The Gitcoin Foundation Update - June 2 2022
It’s been a while since I offered an update on the gov forums about our Foundation set-up and work to take possession of our collective assets. Here is how things are shaping up - there are three primary buckets to think about in this update:
- Foundation updates
- DAO updates
- Asset Transfer updates
We have prepared a new set of proposed governing documents for the Foundation that would memorialize the Foundation’s operating rules. These include a new Memorandum of Association and Bylaws. These docs have been reviewed by community members (including friends at LexDAO, and our own legal counsel) without any objections, and at this time we believe they are ready to be submitted for approval and ratification. These documents generally direct the Foundation to carry out DAO governance decisions (per our governance process - see update below), subject to statutory or other legal limits. They also allow the Foundation or its subsidiaries to spend capital within its control (ie assets transferred, not the treasury) to advance protocol development until Grants 2.0 is operational and comply with legal and other core requirements (like establishing AML processes, hiring accounting firms, etc).
As part of the ratification of the updated governing documents for the Foundation, it will also become “ownerless”, meaning it will have no shareholders to whom fiduciary duties or other obligations are owed (one shareholder was initially required to be able to form it under Cayman law) and instead will be able to act in accordance with DAO governance without any obligations to any equity holders.
Operating as an ownerless foundation will, however, increase the complexity for KYC purposes, including anti-money laundering and sanctions laws compliance, and also for certain other diligence purposes and interactions with the real world. But we believe that any such inconvenience is a worthwhile trade-off to establish a structure and environment where the DAO can truly direct the development of the Foundation long term.
In addition to the Foundation, we have formed 3 subsidiaries to help protect the Foundation’s assets and structure its interactions with the real world. One of these subsidiaries will be a holding company for Gitcoin trademarks and certain other intellectual property (such as our monorepo). The second subsidiary will serve as our primary operating entity and will be responsible for activities such as paying for our domain names, safeguarding and allocating our treasury per DAO governance, engaging and paying ordinary vendors (such as Google and AWS), and serving as the counterparty to DAO contributor agreements. For those contributing to the DAO, this also means you will have a contributor agreement that we hope will help offer more structure, clarity and protection to both you and the Foundation when you perform work on behalf of the DAO); and (iii) a third entity that was created to custody the Gitcoin Grants Multisig (mostly to handle KYC and AML).
We are in the process of formalizing a few external service providers, such as a KYC/AML compliance officer and an accounting firm and we will continue to retain external legal counsel for any legal needs and questions that arise. As with starting any new entity, there are legal reporting requirements and business functions that will need care and feeding. For now, I am taking care of those things but we may want to consider hiring an operations person to manage much of the day to day.
A new v3 of our governance process has been posted for commentary and we seek to ratify this as part of our upcoming vote. This ratification process will enable us to memorialize the adoption of a process we are largely already following.
We also have a newly proposed DAO Purpose and Essential Intents to align and focus our efforts. These will serve as our guiding framework when evaluating budget requests, workstream focus and overall direction into which to move the DAO.
Asset Transfer Updates:
Gitcoin Holdings is aligned with our interest in taking formal legal ownership of the various assets mentioned above (e.g. our Treasury, smart contracts, trademarks, SaaS contracts we need to operate) we as a community have created/maintained or advanced or need to grow so that they can then focus on revenue and delivering the best hackathon experience possible for those partners who entrust them to grow their communities (for simplicity, I refer to these as our Assets). This means that Gitcoin Holdings will be transferring these Assets to us, as well as some additional capital to ensure the Foundation and subsidiaries can pay their operating costs for some time and run as an independent and decentralized enterprise (which also solves certain legal capitalization requirements).
Since Hackathons is built on the Gitcoin brand, Gitcoin Holdings will be granted a temporary license to use Gitcoin trademarks until they reestablish operations under a new name, and I imagine we will continue to share a community for some time.
I am proposing we vote (in 5 days per our process) to ratify these changes, accept the transfer terms and start the life of the DAO as an independent legal organization (i.e., within the structure of the Foundation) in earnest.
I will also work to build a reporting cadence for the Foundation’s operations to ensure there is a pattern of transparency and sustainability long term.