Brand Clarity Between DAO and HQ

Hey All,

I agree with most of the original proposal/post from @rsa above. And I respect many of the contrary opinions shared by others above.

The two items that stand out to me that I want to comment on are (1) founder vetos and (2) legal entity choice.

Regarding Founders Vetos

Regarding founder vetos, I do not like the idea. I know they have it in Nouns and Nouns-ish DAOs, and I think it’s useful in the early stages of a DAO when someone can easily come in and sweep all the governance rights and drain the DAO. But in the later stages we are in at bDAO, it just does not make sense to me, and there are other protections we can put in place for disagreements, such as arbitration, proposals with different time periods / quorum requirements, etc.

To be clear, I do think BanklessHQ should retain the proposed veto power over use of the Bankless brand and Bankless DAO should retain the proposed veto power over the use of the BanklessDAO brand. What I do not like is that the founders of each of the entities retaining veto power over their entity’s decisions. In the case of bDAO, the original post proposes bDAO having both the Foundation’s Directors and the DAO’s founders have veto rights, which just feels very non-value-aligned and unnecessary to me.

Regarding legal entity choice

First, a disclaimer. I have spent the last 2.5 years of my professional life working on legal entities for DAOs, specifically the Marshall Islands DAO LLC, for which I wrote the legislation (three laws over the past three years) with the help of dozens of crypto lawyers from all over the world. I am also a founder of MIDAO (which stands for Marshall Islands DAO), which is the registered agent that helps Web3 projects create DAO LLCs in the Marshall Islands. I think this means (1) I have a very informed opinion and (2) I have a very biased opinion. Also, I am not a lawyer, and so nothing I say is legal advice. But I will reiterate something I’ve said in the past: lawyers do not make legal decisions; they advise business people who make legal decisions. Both are an important part of a process like this.

Note that I have offered MIDAO’s services, which would normally cost $9,500 for all the services related to the creation of a DAO LLC, for free (now and forever) to BanklessDAO! Of course, we’d still benefit from having another client to brag about, but at least I won’t be directly financially benefiting if bDAO chooses to go Marshall Islands.

The reason that several people and I started MIDAO is that three years ago, we needed a legal entity for AdmiralDAO (the DAO that governs the Clipper Exchange), and when we looked at Foundations and Corporations and Trusts and Cooperatives, etc, we saw that they all forced us to make meaningful compromises we thought most true DAOs would not want to make:

Compromise 1: requirement to have a board, directors, officers, trustees, managers, or similar.
Compromise 2: requirement for those people and all other members to give their real names and physical addresses to the organization and often to the government.
(I’ll skip the other compromises for now)

So we set out to - and successfully passed three laws in the Marshall Islands, already a leading corporate jurisdiction in the shipping industry, creating a DAO LLC legal entity similar to but better than Wyoming’s DAO LLC.

Why should banklessDAO consider the Marshall Islands DAO LLC?

  • So that bDAO does not have to have a board or any trustees or managers with any kind of veto right whatsoever. Note that we can have Managers or others with veto power if we want to, but we don’t have to, so if we wanted to do so temporarily we could do so. Oftentimes, supporters of the Foundation model say, “But you can obligate the Directors to act in accordance with the DAOs wishes.” The problem with that, is that you can legally obligate them to do it, but they still don’t have to! They can act on behalf of the DAO in a way inconsistent with its wishes, and then the DAO has to take them to court to try to reverse course. In a DAO LLC, the DAO members actually have direct legal control over the legal entity. Even if the SEC or another law enforcement agency tells us to do something, it’s up to us as the DAO members to decide whether do it or not!
  • So that there is the absolute minimum of KYC required. Only any Managers, initial filers, or holders of 25% or more of the governance tokens would have to do KYC. Everyone else can be completely anonymous, except for the wallet address they use to hold their BANK
  • No cost from the Marshall Islands or MIDAO, and no requirement to hire local lawyers or independent directors like you have to do in Panama, Cayman, etc

Of course, this is a very complicated discussion, and we’d have to get way deeper into it, including hopefully with (pro bono?) lawyers working for banklessDAO and/or HQ. But I want to really encourage my fellow DAO members to consider why me and many other people have spent years of our lives creating this new DAO-focused legal entity, why 100 other DAOs have already chosen it, why Balaji himself (and others) have invested $1M into our company, etc, etc… and at least give the MIDAO DAO LLC consideration here!