Ren DAO considers setting up a legal entity

Ren DAO considers setting up a legal entity

Days after passing a proposal to mint 200 million new tokens to fund future development, Ren DAO has begun mulling over the idea of creating a legal entity. The recently approved proposal hinted at the formation of the Ren Foundation.

According to forum discussions, the legal entity will manage the grant program and be the custodian of the treasury. Notably, “funds only can be allocated to a treasury in a compliant way through a non-profit legal entity. RenLabs can only receive funds throughout a legal entity.”

The community is currently evaluating two options. The first option is setting up a non-profit foundation in either Swiss or the Cayman Islands. The DAO estimates that it would cost around $100,000 to register the foundation in Swiss. The second option is setting up a special purpose trust, similar to dYdX’s Guernsey Purpose Special Trust. This option is arguably faster and more cost-effective.

The main reason for a foundation to exist is that without a legal real-world entity everyone who is contributing to or governing Ren would be legally liable to things that are not under any one person’s control.

In general, the legal entity will provide a framework to protect members of the community against liability, provide clarity on taxation to token holders, and interact with real-world entities like banks.

It is worth mentioning that Darknode operators are not expected to have a direct ownership relationship with the foundation. However, they will be able to initiate actions through voting.

Over at the forum, a handful of community members appear to align with the second option of setting up a special purpose trust. One member wrote:

In the interest of moving forward as soon as possible, I am inclined to go the special trusts route with a longer-term objective to set up a nonprofit foundation.

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