VDP-101 Proposal to Establish an Operating Entity for VitaDAO

Proposals Active Proposals
1

Summary

This is a proposal for the formation of an operational company for the execution of the Coordination Working Group functions on behalf of VitaDAO - specifically execution of member services, finance, communications and service provider management functions.

Team

Todd White

Motivation

VitaDAO has been engaging with off-chain entities such as universities, and companies, using an “agent-centric” model to execute various agreements and engage in funding projects.

This has been a requirement so that legally recognized counterparties could execute the will of the VitaDAO community.

Operationally, VitaDAO has come to rely on these agents for a number of more mundane operational functions such as wiring funds to service providers, and maintaining KYC/AML compliance.

This burden has increased substantially over the past 8 months as VitaDAO activities have grown, and it is proposed that an operating entity - “VitaDAO Global Services”- be created to provide a limited liability entity to execute the operational functions of VitaDAO including the execution of member services, finance, communications and service provider management functions.

This entity will encapsulate and provide a legal entity and will act as the sole service provider to the VitaDAO community for these functions. It will not however hold any IP or assets of VitaDAO beyond the fiat and cryptocurrencies provided to it by the VitaDAO community to execute its operational functions thereby limiting its legal exposure.

Specification

A for-profit corporation, operating in Canada, with internal capacity to provide the following services:

  • Service provider contract management.
  • Finance and accounting services for VitaDAO and related projects (i.e. spin-off companies)
  • Management and execution of the Member Services program of VitaDAO.
  • Legal services.
  • Fiat banking for VitaDAO (including crypto-exchange services).
  • KYC/AML compliance for all functions within VitaDAO.

Implementation

If this proposal passes, the above company will be formed and any existing execution of operational functions will be transferred from VitaDAO’s network of agents to VitaDAO Global Services, Inc.

Success Metrics

  • Reduced Operational Risks.

  • Improved Coordination Execution.

  • Agree
  • Revisions Requested (Detail in Comments)
  • Disagree

0 voters

2 Likes
2

Overall makes sense to me.

But why Canada?

2 Likes
3

Candidly, it is easy and inexpensive to incorporate, banking is accessible and the banks are stable and well connected to international banking, and one of our primary agents for VitaDAO is already in Canada - and it isn’t the US which is the mantra for any project remotely related to crypto these days.

4 Likes
4

We need a process for onboarding and offboarding people in the company.

1 Like
5

This isn’t the DAO, so people will be contractors or even employees (if we wanted to go that route for some reason). As such, onboarding and offboarding staff will be normal HR functions within the company, not requiring DAO intervention.

As to who manages the company, there would be a legal requirement for minimally a Managing Director who reports to the Shareholders (VitaDAO), per a Unanimous Shareholder Agreement. Could be someone from within the DAO from the Coordinations Working Group, or an outside hire.

2 Likes
6

Thanks @Taliskermalt for the proposal
1.

For this to function as intended, this entity has to be formed independently of the DAOs’ opinion and onboarded via the service provider framework as stated in VitaDAO Governance

That being said, I find it odd to have a service provider which also does

why not simply have a legal wrapper for the Coordination Working Group which can do the same functions?

  1. Is it possible to see some references to the research you all have conducted before concluding Canada as the final jurisdiction? Especially, if this

is important for the DAO, then I’d recommend an offshore non-profit.

1 Like
7

Thanks @jengajojo for the comments.

I concur with you that the creation of the legal entity can be done outside of the DAO’s opinion. But in the spirit of transparency, it was suggested that this be put on-chain.

However, the whole point of this is (to your second point) to provide the DAO with a pied-a-terre - a footprint IRL to act as a legal counterparty for the DAO, specifically for the Coordinations Working Group, but with a limited liability component.

That said, this is more than just a legal wrapper to limit liability, this is a working entity which needs to be able to handle issues such managing contracts with service providers to the DAO, and also provide a KYC/AML beachhead for work on the upcoming VitaDAO Accredited Investors Fund (sidecar fund) and several other initiatives where there needs to be a legally recognized entity.

As to why Canada, it is convenience mostly. Well connected on the banking front, not on any blacklists (which many “overseas” jurisdictions are), access to banking is easy (and very inexpensive compared to Switzerland as an example where you have to carry larger balances). Another jurisdiction could be chosen, but then someone would have to be prepared to do the leg work in that country to get everything setup, or hire an external agent in that country and pay extra fees to have it managed.

One of VitaDAO’s other agents - the not-for-profit Vitality Healthspan Foundation - which I contribute to, is located in Canada - so the intent is to piggyback on the work done there around KYC/AML, etc. to keep the setup costs and logistics costs low.

4 Likes
8

thanks for the clarification @Taliskermalt

While service providers today are singular actors in the sense that there are no competing bids from other groups to provide this same service, this may not always be the case. It is in the interest of the DAO to choose the best provider for services from a menu of bids, and if an operations entity is also a service provider which manages other service providers, this operations service provider risks being out bid by a competitor in the future. This is a risk for the DAO, since all the expertise and knowledge gathered by the contributors of this operations entity will be lost if it were outbid by another service provider. DyDx went down a similar path, but defined operations entity as a subDAO of the main DAO and hence the DAO was able to maintain core functionality in-house. I do suggest that the VitaDAO thinks carefully about the pros and cons of outsourcing core functionality to a service provider.

2 Likes
9

As a community participant, I can understand the requirements of the VitaDAO for better future, but I believe especially very operation itself with all mundane operational functions should kept and run on the discord server. Is it possible to divide and share the ‘burden’ via DeWork or other similar Dao Management Tools? For example Koris built ‘Decentralized Autonomous Company’ DAC toolkit, there are sobol and many other alternative tools also. So any Coordination Working Group solution that held on-chain, utilize onchain tools, and process shared over Discord feels more DAO way. Especially selection of the governance stewards that will run ‘VitaDAO Global Services’. DAO should focus on autonomity…

3 Likes
10

I understand the need to get a government recognized/registered entity to help carry out some work like the ones mentioned above. I think the major fear is how control will be effected.

11

@jengajojo - I agree with this concern.

The mechanics I am proposing here is that the VitaDAO Global Services will simply be the contracting entity for all service providers wishing a legal counterparty. There would be no “outbidding” of this entity because the entity would be, for all intensive purposes, the on-ramp for service providers to the DAO.

VitaDAO Global Services would be the proxy of the Coordination Working Group which is responsible for the same functions today, but instead we use 3rd party agents that are not directed/ owned by the DAO to engage service providers to have work done, them contracting the service provider, and us reimbursing them, we would engage directly with the resource - reducing the overheads of those engagements.

As for who controls VitaDAO Global Services, the Coordination Working Group/DAO would be the effective owners of the entity as it would be the WG members who would be operating within its structure.

12

I do not see a difference between this entity and a legal wrapper for the operations working group.

If understood as a legal wrapper for the ops wg, then it answers the concerns rightfully raised above—it will have a clear method for onboarding/offboarding people (namely, the ops wg’s existing method) and will be managed via Discord (as the ops wg already is).

The entity should include code deference clauses in its operating (or similar) agreement and be trust-mitigated, accountable, DAO-adjacent and purpose-limited in the spirit of the BORG in order to prevent the issues raised above and in the linked article.

2 Likes