For treasury actions bound to market authorization, decision markets reduce tokenholders' risk of opportunistic treasury extraction relative to discretionary team control, by making value-diverting proposals costly to force through when informed holders can trade against them.

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But despite Ben’s large amount of bid activity, the advantage was on our side. Because manipulators are “noise traders” and move prices without having any alpha, it’s in other traders’ interest to trade against them. In mature markets, statistical arbitrage firms trade against manipulators within milliseconds and render their attempts futile. We didn’t have statistical arbitrage firms, but we did have people like [Barrett](https://twitter.com/barrett_io) and [7Layer](https://twitter.com/7LayerMagik). They sold their META into Ben’s high bids in the pass market, figuring that they could buy back META for a cheaper price in the spot market if it were to pass. Eventually, the seemingly-impenetrable buy walls in the pass markets had been torn down and the DAO emerged victorious.

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Futarchy is not sufficient for cases where a DAO has control over an asset but is not supposed to be the owner of that asset. For example, consider an upgradeable borrow-lend protocol with a fair market cap of \$10m and total deposits of \$100m. Futarchy alone would not be enough to reject a proposal to steal all the deposits—in such a scenario the attacker would be rational in buying DAO tokens above their "fair" value.

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Futarchy cannot prevent a founder from promising to work on something, raising funds and then running off with the money. For example, the Parrot DAO [incident](https://www.dlnews.com/articles/defi/parrot-protocol-team-rage-quits-and-wait-for-big-payday/) saw the DAO's assets distributed among token holders on a pro-rata basis in a way that might appear fair at first glance. The catch here was that the team held most of the tokens because they minted themselves those tokens for free, so this represented the founders pocketing at least \$47m of investor funds after doing almost no work.

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The MetaDAO repelled its first attempted pillaging in its very early days: in [proposal](https://medium.com/@benhawkins18/stress-testing-the-futarchy-1f4fb6d0b4ba) 6 Ben Hawkins tried and failed to make the DAO sell him tokens at a discount, despite spending a lot of capital to push the market around.

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Suppose instead Bob focuses on pushing down the price of fABC—as long as Alice (or anyone else who cares to participate) has capital to buy discounted fABC in the fail market, Bob's proposal will be rejected and he will have lost money by selling ABC for less than it's worth. But what if Alice has no capital and the asset is some peculiarity that nobody else would care to trade? This is a pathological case that strays into speculative fiction, but in practice it would still be an audacious bet for Bob to make. After all, the outcome for Bob if he almost succeeds tends to be one where he sells a lot of fABC at a heavily discounted price.

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So far we treated the settlement price—the price that decides whether the proposal passes—as a given. However it is not trivial to calculate a fair settlement price. The current TWAP implementation used by the MetaDAO is a work in progress. Its current form demands a lot of active participation and monitoring from traders. For example, a trader who does not monitor a MetaDAO decision market until the final day of trading may find that they disagree strongly with the TWAP value but cannot do anything about it because the market has diverged from the TWAP.

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One implication is that futarchy is useful even if the underlying market is quite small and inefficient. The benefits of protecting ownership and resolving disagreements still exist even if the market is quite wrong about the value of the underlying asset.

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By joint ownership we mean multiple entities having shares in something valuable, such as a company, a DAO, a piece of land, etc. By trustless we mean that this ownership can be enforced without a legal system or social pressure, even if majority shareholders are acting maliciously towards the minority.

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The fundamental problem is that governance tokens are only useful if you command a majority of the voting power, and unlike equity shares they entitle minority holders to nothing. In the typical token voting DAO, there is no internal mechanism to prevent the majority from raiding the treasury and sharing it only amongst themselves. If minority holders ultimately have no claim to shared assets, then those assets are not jointly owned. In other words, joint ownership without minority protection is an illusion.

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So while quadratic voting doesn't unlock joint ownership because it doesn't give minority holders rights, that is something of a moot point since there are several other compelling reasons not to use it in DAO governance.

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This is bad news for Bob, as he'll need to buy worthless pABC above the spot price and sell fABC below its fair value (the pre-proposal spot price) if he wants this proposal to pass. It gets worse suppose he hopes he can just buy a little bit of pABC and still come out in profit: unless he has a good way to manipulate the settlement price, Alice can just keep selling pABC to him at a premium until she runs out of tokens. The outcome of Bob's plot would simply be Bob buying all of Alice's tokens for more than they're worth.