MME | 11 for all. Legal | Tax | Compliance

Beyond DAOs and Foundations:

The Decentraliced

Autonomous Association

(DAA)

MME | 2

Governance of decentralized ecosystems

- Network governance- Project governance

- On-chain (by smart contracts)- Off-chain

- Community based / permissionless- Orchestrator / permissioned

- Investment purpose- Membership / Voting- Asset-allocation

The DAO: Community based, on-chain project governance withinvestment purpose (public / permissionless)

MME | 3

DAO – Simple Partnership as legal anchor

• A simple partnership is the most basic form of a partnership.

• It involves a contract under which two or more persons (“partners”) agree to unite their efforts or their resources to achieve a common goal (Art. 530–551, Swiss Code of Obligations).

• From the outside, a simple partnership looks like an economic interest collective.

• Fallback rules. The creation of a simple partnership does not require any specific formalities.

• It has no legal personality, therefore, and cannot be represented under a company name.

• The partners are liable, jointly and severally and without limit, for the obligations of the whole partnership.

MME | 4

DAO – Risks of Simple Partnership

• Liability: partners (i.e. individuals) are liable jointly and severally and without limit for the obligations of the whole partnership; a blockchain account cannot be a partner!

• Taxation: tax liability is with the partners as well (e.g. income tax and VAT); jurisdiction depends on location of the partners.

• Regulatory: qualifies maybe as security or collective investment scheme due to investment purpose; jurisdiction depends on location of the partners.

• Governance: all partners can act on behalf of the whole partnership; however, lack on defined organization and procedures.

MME | 5

Swiss Foundation as legal anchor

• Foundations allow assets to be used for a specific pre-defined purpose. (= functionality like a smart-contract!)

• A foundation is established by means of a notarial act or a will.

• A foundation is a legal entity, subject to respective tax and regulatory obligations.

• It acts through the intermediary of a managing body (the foundation board).

• No members. No shareholders. No beneficiaries.

• Under supervision by the federal foundation supervisoryauthorities (audit requirement).

MME | 6

DAA – Swiss Association as legal anchor

• To start an association, at least two natural persons and/or legal entities are needed as members.

• An association is an independent legal entity, subject to respective tax and regulatory obligations.

• One member = one vote. No seed capital is required. No capital related voting rights.

• It is established following an organizational meeting called to approve the association’s articles of association and to appoint its board members and auditor. The required bodies are the general assembly and the association board (“delegate”; at least one member).

• Hence, association members are not personally liable for the association’s debt. That said, an exception may be made when the articles of association provide otherwise (Art. 75a, Swiss Civil Code).

• Association can own and hold assets.

MME | 7

DAA – Basic Governance Model

MME | 8

Governance of decentralized ecosystems

- Network governance- Project governance

- On-chain (by smart contracts)- Off-chain

- Community based / permissionless- Orchestrator / permissioned

- Investment purpose- Membership / Voting- Asset-allocation

DAA: Orchestrated, membership-based on-chain project governance(consortium / permissioned)

1 for all. Legal | Tax | Compliance © 2020 MME

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www.mme.ch

office@mme.ch

Buidling DAOs2020-05-28

Dr. Sebastian Bürgel, HOPR Association

hoprnet.io

“Decentralized Organizations - Create decentralized companies or

organizations that operate entirely on the blockchain”

Ethereum.org, Jan 2014

“Create a democratic autonomous organization”

A robot running your organization is guaranteed to execute only what it

was programmed to

Ethereum.org, Nov 2015

hoprnet.io

“The Mother of all DAOs

DAOs will be at the center of many economies going forward”

daohub.org, May 2016

Code is not law

Let’s make the best of both code AND law

A DAO with a legal wrapper

Or a legal entity with on-chain governance

hoprnet.io

DAA implementation in Solidity

- Minimal feature set of fully functional Swiss association

- Interactions are entirely on-chain:

- Membership management

- Proposal-based fund management

- Voting (e.g. for delegate, changes, proposals)

- General assembly / agenda / voting

- Developed by Validity Labs, available on GitHub: https://github.com/validitylabs/daa

hoprnet.io

By Validity Labs AG

DAA implementation in Solidity

hoprnet.io

… and back to Earth: DecenGov(Decentralized Community Enabling Governance)

- All off-chain interactions- Token-governed Swiss association- Quadratic voting for members- Step by step moving back onto the chain- Being used by HOPR Association TODAY

hoprnet.io