Community Vote Ends Treasury Management Partnership
Gnosis DAO, the decentralized organization behind projects like Safe, CoW Swap, and Gnosis Chain, has officially terminated its relationship with treasury management partner KPK. The decision came through proposal GIP-143, which saw overwhelming support with 88% of voters backing the move. The proposal cited ongoing community concerns about KPK’s performance, costs, risk management, and alignment with the DAO’s objectives.
This isn’t just another governance vote—it represents a significant shift in how DAOs are approaching treasury management. With over $175 million in assets under management according to DeFiLlama, the Gnosis treasury is substantial enough that these decisions carry real weight. The relationship between Gnosis and KPK dates back to when KPK, formerly known as Karpatkey, was actually part of the Gnosis ecosystem before spinning off into a separate entity last year.
Performance Issues and Cost Concerns
What really tipped the scales against KPK appears to be a combination of performance issues and what community members considered excessive fees. Forum discussions highlighted what users called “highly contentious” fee structures—1% of assets under management plus 20% of generated yield, established back in 2022 through proposal GIP-58.
But the problems ran deeper than just costs. Community members pointed to underperformance against benchmark assets like sUSDS from Sky (formerly Maker) and Lido’s wstETH. There were also concerns about liquidity management, with one user noting that approximately $8 million was “out of range” in concentrated liquidity positions.
Perhaps the most damaging incident occurred in June with a EURe/sDAI liquidity pool on Balancer. The pool, which served as the primary liquidity source for GnosisPay, had an oracle that only updated every three hours and not on weekends. This configuration led to an estimated $700,000 in losses due to arbitrage opportunities created by the lagging prices. While KPK apologized and promised refunds, the damage to their reputation was significant.
KPK’s Defense and Cost-Cutting Efforts
KPK wasn’t completely passive in the face of these criticisms. On the same day GIP-143 was published, they released an update detailing efforts to reduce costs from $6.3 million in 2024 to $2.2 million projected for 2025. They also promised to “clarify scope” by focusing more narrowly on treasury and liquidity management.
In their defense, KPK pointed to what they described as a poorly defined initial scope that led to ballooning responsibilities. They highlighted their proactive removal of “idle holdings” from the fee base and implementation of a $2 million fee cap. KPK did acknowledge shortcomings in communication, stating they “should have delivered structured updates and clear reporting cycles.”
However, community members pushed back against framing this as a communication issue. One user bluntly stated, “it’s not a communication issue, it’s a performance issue.” This sentiment seemed to resonate throughout the community discussions.
Broader Implications for DAO Treasury Management
This situation reflects a larger trend in the DeFi space where DAOs are becoming more discerning about their service providers. Treasury managers and risk consultants were supposed to be the solution to outsourcing complex financial work to specialists rather than relying on token holder voting for every decision.
But accusations of service providers collecting substantial fees while delivering minimal value have become increasingly common. We’ve seen similar tensions elsewhere—last year’s public dispute between Aave and its former risk advisor Gauntlet, and more recently, Uniswap’s controversial fee switch implementation.
One observer from Sandbox Tree Capital praised Gnosis DAO’s decision as “business sense driven.” It suggests that DAOs are maturing beyond the purely ideological approach to decentralization and starting to make pragmatic decisions based on performance and value.
What’s interesting to me is how this reflects the natural evolution of decentralized organizations. They’re learning that while decentralization has its benefits, it doesn’t mean you have to accept poor performance or excessive costs. The 88% vote in favor of termination shows that when a service provider isn’t delivering value, the community can and will take action.
I think we’ll see more of this kind of scrutiny in the coming months as DAOs continue to professionalize their operations. The days of blindly trusting service providers just because they operate in the crypto space seem to be ending.
