►
From YouTube: LexMaker #2 | System of a DAO: A Legal Framework for Decentralized Autonomous Organizations
Description
During this session, Miles Jennings from a16z and David Kerr from Cowrie LLC provide an update on their published analysis of legal frameworks for DAOs.
Published Analysis: https://a16z.com/wp-content/uploads/2021/10/DAO-Legal-Framework-Jennings-Kerr10.19.21-Final.pdf
Miles Jennings: https://a16z.com/2021/09/02/miles-jennings/
a16z: https://a16z.com/
David Kerr: https://twitter.com/David_M_Kerr
Cowrie LLC: https://www.cowryllc.com/
A
Hello
welcome
everyone
to
lexmaker
today
we're
in
episode
number
two,
where
we're
discussing
well
leo
frameworks
for
decentralized
autonomous
organizations.
Yeah.
The
topic
is
a
bit
broad
and
that's
on
purpose.
We
actually
have
two
guests
of
honor
who
have
miles
jennings
from
asics.
Instead,
where
he's
a
general
counsel,
yeah,
maybe
I'll
I'll,
let
it
to
you
guys
to
to
speak
more
about
about
yourselves,
and
we
also
have
david
kerr
principle
of
a
car
llc.
I
might
be
mispronouncing
that,
but
they
they
produce
this.
A
So
we
are
actually
pleased
to
have
you
guys
here
and
and
we're
thrilled
to
to
share
this
well
to
have
youth
sharing
these
things
with
you.
So
without
any
further
ado,
if
anyone
wants
to
to
ask
any
questions,
please
raise
your
hand
or
write
it
in
the
chat
and
we'll
do
it
and
yeah.
Now.
I
also
can
take
the
mic
all
right.
C
C
My
background
is
in
taxation.
I
worked
for
instant
young
for
a
period
of
years
and
then
I
started
my
own.
Consulting
shop
and
miles
was
a
pretty
large
factor
in
my
deciding
to
go
full-time
crypto,
just
because
there
were
so
many
nation
issues,
novel
issues
and
just
so
much
work
to
be
done.
That
it
became
pretty
clear
that
my
background,
in
tax,
mostly
in
gaming
and
telecom,
was
highly
applicable
to
the
treatment
of
u.s
taxation
and
some
of
the
international
issues
facing
taos.
B
So
you
know
happy
to
be
here
I
before
this,
so
I'm
currently
at
a16z
as
the
gc
of
their
their
crypto
fund
and
prior
to
that
I
was
a
partner
in
latham
watkins,
emerging
companies
in
capital
markets
group.
So
I
basically
spent
the
last
kind
of
four
years
working
with
startups
in
the
space
you
know
going
from
incorporation
through
kind
of
token
launch
and
then
decentralization
stuff
after
that,
and
and
also
kind
of
you
know,
working
on
the
investor.
D
B
Representing
paradigm,
peripheral,
pantera,
dragonfly,
co2
and
others,
and
and
basically
so
got
a
good,
very
good,
feel
for
kind
of
how
you
know
the
investment
frameworks
are
set
up,
and
you
know
one
of
the
problems
that
you
know.
Some
of
my
clients
started
having
you
know,
for
instance,
I
worked
on
the
unit
swap
token
issuance
was
you
know,
treasury
management
and
you
know,
dealing
with
kind
of
issues
that
that
have
arisen
with
respect
to
you
know.
B
Here
you
know
there
are
other
jurisdictions
and
also
you
know
there
are
other
types
of
dows
right.
We've
we've
mainly
focused
on
you
know,
dows
for
decentralized
finance
protocols,
and
not
you
know,
investment,
dows
or
social
club
dows.
All
of
those
are
are
kind
of
outside
the
scope
of
this
and
needs
kind
of.
You
know
a
different
analysis,
though
you
know
there
are
some
kind
of
carryovers
that
could,
potentially
you
know,
work
in
those
scenarios.
B
So
here's
a
quick
disclaimer
on
on
kind
of
you
know
this
not
being
legal
advice
and
then
we'll
just
kick
into
it.
So,
as
many
of
you
are
probably
aware,
there
are,
are
several
key
issues
facing
the
two
main
dow
structures
that
that
currently
exist,
which
I
I
categorize
as
being
kind
of
entityless,
and
you
know
the
foreign
foundation
route
on
the
entity
list
side.
B
You
know
what
that
really
is
right
is
a
developer
c
corp
in
the
us,
creating
the
technology
launching
their
you
know,
protocol
and
then
launching
the
governance
protocol
issuing
you
know
tokens
and,
and
that
kind
of
being
it
right,
no
actual
legal
entity
formed
in
any
jurisdiction,
and
so
you
know
the
issues
that
we've
seen
arise
from
that
right.
Are
that
the
you
know
you
don't
have
any
legal
existence
which
you
know
makes
it
impossible
to
kind
of
represent
the
the
dow
as
a
legal
entity.
B
That
means
you,
can't
you
don't
have
any
ability
to
pay
taxes
right.
Taxes
do
arise
for
for
dows
in
several
instances
you
know
use
of
the
governance
tokens
by
the
the
dow
treasury.
You
know,
including
liquidity
mining,
and
you
know,
income
that
the
the
job
generates
through
you
know,
operation
of
the
protocol.
All
of
these
are
potential
taxable
events
that
that
you
know
would
necessitate
tax
filings.
B
If
you
know
there
was
a
legal
entity
and
you
know
in
the
long
run,
I
think
we
think
that
the
taxes
is
really
going
to
be
an
area
where
you
know
the
u.s
government
at
least
really
kind
of
tries
to
make
moves
on
on
the
industry.
You
know
you
saw
that
somewhat
with
the
infrastructure
bill.
Where
you
know,
one
of
the
big
things
was
was
driving
tax
compliance
amongst
users
of
crypto,
and
you
know
I
don't
think
they
they
really
realize
what
the
you
know.
B
The
pot
is
up
in
terms
of
treasuries,
but
you
know
if
you
look
at
a
corporation
like
or
a
protocol
like
uniswap
right,
that
treasury
is
is
worth
or
was
worth
multiple
billions
of
dollars,
and
so
you
know
it.
It's
obvious
that
that,
from
my
perspective
that
that
the
government's
going
to
be
ultimately
very
focused
on
this
and
as
a
result,
I
think
you
know,
having
kind
of
a
method
of
complying
with
tax
obligations
is
a
fairly
important
one.
B
Unlimited
liability
is
also
a
a
fairly
scary
one.
You
know,
under
normal
corporate
structures,
there
is
typically
limited
by
ability
for
the
shareholders,
and
you
know
even
for
the
you
know,
officers
and
directors
of
the
company,
whereas
here
you
know
with
dows,
when
you
don't
have
a
legal
structure
in
place.
You
know
everyone
is
potentially
a
member
of
the
dow
and
could
potentially
be
sued.
You
know
and
and
maybe
like
we
obviously
have
not
seen
yet
what
the
you
know,
practical
application
of
that
is
going
to
be.
B
But
if
you
were
to
look
at
you
know,
I
mean
pool
together
got
sued
recently
in
a
class
action
where
you
know
the
investors
were
named.
Compound
was
named,
the
founder
was
named,
you
know,
even
if
that
case
is
spurious,
and
I
think
if
you
looked
at
kind
of
how
they
set
it
up,
it
certainly
looks
that
way.
You
know
it's
still
going
to
take
time
and
money
to
pay,
for
you
know
filing
motions
to
dismiss.
B
If
you
get
through
a
motion
to
dismiss
right,
you're,
then
talking
about
discovery,
and
you
know
a
long
kind
of
line
of
of
of
litigation,
and
I
think
that
you
know
that
potential
to
hit
founders
and
prominent
members,
particularly
those
that
are
active
in
in
the
dow
governance.
I
think
the
the
likelihood
is
just
very
high
and
as
a
result
of
that,
I
think
it's
it's
really
necessary
for
the
industry
to
kind
of
coalesce
around.
You
know
potential
options
to
to
limit
liability.
B
B
You
know
in
grant
programs
in
code
audits
things
like
that
where
people
have
difficulty
contracting
with
service
providers
because
they
don't
have
a
legal
entity
now
you
know
sometimes,
obviously
a
lot
of
those
arrangements
just
end
up
being
that
they
pay.
You
know
on
chain
and
and
and
kind
of
the
relationship
is
what
it
is.
B
So
as
a
result
of
that,
I
think
that
you
know
grant
programs,
and-
and
you
know,
other
services
that
does
have
have
used
so
far
are
not
really
being
held
to
account
to
deliver
on.
You
know,
potentially
the
promises
that
they
make
to
the
the
dow
when
they
you
know,
submit
their
proposal
for
for
for
grant
skipping
over
to
the
the
foreign
foundations
right.
I
think
that
the
the
most
popular
destination
has
been
the
cayman
islands,
given
their
their
flexible
tax
framework.
B
What
I
mean
by
that
is,
you
know,
oftentimes
the
dow
and
dow
governance
will
all
be
on
chain,
and,
as
a
result
of
that,
you
know
that
the
cayman
entity
that
is
formed
as
a
foundation,
isn't
really
you
know,
isn't
acting
on
behalf
of
the
dollar,
doesn't
shield
the
dow
from
limited
by
ability
right
in
order
for
the
those
foundations
to
actually
shield
the
the
dow
members
from
liability.
They
would
actually
need
to
be
the
ones
that
enact
the
dow
decisions,
and
so
you
know
there
are
examples
of
that.
B
Where
you
have
you
know
the
dao
essentially
decides
to
do
x.
It
tells
the
foundation
to
do
x.
Foundation
then
does
x.
So
you
know
we
have
seen
that
in
place,
but
but
that
kind
of
setup
you
know,
does
raise
some
questions
around.
You
know
decentralization
because
you
know
if
you
go
back
to
2018
in
the
dow
report
right
the
the
sec
kind
of
stated
at
that
time,
that
you
know
the
ability
of
certain
members
to
veto.
B
You
know,
decisions
of
the
dao
was
determined
that
that
there
wasn't
decentralization,
and
so
as
a
result
of
that
right,
I
think
that
that
you
know
if
we
really,
if
the
sec
got
around
to
kind
of
really
looking
at
this
framework,
I
think
that
they
would
ultimately
say
that
the
foundations
you
know
that
are
set
up
that
way,
you
know,
do
cut
against
the
decentralization
analysis.
You
know,
in
addition,
right,
the
the
foreign
foundations
are
also
difficult
to
set
up.
B
You
often
have
to
have
you
know
people
on
the
ground
in
that
jurisdiction
acting
on
the
board
and
then
lastly,
you
know,
I
think
that
it's
you
know
potentially
politically
unfavorable
in
the
united
states
to
go
with
the
foreign
route
because,
ultimately
right,
I
think
that
you
know,
in
order
to
encourage
you
know,
legislators
in
the
united
states
to
you
know,
support
this
industry
with
you
know
smart
regulation
right.
I
think
that
that
they'll
obviously
want
to
see
the
economic
benefits
of
providing
that
kind
of
you
know.
B
B
That
you
know
everyone
around
the
world
should
be.
You
know,
coming
and
forming
one
of
these
in
the
united
states,
but
to
the
extent
that
the
taos
have
a
significant
presence
in
the
united
states.
I
think
it's
worth
them
considering
whether
or
not
a
nuna
you
know
makes
sense
for
that.
U.S
portion
moving
on
to
the
let's
see
existing
legal
structure,
so
you
know
all
that
being
said
right.
You
know.
B
B
You
know
when
dave-
and
I
started
on
this
project-
we
basically
you
know,
went
through
and
and
started
with
first
principles
about
what
you
know
what
these
entities
needed
to
be
and-
and
you
know,
a
lot,
those
considerations
took
into
account
right
whether
or
not
people
could
remain
anonymous,
whether
or
not
you
know
there
was
centralization
and
whether
or
not
you
know
the
inherent
corporate
governance
requirements
of
those
of
the
entity
required.
You
know
people
to
be
in
charge
and
people
to
be
able
to
veto
the
dow.
B
So
you
know
in
thinking
through
those
right.
You
can
quickly
kind
of
check
off
that
you
know
c
corps
and
llc's
and
and
limited
partnerships,
don't
really
work
because
you
know
all
of
them.
Well,
the
llc
and
the
limited
partnership.
Have
you
know
issues
with
respect
to
pseudo-anonymity
right?
You
can't
become
a
member
of
an
llc
without
you
know,
disclosing
who
you
actually
are
the
llc's
need
to
file
tax.
You
know
reports
for
each
individual,
individual
member.
It's
just
not
a
workable
framework
for
for
widely
held
anonymous
downs.
B
You
know
you
also
look
at
at
the
corporate
trend.
Transparency
act,
which
is
you
know,
currently
being
enacted
by
fincen,
the
rulemaking
that
congress
previously
approved-
and
you
know
that
is
potentially
gonna-
require
disclosure
of
llc
members,
and
you
know
partners
in
partnerships
to
the
government.
And
so
again
you
know
if
you
have
a
anonymous.
B
You
know
membership
group,
it's
it's
fairly
difficult
to
kind
of
see
how
you
would
get
around
those
issues.
Finally,
it's
it's.
You
know
like
interests
in
you
know,
for
instance,
a
c
corp
right.
All
of
us
have,
you
know,
spent
a
long
time
making
sure
that
that
these
tokens
aren't
treated
like
shares,
because,
ultimately
you
know
that
would
make
them
securities.
And
you
know
if
you
were
to
set
up
a
c-corp
issue.
B
B
C
C
There's
a
significant
amount
of
different
types
of
dows
different
use
cases
different.
You
know,
participation,
requirements,
different
governance
models,
and
so
I
think,
there's
a
lot
of
times
of
pressure
to
to
decide
what's
best
for
a
dao
when
we're
dealing
with
such
a
a
wide
divergent
entity,
and
so
what
we
kind
of
tried
to
do
with
the
formative
principles
was
establish.
What
was
really
important
for
the
dows
with
facts
that
were
more
similar
to
ours.
Our
goal,
hypothetical,
not
a
specific
client,
and
so
that's
why?
C
I
think
a
lot
of
times
with
the
co-op
model.
Wyoming
model
caymans,
is
certainly
viable
and-
and
I
think
the
other
thing
we
want
to
look
at
is
also
time.
I
mean
this
has
been
the
the
environment.
Around
dallas
has
been
growing
over
the
past
four
or
five
years,
but
there's
not
a
huge
amount
of
legislative
direction
on
the
way
to
go.
C
There's
a
lot
of
different
areas
to
look
at,
and
so
one
of
the
things
to
keep
in
mind
is
that
a
lot
of
these
dows
have
been
handed
over
to
decentralized
membership,
and
so
when
we're
trying
to
actually
onboard
one
of
these.
For
for
for
me,
a
client
and
and
miles,
and
I
kind
of
share
a
few
situations
where
we're
working
to
take
a
step
forward
on
what
we
put
out
in
the
memo
into
the
real
world.
C
That
is
that
is,
that
is
that
provides
them
the
ability
to
make
an
informed
decision
around
entity
structure
and
to
confine
their
behavior
within
those
rules.
This
is
a
difficulty
that
goes
beyond
a
theoretical
song.
It's
an
actual
communication
issue
about
education
and
involvement
to
the
community,
and
I
would
say,
since
we
published
our
memo
and
got
started
actually
putting
some
of
these
into
practice.
C
The
area
that's
slowing
us
down
is
not
the
theory
at
this
point.
It's
the
fact
that
we're
trying
to
find
ways
to
make
sure
that
the
the
messaging
is
done
that
involves
the
community
that
it's
community,
driven
that
they're
involved
in
the
decision
making
for
how
to
make
these
decisions,
how
it
fits
within
the
protocol
and
we're
living
that
decentralized
experience
as
as
is
somewhat
external
advisors.
And
so
that
is
a
huge
point
of
of
of
of
slowdown
and
emphasis.
C
Because
it's
one
of
the
reasons
why
the
una
is
is
such
a
valuable
tool
in
that
it
doesn't
require
a
particular
amount
of
formalization
around
the
members
to
join.
And
when
we
were
looking
at
how
a
decentralized
group
of
individuals
was
going
to
actually
make
an
affirmative
assessment
to
become
an
entity.
That
was
a
huge
part
of
the
test
as
far
as
limitations
of
other
structures
and
how
to
actually
get
one
of
these
off
the
ground.
C
And
so
the
history
of
the
unincorporated
nonprofit
association
was
hugely
informative
in
providing
a
background
where
it
was
more
of
an
informal
membership.
And
you
know
I've
seen
through
the
chats.
There's
been
some
questions
about
co-ops
and
some
differences
between
the
co-op
structure
and
the
dow
structure
in
the
uno.
There's
certainly
an
overlap
on
a
venn
diagram
behind
some
of
those
concepts.
C
It
was
because,
when
we
were
going
through
the
fact
patterns
for
what
existed
under
the
law
and
what
had
been
conceived
under
the
law,
this
was
what
really
stood
out
as
meeting
the
test
for
an
entity
to
get
the
benefits.
That
miles
was
talking
about
as
far
as
existence
as
far
as
paying
taxes
as
far
as
limited
liability
in
a
manner
that
was
consistent
with
their
rather
informal
association,
which
doesn't
mean
that
a
dow's
not
a
valid
organization.
C
C
But
there
was
a
time
where
there's
a
significant,
very
difference
between
the
treatment
of
a
general
partnership
and
an
incorporation
entity.
It
was.
It
was
the
ability
to
have
an
entity,
a
legal
existence
through
the
organizational
structure
that
provided
the
ability
to
sign
contracts,
to
provide
the
ability
to
get
limited
liability
protections.
C
And
so
you
know
you
can
look
at
the
writings
of
adam
smith.
You
know
any
number
of
contemporaries
from
from
that
time
period
around
the
joint
venture
companies
and
just
the
the
reason
why
any
of
this
matters
was
that
it
provided
a
legal
entity
for
avoiding
liability
and
for
operating
as
an
existence
form
historically,
that
has
become
less
meaningful.
C
As
the
protections
of
that
entity
structure
have
been
expanded
to
non-incorporated
entities
and
so
from
a
functional
standpoint,
when
you're
able
to
exist
for
contract
when
you're
able
to
have
limited
liability
protection,
when
you
have
legal
existence,
when
you
have
the
ability
to
pay
a
tax
return
as
an
entity,
you've
kind
of
crossed
that
barrier
into
basically
being
a
corporate
form
from
a
practical
purpose
and
just
to
take
one
kind
of
pause.
Because
you
know
we
have
an
international
audience
here,
and
this
is
a
question
that
comes
up.
C
A
lot
is:
why
are
we
talking
so
much
about
u.s
securities
law
and
u.s
tax
law
and
u.s
entity
law
when
dowse
are
international
organizations
that
may
or
may
not
have
any
ties
to
the
u.s?
I
think
miles
alluded
to
the
fact
that,
certainly,
you
wouldn't
necessarily
seek
out
the
u.s
for
your
entity
status.
C
Given
the
option
of
not
but
the
reality
is
that
the
u.s
government,
through
a
variety
of
of
means,
has
a
very
wide
interpretation
of
when
its
securities
laws
apply
based
off
of
its
citizens,
participating
in
the
transfer
of
those
securities
and
a
very
wide
view
of
taxation.
Based
off
of
you
know,
impact
on
the
u.s
u.s
sourced
income,
effectively
connected
income,
the
ability
to
do
operations
in
the
united
states.
C
Is
that,
because
of
that,
those
levels
of
risk
and
their
activity
in
the
space
and
the
connections
that
come
from
the
us
and
a
lot
of
situations,
it
presents
a
pretty
good
risk
option
to
utilize
the
us
as
a
as
an
entity
home,
because
the
the
benefits
are
clear
in
terms
of
you
know
some
reduced
complexity
around
how
you
would
figure
out
the
treasury
taxation
who's,
your
taxation
authority.
What
your
tax
would
be,
what
your
entity
structure
should
be.
C
It
closes
a
lot
of
the
loops
and
provides
some
amount
of
value
to
to
to
to
the
members,
not
just
from
an
anti-risk
standpoint
or
a
reduction
of
risk
standpoint,
but
also
from
you
know,
an
operational
clarity
of
purpose.
You
know
there's
certainly
a
lot
of
benefits
to
to
to
the
united
states
in
terms
of
being
a
a
free
society
with
obvious.
C
Not
a
perfect
situation
that
does
have
issues,
but
from
a
grand
sense
it
does
provide
free
speech.
It
provides
free
ability
to
interact
with
ideas
and
that's
a
huge
fundamental
part
of
it
now
being
able
to
operate
so
there's
some
amount
of
higher
level
benefit
to
the
us,
besides
just
the
clarity
and
regulations,
and
so
that's
kind
of
my
sales
pitch
for
why
the
u.s
is
so
prominent.
In
these
discussions
I
mean.
D
John,
so
my
question
is
related
to
like
securities
like
using
of
book
governance
token.
Is
it
a
security
or
not
right
because
like
if
we
keep
the
governance
token
completely
separate
from
the
main
entity
yeah?
That
means
it
would
not
be
if
it's
like
sort
of
a
non-profit.
It
is
not
tied
to
the
entity.
That
means
there
is
not
too
much
incentivization
for
the
members
right,
but
just
take
an
example
of
maker,
because
I
feel
like
the
way
maker
work.
That's
wonderful,
a
really
great
governance!
D
Token,
because
it
like
the
maker
token,
like
sort
of
helps
the
protocol
in
case
whenever
it
needs
money
and
if
there
is
surplus
like
it,
helps,
then
the
members
by
purchasing
the
maker
token
and
then
like
raising
the
price
right
like
so
I
think
like
here,
you
see
the
governance.
Token
is
somewhat
very
like
completely
tied
to
the
core
foundation
entity
and
helps
that.
So
in
that
case,
do
you
count
like?
If
you
have
these
type
of
governance
tokens?
Do
you
count
them
as
securities
or
not.
B
B
But
if
you
look
to
you
know
companies
that,
like
you
know
publicly
tradeable
companies
in
the
united
states
right
obviously
share
repurchases
and
share
repurchase
programs
are
something
that
that
they
engage
in
and-
and
so
you
know,
we,
we
would
think
that
that
there's
a
potential
that
the
sec
would
draw
the
analogy
between
the
two.
But
but
you
know
to
speak
to
your
more
basic
point
right.
A
E
Yep,
yes,
yes,
so
thank
you
very
much
for
for
this
presentation,
but
and
and
especially
this
paper.
That
was
interesting.
I
was
my
question
was:
are
you
now
recognized
internationally
and
if
they
are
not
perfectly
recognized,
could
we
imagine
that
the
dio
has
different
status
in
different
jurisdictions
to
protect?
For
the
same
reason,
if
there
were
other
countries
that
would
have
a
potential
risk
of
regulatory
reach,
yeah.
B
Sure
you
know
it's
it's,
it's
obviously
a
very
complex
question,
because
you'd
have
to
look
it
at
every
every
jurisdiction
right,
but,
generally
speaking,
the
the
the
role
out
here
that
that
we
envision
right
is
we're
really
just
kind
of
focused
on
the
us.
You
know
there
are
structures
in
switzerland,
there
are
association
structures
in
switzerland
that
are
very
similar
to
the
uno
statutes
in
the
us,
and
so
you
know
looking
into
that.
B
We
haven't
kind
of
gotten
that
far
in
this
process,
yet
as
to
whether
or
not
you
would
need
you
know
a
separate
una
in
every
jurisdiction.
Obviously
that
seems
pretty
unworkable
and
isn't
something
that
you
know
really
that
c-corps
or
you
know
other
entities
do
right.
Typically,
they
have
an
entity
located
in
one
jurisdiction
and
that's
respected
around
the
world.
It's
even.
D
B
You
know
thinking
has
already
been
done
when
when
the
internet
was
first
created-
and
you
know
at
the
outset
of
the
internet
right,
you
had
a
lot
of
kind
of
cross-jurisdictional
entities
that
were
operating
and
kind
of
you
know,
and
there
were
all
sorts
of
kind
of
regulatory
complications,
and
you
know
eventually
a
regulatory
framework
you
know
was
applied
and
and
that's
where
we
ended
up
today,
and
so
we
think
that
there's
you
know
most
likely
outcome
is
a
similar
course
of
events.
Here.
A
F
B
No,
I
don't
think
the
inherent
like
appreciation
in
the
in
the
price
of
the
share
in
the
price
of
the
tokens,
isn't
something
that
that
you
know
puts
you
offsides
with
respect
to
securities
laws,
it's
the
actual
distribution
of
of
the
profits
of
the
enterprise
or
the
actual,
having
a
right
to
the
profits
of
the
enterprise
right.
So
if,
if
you
know
to
put
it
more,
like
you
know,
makers
situation
is,
I
think,
more
unclear.
B
But
if
you
were
to
have
a
you
know,
d5
protocol,
that
essentially
you
know,
all
fees
that
were
acquired
were
accrued
to
it
if
they
were
to
just
distribute
those
to
token
holders
pro
rata
right.
That
would
be
a
you
know.
That
would
be
a
serious
factor
I
think
in
in
the
application
of
landreth
to
that
arrangement,
and
I
think
that
it
would,
you
know,
significantly
increase
the
risk
that
those
tokens
were
deemed
to
be
shares.
Securities.
C
I
just
saw
one
come
across.
The
buy
and
burn
is
at
risk.
With
that
strategy.
Yeah
I
mean
that's
that's
kind
of
what
we're
talking
about
operationally
some
of
these
items
that
some
of
the
conduct
on
the
part
of
dao's
is
a
securities
risk,
and
then
you
know
it's
also
an
entity
risk
depending
on
what
type
of
entity
you
frame
yourself.
C
There's
there's
behavior
that's
outside
of
what's
allowed
for
for
the
organization,
and
so
so
yeah,
that's
where
the
the
high
risk
levels
come
from
and
that's
where
consideration
of
of
what
member
distributions
look
like
or
distributions
at
all
activities
done
by
the
protocol
in
relation
to
member
benefit.
All
that
needs
to
be
considered
from
a
risk
standpoint
in
terms
of
what's
allowed
and
what's
not
it's
not
a
super
defined
area,
but
there's
certainly
clear
indications
of
what's
more
risky,
as
opposed
to
rest,
less
risky.
C
B
C
C
The
lack
of
board
or
other
centralized
hierarchy
is
really
important,
not
just
from
a
it's
in
good
faith
with
how
dows
operate,
but
that's
also
an
avoidance
of
some
of
the
securities
additive
risk
that
miles
talked
about
when
you,
when
you
have
the
ability
to
override
your
dow
or
have
the
ability
to
have
off
chain
decision
making
that
circumvents
the
dow.
This
is
not
possible
under
under
the
unit,
or
at
least
you
know
it's
not
it's
not
a
requirement.
C
There's
that
centralized
hierarchy
and
so
there's
a
there's
an
opportunity
to
have
a
real,
clean,
decentralized
form
of
governance.
No
membership
limits
is
obviously
big.
Some
of
the
more
restrictive
llc
models
around
investment
do
have.
You
know
limits
of
how
many
people
can
can
be
a
member
before
you
have
to
meet
certain
registration
requirements,
and
so
this
is
not.
This
is
not
in
line
with
that.
There's
there's
no
membership
limits
here.
C
It
needs
to
dictate
whether
or
not
it's
allowed
it's
an
opt-in.
It's
not
it's,
not
it's
not
automatic,
but
it's
also
a
surmountable
problem,
and
then
you
know
with
a
limited
liability,
and
this
is
legally
separate
from
us
members
and
determining
enforcing
rights,
duties
and
liabilities,
and
so
you
know,
and
to
take
it
to
my
area,
specialty
the
tax
side
of
this.
What
we're
trying
to
really
solve
too
is
one
of
the
questions
that
I
get
a
lot
from
doubt
about
community
members
in
relation
to
the
benefits
of
the
una
is
well.
C
Why
should
the
international
community
be
forced
to
pay
u.s
tax
and
I
would
reframe
that
slightly
differently
we're
not
talking
about
the
tax
impacts
related
to
the
governance
tokens
themselves,
so
to
whatever
degree
you
know,
people
have
the
governance
tokens.
You
know
if
it
was
given
as
an
air
drop,
how
they
got
it.
C
There's
a
tax
on
an
ordinary
income
for
the
receipt
of
that
and
then,
if
they
sell
it,
there's
a
capital
announced
to
be
done,
whether
it's
a
capital
gain
or
loss
in
relation
to
that
ordinary
income
that
still
exists
with
the
uno.
What
we're
really
talking
about
is
behavior
that
is
not
necessarily
allowed
under
securities
law
not
allowed
under
nonprofit
definitions
and
the
treasury.
Well,
the
treasury
has
any
number
of
ways
of
having
tax
realizable
events
a
hard
fork
will
do
it.
A
diversification
of
assets
will
do
it
anytime?
C
You
change.
One
form
of
you
know
crypto
for
another.
That's
that's!
That's
a
swap!
That's
taxable
according
to
the
irs,
and
so
there's
a
lot
of
times
where
the
treasury
has
to
pay
tax
and,
as
has
has
a
tax
bill,
and
what
this
does
is.
It
provides
kind
of
a
clear
path
to
how
that
treasury
tax
ratification
that
that
event
should
be
taxed.
It's
at
an
entity
level
there's
a
clear
amount
of
tax
to
it.
C
Now
there
is
double
taxation,
so
any
distributions
would
also
be
taxed
if
you'll
receive
the
distributions,
but
as
we're
talking
about,
there
should
not
be
very
many
distributions
if
any,
and
so
it's
really
kind
of
a
complimentary
overall
to
the
tax
side.
And
so
really
what
we're
talking
about
is
that
the
treasury
itself
has
a
tax
obligation
in
relation
to
its
activities,
and
that
would
be
the
same
regardless
of
the
entity
structure.
It
would
be
based
off
of
geographic
activity
and
whether
or
not
there
was
a
u.s
tax
impact.
C
But
in
the
memo
we
go
into
a
lot
of
detail
around
this
deciding
who
the
taxpayer
is,
whether
it's
the
entity
with
the
members
whether
it's
the
founders.
Those
are
the
only
options
and
none
of
them
are
good
from
from
from
a
logistics
standpoint,
whereas
getting
an
entity
structure
that
alexis
taxation
is
a
c-corp
solves
a
lot
of
areas
that
don't
have
good
answers.
Otherwise,
and
so
it's
really
beneficial.
And
so
it's
not
that
it's
a
application
of
us
tax
on
to
the
members.
A
C
C
Now
they
have
a
right
to
vote
in
the
dow,
so
you
can
freely
move
the
the
the
governance
token
in
this
context
and
that
method
of
membership
would
be
allowable
under
the
una,
because
there
wouldn't
be
a
limitation
on
who
could
be
in
the
organization
and
then
the
method
in
which
they
transferred
their
right
to
participate
in
the
organization.
It
would
be
complementary
to
the
the
moving
of
the
token
would
allow
the
membership
in
the
una
to
change,
and
so
that's
a
really.
A
B
No,
you
you,
you
can
right,
so
the
the
you
can
set
the
the
governance.
Token
right
you
can.
You
basically
have
a
lot
of
flexibility
with
respect
to
your
your
articles
of
association
for
anunna
right,
and
so
you
can
set
it
up
so
that
you
yeah
tokens
can
be
freely
transferable.
You
don't
need
to
have
someone
submit
their
name
or
sign
anything.
You
know
it
is
as
simple
as
as
swapping
tokens
on
uniswap.
That
would
be
the
transfer
of
your
interests
and
or
your
your
membership
in
the
unit.
B
The
other
thing
here
that
we
don't
really
have
read
it.
It
was
kind
of
talked
about
on
the
flexible
governance
right,
but
as
specifically
like
using
maker
as
an
example
right,
there
are
a
lot
of
sub
dows
and
you
know
you
could
set
that
whole
framework
up
in
the
articles
of
association
for
anunna,
where
you
know
there
were
various
taos
and
either
an
individual
that
was
responsible
for
you
know
ultimately
kind
of
coordinating
there
or
you
know
making
decisions.
B
You
know
so,
there's
there's
a
lot
of
flexibility
in
terms
of
setting
up
a
you
know
a
very
kind
of
distributed
system.
You
know
so
the
one
kind
of
you
know
disadvantage
that
we
have
come
across
so
far
with
with
the
una
is,
is
non-profit
status
right,
the
luna
stands
for
unincorporated,
nonprofit
association,
non-profit
doesn't
mean
you
know,
tax
exempt
right,
so
it
doesn't
mean
that
you
are,
you
know,
not
a
taxable
entity,
and
so
the
the
you
know
to
qualify
for
it.
B
Typically,
the
you
know
the
the
restriction
around
nonprofit
status
is
one
of
distributions
of
profits
to
members,
and
so
you
know,
if
you
look
at
the
bottom
there
they're
in
california
the
statute
itself.
You
know
specifically
says
that
unis
can
engage
in
for-profit
activity,
but
again
the
restricted
activity
is
really
distribution
of
profits
to
members
now,
given
that
that
is
already
something
that
is
potentially
prohibited
under
landrith,
which
I
mentioned
earlier
right,
the
unit
doesn't
really
change
kind
of
the
existing
paradigm.
B
With
respect
to
the
risk
of
of
you
know,
transferring
profits
to
users
at
the
same
time.
Right,
this
is
is
something
that
we're
going
to
actively
lobby
to
get
rid
of
in
in
the
united
states
and
hopefully
in
several
states.
You
know
convince
them
that
that
it's
not
necessary
to
have
that
limitation
in
place.
Now.
One
of
the
you
know,
one
of
the
reasons
for
that
right
is
that
what
we
hope
to
do
is
basically
establish.
B
B
You
know
no
financial
ability
to
pay
for
harms
that
they
might
cause,
and
then
they
go
out
and
you
know
recklessly
cause
a
lot
of
harm,
and
so
I
think
that
you
know
one
of
the
things
that
we're
going
to
need,
as
as
this
industry
evolves
over
time,
right
is
to
prove
that
you
know
decentralized
governance
protocols
can,
you
know,
behave
responsibly
and
can
you
know
mitigate
harm
and
we've
already
seen
that
right?
You
know
when
there's
been
smart
contract
breaches.
B
You
often
see
protocols
make
people
harm
or
sorry
make
people
whole
by
distributing.
You
know
additional
governance
tokens
to
them,
so
I
think
that
you
know
that
ethos
is
is
already
like
fairly
prevalent
within
the
industry,
and
so
just
you
know
showing
kind
of
regulators
how
that
works
and,
and
how
that
you
know
people
are
behaving
responsibility.
B
Will
you
know,
do
a
lot
in
convincing
them
to
to
make
the
you
know
una
statutes
more
flexible
to
to
tailor
to
dao's,
so
we'll
go
through
a
couple
structures
here
just
to
to
to
give
you
guys
a
sense
of
kind
of
what
this
could
look
like
you
know
there
are
there's
the
fully
wrapped
concept
right,
which
is
essentially
you
know.
The
entire
dow
is
a
is
an
una
right.
B
So
the
the
you
know,
each
token
holder
is
a
member
of
the
una
and
you
essentially
wrap
the
entire
structure
in
this
you'll.
See
that
we
have
a
you
know,
an
outside
501
c4.
This
is
is
an
entity
that
you
could
create
outside
of
the
unit.
That
would,
you
know,
potentially
engage
in
lobbying
efforts.
That
would
be,
you
know,
potentially
a
non-profit.
So
there's
just
this
is
just
to
give
you
a
sense
of
kind
of
you
know.
B
The
overall
kind
of
combination
that
you
could
could
use
to
essentially
give
the
unum
members.
You
know
limited
liability
protection
right.
You
could
also
have
you
know
sub-dials,
underneath
this,
where
you
know
there
are
unas
that
are
formed.
You
know
that
are
separate
from
the
the
kind
of
main
una,
and
you
know
if
that
separate
uno,
for
instance,
like
makers,
legal
dao
was
anuno
right.
B
You
would
expect
it
to
have
kind
of
you
know
some
allocation
of
grant
funding
to
to
kind
of
continue
operation,
but
really
you
know
the
idea
being.
I
know
that
that
you
know
with
a
lot
of
the
maker
structures.
People
have
used
llc's
for
these
sub-dials.
You
know
this
would
potentially
give
you
a
way
to
to
have
sub-dials
that
could
maintain
anonymity
for
you
know
for
their
members
dave.
Why
don't
you
kind
of
quick
talk
quickly
about
the
siloed
structure
and
then
we
can
open
it
up
for
questions.
C
Yeah,
so
one
of
the
ideas
that
we
had
in
terms
of
obviously
there's
some
concern
about
having
an
unadopted
one
of
these
without
a
clear
exit
strategy,
the
law
could
change
and
even
though
the
una
looks
very
good
for
right
now,
if
there's
all
of
a
sudden
a
new,
you
know
crypto
entity
structure
created,
which
seems
unlikely,
but
it's
certainly
possible.
Then
you
might
be
in
the
wrong
spot,
and
so
there
was
some
concern
about
how
you
could
still
limit
your
liability.
C
Get
some
of
the
benefits,
pay
your
taxes
and
that's
where
the
kind
of
the
silage
structure
came
up
and
that
there's
the
fundamental
the
dominion
and
control
necessary
to
establish
an
individual
entity
exists
within
the
technology
of
a
doubt,
multiple
layers.
So,
depending
on
how
it's
constructed,
you
may
well
be
able
to
wrap
just
the
treasury
or
just
the
operations
in
in
in
an
inner
structure.
C
For
the
purposes
of
you
know
filing
a
tax
return,
reducing
your
limited
liability
to
some
extent
and
the
reason
why
that's
possible
is
they
have
different
functions.
I
mean
the
chart
kind
of
lays
out
how
it
starts
with
the
down
members
holding
the
governance
tokens
and
I
think
from
a
imagine
picturing.
It
might
be
easier
if
there
were
two
different
tokens,
but
the
same
token
has
two
different
functionalities:
you
get
to
make
decisions
around
the
smart
contracts
and
you
get
to
make
decisions
around
the
treasury.
C
Now
that
depends
on
the
dow,
because
at
the
beginning,
there's
thousands
of
different
potential
permutations
of
this,
and
so
just
taking
at
a
high
theoretical
level.
You
know,
if
there's
a
clear
delineation
of
your
ability
to
impact
the
decision
making
and
the
outcome
then
you're
really
talking
about
you-
know
separate
processes
and
so
the
potential
to
wrap
them
and
and
and
have
them,
be
the
appropriate
place
to
pay
tax
to
limit
reliability.
C
That's
talked
about
in
the
paper
almost
talked
about
by
miles,
but
it's
certainly
an
a
planning
opportunity,
depending
on
how
a
dow
wants
to
proceed,
if
they're
not
interested
in
fully
wrapped
or
they
have
a
particularly
risky
aspect
of
their
operation,
then
this
this
might
be
a
solution
that
keeps
them
from
having
to
unwind
the
una
if
laws
get
better
or
to
to
just
keep
it
in
the
place
that
makes
the
most
sense
for
them.
So
it's
just
a
it's
a
it's.
B
Okay,
so
then,
there's
just
you
know
a
couple
things
on
practical
applications,
next
steps
right,
so
we
talked
a
bit
about
sub
dials.
Already
you
know,
safety
modules
is
is
an
area
that
we're
kind
of
currently
exploring.
You
know.
I
think
that
this
would
be
a
pretty
interesting
way
to
essentially
compensate
you
know,
governance
token
holders,
if
you
were
to
you,
know
basically
set
up
a
safety
module
where
the
governance
tokens
were
staked
and
would
be
slashed.
B
For
you
know,
potentially
you
know
covering
any
losses
created
by
the
protocol.
You
know
if
you
then
compensated
the
people
that
were
staking
the
tokens.
You
know
that
would
would
not
be
a
you
know:
distribution
of
profits
to
you
know
the
members
of
the
una,
so
I
think
both
from
a
securities
law
perspective
and
from
a
you
know,
una
framework
that
safety
modules
are
are
something
that
people
should
really.
You
know
be
working
on
and
iterating.
You
know
maker.
B
I
guess
already
has
kind
of
one
in
a
sense
that
that
the
maker
token
itself
out
of
the
treasury
is
is
used
to
you
know
to
underwrite
some
of
the
risks
associated
with
shortfalls
and
liquidations
and
collateral.
But
you
know,
obviously
the
way
that
that's
currently
set
up
doesn't
involve
kind
of
compensation
going
to
you
know
token
holders.
For
specifically
assuming
that
risk
I
mean
I
guess
you
could
make
that
argument,
and
that
would
be
the
one
that
you
would
you
would
want
to
make.
B
But
obviously
there
are
examples
of
safety
modules
like
such
as
aves
that
that
show
a
little
bit
more
direct
correlation
between
the
risk
that
the
governance
token
allergies
are
taking
on
and
the
you
know
what
they're
being
paid
to
do.
So
you
know
we
are
actively
working
with
with
state
legislators
right
now
to
get
the
uni
statutes
expanded
to
make
them
more
flexible
for
dows.
B
So
I
expect
2022
to
be
a
fairly
big
year
in
in
you
know
getting
that
through
and
I'm
hopeful
that
we'll
we'll
get
a
couple
states
to
go
through
and
then
you
know
another
thing.
Another
thing
that
we're
kind
of
focused
on
is,
is
you
know
how
dow
tooling
can
can
basically
be
tailored
to
unis
to
allow
them
to
work?
Obviously,
I
think,
most
of
the
stuff
that
the
dow
tooling
is
is
kind
of
geared
towards
now
in
a
sense
of
decentralized.
B
B
Good
question:
so,
yes,
they
can
hold,
unas
are
allowed
to
hold
property
right
and,
as
a
result
of
that,
they
would
technically
be
allowed
to
hold
a
you
know,
shares
in
in
a
corporation
right,
and
so
so
we
we
think
that
that
works.
There
aren't
a
lot
of
examples
of
it.
So
that
is
an
area
that
we
would
be
kind
of
seeking.
You
know
clarity
on
when
when
we
go
to
state
legislatures
to
deal
with
these
statutes
and
then
on
the
on
the
second.
C
Question
jump
in
on
the
first
point,
though,
that
and
they
may
not
own
an
entity,
but
that
entity
would
not
be
able
to
distribute
profits
correct,
and
so
it
would
have
to
be
consistent
with
its
operational
structure.
So
you're
gonna
owe
to
c
corp.
That
c
corp
would
not
be
imputed
with
the
right
to
have
member
distributions.
It
would
have
to
follow
the
restrictions
of
the
unit
that
okay,
that's.
B
B
I
think
the
the
difficulty
that
you
would
have
right
is
finding
a
you
know,
a
workable
legal
framework
in
which
you
could
then
like
accomplish
that,
and
so,
if
you
didn't
have
something
better
to
jump
into,
it
might
be
difficult
to
leave
the
infrastructure.
So
that's
another
area
we're
going
to
be
trying
to
work
on
with
with
state
legislatures
to
try
and
get.
You
know
more
clarity
around
how
you
could
dissolve
a
nuna.
If
you
wanted
to,
you
know,
move
to
a
pro
for
profit.
C
C
C
There
are
mechanisms
where
you
know
members
are
making
contributions
to
the
community
where
they
should
be
compensated
for
their
time
and
so
getting
a
delineation
of
what
is
and
is
not
allowed,
will
provide
clarity
and
help.
You
know
dows
make
planning
decisions
around
what
they
should
be
doing
because,
right
now
it's
an
unknown
space
and
that's
where
some
of
this
difficulty
comes
from.
Is
you
know
every
every
ability
to
derive
profit
or
income?
Or
you
know,
the
tracking
of
how
value
gets
transferred
is
hugely
important.
C
D
Hour
thanks
mike
for
clarifying
like
how
tokens
would
be
used
like
a
safety
module.
So
what
you
said
as
like,
if
you
safety
modules
tokens,
can
support
the
foundation
and
foundation,
can
pay
in
return
for
that
risk
right
and
when
we
talk
about
exchanging
of
the
tokens
or
selling
and
buying
on
secondary
market,
will
the
governance
tokens
be
always
considered
as
securities
or
that's
like
it
depends
in
certain
cases
it
might
not
be
considered
as
security.
B
No,
I
mean
our
our
our
entire
framework
that
we're
you
know
focused
on
right
is
that
that
the
tokens
should
not
be
treated
as
securities
right,
I
mean
obviously
this.
I
I
think
that
the
you
know
the
una
structure
that
we're
proposing.
I
I
don't
think,
really
impacts
the
the
analysis
as
to
whether
or
not
the
tokens
are
securities.
Ultimately
what
it
you
know
what
it
does
do.
If
you
were
to
take
the
view
that
you
know,
potentially
the
the
you
know,
centralized
foundations
that
that
kind
of
act
on
behalf
of
dao's.
B
If,
if
those
were
to
be,
you
know,
come
under
fire
for
you
know,
potentially
undermining
decentralization.
The
unit
certainly
doesn't
have
that
same
problem.
It
there's.
No,
you
know,
there's
no
hierarchy
that
you
need
to
create
within
the
articles
of
association
that
would
potentially
lead
to
a
finding
that
the
you
know
that
the
overall
structure
is
is
centralized
and
as
a
result,
like
the
unit
structure,
shouldn't
kind
of
hurt.
B
A
C
We're
pretty
active
on
twitter
a
little
less
so
these
days
than
you
know
when
we
first
put
out
the
memo,
but
we
try
to
respond
king
and
I
were
talking
off
of
twitter
last
night,
so
we
met
you
know
before
this
call,
and
so
we
do.
You
know
we're
around.
So
if
you
reach
out
to
us
on
on
twitter,
we'll
we'll
answer
back-
and
you
know
it's
always
good-
to
discuss
this
stuff
so
we're
pretty
accessible
from
from
from
a
twitter
perspective,
yeah.