NFT finance-focused crypto group FloorDAO “forked” into two separate entities this week in an effort to shake off FLOOR token investors who disagreed with the project's direction – and its abandonment of its arbitrage-friendly roots.

FloorDAO, which seeks to build products for “NFT-Fi,” recently sent over $2.5 million of its treasury – in crypto tokens and NFTs – to a splinter group called FloorkDAO that was controlled by activist investors and comprised of dozens of disaffected holders who opted to join their exodus. The splinter group quickly initiated a redemption that paid nearly $5 per FLOOR, close to this year's high water mark for the struggling asset, which is currently trading at $3.88.

The exodus is the culmination of months of internal battles over FloorDAO's commitment to its obligations to investors in its FLOOR token. The project is a spinoff of Olympus DAO, the once-mighty protocol that pioneered a new way of raising cash, issuing tokens, and managing project treasuries.

That lineage meant FloorDAO's native token shouldn't be falling below the value of its treasury, a.k.a its "book value." The project's original documentation reflected this, stating that if it were ever to happen then the "theoretical arbitrage" could be closed by the DAO's disillusion and asset distribution.

When FLOOR's price inevitably fell below book value, however, this theory failed to follow through. Project insiders pledged last year to introduce a redemption mechanism that would fix the hole in FLOOR's floor, according to Discord records and longtime investors who spoke to CoinDesk. But somewhere along the line they abandoned their promise and instead planned a protocol upgrade that stripped token-holders of voting power and their rights to the treasury.

Before this "v2" upgrade took effect a subset of FLOOR's community began rallying against it. They demanded the project let them exit the DAO and get their share of the treasury ahead of the upgrade, which they saw as an abandonment of the project's roots and its future promises. Holders routinely demanded through votes that the project conduct buybacks of their tokens instead of buying more NFTs for the treasury.

FloorDAO's insiders ultimately conceded that the disaffected bloc had grown so powerful that the project had no choice but to split. A vote earlier this year cleared the way for FloorDAO to splinter into two groups: one that would retain the name and the focus on NFTs, and another, called FloorkDAO, that any fed-up investor could join as an escape hatch.

FloorkDAO highlights the growing strength of activist investors within decentralized autonomous organizations, or DAOs. Projects that struggled to find product-market-fit or maintain their asset's "book value" have faced pressure this year from investors to buy them out, rather than keep spending their treasury.

This is possible because many DAOs treat their issued tokens as governance chips; the more chips one has, the more say they get in the DAO’s decision-making. Arbitrage investors have been known to buy tokens trading below "book value" and then lobby for mechanisms that allow them to cash out – hence the activist tilt.

Project insiders tend to see their coordination as an attack against the DAO. “FloorDAO has now successfully forked to allow members who are not aligned with the long-term vision of the DAO to exit,” a blog post from earlier this week said.

But the activist investors see themselves as protecting their positions, as well as the interests of all token holders who join them in rage quitting. Those who spoke to CoinDesk said FloorDAO's false promise to implement redemptions laid the groundwork for the exodus.