This Week in DAOs - October 28, 2021
DAOs' Legal Standing, DAO Financial Reports, and Uniswap's Competitive Fee Proposal.
Keep scrolling to get caught up on this week in DAOs. And, remember, open metaverse > whatever Facebook is doing.
📊 This Week’s Stats
Governance Activity - Last 7 Days
🗳️ 4,559 ballots cast on 73 different proposals 🗳️
👥 2,940 unique voters 👥
🌐 26 DAOs with active voters 🌐
✍️ 42 new proposals created this week ✍️
📰 This Week’s News
DAO Legal Solutions
Two weeks ago, we covered MakerDAO delegate PaperImperium’s governance forum post urging the community to address perceived risk concerning MakerDAO’s legal structure. Specifically, the concern is that MakerDAO - and other DAOs - would most likely be classified as “general partnerships,” thus exposing members of the DAO to legal liabilities, tax burdens, and business obligations.
Indeed, this concern is shared by many in the DAO space. BanklessDAO legal guild contributor @Bauhaus shared this proposal with the community that argues for the creation of a legal entity for BanklessDAO. The main reasons for establishing a legal entity for the DAO, according to the document, are: compliantly paying full time employees and service providers, protection against tax audits, the ability to license products designed by the DAO, and the aforementioned legal liability concerns for individual members.
Of course, some might suggest that there is inherent tension between the ethos of DAOs and the act of registering them as legal entities with a state/government. Certainly, serious discussions should be had amongst those of us building in the space as to the tradeoffs and relative merits of both sides of the argument.
However, in the meantime, there is a growing chorus of DAO participants that are searching for solutions to this rather thorny problem.
This week, a16z Crypto General Counsel Miles Jennings proposed a solution: registering DAOs as “Unincorporated Nonprofit Associations in states that recognize such entity form.”
You can read their full piece here:
Delphi Labs General Counsel and LeXpunK founder Gabriel Shapiro chimed in to say that he agreed with this approach and cited his work from May 2020 on the topic.
Including this draft of a “Simple Code Deference Agreement,” which is a “potential model DAO Charter for DAOs wishing to function as unincorporated associations.”
Will this framework suffice for all of the DAOs that we’ve seen form in the past 12-18 months? Definitely not, as there are many intricacies of each use case to consider such as what activities a DAO is focused on, who is in the DAO, the nature of the token and its distribution, etc.
However, there seems to be real brain power being devoted these days to tackling these issues and certain DAOs will benefit greatly. This is definitely something to watch.
Related, another awesome piece of writing, entitled “What I Wish I Knew Before Talking to Lawyers about DAO,” was shared this week by an anonymous writer on Mirror. Check it out:
DAO Financial Reporting
As has been covered in this newsletter and elsewhere, a variety of DAO service providers have been popping up in recent months. One of which, Llama will ring a bell to anyone who hangs out in certain large DeFi DAO governance forums - they create financial reports for DAOs like Aave. See below:
This theme - DAOs and DAO service providers producing financial reports - seems to be catching on as a few such reports were released this week.
First, Index Coop released first Annual Financial Statement, produced in-house (though seemingly led by team members affiliated with Llama). Totaling 74 pages, the very-polished report goes into detail about:
Index Coops’ internal organizational structure
Financial metrics, including KPIs and financial statements
Accounting and budget analysis
Market dynamics and competitors
Second, Messari released The State of Compound Q3 Report, which they received a Compound Grant to produce in July.
Topics covered include:
Macro & micro overviews
Governance & key events
The Compound Grants program
Compound’s roadmap for the future.
They also held a community call with Compound Labs CEO Robert Leshner. Both the call and report are available below:
Uniswap Considers Stablecoin Fee Tier
Uniswap v3’s factory contract currently allows for the creation of new pools with fees of either 5, 30, and 100 basis points.
This week, Uniswap delegate Getty Hill proposed adding a 1 basis point fee tier via Uniswap governance vote in order to “help Uniswap compete in stablecoin <> stablecoin pairs, where the majority of the market share is taken by Curve and DODO” which have lower fees, 3-4 bps and 1 bp, respectively.
The Snapshot Consensus Check vote is live until tomorrow. At time of writing, the vote count is 16.26m UNI for Yes and 0 UNI for No.