Oh well - can’t beat them so might as well join them. 
Where do I sign up?
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Rather than $1M into anti-regulatory shouting match, how abut $1M into looking to promote self-regulation or co-regulation?
By establishing voluntary standards of transparent governance (which circle does) or willingness to out bad actors (big fail here with 2017 ICOnu) DeFi can demonstrate willingness to act as global adult and not rebellious cowboys (with allowance for competitive behaviour for entrenched incumbent rent-seekers).
Suggestions to get the legal positivism going (sandbox type legislation so that small purpose-driven DAOs don’t get tarred with same brush as commercial operators)
- in-DAO alpha testing < 20 parties (use soft loan/stake + reversible transactions) … eg Swiss 1 million CHF innovation license
- cross-border testing < 100 parties cap say $1M real money equiv tokens eg or Aust. sandbox 100@$10keach
- go semi-public after getting license & travel passport + paperwork (PITA)
so a mutual non-interference and gradual integrtion with the mainnet to avoid Poly-network type attacks.
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100%
Establishing standards is one part of my proposal for a global industry group. DeFi needs to establish a pro-active response to regulation.
One of my biggest concerns is that DeFi moves in the wrong circles of power. If we want legislators around the world to make sound regulatory decisions, they can only do that to the extent we are engaging with the relevant government departments and industry bodies that formulate policy and related laws.
A lot of folks seem to think individual legislators make up these rules and draft the legislation too - as if! They get their guidance from policy wonks in the public service and lobbyists, not twitter. The legislators are just one of the cogs in the in the machinery of law.
We all know there is an intellectual vacuum within the public sector in relation to crypto. In the EU they went this way: Have your say
They sought industry and public response which resulted in a strong turn-out: Have your say
One of the respondents was www.fmlc.org (I’m not affiliated at all) - this group includes a number of law firms specialising in crypto such as Linklaters and Norton Rose as well as jurists and researchers in the field. Check their mission statement: About the FMLC – Financial Markets Law Committee
Another organisation who responded was ANNA (Association of National Numbering Agencies). And the International Capital Market Association did as well. DeFi needs the functional analogue of these bodies.
Those folks are miles ahead in their engagement with legislators, are responding strategically and making an impact. If there is an interest in doing this via a DAO, I really don’t care because I’m all about results. But this needs a bigger picture approach to legal activism with clear objectives and mission statements, openness to working with legislators, ongoing funding via membership fees and cross-platform support.
Where might standards be useful? I nominate 3 areas
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Stablecoins + Basel 1.5 … love or hateit, CBDC like chinese DCEP are coming and the US Treasury will either co-op private stable coins or else tax them to negative profit by requireing 100% fiat backing. To pre-empt such a move, I suggest relooking at stablecoins through lens of Basel, that you have CBDC at tier 1A, then ranking credit instruments from pegged, to dirty float to algo-coins to overcollateralised to basically wishful thinking (cough Tether). In return for co-regulation, then the on-off-ramps to fiat needs to be relaxed, so long as provide KYC/AML no worse than existing neo-banks, you should be able to interchange with existing banking system to enable more participation for real goods/services and less speculation. This is a step towards legitimacy
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Classification of tokens (bottom left) … in particular what is a commodity to get away from a capital gain event for every security/property transaction. This is needed for AMMs since it would be nicer to set up liquidity pools for tokens of similar properties. By putting tokens within the existing financial ontological framework, you can then try and get a single passported regulator to keep eye instead of the current cluster-fsck where every country wants jurisdiction and DeFi ends up in the grey-zone
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Nominate emerging practices where innovation can happen in sandboxes (mutual non-interference) but a pathway to getting onto mainnet and global acceptance by doing basic stuff like product disclosure statements … if it is a speculative investment, then be honest about it. Without establishing grounds for trust, then DeFi will be mentally classed as shadowy banking for terrorist kiddie-port crypto-anarchists which tars the valid use cases.
I note Curve is opening up community grants … anyone interested in putting heads together to identity what areas are worthwhile coming to framework standards consensus to reduce regulatory friction?
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Hi All - Below is the first slate of proposed projects for the LeXpunK Builder Defense DAO.
We are submitting these to the community with a signaling poll for feedback and welcome your thoughts, which can be posted here or on an ongoing basis in the LeXpunK forum, on additional pursuits and considerations as we pursue the initial slate of projects below. Each project will be fleshed out with additional qualitative criteria and specifications when the working group applications process is announced.
As you can see below, most projects have a budget range. The Multisig will decide the amount of actual payment to be allocated to each project based on the actual work product produced and we will be utilizing Coordinape to pay the bounties to those who worked on the projects.
Proposed Spend on Contributed Funds - Tranche 1 (start of Q4 2021 - end of Q1-2022)
- Operations | $150k (fund coordinator pay ($3k per project) & misc. expenses)
- DAO Structure & Risk Mitigation Bounties:
o Build DAO Coop / Labor Union Model | $15k min, up to $150k
o Model Foundation / DAO back-to-back docs / structure | $15k min, up to $100k
o Limited liability for DAOs, forking California nonprofit unincorporated association statute | $20k min, up to $100k
o DAO tax safe harbor (cross-category) - proposal to establish a safe harbor for smart contract systems that if they pay a ‘greater of’ %-based or flat tax, they will fit into safe harbor for certain tax-related risks
o Guidance paper regarding DAO legal claim standing, attorney client privilege issues, and proposed model structures and parameters for proper DAO legal defense funding | $25k min, up to $60k
- Model Legislation/Regulation Bounties:
o Section 409A amendment to improve tax treatment of vesting token awards + fork of yearn vesting contract that complements the amendment proposal | $25k min, up to $50k (legal) ; $50k flat (smart contract)
o Fork of Hester Peirce Safe Harbor (address lack of smart contract coverage & other issues) | $20k min, up to $100k
o Amendments to Beyer Crypto Bill (carve-out algo stablecoins, improve desecuritization process, better - clarity on not covering DeFi) | $10k min, up to $50k
o DAO tax safe harbor (cross-category) - proposal to establish a safe harbor for smart contract systems (i.e., if pay a “greater of” %-based or flat tax, a safe harbor for certain tax-related risks will apply)
- Policy/Legal Position Paper Bounties
o Position paper on why DeFi smart contract transactions do not meet definitions of ‘swap’ | $50k min, up to $200k
o Why Worker-Driven DeFi communities are different from VC-backed communities and legal ramifications | $10k
o DeFi Functional Overview (functional overview, review against risk frameworks, discuss implications/application of CEA) | $50k
o Position paper on the MiCA Commission’s proposal, its potential application to DeFi protocols and basis for why its application should be limited in scope and recommendations / modifications of the existent rules to cover risks posed | $30k min, up to $40k
o Workable AML/KYC Compliance Model - compliance for regulated entities at fiat on and off-ramps | $15k
- Signal Support
- Signal Opposition
0 voters
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LEXPUNK UPDATE TIME!!
Hi All - Just wanted to drop in and make sure everyone is aware of the LeXpunK work product that is dropping.
As part of our “DAO Structure & Risk Mitigation” efforts, LeXpunK recently pushed out the LeXpunK Legal Defense Protocol v.1
This work product has several integral pieces that we want to highlight as the scope of this effort increased dramatically from what we origially set out to do. Quick reminder that all of the resources we produce are open-source available on the LeXpunK GitHub but links are included below to the Defense Protocol for ease of reference:
- The Operator’s Manual. The manual summarizes the legal threat landscape for DAOs/Multisigs and provides within the manual guidance to address these. NOTE: read the disclaimers, we are not your lawyers and you will need your own on this - goal is that you wont have to invent the wheel, that is the objective of the manual - it is a good faith effort at creating the wheel.
- LeXpunK Form of DAO Charter - model DAO Charter to allow DAO members to set certain ground rules about the nature of the DAO’s purposes and rules.
- LeXpunK Form of DAO/Multisig Joint Defense Agreement - a really important type of agreement that enables persons participating in unincorporated DAOs/Multisigs to obtain the benefits of attorney-client confidentiality and attorney-client privilege when prosecuting or defending claims where they share a mutuality of interest, claims or defenses. Note: This agreement also includes a Joinder Agreement and Non-Disclosure Agrement as exhibits.
- LeXpunK Form of Multisig Participation Agreement, which enables Multisig participants to set certain ground rules about the nature of their activities, responsibilities to their communities and responsibilities to one another.
- LeXpunK Model Yield Disclaimers for yield-bearing DeFi protocols.
The LeXpunK Legal Defense Protocol is intended to be an evolving open-source community-driven legal risk management toolkit. Accordingly, we are calling this first batch of documents “v. 1.0” but anticipate there is much room for improvement of these forms, as well as adding new tools, as cryptolaw evolves and the LeXpunK Army continues pursuing its mission.
We love feedback - let us know what you think and what you would like to see added to the Protocol next!
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