Creating an Unincorporated Nonprofit Association ("UNA") for the Franken DAO

Big Update for the Franken DAO

We need to create Unincorporated Nonprofit Association (“UNA”) to house the Franken DAO assets and be a legal entity inside the United States.

-- This is very important --

If you want to dive deep into why, please look at this paper by a16z on the benefits of the “UNA” for DAOs: https://a16zcrypto.com/wp-content/uploads/2022/06/dao-legal-framework-part-1.pdf

To do this, we need DAO approval.

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TL;DR - the “UNA” legal framework allows our Franken DAO to operate within the US as an entity that can pay taxes, open bank accounts, etc. while giving us the freedom to pass proposals, engage in DAO activity, and govern the treasury assets together with limited liability.

The general summary of why the UNA is the best current US entity is because it answers the following questions:

1.) What do we do about taxation? 2.) What do we do about liability? 3.) How do we preserve the anonymity of our members?

As a UNA, the Franken DAO would be able to interact with traditional financial structures such as opening a bank account, signing contracts, filing tax returns, paying employees and in general, meet US requirements of existence to interact as an entity.

What would happen is we would actually “silo” the two entities underneath the Franken DAO umbrella: the treasury and the smart contracts. Essentially the treasury would be fully “wrapped” inside the UNA structure while the protocol could decide to stay regimeless by “wrapping” itself in a seperate UNA or using an LLC structure, whichever benefits us (the members) the most.

This provides a large degree of liability limitation for the DAO and its members. Unlike an LLC, which requires all members to “doxx” themselves, a UNA doesn’t require that. UNA’s allow its members to retain their anonymity while generally allowing a small group of members to “backstop” any liability that falls upon the DAO. More on this later…

Lastly, this type of entity opens up the door for us to seek for-profit activity for the benefit of our holders by keeping each entity (Treasury and Protocol) “siloed”. This entity provides the legal framework to release governance tokens and even engage in member distributions. Now don’t get ahead of yourself, there are many limitations to this, but it is an additional benefit.

We need to pass this proposal, thank you!

Doctor ETHvil