Over several months, the TEC Legal Working Group, along with DAO legal experts, examined the liabilities and strategies for the legal protection of TEC members. The following proposal is the result of that research.
We have settled on an innovative middle way approach that protects the individual members while giving the TE Commons the freedom to evolve.
Please vote on the following strategy and we welcome your feedback:
Core Legal Strategy - Using the Commons Stack’s Swiss Association
To allow the Token Engineering Commons to launch and evolve with less restrictions, we propose to have no formal legal entity.
The advantage is less requirements for members before and after the Hatch, and the freedom to change the structure of the TE Commons as needed. It would be very difficult to design a legal structure flexible enough for a bonding curve, which is why DXdao, Aragon Court and PrimeDAO all lack a formal legal entity for their Bonding Curve enabled DAOs. The downside of this path is that with no legal distinction, DAO members risk being classified as ‘general partners’, making each member liable for the actions of the DAO, including potential security issuance liability.
In light of this, the Legal Working Group is recommending all founding members of the TEC to join the Trusted Seed. This ensures all participants of the TEC Hatch are members of the Commons Stack’s Swiss Association, which offers protection in the case that any member, acting in good faith, faces legal issues.
Under this proposal, everyone contributing to the TEC HatchDAO would apply to become a member of the Trusted Seed and pay dues to become a member of the Commons Stack’s not-for-profit Swiss Association, receiving legal protection and the opportunity to participate in future Common’s hatches. For more details, read the Commons Stack Association’s Statutes and Terms & Conditions for joining.
Using the Commons Stack’s Trusted Seed has the added benefit of attracting participants who are aligned with the TE Commons mission and vision and will be responsible stewards of our shared resources, as opposed to only seeking to speculate for short term profits, and extract value from the Commons for their own personal benefit.
Other Steps to Mitigate Legal Risks
Our altruistic mission, of funding TE Public Goods is itself helpful in reducing the risk of legal issues, but in addition to recommending the Commons Stack’s Swiss Association, we also advised:
Launching in two parts to maintain a “sufficiently decentralized” strategy. (The community decided to accept this recommendation in a previous vote.)
Start with a non-transferable token.
Crafting a terms of service to be signed before every interaction with the TE Commons.
Do you support the legal strategy recommended by the Legal Working Group for the launch of the TEC?
*If you vote Neutral or Block, please share your feedback, alternative strategy suggestions, or questions below by replying to the thread