This post from the core team aims to gauge the community’s sentiment and gather input before moving forward with the next steps toward a CIP. It serves as a pre-CIP phase, allowing ample time for questions, concerns, and clarifications.
We actively encourage feedback, questions, and further community input. Please review this draft carefully and share your comments before we finalize the CIP—especially before it moves to a Snapshot vote.
If the general feedback is positive, the goal is to finalize this proposal, incorporating the placeholders below, and share it on the Forum as a follow-up to this Temp Check by February 21.
If there’s strong interest in hosting an AMA, please leave a comment to indicate your support.
Simple Summary
This proposal establishes a robust 4-entity legal structure for CoW DAO by incorporating a Cayman Islands Foundation and three BVI companies—CoW Core, CoW Hosting and CoW Business. The structure is designed to isolate and mitigate tax, regulatory, business, and liability risks while ensuring that all major decisions and operational mandates flow from CoW DAO’s governance process. The framework also sets out clear roles for directors, supervisors, secretaries, and service providers to create a balanced relationship between decentralized governance and day-to-day management.
Motivation
Current Challenges:
- Risk Concentration: The current unincorporated model exposes core contributors and large token holders to significant tax, regulatory, and operational risks.
- Operational Limitations: The current unincorporated model limits CoW DAO’s ability to engage with institutional service providers and manage specialized operational functions efficiently.
Objectives of the Proposal:
- Risk Mitigation: Distribute revenue, operational functions, and liabilities among four distinct legal entities.
- Enhanced Credibility and Efficiency: Create entities with appropriate legal forms that can sign formal contracts and engage with traditional institutions and counterparts.
- Decentralized Oversight: Maintain unified DAO control over strategic decisions while granting directors the operational flexibility needed to manage day-to-day activities.
Entity Structure and Legal Form
Overview
This proposed legal structure is designed to establish a network of adjacent legal entities that support and interact with CoW DAO. The aim is to strategically separate core activities to mitigate tax, legal, and regulatory liabilities while preserving the DAO’s autonomy as an unwrapped, self-governing entity with ultimate decision-making power—including the authority to dissolve any of these affiliated entities if necessary. In the final configuration, the functions formerly handled by Defou will be transferred to these new entities, rendering the mandate to Defou obsolete.
CoW DAO (Unwrapped DAO)
CoW DAO operates as an unwrapped, self-governing entity with no immediate legal “wrapper.” This design maximizes decentralization and ensures that ultimate decision-making power—including the authority to direct, modify, or dissolve affiliated entities—remains with the DAO.
- Key Components:
- Governance + Delegation: The DAO sets strategic direction and approves mandates that are transmitted to the affiliated entities.
- Settlement Contract & Tokenomics: The DAO’s settlement contract (core and fully decentralised part of the product) and tokenomics framework remain unwrapped.
- CoW DAO’s MultiSig: CoW DAO remains exclusive owner of the COW token supply which shall not be attributed to any of the newly created entities. The signer structure remains unaltered and unwrapped.
1. CoW DAO Legal Representation – Cayman Company Foundation (“CoW Foundation”)
- Legal Form:
- A Cayman Islands Foundation that is shareholder-less and member-less.
- Purpose & Role:
- Legal Interface: Acts as the DAO’s legal representation, interfacing with the real world.
- Treasury & Grant Management: Manages financial assets, fundraising (e.g., token sales), and grant distributions through dedicated community committees such as Grants DAO Committee or Treasury Core Team
- Intellectual Property (IP) & Competition Rules: Holds key software rights and trademarks, and independently sets and enforces solver competition rules.
- Governance Considerations:
- The Foundation operates based on mandates issued by CoW DAO through governance process.
- CoW DAO ultimately retains the power to amend the Foundation’s mandate or dissolve it if necessary.
- Mandate (specifics):
- Represents and Formalizes Governance: Acts as the DAO’s legal interface.
- Treasury Management: Manages financial assets on the DAO’s behalf, including, Fundraising and liquidity provisioning initiatives.
- Grant Management: Oversees grants, including core team token allocation.
- Intellectual Property (IP): Holds software and trademarks.
- Solver Competition Rules: Sets and enforces contest rules independently from solver team operations.
- Documentation:
- Placeholder: [Memorandum of Association – Cayman Foundation will be shared at latest with the formal CIP post]]
- Placeholder: [Articles of Association – Cayman Foundation will be shared at latest with the formal CIP post]]
2. Core Protocol Activities – CoW Core Limited (“CoW Core”)
- Legal Form:
- A BVI Company Limited by Guarantee.
- Key Characteristics:
- No shareholders are present; instead, the company has members whose liability is limited to a nominal guarantee (e.g., $1).
- The Cayman Foundation is the sole member and guarantor, ensuring that CoW DAO’s interests are fully represented.
- CoW Core operates based directly on mandates issued by CoW DAO through governance process.
- Primary Activities:
- Solver Operations Management: Oversee the technical and operational aspects of solver management, including vetting, onboarding, and managing the solver bonding pool.
- Backend Infrastructure: Maintain critical functions such as the order book and autopilot features.
- Regulatory/Tax Considerations: Structuring solver bond management to avoid triggering VASP risks by ensuring that the entity is not the custodian of funds.
- Mandate (specifics):
- Solver Operations Management: Vetting, Onboarding, Allow & Deny Lists; Overseeing participant eligibility for CoW DAO’s bonding pool. Social consensus rules enforcement.
- “Managing” Reference Driver: Ensuring key protocol infrastructure runs smoothly.
- Backend Responsibilities: Maintaining order book and autopilot functionalities (incl. Solver ranking)
- Solver R&D: May research and develop solver related technologies, either through internal services or outsourced
- Documentation:
- Placeholder: [Constitution will be shared at latest with the formal CIP post]
3. User Interface Activity – CoW Hosting Limited (“CoW Hosting”)
- Legal Form:
- A BVI Company Limited by Guarantee.
- Key Characteristics:
- No shareholders are present; instead, the company has members whose liability is limited to a nominal guarantee (e.g., $1).
- The Cayman Foundation is the sole member and guarantor, ensuring that the DAO’s interests are fully represented.
- CoW Hosting operates based directly on mandates issued by CoW DAO through the governance process.
- Primary Activities:
- Hosting & Maintenance of the UI: Ensure stable and secure public-facing access to the protocol’s interface including CoW Widget. Owner of the domain.
- User Support & Token List Management: Provide user assistance and manage the protocol’s token list and related features.
- Mandate (specifics):
- Hosting & Maintenance of the UI: Ensures stable access to the protocol’s front-end.
- User Support: May handle certain non-financial, user-facing tasks.
- Token list management: Will be the manager of the token list and token selection related topics.
- Documentation:
- Placeholder: [Constitution will be shared latest with the formal CIP post]
4. Business Entity Activities – CoW Business Limited (“CoW Business”)
- Legal Form:
- A BVI Limited Liability Company organized as a company limited by shares, and a subsidiary of CoW Foundation.
- Key Characteristics:
- The Foundation is the sole shareholder of the CoW Business
- CoW Business operates based directly on mandates issued by CoW DAO through governance process.
- Primary Activities:
- Protocol-Related Payments: Handle incoming and outgoing transactions (incl. solver reward calculation and distribution), manage the payout safe and protocol fee safe, and execute potential COW token buybacks.
- Commercial Partnerships: Enter into fee agreements, manage relationships with centralized exchanges (CEX listings) and market makers, and oversee broader business relationships.
- Risk Separation: By handling these revenue-generating activities here, the entity isolates VASP and tax risks from the core governance and technical functions.
- Transition of Service Providers:
- This entity will assume and integrate activities formerly performed by Defou. The current mandate to Defou will be terminated as its functions are fully transferred to CoW BusinessCo.
- Mandate (specifics):
- Protocol-Related Payments: Handles transactions in and out of the Protocol and MEVBlocker
- Payout Safe & Protocol Fee Safe: Manages safes for operational payouts and protocol fees.
- COW Token Buybacks: Executes market transactions for token buybacks.
- Business Relationships: Enters into commercial partnerships for swap integration and MEV Blocker integration (and others business deals, where applicable).
- Fee Agreements: Negotiates and signs agreements on behalf of CoW DAO with partners regarding fee structures.
- CEX Listings & Market Making: Manages relationships with centralized exchanges and Market Makers.
- Documentation:
- Placeholder: [Constitution will be shared at last on the formal CIP post]
General considerations regarding the impact of CoW DAO’s decentralisation efforts on the mandates:
- In the event some parts of the protocol are further decentralised, these parts, where possible, should be automatically withdrawn from the mandate of the entity to which it has been allocated and moved back to CoW DAO.
Mandate Flow from CoW DAO to the New Entities
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DAO Strategic Direction:
- CoW DAO sets the overarching strategic goals and specific mandates for each entity by means of governance process. This is reflected in the mandate documentation within each entity’s Memorandum of Association.
- If a Service Provider requests a specific mandate or scope of work (for instance, through CoW DAO’s governance process such as CIP-58), they are assigned to the appropriate structural entity, which then adopts their updated mandate.
-
Delegated Committee and Major Decisions:
- Already existing decision structures, namely Grant Committee (CIP-63), Treasury Committee (CIP-62) and Defense Reserve Committee (CIP-50) (“Delegated Committees”) remain empowered as is. The respective entity’s director delegates powers within the scope of the named CIP to said committees. The director may appoint new Delegated Committees upon DAO approval.
- For any matter listed in the Memorandums of Association—such as investments, asset management, or commercial engagements—the Directors must either obtain prior consent from or verify that the Delegated Committee and/or the DAO has approved the action.
-
Appointment and Removal Procedures:
- The DAO holds the authority to appoint or remove the Director and Supervisors via ordinary resolutions, ensuring that the board remains aligned with DAO objectives.
-
Day-to-Day Operational Mandates:
- Directors have the operational freedom to manage day-to-day affairs, provided their actions adhere to the DAO’s mandates.
Governance Structure and Roles
Director:
- Name and Firm: A proposed independent director from Leeward Management Limited, based in the Cayman Islands, is set to oversee all entities. While appointing multiple directors may be beneficial in the future, the authority to make such changes resides with CoW DAO.
- Role:
- Day-to-Day Operations: Manage and control the operational affairs within the boundaries set by the DAO’s mandate.
- Implementation: Ensure that all actions conform to applicable law, the Memorandum, and Articles of Association.
- Delegation: May and must delegate tasks to committees, subject to CoW DAO’s approval.
- Balance of Power:
- Budget limitations: While the Director enjoys operational flexibility, they must first secure approval from the Delegated Committees for any reserved actions(such as investments, asset management, and commercial decisions). Additionally, accountability is maintained through transparency reports
- The DAO retains ultimate control via ordinary resolutions for the appointment/removal of Director(s) and Supervisor.
Supervisor:
- Name and Firm: Independent TraversThorpAlberga’s supervisor firm is proposed as the Supervisor for the Foundation (to be confirmed prior finalising formal CIP)
- Role:
- Oversee that the Director complies with their fiduciary duties and operational mandates.
- Access records, call for reports, and ensure compliance with the Articles of Association.
- Appointment:
- Appointed and, if necessary, removed through a DAO resolution or by decision of the Defense Reserve Committee as per CIP-50.
Secretary:
- Name and Firm: Leeward Management Limited is proposed to serve as the Secretary.
- Role:
- Handle administrative tasks and act as the AML officer for incoming funds and donations.
Operator:
- Name and Firm: Lemma Solutions, a Cayman based service provider is proposed as Operator.
- Role:
- Execute the operational tasks related to the structure such as bookkeeping, transaction initiation, agreements discussion and support to the Director
- MultiSig creation and alignment on operations with the different committees.
Service Providers
- Nomev Labs Lda
- Continues to provide technical and operational services where appropriate. Once the Foundation and other entities are up and running the Foundation will allocate the various mandates of the development company to the appropriate entities. CIP-58 remains in full force and is assigned to the relevant new entities.
- Additionally to the current mandate, which will be reflected in the appropriate entities, Nomev is assigned to help with the coordination of this structure, including an ongoing communication directive that director and involved operators (cf. listed above) are kept up to date with CoW DAO’s decisions.
- The incorporation mandate will be assigned to the legal firm TTA, via Nomev’s initial mandate and with the direct confirmation via forthcoming CIP.
- Defou:
- The current mandate to Defou upon CIP-59 will be terminated (via forthcoming CIP and in alignment with terms outlined in CIP-59). Its responsibilities will be transferred to CoW Business, which will assume and integrate the activities previously handled by Defou.
Winding Down
- Wind-down process:
- Decision command:
- CoW Foundation: by governance
- CoW Core: by governance
- CoW Hosting: by Director and/or governance
- CoW Business: by Director and/or governance
- Asset Disposition:
- CoW Business: to the Foundation, which is the sole shareholder of the entity
- CoW Core and CoW Hosting: donated to the Foundation, as designed in the incorporation documents.
- CoW Foundation: Move financial assets to a DAO owned wallet as dictated by governance.
- Decision command:
The Director is authorized to wind down HostingCo and BusinessCo solely for the purpose of efficiently liquidating these entities in response to legal or regulatory requirements. This authority shall be strictly confined to such legal and regulatory obligations as outlined in the bylaws of these entities
If the DAO opts to wind down all entities simultaneously, it is advisable to proceed gradually, with the Foundation being the final entity to be dissolved. In this scenario, the DAO and its members acknowledge that tax, regulatory, and liability risks will revert to CoW DAO and affiliates.
Costs
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Cost (for entire structure)
- Setup: USD ca. 100’000 (+/- 10%)
- Yearly Running Costs: USD 180’000 (but also decreasing around 100’000 USD to due to cost savings on crypto-off-ramp); equals operating budget.
-
The cost for the structure (set-up and 1 year running cost) is to be borne by the service provider under the mandate and budget allocated by CIP-58.
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The multi-entity structure will incur additional legal and administrative costs; however, these are justified by the reduced risk exposure and enhanced operational credibility.
Final remarks
This CIP proposes a comprehensive 4-entity legal structure for CoW DAO that includes a Cayman Islands Foundation and three dedicated BVI companies. This structure is designed to:
- Distribute risk and responsibilities,
- Enhance legal and operational credibility,
- Provide clear mandates from CoW DAO,
- Ensure balanced power between the DAO and the appointed Director (with oversight by a Supervisor and administrative support from the Secretary and Operator), and
- Transition service functions from Defou to CoW Business.
By adopting this framework, CoW DAO will be well-positioned to manage tax, regulatory, business, and liability risks while maintaining decentralized governance and operational efficiency.