Xai Taps Gauntlet To Design DAO Governance and Treasury Management Strategy

Xai, the booming gaming-focused Layer 3 network associated with Offchain Labs, is teaming up with Gauntlet on its governance treasury management strategy.

Announced on Aug. 21, Gauntlet will develop a stake-weighted governance mechanism for the Xai DAO. Decentralized governance will oversee the allocation of ecosystem budgets, protocol upgrades, funding stream management, and will provide special consideration for Xai Sentry Node Holders.

Gauntlet also acts as a guardian for Aera, a non-custodial treasury management protocol, allowing the company to implement strategies for managing liquidity, hedging risk, and “captur[ing] market upside.” Gauntlet will also deploy time-weighted average pricing strategies for leveraged ETH staking and stablecoins on behalf of Xai.

“Our collaboration with Gauntlet represents a significant milestone in our journey to refine Xai’s governance structure, helping to drive more community-first initiatives and foster a thriving web3 gaming ecosystem,” said Soby, a core contributor to Xai. “We’re poised to implement state-of-the-art practices that will bolster our ecosystem’s involvement and propel our growth as players see fit.”

Gauntlet is a firmly established risk management firm servicing web3 protocols, including Arbitrum, Uniswap, and Near.

“Partnering with Xai aligns with our mission to advance decentralized governance and ensure long-term sustainability across DeFi ecosystems,” said Jake Au Jus, a senior protocol strategist at Gauntlet.

In February, Gauntlet split ties with Aave, the largest DeFi money market protocol, following a four-year relationship, citing disagreement with the project’s community. John Morrow, the co-founder of Gauntlet, told The Defiant that the clash stemmed from “the assertion by members of the Aave community that we could not sell software or services to other protocols.”

The move came after Aave sought to introduce the Merit rewards program, which would penalize firms for partnering with its competitors. Gauntlet began working with Morpho, a competitor to Aave, one week after announcing the split.

Xai’s rise to prominence

Xai recently emerged as the leading Layer 2 network by activity, consistently hosting more than 100 transactions per second (TPS) since launching its Genesis: Vanguard campaign, which introduced a roster of on-chain games alongside a points campaign to incentivize adoption.

Xai hosted more than 109 TPS over the past 24 hours, down from a peak of 140.3 TPS on July 16, according to L2beat.

The project’s native XAI token is down 8.5% in seven days, last changing hands at a market cap of $107 million, according to CoinGecko.