David Kerr

@cowriellc

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[email protected]

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Is this an accumulated earnings question? Feels like you are asking about AET. Happy to get on a quick call and talk through it.

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Friends With Benefits

EMERGING ENTITIES FOR EMERGING TECHNOLOGIES a new editorial from FWB member David Kerr @cowriellc David Kerr writes about the latest DAO entity structure out of Wyoming — the Decentralized Unincorporated Nonprofit Association, or WY DUNA for short. https://www.fwb.help/editorial/emerging-entities

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The DUNA would be the entity structure around the governance tokens themselves and then could be bolted on to a number of existing or ideally, even better frameworks around the activity.

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Miles' answer is for the DUNA mine was for coops, which is what I interpreted your question to be about.

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Brass tacks - it would be hard for a tax exempt entity to operate without a board of directors. But coops are not necessarily tax exempt and I can certainly think through a TX UNA structured as a coop w/o a board (I harp on Texas because of existing case law and the non profit definitions the TX UNAA is subject to)

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Looking at Nouns - there are a lot of transfers of value that come from votes from the community (not protocol) so the community itself provides the operational structure as opposed to a protocol.

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Given your facts - I would think the various cooperative models may well provide your project the most viable entity structure. Would look at TX UNA (specifically allows for co-ops) and CO LCA.

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While WY courts will determine what is reasonable, there are ample real-world examples of nonprofit orgs to draw inferences from. The unique characteristics of blockchain networks also provide strong justification for robust member compensation. For more, see: https://a16zcrypto.com/posts/article/duna-for-daos/

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Broad strokes, the DAO token holders would comprise the DUNA. 1) Nothing in the DUNA would prohibit the governance token from rising in value due to market demand. 2) Distributions (particuarly dividends) are prohibited. 3) Buybacks are unproductive use of capital and likely prohibited under federal law.

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The DUNA was designed for DAOs with U.S. nexus seeking to use tokens to govern an asset. For example, governance tokens that contral a treasury, a blockchain network, a smart contract protocol or any other asset capable of producing revenue.

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So a labs corp would want to start looking at this as an option now as the law is effective July 1. Getting tokens in the hands of protocol participants is one of the challenges for projects but the DUNA is designed to work in coordination with existing strategies.

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The intake process for consideration starts with analyzing activity and physical nexus concerns. The nouns DAO itself would have activity that would make conformity with the DUNA difficult, so it is probably not a likely candidate for a DUNA unless significant US nexus exists.

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Hey Prof good to see you outside of discord - haha. There are a number of projects that would benefit from switching to a DUNA to gain additional clarity, but the existing UNA statututes provide the same benefits (by design) so for many projects, the more broad UNA rules would still be preferable.

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Nonprofits are commonly mistaken as being synonymous for tax-exempt entities. Although nonprofits can be tax-exempt, they are not neccessarily. In contrast, nonprofits are a matter of state law around how the profits are utilized (in the case of the WY DUNA - distributions of profits to members is prohibited).

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