DXdao Entity Formation and Maintenance Contributor Stipend

The following outlines a signal proposal for a contributor stipend towards individual legal and tax advice, and eventual legal entity formation and maintenance.

DXdao is a fully on-chain DAO with no legal entity, which exposes active DAO participants to layers of legal and regulatory risk, especially when respective participants are also acting outside a legal entity (the main purpose for which is to limit the liability of its members). As such, DXdao should do as much as possible to ensure its contributors remain covered from any legal and regulatory risk and encourage the formation of individual contributor legal entities. Additionally, DXdao should cover the costs the individual contributors incur to do so.

This stipend should cover the following costs:

  • Legal / Tax review of income and how to correctly declare it
  • Eventual costs for incorporating a legal entity, if advised to do so

Contributor Entity Formation and Maintenance Stipend

This stipend covers up to $5,000 in fees for legal and tax advice, including any eventual entity formation costs for DXdao contributors. In addition, this proposal covers up to $500 in annual entity maintenance fees.

Funding distribution

DXdao contributors are responsible for claiming this stipend in a separate forum post and on-chain proposal other than their worker proposal. Please note that the legal stipend funding requests will require prior review and verification by the ContributorX, where a legal quote / invoice shall be presented to verify the actual costs incurred.

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Thank you @Melanie for drafting this post and leading this initiative.

It’s important that DXdao pay for the off-chain infrastructure it depends on, whether it be gas fees to run its governance on mainnet or legal routes for contributors to get paid.

Two things to highlight:

  • The text says “individual contributors”, which I think is important because I can imagine other larger entities (or contractors) that contribute to DXdao where this stipend should not apply.
  • This does create some centralization concerns around verifying the legal information with ContributorX squad. I think this is necessary given the privacy concerns, but also important to be transparent. I also think it creates a governance expectation that ContributorX members will vote/boost/signal support for an on-chain proposal, since they are in a privileged position. This is not the final say on the proposal going through, but would be in my mind “good governance”

And then, to clarify, what is the time frame that the subsidy would apply to. Is this retroactive for all contributors? What about those who had already set up legal entities?

7 Likes

After further community discussion, I will be adding the following information to the on chain proposal to clarify retroactive and effective date details:

Effective Date

If this proposal passes it will go into effect immediately for all DXdao contributors. In addition, this stipend will be retroactive for all contributors who had already set up legal entities dating back to July 14, 2019.

4 Likes