Ragequit

Beyond simple exits, large-scale ragequits serve as a powerful governance signal. If a controversial proposal passes, a coordinated ragequit can:

• Deplete the treasury, making the proposal impossible to fund.
• Reduce the voting power of remaining members by shrinking the total share supply.
• Publicly demonstrate severe member dissatisfaction, often forcing a proposal's reconsideration.

Ragequit is not a panacea. Key limitations include:

• Gas Costs: The transaction can be expensive, especially for small holders.
• Illiquid Assets: Members receive a slice of all treasury assets, which may include tokens with no market.
• Timing: The claim is based on the treasury snapshot at the time of execution, not when the disagreeable proposal passed.
• Sybil Resistance: It does not prevent the creation of new, aligned members to replace exiting ones.

Ragequit is distinct from a simple withdrawal from a liquidity pool or staking contract. It is a governance action that:

• Burns a governance token (share).
• Claims a pro-rata share of a mixed-asset treasury.
• Directly reduces the total supply of governance power. In contrast, unstaking from a DeFi protocol typically returns a single, deposited asset and does not affect governance structures.

Guild kick is the inverse of ragequit—a forced exit initiated by the DAO against a member. It is a security mechanism to remove malicious or inactive members. The process:

1. A proposal is made to kick a member and specify a fair exit payment.
2. If passed, the member's shares are burned.
3. The member receives the specified payment, not a full pro-rata share. This protects the treasury from abuse while allowing for member removal.

Ragequit is a mechanism that allows a member of a decentralized autonomous organization (DAO) to voluntarily exit the organization by burning their governance tokens in exchange for a proportional share of the treasury's assets. This action is a direct withdrawal right that serves as a fundamental exit option and economic disincentive against poor governance.

• Purpose: Provides a last-resort defense against proposals a member disagrees with.
• Trigger: Typically activated after a proposal passes but before it is executed.
• Effect: The exiting member's voting power is permanently removed.

Ragequit acts as a critical circuit breaker and deterrent within DAO security models. It protects minority stakeholders by allowing them to withdraw their funds if they believe a passed proposal is malicious, wasteful, or will reduce the treasury's value.

• Prevents Governance Capture: Makes hostile takeovers economically costly, as attackers would deplete the treasury they are trying to control.
• Aligns Incentives: Forces proposal creators to consider the economic impact, as a successful proposal that triggers mass ragequits could collapse the DAO.
• Example: In Moloch DAOs, members can ragequit during a grace period after a proposal passes, ensuring no one is forced to remain under new rules they oppose.

The process is governed by precise on-chain calculations to determine a member's fair share upon exit.

• Proportional Claim: A member can withdraw assets equal to: (Tokens Burned / Total Supply) * Treasury Value.
• Asset Composition: The withdrawal is typically a pro-rata claim on all treasury assets (e.g., ETH, stablecoins, LP tokens), not just a single asset.
• Gas Costs & Slippage: The exiting member bears transaction costs and potential slippage if the treasury contains illiquid assets, making frequent exits impractical.

While powerful, ragequit has inherent limitations that affect its utility as a safety mechanism.

• Liquidity Dependency: Requires the DAO treasury to hold sufficient liquid assets to cover withdrawals; illiquid assets (e.g., vested tokens, NFTs) cannot be easily distributed.
• Coordination Problems: A 'bank run' scenario, where many members ragequit simultaneously, can drain liquid assets and leave remaining members with devalued, illiquid holdings.
• Timing Constraints: Often only possible within a specific window (grace period), missing the window forfeits the right.
• Informational Asymmetry: Members must accurately assess proposal impact to decide to exit, which can be difficult.

Exit to Community (E2C) is a broader governance concept related to ragequit. It describes a planned transition where a project's founding team or investors gradually cede control by distributing governance tokens to the user community, effectively allowing the original stakeholders to 'exit' while the project continues.

• Contrast with Ragequit: E2C is a proactive, structured decentralization process, while ragequit is a reactive, individual exit mechanism.
• Shared Principle: Both concepts are rooted in the right of exit as a foundational element of credible neutrality and decentralized governance.

The Moloch DAO framework popularized the ragequit mechanism. Its v2 implementation provides a canonical reference.

• Process Flow: 1. A funding proposal passes. 2. A grace period (e.g., 7 days) begins. 3. Dissenting members can call ragequit() to burn their shares and claim their portion of the guild bank (treasury).
• Technical Detail: The function calculates shares using an internal accounting system to track each member's fair claim across multiple asset types.
• Impact: This design has been adopted and adapted by many subsequent DAOs, establishing ragequit as a standard security primitive.

The on-chain treasury contract that holds all of a Moloch-style DAO's pooled assets (e.g., ETH, ERC-20 tokens). When a member executes a ragequit, they withdraw their proportional share directly from the Guild Bank. Its key features are:

• Asset Custody: Securely holds all contributed funds.
• Proportional Accounting: Tracks each member's share of the total pool.
• Direct Withdrawal: Enables the ragequit function to transfer assets without a proposal.

The two types of membership units in advanced Moloch DAOs that define economic rights.

• Shares: Represent both voting power and economic rights to the treasury. Ragequitting burns shares to claim assets.
• Loot: Represents pure economic rights without voting power. Holders of Loot can also ragequit to claim their treasury share but cannot vote on proposals. This separation allows for funding contributors without diluting governance.

The specific, on-chain function call that executes the ragequit process. A member calls this function, specifying the amount of shares (or Loot) they wish to burn. The contract then:

1. Calculates the caller's fair share of each asset in the Guild Bank.
2. Transfers those proportional amounts to the member's address.
3. Permanently burns the submitted shares, reducing total supply. This is a permissionless action that does not require a vote or proposal.

A mandatory waiting period between a proposal's passage and its execution. This period is a critical safety feature that enables ragequit. If members disagree with a passed proposal, they have this window to:

• Assess the impact on the treasury.
• Execute ragequit to withdraw their share before the proposal's funds are spent. It acts as a final check against governance attacks or reckless spending.