After the DAO Token Sale – retrospective and explanations

A reader question reached us on the Fabebook page of BTC-Echo regarding the DAO Token Sales. Questions of substance are always welcome and we would like to try to answer them.

About a week ago some questions regarding the DAO Token Sale and Ethereum were asked. We asked for some processing time at the time and now we want to pay this debt! Finally the time is right, the DAO token sale is over, first proposals have been presented to the DAO and some Exchanges now allow the trade with DAO tokens.

Short review of the Bitcoin formula

The first question concerned the rise or fall of the Ethereum share price during the sales period. It has been discussed from the point of view of Bitcoin formula analysis. However, technical analysis ultimately looks at developments on the market irrespective of any underlying causes, and accordingly one can say something from the perspective of fundamental analysis like this:

Ultimately, bulls and bears can be named throughout the process: DAO token buyers on the one hand, Ethereum bagholders on the other. If we take a look at the share price performance over the last month, we can see how the DAO Token sale drove the share price upwards – after 30 April, people were enthusiastic about buying.

This effect was particularly strong in mid-May. This can be explained by the fact that DAO token buyers should buy as low prices as possible – you have to keep in mind that the price of DAO tokens has been successively increased since 11 May.

Around 20 May the Ethereum Bagholders sold their Ethereum; the reminder that the price fell low on 14 March after passing the previous price peak of over 13 EUR (USD) probably triggered this. Of course, they didn’t want to experience that again! After all, on 28th May there was the last big rise before the token sales were concluded, again by the DAO token buyers.

Since then, the Ethereum price has continued to rise, which is due to the DAO’s reputation as well as other positive news.

How does the Bitcoin trader work?

In addition to the questions about the Ethereum price movements, a few more questions about the Bitcoin trader were asked, including what happens to the ether spent on buying DAO tokens. These remain in the DAO; one has bought DAO tokens for Ethereum. The DAO can then consider what the ether should be put into when voting on submitted proposals.

Getting the invested ether back from the DAO is not entirely trivial. Of course you can sell them on an exchange – but that wouldn’t be worth it at the moment. So you are finally bound to the DAO. In addition to this, you can also initiate a split of the DAO.

With Life of Brian you might call “splitter!” – but especially in the case that a majority of a minority wants to undercut by taking advantage of the voting process, or even only if you are not satisfied with the principle of the DAO at all, that would be an approach.

So if someone is dissatisfied with a proposal, he can submit one himself before the proposal is executed, with the aim of forming a new DAO. Anyone who votes in favour will then found this new DAO together with the ether he has paid in. What then happens to the ether in concrete terms is, of course, the content of this new DAO.