$ORCA Up 84% As DAO Weighs Up Potential Credit Market Acquisition

Orca, one of Solana’s oldest DeFi protocols, is setting its sights on growth. Having negotiated terms to acquire a “leading Solana DeFi protocol” that would introduce credit and yield product lines, the Orca DAO has floated a governance proposal to mobilize resources and make adjustments to protocol fee movements.

But despite supposedly unanimous support for the vote itself, Orca DAO members have pushed back hard against the “atrocious” proposal, which currently doesn’t permit holders of staked $ORCA, or $xORCA, to cast votes.

Meanwhile, markets have reacted favorably to the proposal, with $ORCA surging 84% in the last 7 days of trading.

Orca DAO Seeks Growth in New Governance Proposal

First published on September 29, Orca DAO’s most recent governance proposal is designed to “resource Orca for its next phase”, suggesting that one of Solana’s oldest DeFi protocols is preparing to head out into deeper waters.

In practical terms, the proposal aims to restructure Orca’s existing buyback program, put the community fee treasury’s $SOL to use in DeFi, and use the community treasury’s $ORCA tokens to acquire businesses and products that will expand the protocol:

• Under the new structure, 80% of protocol fees will be retained by Orca to fund ongoing development and growth. 10% will be used to buy $ORCA programmatically off the open market and distributed to $xORCA holders, while the remaining 10% will be routed to another discretionary buyback wallet controlled by the team.

• All $ORCA held in the community treasury wallet, (~14.2M $ORCA, valued at $40.4M) will be transferred to a team-controlled account and used for acquisitions.

• All $SOL in the community fee treasury will be transferred to a team-controlled wallet and deployed productively across Solana DeFi.

Beyond these main economic and operational changes, certain aspects of protocol governance will also be restructured. The existing governing council will be dissolved and shifted to a more community-centered approach, while also establishing a list of verified and identifiable $ORCA tokenholders.

Currently, 40% of protocol fees are allocated directly to purchasing $ORCA off the open market, with 10% going to a community fee treasury and the remaining 50% supporting Orca’s growth. While popular with tokenholders, the Orca team argues this model isn’t sustainable long-term. The crypto industry is at a critical inflection point, and the team simply needs greater resources if it’s to scale effectively.

One such growth is the proposed acquisition of a leading Solana DeFi protocol, which would expand Orca’s offering to credit and yield products. This would greatly diversify Orca’s revenue streams and help the protocol stay competitive in an expanding market.

At press time, the proposal is set to pass in a landslide. However, despite unanimous support in votes, $ORCA community members are rebuking the vote, which they argue is mechanically set up to pass regardless of tokenholder wishes.

Holders Divided Despite 100% of Votes in Favor Proposal

One look at Realms data confirms that Orca’s proposal is set for unanimous approval, with 100% of votes supporting the changes. Voting is set to run until a cool off period, before ending in 5 days time on October 12th.

But despite voting data suggesting otherwise, the Orca community is vehemently opposed to the changes. Critics have called the proposal “atrocious” and “harmful”, while decrying the very mechanics that allegedly block them from voting. 

Detractors' chief concerns are centered around the ambiguous terms of the proposed acquisition, which critics argue comes at the expense of tokenholders through future sell pressure from the acquirees. Others have expressed disappointment with reduced buybacks and staking rewards, while also lamenting the dissolution of the council.

Beyond the contents of the proposal itself, critics argue that the mechanics of the vote are only offering an “illusion of democracy”. Holders of $xORCA, or staked $ORCA, are not able to vote. Additionally, unstaking xORCA is subject to a 7-day cooldown, so holders may not have time to convert $xORCA to $ORCA and submit their votes. 

Beyond these constraints, the proposal’s conditions of approval demand only that 3M ‘Yes’ are submitted. Even with a majority of ‘No’ votes, the proposal would still pass.

$ORCA Surges 84% as Volume Returns

While $ORCA holders might feel disappointed by the ongoing proposal, markets have gifted them a silver-lining. News of the potential acquisition has renewed interest and demand for the $ORCA token, which has climbed 84% in the last 7 days of trading.

As one of Solana’s oldest DEXs, and pioneers of the CLMM model, Orca has benefitted greatly from renewed flows of capital and trading activity across Solana.

Blockworks data suggests Orca’s weekly trading volume has exploded in recent weeks, rising from August lows of $605M to $2B in the first week of October.

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