Creating A DAO - Part 2
This is part 2 of creating a real and legal DAO in the US. Had an interesting conversation last week with (yet another) founder selling their web2 product to go do a web3 thing. Yes, I do experience a small amount of FOMO, it's an exercise in focus. Actually all of XO is just an exercise in focus.
So don't quote me on this and I'm not a lawyer whatever etc (this is not legal advice or even advice let alone good advice) but basically how these US peeps have been doing it before the Wyoming LLC / DAO became a thing was like this:
- form a cayman entity
- create a separate fund that is controlled by the cayman entity
- do KYC and take in $$ into the fund. Regular 506(b) stuff. Maybe 506(c) so you can shout it out to the world.
- issue tokens to the shareholders
This is basically the state of the art. What happens when an investor puts some tokens up on sushi swap and some rando buys it? Well, great question ... that's the major rub.
Now could you do all this crazy shit inside the token protocol to only allow tokens to be sent to particular wallets of accredited investors, etc. Yes. but then I'm not sure how you get "To The Moon". In plain english:
Even if you set all this shit up legally and conduct a legal initial offering, these are still things people can trade, and if they trade to someone that's non-accredited, the SEC doesn't like that. Guarantee heads will roll.
Back to our shiny new DAO:
A few days after submitting my paperwork, I got an email saying I needed a real public hash of my DAO.
OK Sheesh. This is going to be much more work than forming the entity! This is not usually the case!
If you were doing this, the better path would be to get all this other stuff set up before making it a legal entity. So... part 2 should actually be part 1. sorry, you're reading this time-linear!
You need a .eth domain
Normally I'm a DIY type, but for this DAO I'm going for quick and dirty (initially) just as a demo and to explore the space.
Going down the rabbit hole, I had to
- Buy a .eth domain name - They're like $200, WTF! So much for free and open!
- Create a space on snapshot.org - https://snapshot.org - $25.00
- I messed up things a few times and it's like $20 just in transaction fees to do anything. still super painful.
All in this was like $300 worth of mistakes just to get a stupid domain name.
One facet of crypto I forgot is all the waiting. You wait for gas prices to change, you wait for transactions. GOD SO MUCH WAITING. This was true 7 years ago, and it's still disappointingly true today. It's a bit faster but it's also stupid expensive to do anything on chain.
So $300 later i think it's ready but not 100% sure.
I'm not going to create a DAO from scratch, so my options are limited to some existing tools.
I went with https://govern.aragon.org/. Mostly because their interface worked. I tried with DAO stack and couldn't get it to work. Something was broken on their website.
The Aragon step through process worked okay. I basically just accepted all the defaults. Who knows what the hell I created, but I'm sure the defaults are sensible and I'll be following up with reading all about what I just created.
This too was expensive. Another $250 in just gas fees for putting all this shit on chain. I see an increased number of mentions of IPFS and much more usage. Basically you can sign something with your key and then store it on IPFS. It's still decentralized and 'good enough'. Strikes me as odd then to have to put so much other shit directly on chain.
Making Wyoming Happy
After deploying my DAO contracts onto the ETH main net, I grabbed the hashes from my handy Aragon dashboard and threw them into a form a nice person sent me from Wyoming Secretary of State. I now have to snail mail this thing (along with a $60 check!) because I messed up on the original form.
Part of me wants to put some random hash in there just to see what they check. maybe they do check it on etherscan! Who knows!
Update -> After about a week, I got an email saying they received my piece of paper, but not sure if it was accepted or not. I can't imaging who on the other side is receiving these things and just has absolutely no idea what they're looking at.
Yeah but what does the DAO do?
Not sure yet! This is just a little fun thing I research and play with on the weekends. And, yes, you caught me, on Friday night instead of going out to bars. idk. I'm getting old.
I've always wanted to make a very simple t-shirt DAO to start. People submit designs, vote on them, highest votes get a limited run (let's say 100) that sell out and never come back. Something like that would be cool just to dip my toe in.
Of course, the elephant in the room is how XO fits into this DAO. It probably doesn't. XO is a great business. I don't see any real benefit at this time to confusing that with crypto stuff.
Now at some point in the future might there be some interesting overlap? Yes definitely, but for now, KISS (Keep It Simple Stupid, or Keep It Stupid Simple).