Nouns

One Noun, every day, forever.

nouns.wtf

Additional thoughts on the Nouns DAO transition to a DUNA and what it means, and some ideas for the future.

Web3 venture, policy & law. Noun 1077.📍The Base blockchain. https://finance.yahoo.com/news/united-states-crypto-capital-world-203015752.html

Per my earlier thread, advantages of a DUNA include:

(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 Nouns as a compliant, U.S.-based DAO for purposes of Trump's crypto policy and as a brand differentiator.

Given that the DAO seems committed to becoming a DUNA, I focused on how we might mitigate some of the downsides.

(1) Tax Burden. 

The DAO could mitigate tax burden by seeking to qualify as a 501(c)(3) (charitable organization) or a 501(c)(4) (social welfare organization) under the Tax Code. 

This could exempt the DAO from federal and state income tax. A 501(c)(4) requires that the DAO promote "the common good and general welfare of the community," which might align well with the purpose of Nouns DAO. 

(I know that some members, such as @wylin, have put thought into this already.)

(2) Corporate Controls. 

The DAO should consider insituting automated corporate controls resulting from increased centralization, particulary around the DUNA administrator's privileged access to the treasury. 

For example, the DAO should have the power to roll back unauthorized transactions (e.g. during a three day window using optimistic logic) by the administrator. 

This will create additional protection for the DAO, but may require a corresponding indemnity from the DUNA to the administrator.

(3) BORG. 

One draw-back of imposing a traditional entity on a DAO is that you risk stifling web3 elements and devolving the org into a dull (albeit tokenized) corporation. 

To avoid this, Nouns DAO can look for opportunities for integrating Cybernetic Organizational (BORG) structures. 

BORGs leverage autonomous technologies, such as smart contracts and AI, to augment a traditional entity's governance and acitivities. Just as robotic limbs augment humans, so BORGs augment legacy companies. 

More info on BORGs:

(3) BORG. 

One draw-back of imposing a traditional entity on a DAO is that you risk stifling web3 elements and devolving the org into a dull (albeit tokenized) corporation. 

To avoid this, Nouns DAO can look for opportunities for integrating Cybernetic Organizational (BORG) structures. 

BORGs leverage autonomous technologies, such as smart contracts and AI, to augment a traditional entity's governance and acitivities. Just as robotic limbs augment humans, so BORGs augment legacy companies. 

More info on BORGs:

https://delphilabs.medium.com/assimilating-the-borg-a-new-cryptolegal-framework-for-dao-adjacent-entities-569e54a43f83

Further to (3), one way for the DAO to BORG-ify governance is by injecting an agentic AI into DAO/DUNA administration. 

This is something we are proposing with our GoverNoun governance agent experiment. 

More info on GoverNoun:

Further to (3), one way for the DAO to BORG-ify governance is by injecting an agentic AI into DAO/DUNA administration. 

This is something we are proposing with our GoverNoun governance agent experiment. 

More info on GoverNoun:

https://substack.com/home/post/p-153783194

Let me know what you guys think. And a big thanks to @cryptotaxguy.eth , the best crypto tax lawyer in the biz, for jamming with me on this and for sharing his ideas.

Some of the disadvantages include:

(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.