Idle DAO incorporation in the Marshall Islands

The following is an extract of the proposal posted on the Idle governance forum.

Author

Treasury League

Summary

A proposal to incorporate the Idle DAO in the Marshall Islands using MIDAO.

References

• Legal structure for the Idle DAO post - Sept 2021
• Idle DAO Legal Structure - Summary post - Jan 2022
• Idle DAO Legal Structure - Governance Proposal post - Jan 2022
• MiDAO website

Background

The research to incorporate the Idle DAO has been an argument of discussion

DAO legal structure: despite using a nonverbose approach, we’ve been continuing to pursue research for the DAO legal structure; the environment for DAOs has been continually changing over the last year, and won’t be likely stopping for the year ahead as well. The currently available structures can create more constraints than benefits (both on DAO level and operational level); so the sentiment is to pursue a leaner structure in the short term, that would allow DAO contributors to legally contribute. And for the long-term, with more legal clarity over DAOs (which we hope and will strive to be proactive with regulators to make it for 2023), we will re-evaluate to wrap the entire DAO.

We want to thank @Salome and @David_M_Kerr in particular for their analyses and the community for the useful insights.

Finally, we came up with a solution that should help our DAO have a formal legal wrapper without adding too many legal burdens. The selected solution aims to incorporate the DAO in the Marshall Islands with a not-for-profit structure supported by the MIDAO.

MIDAO RMI DAO LLC

Incorporating Idle DAO with MiDAO will benefit the community under multiple aspects:

1. Limited Liability Incorporating the DAO is the best way to shield contributors and token holders from legal risks. This ensures every DAO member can keep his assets and future earnings even if the DAO is sued or under a legal crisis.
2. Corporate Personhood Incorporating the DAO will give our organization the possibility to act as an individual entity, enter into traditional agreements and own assets. If our DAO needs to open a bank account to manage fiat currencies, it’s impossible unless we establish corporate personhood. And, if Leagues sign contracts and interact with third-party companies outside of the blockchain, the contracts don’t hold up under the law without corporate personhood.
3. Tax Entity Idle DAO does not have a tax entity making it more difficult to manage taxes for the DAO and its contributors. A MIDAO DAO LLC will protect IDLE token holders with respect to any DAO-related tax burden.

Additional benefits include

• No trustees, directors, officers, or managers with extra liability or responsibility
• All documents and records can be kept on the blockchain
• Most members can remain anonymous
• Governance by smart contract is allowed by law

Expenses

The cost associated with this proposal is expected to be a one-time payment of $20,000 used to pay MIDAO, legal advisors and the costs associated with the initial entity filing. This amount will cover budgeted expenses until January 2025.