Proposal to Establish Cedar DAO’s Ownership Structure in Wallet Enterprises Ltd and to Support Growth

Summary:

This proposal outlines the transfer of ownership of Wallet Enterprises Ltd, the owner of Atlas Wallet, to an entity representing Cedar DAO. The transfer aims to facilitate the company’s growth, enable governance structuring, and allow future fundraising while ensuring Cedar DAO’s economic participation.

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Proposal Details:

1. Allocation of Treasury Funds Cedar DAO will allocate $1.2 million from its treasury to Wallet Enterprises Ltd to support operations and expansion.

Explanation: The vast majority of Cedar DAO’s current expenditures are allocated to the development and operations of Atlas Wallet, the flagship product of Wallet Enterprises Ltd. By officially transferring this funding to Wallet Enterprises Ltd, we ensure that Atlas Wallet has a clear and stable financial foundation, making it a viable business that is attractive to venture capital (VC) investors. Beyond this allocation, Cedar DAO will still retain substantial and adequate funding and will continue to generate independent revenue through liquidity pool farming of the token. This revenue will be split between covering operational expenses and holder rewards, ensuring that the DAO remains financially sustainable.

2. Creation of a Legal Entity for Cedar DAO

• An appropriate legal entity (e.g., trust, foundation, or SPV) will be established to formally represent Cedar DAO’s economic interests in Wallet Enterprises Ltd.
• The structure of this entity will be determined based on legal counsel to ensure compliance and effective representation.

Explanation: At present, Cedar DAO exists as a decentralized group of token holders, but this structure does not allow it legal ownership of Wallet Enterprises Ltd. To ensure that Cedar DAO’s ownership of Wallet Enterprises Ltd is properly recognized under the law, a new legal entity (such as a trust or foundation) will be created. This entity will hold the shares on behalf of DAO members, making their ownership official.

3. Transfer of Ownership to Cedar DAO’s Legal Entity

• Once the legal entity is established, 100% of the existing share capital of Wallet Enterprises Ltd (50,000 shares) will be converted to Class B non-voting shares.
• These shares will then be transferred to the newly created legal entity representing Cedar DAO.

Explanation: Currently, the shares (ownership) of Wallet Enterprises Ltd are held privately. This proposal will convert those shares into a new type of share called Class B, which means they will not have voting rights or control over company decisions. Once converted, these shares will be transferred to the new legal entity, meaning that Cedar DAO members will have economic ownership but will not be involved in decision-making.

The decision to create non-voting shares is essential to ensuring that Wallet Enterprises Ltd is attractive to venture capital (VC) investors. It would be very unlikely for any VC to invest in a company where major governance decisions are controlled by a decentralized crypto community, as this could make it difficult to manage operations and fundraising effectively. By having non-voting shares, Cedar DAO still benefits from the financial success of Wallet Enterprises Ltd while allowing the company to raise external investment and grow in a structured way.

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Understanding the Implications:

Cedar DAO token holders acknowledge that this proposal is designed to enable Wallet Enterprises Ltd, the owner of Atlas Wallet, to:

• Accelerate its growth and development.
• Establish a Board of Directors (BOD).
• Secure external funding through fundraising rounds.

Explanation: Wallet Enterprises Ltd needs to expand and bring in more investment to scale up its operations to become competitive in a highly-funded and fast-moving industry. This proposal allows the company to grow without DAO members being involved in day-to-day decisions. By setting up a Board of Directors and securing funding, the company can operate like a traditional business while ensuring Cedar DAO benefits from its growth.

Token holders voting in favor of this proposal understand that:

• Cedar DAO’s ownership percentage in Wallet Enterprises Ltd will likely be diluted over time due to, but not limited to:
  • Future fundraising rounds.
  • Equity incentives for Board of Directors (BOD).
  • Stock-based compensation for employees and key stakeholders.

Explanation: Cedar DAO will initially own 100% of Wallet Enterprises Ltd shares, but over time, new investors, staff and directors will receive shares. This will reduce Cedar DAO’s percentage ownership, but this is a normal part of business growth. By allowing dilution, the company can raise more money, attract top talent, and expand more effectively.

By voting to approve this proposal, Cedar DAO members acknowledge that it serves two key purposes: formalizing Cedar DAO’s legal ownership of Wallet Enterprises Ltd and positioning the company for rapid growth and higher returns. While Cedar DAO will initially own 100% of the company, members understand that the best path forward will likely involve dilution of this ownership as new investors and employees acquire stakes -- fueling expansion, increasing value, and ultimately benefiting all stakeholders.