RugDAO SubDAO Framework

ABSTRACT

This Sub-DAO Framework is constructed to facilitate the proposal, approval and formation of SubDAOs within the Rug Radio / RugDAO ecosystem. The purpose of SubDAOs can and will vary, however the purpose of SubDAOs remains constant - to compartmentalize initiatives that may or may not align with the economic, and/or ideological, interests of the parent DAO and, in doing so, insulate both the SubDAO initiatives and the Parent DAO from the convolution of assets and interests. Additionally, SubDAOs benefit from sovereignty and the ability to function autonomously, removing the need for greater Parent DAO administration.

MOTIVATION

Participants of the Parent DAO are stakeholders in the ecosystem and have a vested interest in its success. As subsidiaries of RugDAO, the SubDAOs should provide value to the greater ecosystem. For the purposes of this proposal, stakeholders will be defined as holders of $RUG token, $RUGDAO token, Genesis NFTs, and/or Host Passes. It’s possible that this definition will be expanded upon in the future to include other stakeholders such as sponsors, community partners, et. al.

There are multiple opportunities for the creation of subDAOs, examples of which include, but are not limited to:

• Charitable giving
• Artist/Builder grants
• Awareness activations, i.e. Mental Health Awareness, Pride, Autism, etc.
• Local meetups / community building
• NFT Conference activations + events, i.e. NFT-NYC, ETH Denver, Art Basel, etc. For profit businesses / investments

GOVERNANCE

Unless specified in a formal request for exemption/amendment, SubDAOs default to following the established standards and by-laws of the Parent / RDAO. This governance format includes, but is not limited to, administration structure, voting mechanism, treasury standards and community guidelines.

OVERSIGHT COMMITTEE

Given the complex and capital intensive nature of SubDAOs, all SubDAOs will be subject to review, in order to ensure compliance with the regulations outlined in this document. An oversight committee (“The Oversight Committee”) of 3 individuals (to be elected by RDAO holders) will be charged with the oversight and review of all SubDAOs. Their primary responsibility will be to ensure the health of the SubDAO economy by:

• Reviewing SubDAO proposals and communicating with Proposal Management Teams to ensure that all proposals are in compliance with established Submission Format before passing through to the voting process.
• Aiding SubDAO Management Teams in the legal and economic structuring of their SubDAOs upon approval vote from stakeholders.
• Review KPIs and ensuring that SubDAOs are meeting their obligations to stakeholders as outlined in the KPI section of their proposals

The Oversight Committee members who are voted in should be prepared to serve as committee members for a period of 12 months with elections occurring 6 months prior to expiration of committee.

ECONOMIC LIABILITY OF SubDAO

Each SubDAO must detail their economic requirements and opportunities. SubDAOs do have a fiduciary responsibility to the Parent DAO and must contribute to the sustainability of the ecosystem and help facilitate a healthy, circular economy. Some of the information that should be highlighted in the proposal and formation of a subDAO according to Sub Article 4 of Formatting Requirements are:

• How will the subDAO utilize the resources provided to them?
• Expectations for sustainable engagement
• What are KPIs and how will they (and ROI) be measured
• Validation / Proof of Concept
• Recapitalization Structure / Schedule to replenish RugDAO assets (if applicable)
• Acknowledgement of Risk of Termination of subDAO should it fail to meet requirements

VOTING

Stakeholders in RDAO are ultimately responsible for the approval of and allocation of resources to SubDAOs. By establishing generally accepted standards for the approval and execution of subDAOs, the stakeholders do not need to provide direct input into every decision related to the SubDAO projects. In order to streamline and minimize the inefficiencies due to variability of initiatives, the SubDAO proposals should conform to the following format:

SUBDAO PROPOSAL / FORMATTING REQUIREMENTS

Adherence to a standardized format for proposal will allow for efficiency in evaluating and subsequently approving a SubDAO. As such, SubDAO proposals should comply with the provided format and include, at minimum, the following information:

• Abstract/Description - What is your proposed project? What is it about? Describe what problem this aims to solve. Why is this a problem worth solving? What is the overall motivation?
• Management Team - Project Lead: Who is leading this project? If approved, is that person willing to take on the team role of lead for the project’s duration? + Remainder of team / roles they play
• Asset Requisition - What is the desired Budget/Resources needed from the parentDAO? How will these funds be distributed/utilized? How will accountability for these assets be maintained initially and over time? What team member will be responsible for budget/resources?
• Economic/Social Justification - List out expected outcomes/goals for the subDAO and ParentDAO if you achieve the project goal. What does the project aim to accomplish? How will this project bring value to the Rug Radio/RugDAO ecosystem?
• Key Performance Indicators - Proposals should outline key performance indicators that will allow for evaluation of SubDAO relative to its goals and mission.
• Pro-Forma Financials - If possible, please include pro-forma / projected financials.
• Proposed Timeline - Define a timeline for how long you think this project will take. What are key milestones you will focus on? What is the proposed life cycle of this SubDAO? How will progress be reported back to the Rug Radio Community?
• Define Key Terms - not every holder will be familiar with industry specific terms that might be used in the proposal.

Note: this proposal does not yet include the technology and/or platform(s) that will be used for proposal submissions, reviews, and approvals. Updates will be made to this draft once those have been decided upon by the larger RugDAO Council and/or Core Team.

PROCESS & TIMELINE

While expediency is valued, due process is required to properly vet and approve subDAO proposals. The following timeline is to be established as a generally accepted practice in the submission and approval of SubDAOs;

Upon of Submission of SubDAO Formation Proposal

Initiation - Within 14 Calendar Days of Submission - proposals should be reviewed by SubDAO Oversight Committee and any omission of information required by Requirements Proposal / Formatting should be addressed and returned to the Proposing Team for revisions.

Given that the Proposal meets the requirements:

• Proposal is forwarded to RugDAO for Voting Approval

Given that Proposal fails to meet requirements:

• Oversight Committee highlights deficiencies and returns to Petitioner with request for revision.
• Petitioner is given 14 Calendar Days to revise the proposal and resubmit. Given that Proposal meets requirements:
• Proposal is forwarded to RugDAO for Voting Approval. Given that Proposal fails to meet requirements:
• Proposal is respectfully rejected and Petitioner is subject to Cool off Period before resubmission.

Cool off Period - Post proposal submission (regardless of approval or final rejection) all petitioners are subject to a 60 day “Cool Off Period” during which they are prohibited from submitting a proposal for a SubDAO. - Justification: Due to the capital intensive and serious nature of subDAOs, in order to achieve proper distribution of opportunity across RDAO holders and to minimize noise and encourage only the highest quality proposals, RDAO holders who submit proposals for SubDAOs should be aware of the limitations of the ecosystem resources and be prepared to put their best foot forward. They should also be cognizant of and respect the sovereignty of the DAO holders as they decide on the best initiatives for RugDAO. Over-submission of proposals benefits no one.

Maximum Proposals - Any individual holder can submit a maximum of 3 unique SubDAO proposals annually (within a calendar year). It is the responsibility of the SubDAO Oversight Committee to review and enforce the compliance of this policy. Any proposal submitted by the same individual that exceeds the third submission is to be politely rejected and asked to hold until the subsequent calendar year.

Timeline Post Initial Review

• Proposals Submitted for RDAO Voting: #Days for Vote
• Upon Approval Vote of SubDAO formation - SubDAOs can expect the following timelines/deadlines for submitting and receiving the following:
  • Operating Agreement / Legal Structure : #Days
  • Installation of Management Team: #Days
  • Wallet Creation: #Days
  • Syndicate DAO Formalization: #Days
  • Capital Call / Funding: #Days

AUTONOMOUS OPERATIONS Upon the approval of a subDAO, the leadership team of the subDAO will have the leniency of the day-to-day decisions such as:

- Acquisition of any asset (Within Proposal Approved Operating Budget)
- Disposition (Selling or Burning) of any asset of the subDAO
- Invitation of New Members to the subDAO

The following will require approval voting of subDAO holders: - Changes to leadership team - Issuing more subDAO tokens The following decisions will require a more stringent approval process including approval voting by RDAO holders:

-  Requisition of assets/resources from Parent DAO
-  Public facing co-branding/association of the Rug Radio Branding
- Any action or initiative that may involve artwork, branding, etc.. of NSFW content (PR concerns for RR)

In the case of a vote, the subDAO leadership team will put together an analysis of the decision to be made along with a recommendation and their reasoning. The vote will be announced in (place of congregation) along with the method and timing for casting the vote. Votes will be tabulated, announced, and the actions will be taken. (This process applies to both internal subDAO votes as well as greater RDAO votes)

Proposed utilization of Snapshot.org as a wallet tied voting protocol to guarantee integrity of vote. [Contingent Upon Approval from Voting Committee]

CHANGE OF LEADERSHIP

The leadership team can be changed by a vote of the subDAO token holders. In the case of one of the leadership team voluntarily moving on, the subDAO will be informed and a vote will be scheduled. If there is a desire to make an involuntary change of the leadership team, the subDAO holders can call a vote. [Calling for a vote must be ratified by supermajority( ⅔ of DAO tokens) - pending Voting Committee input].

If approval for involuntary reassignment of subDAO leadership is passed, new leadership members are to be proposed and voted on based upon majority vote rules.

LEGAL FORMATION OF SUBDAOs

SubDAOs should adhere to an accepted standard of formation and execution. The inability or unwillingness of the SubDAO administration team to comply with the following will result in the disqualification of the formation of subDAO.

Implementation

• Consensus and operating agreement between subDAO members; SubDAOs should be structured as legal entities.
• Assignment of Administrative Team including Executor, Treasurer, and Multi-Sig
• GNOSIS SAFE Wallet Creation
• Syndicate DAO formation

Capital Call

• Deposit of (allocated assets) to GNOSIS via Syndicate
• Capital contributors receive their DAO Tokens from Syndicate

TERMINATION / DISSOLUTION OF SubDAOS

In accordance with item #5 of the SubDAO Proposal Format, each proposal will include Key Performance Indicators (KPIs) for the evaluation of the SubDAO’s success, relative to the proposed mission and goal.

KPIs will be reviewed by the Oversight Committee? on a semi-annual basis and failure of a Sub-DAO to consistently meet KPIs will result in termination / dissolution of SubDAO.

• Expected KPIs if financially driven
• Expected KPIs if community driven
• Expected KPIs if both?