Summary
We propose that 1inch DAO engages the Swiss law firm MME Legal AG (“MME”), incorporated in Zug, which has a proven track record in the blockchain space and provides legal assistance to various L1 protocols, DeFi protocols, and DAOs. By engaging MME, 1inch DAO will obtain the necessary legal expertise to navigate complex legal situations, enhance its operational efficiency, position itself as a responsible and legally compliant organization, and protect stakeholders’ interests.
This governance proposal is made by MME at the request of 1inch DAO following an extensive review and selection process. The approval of this governance proposal would allow MME to onboard 1inch DAO as a client and provide comprehensive legal support to the 1inch DAO.
Abstract
As more of society, commerce, and life moves on chain and into online communities, DAOs are struggling to determine the scope of their regulatory and compliance responsibilities, and how to best protect their protocols, users, token holders, and indeed their entire communities from legal and regulatory risk. In particular, the regulatory environment facing DAOs is quickly evolving, and DAOs around the world are taking wildly disparate steps in addressing these risks. Some ignore them entirely, believing they are outside of established regulatory frameworks, sometimes to their peril. Others are struggling to determine what level of compliance controls is appropriate given their protocol’s function, the beliefs and ethos held by the community, the risks posed by the protocol, and other factors.
As DAOs operate within legal frameworks, it is imperative to establish a solid legal foundation to safeguard its operations and protect the interests of stakeholders. This governancen proposal aims to engage a law firm that specializes in blockchain technology and understands the unique legal challenges faced by DAOs. By doing so, the DAO will benefit from expert legal advice, contract drafting, regulatory compliance, and representation in potential legal disputes. The engagement would signal the community and potential regulators that 1inch DAO is committed to “doing the right thing” in assessing the scope of its risk and responsibilities and trying to assess how to meet them in light of its mission of supporting free and open online communities.
Motivation
Legal Compliance: Engaging a law firm with a proven track record in the blockchain and Web3 space will ensure that 1inch DAO operates within the bounds of applicable national and international laws. This partnership will ensure compliance with regulatory requirements, safeguarding the DAO’s reputation and the interests of its participants.
Drafting Expertise: MME will provide valuable guidance in drafting and reviewing contracts and governance proposals, ensuring they align with the DAO’s objectives and comply with legal standards. This expertise will increase legal certainty, minimize potential contractual disputes and enhance overall operational efficiency.
Regulatory Navigation: The rapidly evolving legal landscape surrounding blockchain and decentralized technologies necessitates proactive legal advice. MME will stay up to date with regulatory developments, assess their impact on the activities of 1inch DAO, and provide timely guidance for compliance.
Risk Mitigation: By engaging MME, the DAO will benefit from risk mitigation strategies. Legal professionals will identify potential risks, help develop robust policies and procedures, and provide guidance on mitigating legal liabilities.
Dispute Resolution: In the event of legal disputes, MME will represent the DAO’s interests, providing expert advice and advocating for fair resolutions. Having legal representation strengthens the DAO’s position and protects the rights of its stakeholders.
In conclusion, engaging a law firm that specializes in blockchain and DAOs will provide the necessary legal expertise to navigate the complex legal landscape and ensure compliance with relevant regulations.
Communication
In order to facilitate effective communication between 1inch DAO and MME, a dedicated legal committee comprising DAO members has been established in a separate governance proposal. The committee will establish a structured communication process with MME to facilitate effective collaboration. This process will include the following elements:
Regular Meetings: The committee will schedule regular meetings with MME to discuss ongoing legal matters, seek advice, provide updates, and address any emerging concerns.
Document Sharing: The committee will be responsible for sharing relevant documents, contracts, and legal materials with MME. This will ensure that MME has access to the necessary information to provide accurate advice and support.
Committee Liaison: A designated committee member will serve as the primary liaison between the committee and MME. This liaison will be responsible for providing instructions to MME, coordinating communication, clarifying any queries, and relaying information.
Information Dissemination: The committee will be responsible for disseminating relevant legal information, updates, and recommendations to the broader DAO community. This will ensure transparency and keep all stakeholders informed about the legal proceedings and their potential implications.
Communication Channels: To prevent potential conflicts of interest, MME will only interact and communicated with the members of the committee. MME will further not share any information related to the engagement with any legal entity within the 1inch ecosystem unless such communication is approved by the committee.
Engagement and Limitations
As legal counsel of 1inch DAO, MME represents the interest of the DAO. Accordingly, MME may and will not be able to represents individual interests of DAO members or Committee members in internal disputes. This includes disputes between the liaison and the committee, between the committee and members of the1inch DAO, as well as disputes between different DAO members. The services provided by MME are subject to the General Terms and Conditions of MME.
Payment and Invoicing
Ensuring a transparent and accountable financial arrangement, this section outlines the payment process for engaging MME to support 1inch DAO in legal matters. The process involves the DAO’s approval of pre-payment amounts, which MME will invoice against for its services.
Advance Payments: In order to establish a clear financial framework, 1inch DAO will be responsible for approving advance payments to be sent to MME in the form of USDC or ETH. These advance payments will be determined based on the anticipated legal services over a certain period of time and will be held by MME as a service credit of 1inch DAO. Once 1inch DAO decides to terminate the engagement, MME will transfer back all remaining advance payments to the same blockchain address from where the advance payment was received.
Invoicing and Billing: Unless otherwise agreed, the services will be invoiced on an hourly fee basis. At the end of each calendar month, MME will provide invoices for its services rendered to 1inch DAO. The invoices will be detailed and itemized, clearly outlining the services provided, corresponding hourly rates fees, and any applicable taxes or disbursements. All invoices sent by MME will be reviewed and approved by the committee. The invoiced amounts will be deducted from the advance payments once approved by the committee.
Expense Tracking and Reporting: The committee will maintain accurate records of the pre-payment amounts, the invoices, and the services rendered. These records will enable transparent and accountable financial tracking. Regular reports on the utilization of the pre-payment amounts and the remaining balance will be shared with the DAO stakeholders to ensure full visibility.
Replenishment and Additional Approvals: As the advance payments are utilized, 1inch DAO may need to consider replenishing the funds to ensure uninterrupted legal services. Any decision to replenish the pre-payment amounts or approve additional funds will be subject to the internal governance process of 1inch DAO and require a separate governance proposal.
Financial Transparency and Accountability: The DAO is committed to maintaining financial transparency and accountability throughout the engagement with MME. Stakeholders will have access to updates regarding the utilization of advance payments. This transparency ensures that the DAO’s resources are managed responsibly and in alignment with stakeholder expectations.
By adopting an advance payment and invoicing system, 1inch DAO establishes a clear financial arrangement with MME, ensuring transparent and accountable utilization of resources. This approach allows 1inch DAO to have a clear overview of legal expenses and ensures that the legal services are appropriately remunerated within the approved amounts.
Approval of First Advance Payment
This proposal includes the approval of an initial advance payment of 50’000 USDC to MME. The first advance payment allows MME to allocate necessary resources and aims to ensure that MME can commence providing legal support to 1inch DAO promptly. By approving the first advance payment, the DAO demonstrates its commitment to engaging the law firm and initiating the legal support necessary for the DAO’s operations.
Following the initial advance payment, the committee will assess the need for replenishing the advance payment funds based on the progress of legal services and the remaining balance. Any decision regarding replenishment or approval of additional funds will be subject to the DAO’s internal governance processes.
The initial advance payment serves as a significant milestone in the collaboration between 1inch DAO and MME, marking the commencement of the legal engagement.