Ben on Warpcast

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https://opensea.io/collection/nouns

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Ivo Entchev pfp

As a lawyer (and a crypto VC) who recently joined the DAO, I thought I would chime in on the DUNA proposal, especially as we are in the process of appointing an administrator. I realize the DAO has chosen a path here, and my goal is not to change it but rather educate members and create greater transparency.

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Ivo Entchev pfp

My take is that there are considerable eadvantages but also drawbacks to structuring as a DUNA (a Wyoming decentralized unincorporated non-profit association). https://a16zcrypto.com/posts/article/duna-for-daos/

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The main advantages seem to be: (1) giving the DAO a legal existence so it can contract, etc.; (2) bestowing limited liability to its members so they can't be held liable for actions of the DAO as general partners; (3) forming a taxable entity in the U.S. (so it can pay tax); and (4) positioning as a U.S. entity of purposes of Trump's crypto policy.

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The main disadvantages seem to be: (1) no payments to anyone without KYC; (2) all income of the DAO is subject to 21% corporate income tax; (3) the DAO has to hire an accounting firm and pay quarterly estimated taxes; and (4) to comply with 2-3, the administrator will need to make sure he/she has access to the treasury to liquidate sufficient assets to fund both tax and service provider payments on an ongoing basis.

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Ivo Entchev pfp

I actually don't know of any other DAOs that have decided to use a DUNA, which admittedly was legislated only recently.

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Ivo Entchev pfp

Curious how others have analyzed these trade-offs and definitely open to being more involved here.

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Ben pfp

@purple worked with @midao to figure out a legal wrapper. So far it’s been only beneficial as far as I’m concerned.

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Ben pfp

- It allowed the DAO to apply for grants it otherwise couldn’t have - There was no resulting change in growth or participation - Provided liability protection to contributors, which in some cases led to more participation @ccarella.eth may have a different take.

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Chris Carella pfp

It’s helpful to have a legal entity to receive grants and work with partners as you noted. We are a Marshall Islands Nonprofit DAO which changes the tax reporting requirements. We are a fraction of Noun’s size, so I feel pretty good about our liability protection. It has not been tested in court yet. I think a DUNA gives significant more liability protection to US Citizens. My take on the Nouns DUNA since we already had a legal entity and liability protection through it is: A. Wanting to be maximally complaint, as to be the Coinbase of DAOs, and held up as an example DAO and bescon of positive sum and compliant crypto. B. We have a number of voters, some with many votes, with Significant personal assets who are US Citizen’s and it was too much risk to be involved with the DAO given the way other court cases have gone. I’m also unsure if we are going to be the first DUNA. No one seems to be able to present an example of another one.

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