The decentralized autonomous organization (DAO) that oversees Ethereum’s layer-2 network Scroll has announced a proposal to disband its Security Council, transferring control of the network to an internal team-managed account. This decision follows two months after Ether.fi, Scroll’s top fee-generating decentralized application (dapp), migrated to Optimism’s OP mainnet. The move shifted approximately 300,000 user accounts and over $160 million in total value locked away from Scroll.
In a governance update, a core contributor of Scroll cited the Security Council’s high expenses as unsustainable, prompting layoffs within the DAO and reductions in operational committee capacities. The handover is expected to occur within the next ten days, contingent on the current council’s approval.
“The evaluation of the Security Council’s costs relative to its usage over recent quarters indicates that its continuation is no longer warranted,” stated a post from the project. Scroll has committed to executing all contract changes transparently and maintaining their verifiability on-chain.
Further complicating matters, an artificial inflation of Scroll’s network fees was observed recently, misleadingly suggesting increased organic demand. An analysis by L2BEAT revealed that over six days in early April, Scroll escalated the cost of publishing data to the Ethereum mainnet by a factor of 1,280, inflating the perceived fee momentum for 30 days. This adjustment led users to incur over $50,000 in excess transaction fees for tasks that typically would have cost about $280. The temporary and extreme repricing was reversed on April 9.
The departure of Ether.fi resulted in approximately $13 million in annualized fees being diverted from Scroll, as per DeFiLlama data, reducing the network’s total value locked to around $23 million.