The Build Finance DAO was a decentralized autonomous organization (DAO), a venture based on blockchain technology. It was the subject of a 2022 hostile takeover by a member who amassed enough votes to pass a motion that allowed them to liquidate the DAO's cryptocurrency holdings and flood the market with new tokens.
Build Finance DAO was formed around September 2020. It was described as a "decentralized venture builder", designed around its BUILD token, that would fund new ventures. The ventures funded by the DAO would adopt the BUILD token, helping popularize it.[1] As a DAO with token-based membership its decisions would be based on voting power.[2]
In February 2022 a user amassed enough tokens to take over control of the DAO. The user then made a governance proposal which would allow it to issue new new tokens, which initially failed but succeeded on the second attempt[3]
The success of the proposal left the other members of the Build Finance DAO without any control of the governance of the DAO. The user then took a number of steps to liquidate the DAO's holdings and issued over 1 billion new BUILD tokens. Their activities generated a gain of about 160 ETH, or about US$470,000, which were laundered through coin tumblers preventing identification of the user.[4]
Attempts to convince the user to return the funds were unsuccessful.
The Build Finance hostile takeover has been cited as an example of the risks of majority-based voting on decentralized finance projects, and of the need to anticipate risks and attack vectors in designing DAOs.[5] [6] One author suggested it highlights the need for quorum requirements.[7]