P18: Introducing The Developer DAO Foundation

Author: @kempsterrrr


This proposal outlines the structure, purpose and implications of The Developer DAO Foundation (the “Foundation”) on Developer DAO and, therefore members.

On passing this proposal, the following will apply:

  • Developer DAO approves the Foundation as a legal entity to represent the Developer DAO, and its Bylaws.
  • The DAO Treasury and its assets are transferred to the Foundation.


Why have a legal entity?

Borrowing from our friends at ENS DAO, having a legal entity representing the DAO in the “real world” is valuable for several reasons:

  • It provides limited liability to DAO participants for the actions of the DAO. Without a legal entity, participants may be individually held liable for anything the DAO as a whole does.
  • It is capable of complying with taxation requirements. Without a legal entity, DAO participants may be held liable for a proportion of the DAO’s income, even if they cannot access these funds.
  • It can enter into contracts with other “real world” entities, holding assets, etc.

Check out this excellent blog post for a more detailed discussion.

Mission, values & goals alignment

Successfully delivering on our mission to “accelerate the education and impact of a new wave of web3 builders” requires interfacing with the real world. A Cayman Foundation not only provides us with an entity, but its structure supports the diverse and global nature of our membership, the philanthropic spirit of our mission via tax neutrality and the added peace of mind of defined regulation related to crypto tokens within which we can operate.

Scope of Work

What is The Developer DAO Foundation

The Developer DAO Foundation is a Foundation Company Limited By Guarantee with No Share Capital, incorporated in the Cayman Islands. Such Foundations are suitable for non-profit entities like ours as they can exist with no equity-like owners and instead be structured in such a way as to follow the will of a wider group of stakeholders. In our case, the DAO and its Governance Tokenholders.

The Developer DAO Foundation initially has three Directors: me (kemp) and two Cayman-resident professional directors who perform similar roles for many other well-known, established DAOs. This majority Cayman director structure is key to ensuring the Foundation maintains residency in the Cayman Islands.

The Directors are responsible for overseeing the day-to-day management of the Foundation and for certain executive functions. For example, implementing changes required by successful DDIPs, signing contracts, and interfacing with real-world entities such as legal counsel that represent the Foundation or financial services providers.

Anything outside of such operational tasks and strategic matters requires DAO approval through Governance.

Foundations also legally require a Supervisor. The Supervisor is an administrative position with reserve powers akin to a shareholder of a company. The Supervisor is one of the Cayman-resident professional directors who also performs this role for other DAOs.

You can find the Certificate of Incorporation for the Foundation on our Github here and an article that explains why this structure is appropriate here.

Our legal structure may evolve, including creating more entities to support various needs. For example, accepting and making fiat payments, registering IP for Developer DAO, and supporting initiatives that are not core to the DAO but need financial and legal infrastructure to operate. With help from the Fundraising Operators and Stewards, I will drive this on advice from counsel and tax advisors in the coming weeks and months and will keep the DAO up to speed with any changes.

What are the implications for the DAO?

The assets currently held by the DAO will be held by the Foundation.

This sounds like a scary sentence, but the Foundation exists to enact the will of the DAO or its tokenholders. Exactly how this works is more clearly defined in the Foundation’s Memorandum and Articles of Association and Bylaws.

The Foundation, and therefore its directors, must follow the will of the DAO unless it could cause harm to the Foundation or if that puts them in breach of (i) their fiduciary duties under Cayman law, (ii) the Memorandum and Articles of Association including the “Objects” of the Foundation (its intended purpose[s]), (iii) any laws that apply to it, or (iv) any agreements or arrangements entered into by the Foundation.

The “Objects” for the Foundation are defined as follows:

  • the education of participants in the web3 and blockchain-related ecosystem;
  • the open-source development and adoption of technologies and software;
  • to provide ongoing research and education concerning decentralised autonomous organisations, open-source software, novel funding mechanisms, coordination tools, practices and protocols, blockchain or distributed ledger technology;
  • to enter into any private use modes or commercial agreements or relationships in furtherance of any of the above; and
  • to do all such things as in the opinion of the directors are or may be incidental or conducive to the above objects or any of them.

The Objects are designed to reflect the DAO’s stated mission, thus limiting the Foundation to that mission. However, they are intentionally broad to ensure the Foundation can legally enact any DAO decisions via DDIP without breaching them. The language is different from the DAOs stated mission; that language isn’t sufficient for a legal document.

The DAO can change everything about the Foundation, including its Directors, Articles, Objects and Bylaws, via a successful DDIP.

What are the implications for members of Developer DAO?

The Foundation is a significant milestone for the DAO. The benefit of being able to enter into contracts, accept money and limit liability for members can’t be understated. We’re now able to move forward on all Season 1 initiatives.

Existing internal processes will remain the same regarding how the DAO makes decisions and who signs the treasury transactions. Responsibility for signing on the Treasury is being delegated by the Foundation’s Directors to the current signatories.

We will add some extra lightweight processes to ensure the Foundation can maintain compliance with regulations, including Anit-Money Laundering (AML) laws.

Examples include:

  • Accounts Receivable and Payable processes for money entering and leaving the Foundation treasury.
  • A Grant Agreement for contributors receiving ongoing fiat denominated payment for services provided to the Foundation, mainly applying to DAO Operators and Partnerships Leads currently.
  • Contracts for any partnerships the Foundation enters into or Services it provides. These will be signed by the Foundation Supervisor.
  • Pre-emptive AML regulatory filings for any in-bound grants received by the Foundation.
  • Successful DDIPs must be shared with the Foundation Directors and Supervisors.

As mentioned above, one of the core motivations for having a legal entity is to provide some limitation of liability for contributors to the DAO. There is, however, no perfect legal structure. DAOs are a new concept and how they are regulated varies significantly across jurisdictions. We are, however, confident this approach will provide much better protection for our community.

Financial Implications

Item Amount
Off-shore legal counsel $37,348.75
On-shore Legal Counsel $10,000.00
Supervisor, Registered office, Cayman Directors and regulatory filings $19,173.38
Accounting $5,000.00

The Bylaws define a yearly operating budget of $50,000 to cover fixed operating costs (Cayman Islands government fees, registered office and secretary/director/supervisor fees) and leave room for some ad hoc legal and operational costs the Foundation may incur.

Further costs will require DAO approval through Governance.

Significant thanks must go to the web3con team for making this possible. Without the funds they brought in from the conference this may not have been possible. A discussion will be opened with the team regarding what to do with the remaining funds when this is clear.


  • The cost incurred with forming and running the Foundation as described above.

Next Steps

  • This post will remain in DRAFT form until the 13th. Kempsterrrr will be answering questions on the forum and be available to have a synchronous discussion about the foundation on 12th August. :white_check_mark:
  • The form vote starts on the 13th of August, running for 72 hours
  • The snapshot vote starts on the 16th, running for five days.
  • On passing, Foundation as a legal entity to represent the DAO is approved and its bylaws are adopted by the DAO


  • Yes, adopt the Foundation and it’s Bylaws
  • No, do not adopt the Foundation and it’s Bylaws

0 voters


Thanks a lot for the comprehensive write-up @kempsterrrr. I’m going to read up on the bylaws and some of the other documents you linked to. I’m sure I’ll have some questions related to fundraising and the FO position. Will try to make tomorrow’s Q&A session or otherwise will post them here.


Thanks @chuck25 ! Here or the synchronous chat is fine :slight_smile: If on the call I’ll try and relay some of the discussion back her afterwards and share a link to the recording

Hey @kempsterrrr thanks again for putting this together including all of the relevant hyperlinks. A few questions:

  1. What are the tax implications of this structure for D_D and its members?

  2. Who (/ what entity) incurs legal liability in the case of legal or regulatory action taken against the DAO?

  3. In references to the Bylaws Article 1, Section 2 - if there is a dispute, the Directors’ decision will prevail over the DAO. Does the fact that the Foundation’s Cayman-based Directors (2) outnumber the D_D-based Directors (1) put the DAO’s mission or operational independence at risk?

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Will get you a proper answer on this later today. The short version is, that the Foundation has 0 influence on, or ability to help folks figure out, their personal taxes. Anyone providing services to the DAO will be an independent contractor/person and handle their own taxes. It is not employing folks.

The Foundation.

These are very good questions.

To maintain its Caman residency the Foundation must have a majority of independent Cayman residents as Directors. This may be quite concerning however the Directors have a fiduciary duty to the Foundation and by extension, given the wording of the Bylaws, the DAO.

The Directors are empowered to make some operational decisions for the Foundation, such as engaging counsel and service providers within a pre-determined yearly operations budget of $50k. Outside of this scope, any action requires a DDIP. The Directors are bound to follow DDIP decisions unless this breaks the law, in which case they can refuse to implement a DDIP - but this would be the same regardless of legal structure.

Given there are no beneficial owners (for example shareholders that can draw dividends) and the limitations the Bylaws etc. put on the Directors, it is my view there is very little risk here. The Directors are incentivised to keep the DAO happy, if the DAO is not happy, it can shut down the foundation, changes the Bylaws, remove the directors or choose new ones.

If it gives you more confidence we’re closely following the model of Gitcoin, Nouns and ENS. All operate under roughly the same structure with similar Bylaws. The Developer DAO Foundation’s independent Cayman directors perform these roles across multiple other well-known DAOs.

Did we recruit the same guy as the supervisor of our Foundation and the director? I think not.

How much do you get from the operation costs, as a director?

Nothing. These funds go to the independent cayman directors who also provide the registered office, secretary and supervisors services, with some wiggle room left for unanticipated costs, for example legal costs.

Yes, the same person is playing the supervisor and director roles. Do you have a specific concern regarding this? It is very normal practice with such foundations ad taking this approach results in some significant cost and efficiency of communication/context etc. savings.

Just following on from this @chuck25 the summary provided is essentially correct. As defined in the template grant agreement:

  1. Independent Contractor Relationship.

a) In providing the Services under this Agreement, the Parties expressly agree that Party A is acting as an independent contractor and not as an employee or agent of [ENTITY], Developer DAO or any other related entity. Party A and Developer DAO acknowledge and agree that this Agreement does not create a partnership of any kind, nor any joint venture or similar relationship, and is exclusively a contract for service. Party A is not required to pay or make any contributions of any monetary value towards any governmental entity for tax purposes, unemployment compensation, worker’s compensation, insurance premium, pension or any other employee benefit with respect to Developer DAO during the Term.

b) Party A acknowledges and agrees that Party A is solely responsible for complying with all laws, regulations, and other governmental requirements applicable to Party A including but not limited to paying all taxes, expenses, and other amounts due from Party A of any kind related to this Agreement.

// consider inclusion (if applicable) to strengthen independent contractor fact pattern, mitigating employment-related risks to Entity

c) Party A represents that their provision of Services and compensation received under this Agreement is reasonably likely to comprise approximately 30% or less of their aggregate workload and income received from all counterparties, employers, customers, and other third parties as of the Effective Date.].

What the Foundation does provide is clarity on what tax requirements are at the organisation level.

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Not yet, just driven by curiosity. I think the role of supervisor is likely a dispensable role in our foundations, maybe? But in order to have our foundation establish, we should obey these roles and fulfill requirements

Yeah, man. I was not to suspect you haha. Today, I just finished the transaltion in CN, so better to know more, when I am asked by community members with such a question :rofl:

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The supervisor, secretary and director roles are legally required roles in the foundation. We can evolve the make-up for the Directors over time however the majority will need to remain independent cayman directors.

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Thanks for this brilliantly crafted tip of an iceberg, @kempsterrrr . I can’t imagine the amount of work that lies beneath its surface. It’s such an inspiration to see how much you accomplish and with such passion.


thank you very much mate, all :heart: out here