Name: Request for budget to set up the legal entity for Ren 2.0
Category: Governance, funding
Scope: Allocate budget from CEF to fund the set up of the legal entity to manage treasury
RIP-000-018 Ren 2.0 funding and Ren Foundation (Snapshot) has concluded with
94.88% of the votes in favor.
Results and recommended next steps can be found here (RIP-000-018: Ren 2.0 funding and Ren Foundation - #32 by MaxRoszko).
In summary, 1) about 180M new tokens will be printed and allocated to a treasury to support the growth and development of the Ren Ecosystem and, 2) a legal entity shall be created to be custodian of the treasury and manage the grant program.
Funds only can be allocated to a treasury in a compliance way through a non-profit legal entity. RenLabs can only receive funds throughout a legal entity.
Ren 2.0 is still in development and RenLabs ran out of funds after the debacle of FTX/Alameda. More information can be found on this link (Moving on from Alameda. Early last year, Alameda acquired Ren… | by Ren Community | Ren Project | Nov, 2022 | Medium).
The importance of a legal entity was explained already by @Susruth:
The main reason for a foundation to exist is that without a legal real world entity everyone who is contributing to or governing Ren would be legally liable to things that are not under any one person’s control. Ideally we could create a legal entity that can legally be controlled by the DAO, and all the DAO participants have limited liability similar to the equity holders of a company. The idea of the foundation would be to get as close to this ideal as possible and protect everyone involved. (source)
Considering the legal implications of printing tokens and its allocation, the creation of the legal entity (describing by Susruth as Foundation) that can act on behalf of RenDAO in a legally compliant manner is imperative.
Darknode Operators would have no direct ownership relationship with this entity, but will be able to instruct actions through the vote. The legal entity will provide a framework to safely allocate funds and:
- Protect token holders against liability as explain above,
- Provide tax benefits to treasury as well as more clarity on taxation to token holders,
- Be able to interact with real world entities (ex. create accounts in banks, sign agreements, etc).
There are two options being evaluated:
- A non-profit foundation, that would most likely be located in Swiss or Cayman Island. Ren has estimated a budget of 100KUS$ would be neccessary to set the Swiss Foundation.
- A Special Purpose Trust. dXdY set already a Guernsey Purpose Special Trust that is very well documented and could be a good baseline to start with. This option is faster and more cost effective.
The following links provides, what I believe, a good understanding on the 2 options:
(What I Wish I Knew Before Talking to Lawyers about DAOs — 0x9548…D02f61)
(Legal Framework for Non-U.S. Trusts in Decentralized Autonomous Organizations)
All described on this RFC needs legal review to move forward. Lawyers are being contacted to inicial conversations and we need to allocate a budget to continue our work. We expect to have a better estimated budget and a schedule after complete legal review by professionals and decide the path forward (either a foundation or a purpose trust)
This RFC has the only intention to request to guarantee 100KUS$ from the community fund (CEF) to set the legal entity. The fastest and most cost effective option that meet the requirement to manage a treasury and distribute funds in a compliance way will be implemented after approval by the community.
The CEF has today about 200KUS$ in the following multisig wallets:
- Ethereum multisig: (Zapper - Your Home to Web3)
- Bitcoin multisig: (Bitcoin / Address / bc1q065r2jrve3j59racc02fpk629vnvr63zk33xywtz4vp858q3mvys2jpgr3 — Blockchair)
The proposal is to allocate 100K USD that shall stay in the control of CEF and only be released when any invoice is to be paid at the time that is needed.
A (Discord) room has been opened to brainstorm and collaborate on the creation of this legal entity where all community members are welcome.
(I am not a lawyer, and nothing said here can be considered as legal recommendation)