CIP-1: Adopt Participation Agreement

Governance Closed Proposals
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CIP: 1
title: Adopt Participation Agreement
author: silkenoa.eth
status: Active
created: 2022-02-22

Update 10/03/2022

This proposal has passed according to CowDAOs governance process and is available as IPFS file here. The Participation agreement IPFS hash was added to the snapshot space according to the specification

Update 01/03/2022

This proposal have finished the 7 day discussion period and all comments were addressed. A PDF version of the Participation Agreement is hosted on IPFS here and updated below. This is the final version to be voted on.
Voting is available for seven days on cow.eth snapshot space available also on vote.cow.fi.
If this proposal is approved, DAO members are encouraged to pin the document on their IPFS clients.

Simple Summary

This is a proposal to implement a private ordering agreement (a so-called “Participation Agreement”) among all DAO Participants to provide an operating framework for CowDAO and to govern the rights and obligations of each party.

Abstract

The participation agreement:

  • Explains the CowDAO’s governance mechanism and determines who CowDAO participants are.
  • Explains the contribution of GnosisDAO and its limitations.
  • Provides a mutual release by DAO participants from claims arising out of or in connection with the CowDAO and a mutual waiver of claims against CowDAO and other DAO participants.
  • Limits the liability of the CowDAO, GnosisDAO, the service providers, and the signers in relation to loss or damage arising under or in connection with the use of CowDAO smart contracts.
  • Provides a complaints and dispute resolution procedure.

Motivation

As a DAO that is currently not wrapped in a legacy system entity, it is paramount to minimize the legal risks to CowDAO participants as much as possible while maintaining its decentralized nature. It does not exclude the possibility of members voting in favor of a legal wrapper/incorporation at a future point in time.

Specification

If this proposal passes, CowDAO and its participants will adopt the proposed CowDAO Participation Agreement. A PDF copy will be stored on IPFS and linked as terms in the cow.eth snapshot space. By voting on any future proposal CowDAO participants agree to be bound by this Participation Agreement.

Rationale

No single party is in control of the CowDAO. It is managed by its members, and does not have any director or manager. While it is entirely up to CowDAO participants to decide to incorporate the DAO into a legal framework, at its onset, it is an unwrapped/unincorporated organization.

The attempted shoehorning of DAOs by legal systems into existing categories such as unregistered organizations, unincorporated associations or general partnerships leads to concerns that DAO participants may be held liable for the actions of the DAO. While CowDAO Participants cannot dictate states and state regulators how to characterize CowDAO, participants can use whatever private law mechanism at disposal to frame the CowDAO as it is internally viewed and minimize legal risks as much as possible to CowDAO and CowDAO participants.

10 Likes
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Thank you @Silkenoa for the proposal.
I think it is essential for CowDAO to consider potential legal risks for its participants and try to mitigate them to the largest extent possible.

2 Likes
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Item 13.19: “You are not in or under the control of, or a national or resident of any country subject to United States embargo, United Nations or EU sanctions or the HM Treasury’s financial sanctions regime, or on the U.S. Treasury Department’s Specially Designated Nationals List, the U.S. Commerce Department’s Denied Persons List, Unverified List, Entity List, the EU’s consolidated list or the HM Treasury’s financial sanctions regime.”

Were vCOW claims restricted in the same manner?

If not, is this language appropriate for the participation agreement?

2 Likes
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yes, CowDAO members manage it. Potential legol risks for DAO members need to consider and do best to take care of.

5

Based on the participant definition in the Participation Agreement not every vCow holder is a DAO member. Commensurate with our self-governance principles, the clause makes it the responsibility of each participant to confirm that they are not on a sanctions list, and if they are, not participate to reduce the risk to other participants. I find the clause important as sanction violations in many countries are strict liability offences. The clause attempts to shift the responsibility of sanction compliance from every one to the individual participant, who may be subject to sanctions (people generally know when they are subject to this). If the DAO were so minded, it may decide later to enforce a sanctions screening.

2 Likes
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Thank you for detailing your reasoning.

I think it sets a poor precedent for the DAO to preemptively condone unethical legacy systems, for the sake of protection against an unlikely scenario.

Those early moments set the tone for the future. “Decentralized… except for the cases where decentralization matters”. Are we a real DAO, or a smokescreen to escape liability?

I expect the vote to pass with 90%+ if not 99%+, simply because by and large this isn’t what people care about. So I’ll get off the soapbox now. Once again, I appreciate your perspective.

7

I personally believe in Decentralization, permission-less-ness, censorship resistance. I think these values are embedded in CowDAO’s values.
I think it is useful to have an agreement that defines the legal relationship between participants.
With regards to sanctioned countries, people living there can still participate by the virtue of how DAOs are technically structured. The PA is trying to mitigate the risk for general participants in the case that some participants are indeed from sanctioned countries.

2 Likes
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This proposal has passed according to CowDAOs governance process and is available as IPFS file here. The Participation agreement IPFS hash was added to the snapshot space according to the specification