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Noun 40
@noun40
discourse around DUNA seems to be focused around the downsides (added KYC requirement to grantees) imo DUNA's massive upsides are: - reducing tax risk - providing limited legal liability to members while still allowing: - members to remain anonymous (privacy) - explicit voting rights to members if there are other avenues to achieve the above without any compromises then that would be wonderful, but as far as i know at the moment DUNA is unique in offering the above properties with limited compromises (paying taxes in the US, KYC req for grantees). more thoughts continued 👇
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Noun 40
@noun40
right now our tax position is that we're based in cayman. the nft auctions are permissionless and global but we tie the tax jurisdiction to the cayman islands via the foundation through the IP that it holds and its veto rights to the treasury. it's not a bad position. it's a position we built through good tax and legal counsel. but it has become increasingly tenuous in the 3 year history of nouns as one could attempt to argue that a good portion of the economic substance of the dao occurs in the US (esports, nouns movie, nouns fest, etc; plus many nouns buyers). i would much rather have a clear jurisdiction where we pay taxes (and in a tax year where treasury spend matches or exceeds auction revenue, the tax bill would be minimal) and it would be natural for that jurisdiction to be where the most amount of economic substance (nouns buying, treasury spending) occurs.
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Noun 40
@noun40
also on legal liability, currently it's very unclear what would happen if someone sued a dao member for legal damages (let's say something went wrong with a prop) or gov bring enforcement action for non-compliance with local regulations. the dao member argue that they are the wrong target. they have no responsibility here. the foundation is the one with control over the treasury and conducting the business activity. but this claim is also tenuous. we like to have explicit token voting rights (token votes aren't some signaling vote that is a recommendation to the foundation). if the claim that the dao = foundation isn't accepted then the court might assume the dao to be a general partnership in the local jurisdiction and it could lead to individual members being liable (such claims have been made in the california court in recent years).
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Noun 40
@noun40
this is a hard nut to crack b/c what entity structure allows for explicit voting rights (members make decisions) but limits liability? the typical answer is a c-crop or an LLC (limited liability company) but two problems with that is that we don't want the nfts to be securities (b/c issuing securities is a whole another realm of legal issues plus we don't see the nfts as securities but rather art with certain voting rights). the other problem is that corporate structures typically require the corporation to keep record of the shareholder identities. this would preclude the ability to have anon nouners. DUNA is quite unique here. it's a Unincorporated Nonprofit Association adapted for DAOs. so it's explicitly not a company (thus the token not a security). but still members are afforded privacy, limited liability, and explicit voting rights. quite a unique combination. you can read more about it here: https://a16zcrypto.com/posts/article/duna-for-daos/
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Noun 40
@noun40
also on the KYC req to grantees part since it seems like that's what's giving ppl the most amount of angst. first off, i feel you. it can be invasive to ppl's privacy. it feels against a certain permissionless ethos of crypto. but let's consider a few things. the ethereum foundation (a swiss non-profit foundation) which gives out tens of millions each year in ecosystem grants KYCs before grant receipt: https://esp.ethereum.foundation/applicants/project-grants there's a way in which this requirement is less of a cayman foundation vs DUNA issue and more of a scale and maturity of nouns issue. there's no jurisdiction that magically allows you to give money towards crime without consequences. certain jurisdictions like cayman might allow you to have a looser policy (you can assume more risk and say we won't check identities upfront and if there's an issue down the line it will be a mess but it's our choice to assume the mess), but at a certain size and maturity that's already a tenuous position
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Noun 40
@noun40
i want as much as possible for nouns to retain its permissionless properties (nouns nft is permissionless to own, all token rights are premissionlessly assumed by the ownership of the token and voting is permissionless, it's permissionless to engage in the auction, etc) so it pains me too but i just don't know if in any large scale success case grant giving could have continued to be completely permissionless and if this is the tradeoff we need to make to get the benefits above my gut is that it's worth it.
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Leo
@leohenkels
I think @midao’s offering could be of interest to you. While the DAO LLC is based in the RMI, it’s likely the most DAO-friendly entity in the world. I understand the desire to potentially establish tax clarity by incorporating in the US, but I believe one issue Nouns may run into down the line could be establishing a “legal nexus” with the US. Once establishing this nexus it’s difficult to reverse. Nouns will continue to become more and more global, and shifting to a US organization utilizing state law might be a more bit limiting than being offshore.
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