W&M DAO Crypto Treasury Partial Liquidation Proposal

PROPOSAL: W&M DAO Crypto Treasury Partial Liquidation for Operational Expenses & Professional Services

Authors: cheriehu.eth, brookejaxon.eth

SUMMARY: Approve a partial liquidation of Water & Music’s $STREAM DAO treasury ether ($ETH) and $USDC holdings for use in covering business operational expenses and professional services, totaling approximately $6,000 in USD fiat upon liquidation.

MOTIVATION/BACKGROUND: For the W&M DAO to act in good faith to comply with evolving guidance regarding regulations and governmental policy for DAOs, it is the core team’s recommendation that the DAO engage legal counsel to ensure all members are properly protected from any potential liabilities, taxes, and fees related to the DAO. Professional guidance is required to do this work correctly and confidently. The firm requires a retainer of $9,000 USD to begin the work, which will need to be paid in fiat, and therefore some current treasury cryptocurrency holdings will need to be converted to USD (liquidated) in order to provide payment.

SPECIFICATIONS: Members of Water & Music’s core team have interviewed and gathered project proposals and quotes from several firms and legal professionals who are experienced with DAOs, and would like to engage one* that we believe will be a good fit for this work and reasonable in cost.

The work will cover the following scope:

• Strategy opinion on legal structure, securities implications and misc. compliance components of DAO, tokenomics, transferability, etc.
• Restructuring / formation of DAO in permissive jurisdiction
• Advising re: pros and cons of jurisdictions
• Obtaining a Registered Agent and EIN (if necessary)
• Drafting an Operating Agreement or equivalent organizational documents
• Analyzing past securities offerings and existing legal materials, including token drops and NFT purchases
• Advising on compensation structure for core contributors and funds flow processes
• Advising and strategizing on personal liability of founder, core team and NFT/token holders

A mix of ETH and USDC cryptocurrency liquidation plus cash in the Water & Music LLC bank account from subscription membership revenues will combine to cover the fee.

The legal work should take approximately two-three months to complete.

CONSIDERATIONS:

• Approval of the proposal will mean less available cryptocurrency resources in the treasury for funding future season-agnostic research projects.
• The legal engagement scope and counsel will not cover tax strategy, only the legal wrapper that will help define what that strategy can be.

VOTE:

• Yes - Approve the liquidation of $ETH and $USDC W&M DAO treasury holdings equal to the approximate amount of $6000 USD on day of liquidation.
• No - Do not approve

All $STREAM holders can vote on this proposal using a 1 address 1 vote strategy (as opposed to 1 token 1 vote).

COMMENT PERIOD CHANGELOG:

• During the comment period for this proposal, a community member noted: “I think it could be very beneficial to share with the community which one's have been approached and which one has been chosen if that's possible."

W&M Response:

• While we are not releasing a full list of firms that we considered, we would note that our search was guided by input and referrals from a number of DAOs actively working in the ecosystem and facing similar legal issues to Water & Music, including Seed Club and their accelerator alumni network, among others. Our goal with this search was to identify a firm that has the background and is capable of supporting us as we consider our legal position and liabilities as a DAO, while also obtaining good value with respect to the overall impact on our treasury and ability to carry out our core work as a community.

A Google doc version of this proposal can also be accessed here: https://docs.google.com/document/d/1b1zWhN5aCwGK9lczPYnyXqJUxARQB3eyO0-H-wDPfgo/edit?usp=sharing