[1IP-94] Renewal of Engagement of MME as External Counsel to the 1inch DAO

Summary

The Legal Working Group (LWG) proposes that the 1inch DAO renew its engagement of MME as external legal counsel through a new USD 15,000 retainer, to be used on an “as-needed” basis. This Proposal provides a report on MME’s work under the prior mandate (approved in 1IP-72), including dispute-resolution analysis, compliance and sanctions assessments, governance research, and grant-framework development. The retainer from 1IP-72 has been fully utilized, all invoices have been accepted, and MME’s continued involvement is recommended to ensure continuity of legal risk management for the DAO.

1. Background and Purpose

In 1IP-72, the DAO approved the engagement of MME as external counsel to support the Legal Working Group in addressing legal, compliance, and governance questions requiring professional legal analysis.

The previous retainer is now fully utilized. MME’s contributions have provided meaningful clarity and improved governance safeguards for the DAO.

This Proposal:

1. summarises the work completed under the previous engagement, and
2. requests renewal of the engagement via a new USD 15,000 retainer.

2. Work Completed by MME Under the Previous Retainer

2.1. HW Dispute — Forum, Jurisdiction, and DAO Personality Issues

MME worked closely with the LWG to evaluate how the DAO could pursue its claim in the HW matter. The analysis included:

• whether the DAO has legal personality or standing to initiate proceedings;
• identification of potentially competent jurisdictions;
• how to initiate a claim given the absence of a predetermined dispute-resolution mechanism;
• risks related to representation, enforcement, and counterparty identification.

Outcome:
After careful consideration it was concluded that arbitration is the most viable and defensible route for this dispute, resolving jurisdictional ambiguity and avoiding the most problematic procedural issues. The DAO was informed accordingly in 1IP-77.

2.2. Development of the DAO Grant Form (Proposal Template + Grant Terms)

To prevent repeats of the HW situation, the LWG—supported by MME—developed a standardized Grant Proposal Template and Grant Terms.

The Grant Terms set out the legal and operational framework under which the DAO provides funding. They define the rights and obligations of grantees, the conditions for receiving and using the grant amount, reporting requirements, compliance expectations, and the DAO’s ability to revoke or modify funding.

The Grant Proposal Template is a standardized form that grantees complete to provide all information needed for the DAO to evaluate a funding request. It captures project details, team information, deliverables, milestones, budgets, wallet addresses, and other relevant disclosures, ensuring the DAO has a complete and comparable dataset to assess proposals.The purpose of the Grant Proposal

Together, these documents establish:

• clear deliverables,
• accountability and reporting requirements,
• milestone-based disbursement,
• enforceability and recourse,
• dispute-resolution mechanisms.

Purpose:
The developed framework strengthens DAO governance by ensuring that any grantee relationship is structured, documented, and enforceable. The documents are attached for DAO review and potential adoption.

2.3. Evaluation of DAO Legal Wrapper Options & Comparison to Current Structure

MME performed an in-depth analysis of legal wrappers used by comparable DAOs and assessed whether adding an additional legal entity would materially improve the DAO’s legal posture, including a cost–benefit analysis of any such changes.

The analysis included:

• comparison of relationship models (social signalling, principal-agent model, wrapper)
• comparison of possible entity types, including the Cayman Island foundation company, the Swiss association (full wrapper and partial wrapper), the Swiss foundation, and various DAO LLCs;
• comparison of administrative and tax burdens;
• governance complexity and reporting requirements;
• whether any structure would provide meaningful enforcement advantages or regulatory clarity.

Outcome:

The LWG concluded that no existing model offers a materially better balance of risk mitigation, cost, and feasibility than the current system where the 1inch Foundation serves as the DAO’s off-chain representative.

The analysis remains useful baseline work for any future revisiting of the topic.

2.4. Ad Hoc Compliance & Regulatory Reasonableness Reviews

MME also handled several proposal-driven ad hoc compliance questions, helping ensure that DAO activity remained reasonable from a sanctions, AML, and regulatory-risk perspective.

These reviews included:

• evaluating sanctions exposure for grantees in high-risk jurisdictions;
• assessing whether certain jurisdictions or team structures could create regulatory issues;
• reviewing potential revenue-sharing or fee-on-swap mechanics (e.g., ZMX alternative front-end proposal) for risk of classifying the DAO as a service provider;
• considering AML/CTF implications of high-risk proposals;
• advising on whether DAO involvement in certain interfaces could unintentionally constitute regulated activity.

In all matters, MME’s conclusions were incorporated into LWG deliberations and communicated back to proposers to help safeguard the DAO’s risk posture.

3. Financial Report

• The previous USD 50,000 retainer approved under 1IP-72 has been fully utilized.
• All invoices were received by LWG members.
• The volume and complexity of issues raised across the DAO justify maintaining ongoing access to external counsel.
• The LWG conducted the replenishment review mechanism established in 1IP-72 and determined that additional retainer funding is necessary.

4. Payment Structure and Administrative Process

To maintain continuity and transparency, the payment and reporting structure mirrors the terms approved in 1IP-72.

The engagement process requires the DAO’s approval of advance payments, which MME will invoice against for its services. This approach ensures clear financial arrangements with MME and promoting transparent and accountable use of resources. Funds will be allocated to the 1inch DAO Operations Multisig 0x45e84e10e8E85c583C002A40007D10629EF80fAF, then transferred to MME.

4.1. Advance Payment (Retainer)

A new USD 15,000 advance payment (in ETH or USDC) will be transferred to MME as a retainer. In the event of termination of this mandate, MME will return any remaining advance payments to the blockchain address from which the initial payment was received.

4.2. Invoicing & Billing

The services will be invoiced on an hourly fee basis. At the end of each calendar month, MME will provide invoices for its services rendered to 1inch DAO. The invoices will be detailed and itemized, clearly outlining the services provided, corresponding hourly rates fees, and any applicable taxes or disbursements. All invoices sent by MME will be reviewed and approved by the LCWG. Upon such approval, the invoiced amounts will be deducted from the advance payments.

4.3. Retainer Replenishment Review (per 1IP-72)

1IP-72 established that the LWG must periodically review the need to replenish the advance payment. The LWG has conducted this review and determined that an additional retainer is required.

Going forward:

• The LWG will continue monitoring the remaining balance,
• Additional replenishments, if required, will only occur through separate DAO governance proposals,
• No automatic or discretionary increases will occur without DAO approval.

4.4. Expense Tracking & Reporting

The LWG will maintain complete records of: all invoices, payments, retainer usage, remaining balance. This information will be included in LWG reporting cycles for transparency. Any questions from DAO members will be handled by the LWG, with escalation to MME as needed.

5. Summary

Through the previous mandate, MME provided substantive and high-value legal support across dispute resolution, governance, sanctions compliance, and proposal-driven risk reviews. The LWG therefore recommends renewing the engagement with a USD 15,000 retainer, under the same transparent invoicing, approval, and reporting mechanisms used before. This renewal will ensure that the DAO remains properly supported as new governance, compliance, and dispute-related issues arise.