I’m buying a sawmill with a couple of friends. We want to coordinate an LLC and a DAO so that when we sell wood for crypto we can vote on what to do with the proceeds (like buy insurance and pay taxes… yeee-haaa).
We did some similar work a couple years ago, and now i want to replicate the process in a more open-source-for-profit way, so we’ll keep track of the wood we mill, and our expenses, and keep that data as public as possible. We are working with Otoco.io to orchestrate our on-chain LLC, and are going to use a membership template Aragon DAO to begin with.
On Wed 27 @Spectra, @tony, @Sem, @dogstoevsky, and @ansonparker met and decided the first approach we are going to test is
create an Aragon membership dao - include wallet id’s from the folks working with sawmill project…maybe enforce brightid so we can have some recovery mechanisms?
connect the DAO to Frame.sh so that we may interact with the DAO’s wallet directly
connect our DAO to Otoco.io and register the DAO as a Delaware LLC
Easy to do’s
Once Otoco’s contracts are live we should load them in Dune.xyz dashboard to build out dashboard for auditability and DAO2DAO development?
Also to do’s
We began discussing KYC integrations - Anson thought it was a hard requirement, however Dogstoevsky informed us that it is not, and that KYC is actually only required once interactions take place… so that brings up some other stuff…like where we might find some KYC integration tools?
Real-world bank: gonna probably need one? maybe work with the local non-profit UVA community credit union?
Insurance: figure out what kind of policies are available and if we can get event-based policies on-chain?
KYC tools: we should look at some of the options @Brent was talking about one?
Also should figure out some tokenomics and see what that looks like = could be interesting at some point
Jumio is a KYC service that is extremely good with many options. Their pricing is not so much as expensive to say but rather they need volume. They want to see $25k/yr at least from understanding dealing with them. Coinbase uses them.
More hands on KYC is Validation.com which requires development against their api and was meant for credit card validation but can be used as KYC.
These are centralized services. It would be nice to investigate decentralized KYC or better termed web3 KYC services… however good those may be.
yeah - i think for starters we’re just gonna ignore kyc - it’s not needed quite yet https://app.dework.xyz/aragon-dtech/onboarding-and-train i’m adding some links to possible dework bounties we can use as a training procedure for contributors
Otoco loads the required information (i’m assuming wallet IDs) on chain - the actual PDFs related to the entity are not particularly relevant anyhow… *
I believe so, worth confirming with Michael to be safe.
Assign the new company a wallet regulated by the governance of the DAO?*
Michael mentioned a few weeks back that they had finished up a smart contract to handle digital asset ownership, great for wallets, NFTs, IP, etc… Otoco I believe is first to come out with this.
Longer term we would like to know whether having an Otoco app in Aragon would be reasonable and if so how we could provide safeguards so that people don’t end up getting the wrong type of legal infrastructure and incurring liability? Can we also start to consider next steps for DAOs that are looking to leverage legal wrappers? How can we help DAOs handle insurance, taxes, etc in a safe way?
Absolutely a great idea for Aragon to include this in its product suite, I think the assisting of DAOs and individuals interested in this would be perfect for the HOTP.
These DAO LLCs are still so new… we should make a seperate channel in the discord for people to share thoughts, findings etc, and put out some formal guides/content to educate and help guide in specifics like Wyoming vs Delaware, Taxes, insurance, compliance etc
It is a legal regime that tradfi service providers must comply with. So, it is only required if a DAO LLC wants to do something like open a bank account, in which case the following documentation would be required:
A copy of your LLC’s articles of organization, certificate of formation or an equivalent document
Your LLC’s federal taxpayer identification number (EIN)
Your LLC operating agreement or some other document which sets out who is authorized to sign on behalf of your LLC
This would present an issue if the DAO is registered pursuant to Otoco’s procedure. Otoco claims that the first Member of a Series LLC can be a smart contract address (some additional explanation from them on this would be helpful). This preserves anonymity en route to limited liability. However, if the only agent identified by the registration documentation is a smart contract address, no bank is going to let the DAO open a bank account.
This presents a more abstract issue about how much anonymity is possible when a DAO interacts with entities that are not digitally native. While the registration process may allow for anonymity with respect to registered agents, interactions with third parties will likely require explicitly identified agents acting on behalf of the LLC. And, it is not clear how a Series LLC Member listed as a smart contract address will be treated in this context.
this is really good feedback! having a bank account, getting insurance (covering liability generally), and paying taxes are probably the most essential business procedures we need to address with our DAO… @michael - what are your thoughts here? KYC is completely reasonable for our work, so if we handle that on the banking side, for instance, that’s probably fine?
Otoco claims that the first Member of a Series LLC can be a smart contract address (some additional explanation from them on this would be helpful).
It’s because functionally whoever owns the smart contract address is the “owner” that any tax authority or government will care about. The smart contract owning the LLC is just an implementation detail to improve efficiency. People will always be accountable.
However, if the only agent identified by the registration documentation is a smart contract address, no bank is going to let the DAO open a bank account.
Correct, everyone who wants a bank account has to KYC and show who is the actual owner of the LLC behind the smart contract. They typically do this by getting an EIN from the IRS which the bank will require anyway (as you mention).
I have not seen a foreign owner of an OtoCo entity try to open a bank account (in Europe or something) with a Delaware Series LLC or the like. I imagine that it’s possible but not easy.
Imo, KYC isn’t necessary since every bank/institution has their own KYC process.
Michael mentioned a few weeks back that they had finished up a smart contract to handle digital asset ownership, great for wallets, NFTs, IP, etc… Otoco I believe is first to come out with this.
Sort of sort of. What we allow is a way for an LLC to sign and link documents to itself on chain. Eg., if you want your LLC to own something, you can sign a purchase agreement in OtoCo to have it linked immutably to your LLC’s address. It still relies on the traditional legal system though with legal docs.
But now if you get audited or something, there’s pretty rock solid evidence that your LLC’s manager (you, or could be a DAO) intended to take ownership of an asset. It’s like blockchain docusign.
