KPI Options as a Mergers and Acquisitions Tool

Clayton Roche
UMA Project
Published in
2 min readDec 31, 2021


tl;dr — There is a proposal in the PieDAO forum which is for PieDAO to acquire BasketDAO using a KPI Option to align shareholder interests. KPI Options are uniquely suited to align shareholder interests in these occasions.

The Problem with DeFi Mergers

The BasketDAO and PieDAO teams have agreed to explore an acquisition, where PieDAO would acquire the social assets, community, and TVL of BasketDAO.

BasketDAO has two index products, a money market and a DeFi index, totaling $3m TVL. In order for PieDAO to actually acquire that TVL, index holders need to migrate to PieDAO’s products.

If PieDAO offered a 1:1 trade between DOUGH and BASK, there would be no guarantee that they would get what they paid for.

The KPI Option Solution

The solution proposed by the author is to use KPI Options secured by UMA’s optimistic oracle to align incentives between shareholders. The options will only be “in the money” if at least 50% of the TVL migrates, and will pay out up to 100% only if 100% of the TVL migrates.

The mechanics of this can be reviewed in the proposal.

This solves the problem above by making sure that PieDAO will actually get the underlying TVL of BasketDAO. It also makes sure that BASK holders are properly compensated — and in a way that makes the wider DAO community excited and willing to join forces.

KPI Options are Secured by UMA’s Optimistic

KPI Options are a subset of generalized contracting, whereby DAOs or other parties can enter into trustless, tokenized contracts. These contracts are impartially enforced by the $UMA tokenholders, and in the case of any dispute, the entire weight of the $UMA marketcap would come to bear on the outcome. This is what allows PieDAO and BasketDAO to coordinate on this sale and these terms.

Learn more about KPI Options on their product page here, and join Discord to ask questions.