Breakout Room 1: Decentralised Treasury Management Models and Legal Requirements
Meeting notes:
Opening:
We started with a roundtable discussion where each participant shared a bit about themselves. This set the stage for the rest of the meeting, highlighting the diverse backgrounds and interests of the attendees.
We had representation from Cardano4climate, Swarm, SingularityNET and INO. Our collective experience shows strength around blockchain governance and building community support systems.
Developing a standard:
INO shared its intention to develop a standard for governance and compliance for Internet Native Organizations, which would also support DAOs. More info: https://internetnative.org/about/
Legalities around DAO land ownership, and examples:
We started off by investigating the legal clarity of owning land in a DAO. The main legal focus for the DAO in this case should be “Who do you give the authority?” In session 2 examples were brought up: Redcurry and CityDAO Documentation / https://ipfs.io/ipfs/QmbAV7dZithaG4Fr85yNZUEebF26tmxcNrDKv948kPXUKM In addition Toku service was mentioned, that has raised money to help DAOs with compliance.
Legal entities used to manage DAOs, and examples:
The discussion then found its way to describe different legal entities used to manage DAO-like organizations effectively. The best strategy highlighted was having one decentralized organization that works on legal compliance and then mirrors the limited liability with other decentralized organizations.
Example in Delaware City, Delaware - Wikipedia best case DAO structure is using master LLC for the legal wrapper and include all decentralized organizations under slave LLC. Alternatively, J&J has a unique legal approach to split its capacity into smaller departments Johnson & Johnson's Organizational Structure [Interactive Chart] | Organimi
Another good example from history was related emergence of a new business type called "social business" in Bangladesh, where the purpose was built into the legal structure. This helped create a solid foundation and rules of engagement for communities and workers to own a business and its impact. The creation of such a business type granted a Nobel Peace Prize to Muhammad Yunus and Grameen Bank: see Professor Muhammad Yunus. More info: https://www.researchgate.net/publication/349811251_Social_Business_in_An_Emerging_Economy_An_Empirical_Study_in_Bangladesh
The example of SingularityNET:
We also discussed the current legal status of SingularityNET. SingularityNET was founded in the Dutch jurisdiction and is looking to expand or move to Switzerland as it is more flexible for decentralized organizations. The SingularityNET ecosystem organizations are currently contractors to the SingularityNET Foundation. As for contributors each contributor is legally reliable in reporting on the received assets, however in most jurisdictions the tax applies once the owner sells or swaps the tokens.
More insight into DAO research in Dutch corporate structure: Decentralized Autonomous Organizations (DAO) Roadmap for DAO projects in Dutch Corporate Structures
Best practice for treasury management:
The final discussion revolved around best practices for managing a decentralized treasury. Currently, the mainstream sentiment is that voters feel like their vote means nothing; therefore, having representatives is a good way to reduce micro-managing. Another notable effect is to conceal voting until the results are out. And for Sybil attacks, the only meaningful solution seems to be setting up a ‘Know Your Customer’ (KYC) process.
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