implementation
Upon on-chain approval of Option #1, the following steps will be executed to ensure a smooth and secure transition to the multisig wallet:
Multisig Wallet Setup
- Four keyholders will provide their public keys.
- The trustees will configure a Cardano-native 2-of-4 multisig wallet.
- Test the multisig to confirm functionality and prevent errors during asset transfer.
Asset Transfer
- Transfer treasury assets from stake1u9hqmm7neuayxpm9962kk09x27yu5kmcx6h9f98tc4r2mzsyaeh40 and LP tokens from stake1u98ak0va7tgd23rl62tphdare6z602e0vx5m0fw4gdr65kq875eec to the multisig wallet.
- Verify transfers on-chain using Cardano explorers and publish a transparency report detailing the new wallet address and asset balances.
- Handover of digital passwords (X, GitHub, etc.).
- Contract presentation and signage.
Governance Framework
- Draft multisig governance guidelines, covering:
- Transaction proposal processes.
- Signer responsibilities.
- Monthly reporting requirements.
- Integrate guidelines with Lenfi’s existing governance tools (e.g., forum, Snapshot) for seamless adoption.
Community Communication (Ongoing)
- Announce milestones on the Lenfi governance forum, Discord, and X, keeping the community informed.
- Provide a public dashboard or Cardano explorer link to track multisig wallet activity, reinforcing transparency.
Budgeting
- Multisig Setup and Audit: 0 ADA
- Elected key holders will handle the configuration and verification process.
- Gas Fees: Negligible Cardano transaction fees for asset transfers
- Estimated <10 ADA
- To be covered by the treasury post-multisig setup.
- Legal Fees: Estimated 5,000 ADA
- To handle paperwork and potentially DAO personhood.
- Total Cost: 5,010 ADA
- Minimizes financial burden on the DAO while achieving a secure and decentralized structure.
Timeline
- Temp Check Discussion: June 10-13, 2025 (3 days) for community feedback on the governance forum and Discord.
- Preliminary Off-Chain Vote: June 14–19, 2025 (5 days) via LENFI token-weighted voting on Snapshot or a Cardano-based platform.
- On-Chain Vote (if applicable): To be scheduled post-off-chain approval, if required by Lenfi DAO governance rules.
- Implementation:
- Begins upon approval, TBA.
- Target completion appr. 6 weeks upon initiation.
Voting Options (Will be added after the discussion period ends)
- Yes: Approve Option #1 (multisig transfer) and initiate implementation.
- No: Support Option #2 (maintain team control).
- Abstain: No preference.
Conclusion
Transferring the Lenfi DAO treasury and LP tokens to a 2-of-4 multisig wallet (Option #1) secures assets, decentralizes control, and builds community trust. Elected key holders will commit to transferring the wallet keys once the community decides to elect new trustees. Option #2 risks security and limits community input. No immediate LP token migration is planned, preserving the DAO’s fee accrual from the LENFI/ADA pool on Minswap. We urge the community to discuss and vote to enhance Lenfi’s security and governance.
. I hope option will get the most votes!
In favour of the DAO