VDP-37 VitaDAO Governance Amendment #2

I would suggest to replace the current wording with yours which is more detailed, easier to understand and introduces higher costs with increasing escalation, which I find useful.

However, there is one key point that we need to carefully evaluate the implications of:

Obviously, this would be a quite a radical change to our governance framework which, so far, always had phase 3 governance (initially through a Moloch DAO-like voting contract, now through a Snapshot instance) as the final and ultimate authority in governance. As it stands, the VITA token holders have the last say and there is no superior instance that could overrule a vote by VITA token holders.

If we choose to adopt the quote above, that would not be the case any longer.

My take:
I believe, deciding whether to include this phrase or not comes down to how we see and understand the ‘DAO’ part in VitaDAO.
On the one hand, I can see how Third Party Arbitration as an authority that cannot be overruled by token holders could be more productive, more efficient or just be more likely to come to a better decision on a given case. A professional arbitrator who is given all information and whose job it is to resolve the conflict may well come to a conclusion closer to the truth than token holders would, as they would likely not spend as much time on evaluating the evidence. Crowdsourcing such a decision could well be counter-productive. Including such a phrase makes sense to me if we optimise for productivity and quality of arbitration-related decisions.
On the other hand, however, I would argue that the nature of our organisation is and has always been that it is governed by token holders. No exceptions. This is a fundamental principle of DAOs. I am not saying that token-weighted, plutocratic decision-making is a good idea - I’d argue quite the contrary. NFT voting or reputation-based token voting are promising alternatives - but they are all forms of governance by token holders which is what VitaDAO has promised in its whitepaper and in VDP-1:

VitaDAO members are in control of all governance decisions by voting on VitaDAO proposals.

While that phrase leaves some room for interpretation, I believe that there is a strong expectation among our community members that token holders have the ultimate authority and changing that would change the very nature of our organisation.

That said, while I see some practical advantages of giving the final authority to a Third Party Arbitrator, I am convinced that leaving the final authority with token holders is a fundamental principle to our organisation that we must not change.

tl;dr I would suggest to replace the current proposal with your wording, except for all instances where it says that a Third Party Arbitrator has a higher authority than a token holder’s vote.

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Broadly agree with the proposed improvement in the Code of Conduct wording.

Regarding interpretation of Conflicts of Interest, there are rules around statutory/contractual interpretation that will help, so you do not need to be prescriptive. . However, it is sometimes a good idea to use a few examples of what would be a conflict. This should be material (be enough to be capable of influencing a decision to override a VitaDAO holder fiduciary duties to the DAO) rather than immaterial. The benefit of prescriptive examples is that it aids interpretation. But it should not be deemed to be exhaustive. On the other hand, I am in favour of conciseness, as long as the meaning is clear.

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I agree that the majority VitaDAO token holders should have “sovereignty”, at least with respect to their own decisions. And the token holders could decide to have a third party arbitrate disputes and interpretation of rules. For some matters, however, it might be appropriate to require a supermajority, e.g. amendment of the governance rules themselves? But at this stage, I am comfortable with a majority having the absolute power to make decisions for the DAO.

The token holders do continue to have the ability to overrule arbitration, just not during arbitration. Phase 3 governance can always be overruled by more phase 3 governance. In this case I’m arguing that arbitration results should only be subject to change with a phase 3 vote. I think we agree on this point and I thought the wording made it clear. Is there a better way to word it?

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A brief update: Last week, @audieleon, @Jesse, @Savva, myself and other working group members had the chance to discuss and improve this proposal during an in-person VitaDAO offsite. The results from that workshop are currently being finalised and reviewed among the workshop participants. Once that’s done, I’ll update the proposal here and leave a comment on the proposed changes.

The updated proposal will then be open for comments & voting for another seven days - or more if further changes will be made.

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Regarding the conflict of interest wording:

Any member of a working group or VitaCore with a potential conflict of interest must disclose the conflict to VitaCore and abstain from governance participation, which includes voting and the discussion of the vote

Let’s clarify that members must abstain [from governance participation] unless VitaCore has given clearance.

This way members don’t have to abstain if it’s appropriate — the potential conflict of interest is disclosed, but VitaCore (and, by extension, the tokenholders, who ratify VitaCore) trust that the member is not acting against the interests of VitaDAO. Could even be the most important aspect of some members’ service to VitaDAO, especially in dealflow (ie a knowledgeable investor, who has/will invest in that project, or knows the beneficiary very well — in a way, “insider” knowledge which is arguably the most important part of private deals).

Members of a working group or VitaCore are subject to fiduciary duties to act in good faith for the benefit of the VitaDAO token holders and broader community as a whole

should “fiduciary” and “benefit” be defined?

Regarding the dispute resolution process, we should also add in Ezanne’s suggestions that mediation should first define the desired resolution (without going into the details of what happened, focusing on what the parties want as a result of the dispute resolution process), and a few other things discussed at the offsite. This will also help with VDP-36 Stewardship Process Amendment #1 – gathering consensus here will help with the debate around what happens when VitaCore disputes a stewardship appointment

should “fiduciary” and “benefit” be defined?

Fiduciary duties are well defined at law e.g. Fiduciary - Wikipedia. Basically, you are in a position of trust and cannot take advantage of that to the detriment of your fiduciaries (i.e. VitaDAO members).

Benefit could be given its ordinary dictionary definition. I think primarily would mean commercial benefit and promoting the interests of the VitaDAO community (i.e. improving longevity). I do not think it needs to be narrowly defined.

I’m ok with this as long as there’s some mechanism for oversight by VitaDAO members, so ideally the conflict and VitaCore’s decision to allow them not to abstain should be disclosed to community so they can have a chance to overrule in a vote proposal. If it should not be disclosed due to VitaCore being involved in a commercially sensitive and confidential discussion, the reasoning of VitaCore should be clearly recorded in minutes in case of legal challenge in future. My personal view is that such decisions to keep a conflict of interest confidential should not be taken lightly in order to maintain trust of community and in general is aligned with Web3 principles. It should also be disclosed as soon as reasonably possible to community. If in doubt, can lean on the Legal WG for guidance. Unfortunately, dealing with conflict of interest and disclosures are complex (e.g. Directors' Duties in relation to conflicts - Stevens & Bolton LLP) and with DAOs we are also in new territory. Happy to workshop this issue more.

Of course, the disclosure should be posted for the community, unless there’s a good reason for confidentiality. If there truly is a conflict (ie a proposal to give money yourself) then there probably isn’t any reason for a waiver. But if there is only a potential conflict (ie you know the person that is receiving money) that doesn’t mean that there actually is a conflict, it comes down to whether we trust that the person is participating in governance with the best interests of the organization or not. Where do you suggest disclosures of potential conflicts of interest be recorded?

We should also crowdsource a list of what potential conflicts of interest could be.

What do other organizations do in comparable situations?

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Wherever relevant, e.g. in the Working Group / VitaCore chat, and definitely in the Discourse or Snapshot proposal document. Should summarise the nature of the conflict (e.g. X holds material amount of tokens in Y project or receives retainer or is eligible for future benefit above certain threshold) and whether the person has abstained or it has been determined to allow them to vote.

I pulled a list from internet and adapted - it’s not 100% fit for purpose and more for traditional companies, but I think we can crowdsource some more DAO-specific examples e.g. front running / insider trading etc.

Examples of Conflicts of Interest that Require Disclosure

  1. Hiring an unqualified relative or friend to provide services for DAO (i.e. nepotism / cronyism).
  2. Starting or working in a competing DAO.
  3. Failing to disclose that you’re related to a job candidate the DAO is considering hiring
  4. Making arrangements to work for a vendor or client at a future date while continuing to do business with them.
  5. Offering paid services on your time off to a DAO customer or supplier.
  6. Posting FUD to social media about the DAO.
  7. Working part-time at a company that sells a competing product or service as the DAO.
  8. Accepting payment from another company for information about the DAO.
  9. Failing to investigate a subordinate or coworker’s wrongdoing because they are a friend.
  10. Sharing confidential information about the DAO to a third party.
  11. Dating or having a romantic relationship with a supervisor or subordinate.
  12. Making a purchase or business choice to boost a business that you have a stake in
  13. Accepting a favor or a gift from a client above the amount specified as acceptable by the DAO.
  14. Owning part of a business that provides goods or services to the DAO.
  15. Reporting to a supervisor who is also a close friend or family member.
  16. Doing business or work for a competitor.
  17. Accepting consulting fees and providing advice to another related company or DAO for personal gain.
  18. Sharing information in an interview about the DAOs confidential activities or plans
  19. Taking advantage of confidential information learned from the DAO for your own benefit
  20. Cashing in on a business opportunity that the DAO might have pursued.

The language is informal and needs some tightening up, but I think a decent starting point.

See above list. Normally, conflicts are disclosed at the time a resolution of the board is being voted on. Typically, this is to disclose that you hold shares or beneficial interest or have some other competing interest regarding the matter being voted on.

The list of exemplary conflicts of interests is certainly useful. Do you think it should be part of the proposal itself?
I tend to not include it since such a list won’t ever be complete, but rather have it documented elsewhere. We’ve got in in this thread now and I’d also include it in our FAQs. Does that make sense to you?

Yes, I think this makes sense. However, we should ensure that governance documents are all in one place ideally to facilitate interpretation.

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Fully agree. If and once the Code of Conduct and the Dispute Resolution Process have passed phase 3 voting, we’ll create a dedicated space for all these docs. To be discussed with ops and comms but I’d suggest Notion, alternatively the website or here on Discourse.

Great addition, agree with the amended proposal!!

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I’ve updated the proposal as follows:

  1. Included a specification where a conflict of interest is to be declared.
  1. Removed the section on introducing a Dispute Resolution Process (DRP), as this proposal is currently being worked on as part of a stand-alone VDP. The significance and increased scope of the DRP demand that.
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As discussed on Discord, I’ve added the following part to the proposal in section “d) Improving the Code of Conduct”:

As discussed, I think it would be elegant to include a IP Policy section in the Code of Conduct in order to address and minimise IP risk to VitaDAO and is also consistent with passing of the VDP23 IP proposal to appoint an agent to own VitaDAO IP. Would like to propose the following new IP Policy section and also added a final section on providing KYC (personal data to identify the VitaDAO contributor held by legal WG on a confidential basis) to ensure enforcement:

IP Policy

Members of a VitaDAO working group or VitaCore or any VitaDAO members or contributors providing services to VitaDAO, whether in a personal capacity via a separate legal entity (“IP Contributors”) must also agree to this IP Policy relating to confidential information and intellectual property, in order to minimise risk to any dealflow or research activity of VitaDAO and also maximise its ability to contract and licence intellectual property to third parties, and/or develop new longevity therapies pursuant to its mission.

"Confidential Information" is defined as information in whatever form (including without limitation, access to a database in an IP-NFT or in written, oral, visual or electronic form or on any magnetic or optical disk or memory and wherever located) relating to research and development, due diligence, drug targets, drug candidates, pre-clinical and clinical results, technical know-how, engineering documents, prototypes, photographs, designs, drawings, plans, manuals, reports, inventions, software (in source or object code), or the business, customers, products, affairs and finances of VitaDAO for the time being confidential to VitaDAO and trade secrets including, without limitation, technical data and know-how relating to the business of VitaDAO or any of its suppliers, customers, agents, distributors, members, VitaCore, working groups, or business contacts, including in particular (by way of illustration only and without limitation) customer lists, partnership agreements, marketing plans, and internal correspondence, and those of VitaDAO’s affiliates and partner organisations, and including (but not limited to) information that the IP Contributor creates, develops, receives or obtains in connection with their services, which: (i) is designated in writing to be confidential or proprietary; (ii) is identified at the time of disclosure as being of a confidential or proprietary nature; or (iii) by the nature of the circumstances surrounding the disclosure, ought to in good faith be treated as confidential.

The IP Contributor acknowledges that in the course of services for VitaDAO they will have access to Confidential Information and has therefore agreed to accept the restrictions. The IP Contributor shall not (except in the proper course of their duties), either during the course of services or at any time after ceasing to provide services to VitaDAO, use or disclose to any third party (and shall use their best endeavours to prevent the publication or disclosure of) any Confidential Information.

This restriction does not apply to:

(a) any use or disclosure authorised by a majority of VitaDAO members or VitaCore or required or permitted by applicable law; or
(b) any information which is already in, or comes into, the public domain otherwise than through the IP Contributor’s unauthorised disclosure.

At any stage during the provision of services, the IP Contributor will promptly on written request of VitaCore return and/or irrevocably delete all and any Confidential Information in their possession.

Intellectual Property is defined as patents, utility models, rights to inventions, copyright and neighbouring and related rights, moral rights, trade marks and service marks, business names and domain names, rights in get-up and trade dress, goodwill and the right to sue for passing off or unfair competition, rights in designs, rights in computer software, database rights, rights to use, and protect the confidentiality of, Confidential Information (including know-how and trade secrets) and all other intellectual property rights, in each case whether registered or unregistered and including all applications and rights to apply for and be granted, renewals or extensions of, and rights to claim priority from, such rights and all similar or equivalent rights or forms of protection which subsist or will subsist now or in the future in any part of the world.

IP Contributors hereby agree that rights to any Intellectual Property produced in the course of services to VitaDAO shall be owned by VitaDAO’s IP holding company or their nominee (currently, the Swiss verein / association VDP23 IP, incorporated in Zug, Switzerland, or otherwise as voted by the majority of VitaDAO members) (“VitaDAO IP Agent”).

IP Contributor hereby grants to VitaDAO IP Agent, and VitaDAO IP Agent hereby accepts, an unlimited, unrestricted, transferable, sub-licensable, irrevocable, royalty-free, fully paid, worldwide and non-exclusive license to any Intellectual Property not first produced or created by or for VitaDAO but incorporated into Intellectual Property produced as a result of the performance of services for VitaDAO, provided IP Contributor holds rights to said Intellectual Property.

The IP Contributor undertakes, at the expense of VitaDAO, at any time either during or after the services, to execute all documents, make all applications, give all assistance and do all acts and things as may, in the opinion of VitaCore, be necessary or desirable to vest the Intellectual Property in, and to register them in, the name of the VitaDAO IP Agent and to defend VitaDAO against claims that works embodying the Intellectual Property infringe third party rights, and otherwise to protect and maintain the Intellectual Property in the name of the VitaDAO IP Agent.

The IP Contributor irrevocably appoints the VitaDAO IP Agent to be their attorney in their name and on their behalf to execute documents, use the IP Contributor’s name and do all things which are necessary or desirable for the IP Contributor to obtain for itself or its nominee the full benefit of this IP Policy. A certificate in writing, signed by any director or chairperson of the VitaDAO IP Agent, that any instrument or act falls within the authority conferred by this agreement shall be conclusive evidence that such is the case so far as any third party is concerned.

In order to ensure this Code of Conduct and IP Policy is enforceable against VitaDAO members and IP Contributors, KYC (including official government ID or passports, certificates of registration and proof of address) or other personally identifiable information may be requested and shall be provided to and held by VitaDAO’s legal working group in accordance with its Privacy Policy. Such personally identifiable information shall be deemed Confidential Information and not publicly disclosed unless required for enforcement of this Code of Conduct and/or IP Policy.

This proposal is now live on Snapshot.

Start date of voting Aug 9, 2022, 5:03 AM CEST

End date of voting Aug 16, 2022, 5:03 AM CEST