The new proposal from Juno aims to confiscate over $100 million in assets, which could become the first case of project parties confiscating user assets

Reference sources: @TheJunonaut, Zombit

Compiled by: Hu Tao, Chain Catcher

In the early morning of March 11, the Cosmos smart contract platform Juno initiated a proposal on its governance platform to upgrade the contract and remove JUNO assets from whale player accounts, sending all to the Juno community fund pool, while retaining a reasonable amount of 50,000 JUNO for that account.

According to Mintscan, the user account currently stakes over 3.1 million JUNO, which means approximately 3.05 million JUNO will be confiscated by the project team. At the current price of $39.6, this asset is valued at $120 million.

Previously, there have been multiple instances in the crypto industry of freezing hacker assets, but they are generally returned to the original owners or directly confiscated by the government. This proposal by the Juno community to directly confiscate user assets is the first documented case of a project team confiscating user assets.

Delphi Digital developer Larry also tweeted that this is the first case where an L1 blockchain community collectively decided to confiscate personal wealth due to a violation of the social contract, which may be noted in history.

So, why did the Juno community make this proposal? Why did it receive so much support?

According to Twitter user @TheJunonaut and Zombit, last year Juno airdropped over 30 million JUNO to ecosystem communities such as ATOM stakers, distributing them at a 1:1 ratio to ATOM stakers, with a limit of 50,000 per address. The project community quickly discovered that an address starting with "juno1aeh" had accumulated 2.5 million JUNO from 50 different addresses. Clearly, this was a typical "airdrop hunter," who had prepped 50 addresses to stake ATOM for more airdrops.

Upon noticing this, the project immediately initiated a governance proposal to reduce the airdrop amount by 90% to avoid token centralization and sell-off, but it failed with a 56.4% opposition rate. The address staked all 2.5 million JUNO tokens, and the community gradually forgot about the potential threat posed by this whale.

However, recently, some community members discovered that this address had been continuously sending staking rewards to external addresses over the past five months. In the first three months, approximately 250,000 JUNO tokens were transferred and sold (at that time priced around $15), followed by daily sales of about 10,000 JUNO tokens.

Currently, this whale address controls 9.6% of the voting power and receives 9.6% of the total network staking rewards daily. Additionally, as long as they sell their tokens, the liquidity of JUNO tokens on the decentralized exchange OSMOSIS could be depleted at any time (with total liquidity only at $72 million).

Therefore, Juno developer Core-1 has initiated another governance proposal (Prop 16), intending to forcibly remove most of the whale's JUNO tokens and allocate an equivalent amount to the community treasury. Currently, this proposal has received support of nearly 15 million JUNO tokens, with a support rate exceeding 90%. Since the whale's JUNO tokens are all staked, and unstaking requires a 28-day wait, there should not be significant issues with execution.

"Community-driven governance cannot be overturned. The community manages the network entirely in the way they deem appropriate. Opposing unethical actions is not unethical; this is the power of decentralized governance," stated @TheJunonaut.

However, such a controversial approach has sparked widespread discussion on Twitter. Opponents argue that the whale acted entirely within the rules of the game and should not have their assets forcibly confiscated due to flaws in the airdrop design. Supporters, on the other hand, believe that decentralization is not anarchy, but rather a collective decision-making process by the community, and this proposal aligns perfectly with democratic principles and does not violate the spirit of decentralization.