Scroll moves to trim governance operations after major protocol defection

The decentralized autonomous organization (DAO) behind Ethereum layer-2 network Scroll said it will propose a plan to dissolve its Security Council and transfer control of the network to an account managed by an internal team.

The proposal announcement comes two months after Scroll’s top fee-generating decentralized application (dapp), crypto neobank Ether.fi, moved to Optimism’s OP mainnet. That saw roughly 300,000 user accounts and more than $160 million in total value locked move away from the network.

In a governance update, a Scroll core contributor said the Security Council was simply too expensive. Scroll is laying off several contributors within the DAO and reducing the capacity of its operational committees. The handover is targeted for the next 10 days, pending support from the current council.

“After evaluating the Security Council’s cost relative to its actual usage over the past quarters, we believe continuation is no longer justified,” the post reads.

The project said all contract changes would be executed transparently and remain verifiable onchain.

Adding to the network’s turbulence, a recent surge in Scroll’s network fees appeared to be artificially manufactured rather than a sign of organic demand.

Over six days in early April, the network raised the amount it charges to publish data to the Ethereum mainnet by a factor of 1,280, creating the illusion of a massive spike in 30-day chain fee momentum, according to analysis from L2BEAT.

The adjustment forced users to pay over $50,000 in excess transaction fees for data posting that ordinarily would have cost roughly $280. The extreme, temporary repricing was rolled back on April 9.

Ether.fi’s migration moved around $13 million in annualized fees away from Scroll, according to DeFiLlama data, and trimmed the network’s TVL to around $23 million.