MIP39c2-SP17 adds Core Unit DAIF-001: Dai Foundation

MIP39c2-SP17: adds Core Unit DAIF-001: Dai Foundation

Preamble

MIP39c2-SP#: 17
Author(s): @sorenpeter
Contributors: @juanjuan
Tags: dai-foundation, core-unit, daif-001, mandate
Status: Request For Comments (RFC)
Date Applied: 2021-07-07
Date Ratified: <yyyy-mm-dd>

Sentence Summary

MIP39c2-SP17 adds Core Unit DAIF-001: Dai Foundation.

Specification

Motivation

Planning for the best case scenario for MakerDAO requires establishing measures to protect Maker’s intangible assets and prepare to mitigate problems in worst case scenarios.

  • What if somebody launches a coin on some other blockchain and calls it Dai?
  • What if somebody uses the software developed for the Maker Protocol for purposes that go against the principles of MakerDAO?
  • What if there is a governance attack and the attackers get control over the Maker and Dai trademarks?

The independent legal entity Dai Foundation has been created to safeguard what cannot be decentralized in Maker DAO, such as ownership of trademarks, domains, software copyrights, etc., which is connected to a real-world centralized governance body.

Dai Foundation cannot seek profits and is only mandated to serve its specific purpose: to safeguard the Maker Assets. The Dai Foundation will make these assets available for use by the community to support the sustainability and growth of the Maker Protocol with as few barriers as possible.

The Dai Foundation Core Unit is proposed to be the vehicle that enables the practical implementation of these critical goals.

Core Unit ID

DAIF-001

Core Unit Name

DAI Foundation Core Unit

Core Unit Mandate

The Dai Foundation Core Unit is responsible for:

  • Facilitating the dialogue between the Dai Foundation and the Community regarding intellectual property safeguarding, intellectual property usage, and related activities - this includes discussing with the community edge cases around various attacks on the protocol and its foundational principles, and formulation of principles for how to approach various forks and other situations where Dai Foundation need to act. Such principles and approaches will be put forward for Maker Governance approval.
  • Request the necessary budget from Maker DAO Governance to sustain its operations and adequately mitigate the related legal risks to its essential role
  • Implementation of processes for safeguarding of new intellectual property that is added to the Protocol at Dai Foundation.
  • Implementation of processes for making the intellectual property that Dai Foundation owns available for use by the broader Maker community for the good of the protocol with as few barriers as possible.
  • Providing transparency around how the Dai Foundation operates and which assets the Dai Foundation owns.
  • In collaboration with Maker Governance, create transparency around how the usage rights of the Maker Assets are allocated.

The Dai Foundation Core Unit will carry these responsibilities following the principles defined in its Trust Deed.

Community Involvement

  • The Dai Foundation Core Unit will create transparency into the activities of the Dai Foundation and engage in dialogue with the Community about how to safeguard Maker’s intellectual property while also making it available for use with as few barriers as possible.
  • The Dai Foundation Core Unit proposes a process by which Maker Governance decides who utilizes any of the assets that the Dai Foundation holds, as long as the users assume responsibility for the use of those assets, and the Dai Foundation remains the legal owner of said assets.
  • As part of the ratification of the Dai Foundation Core Unit, the Dai Foundation offers Maker Governance the appointment of two members to join the Dai Foundation board. This will enable insight into all activities and make sure the views of Maker Governance are appropriately taken into account.

Planned near-term activities

  • Creating a process together with Maker Governance for making intellectual property held by the Dai Foundation available for use by the Community - See the proposal for discussion here.
  • Finding owners for the assets from the Maker Foundation that the Dai Foundation has accepted for temporary care-taking.
  • Creating a process with Maker Governance for giving copyright/intellectual property ownership to the Dai Foundation for assets added to the protocol (e.g. the copyright for the code contained in a new smart contract).
  • Creating a process with Maker Governance for appointing community board members.
  • Defining a backlog for missing processes (e.g. how a Contributor or a Core Unit can transfer an asset to the Dai Foundation)

Connection with the Dai Foundation

The Core Unit’s Facilitator will be an official member of the Dai Foundation. Additional members from the Dai Foundation may participate in activities required to fulfill the Core Unit’s mandate and third parties that the Dai Foundation may subcontract.

Related Documents

10 Likes

I want to raise a couple of issues around this proposal:

  1. The first has to do with the way this proposal’s been brought to governance

When the Core Unit model was introduced in CommDev, we were told the Maker Foundation would remain neutral so as to give the community an even playing field to make their own proposals about how the DAO should be run and avoid the appearance of favoritism toward groups associated with the Foundation.

If this proposal was to be made in a neutral manner, the Maker Foundation should have disclosed what resources the Dai Foundation is proposing to take legal ownership of so the community could assess the Dai Foundation’s plans and propose alternative solutions.

Instead, the Dai Foundation has made its plans and treated the governance process as an afterthought.

I understand there needs to be a legal entity in order to hold IP and initiate enforcement actions against those who violate the terms of use of IP; my concern is that the community hasn’t been given an opportunity to consider alternatives to this proposal.

  1. The second issue has to do with this proposal’s implications for Core Units

Please correct me if I’m misunderstanding the proposal but passing this proposal would put Core Units in a position where the Dai Foundation could, without the consent of the DAO, decide a CU was in violation of the trademark agreement OR that the work of a CU should belong with MakerDAO’s IP and threaten to initiate enforcement actions against them for non-compliance.

Again, I understand there needs to be a legally-recognized entity in place to protect IP but there’s a significant difference between that entity being accountable to itself and accountable to the DAO.

If the DAO can find a way to hold real-world assets and initiate enforcement actions to liquidate loans that have gone bad, surely it can find a legal structure that allows the DAO to protect its IP and manage its social and web properties in a way that provides accountability to the DAO rather than a private team of individuals.

I’m not sure what the appropriate course of action is with regard to governance but I think the community should be given a opportunity to discuss what the possibilities are and how it wants its IP to be managed on neutral grounds.

With regard to the second concern, I’d like to see language explicitly stating that the Dai Foundation will act in an advisory rather than authoritative role and will not initiate demand IP from Core Units or initiate enforcement actions without the consent of the DAO.

P.S. The link to the proposal about “Creating a process together with Maker Governance for making intellectual property held by the Dai Foundation available for use by the Community” isn’t working for me.

2 Likes

Thanks for your comments, @seth. I would suggest starting by reading the Draft. It might clear some of the doubts.

I’m not sure when or at what point you would think it would be better.

The Dai Foundation has been bootstrapped by the Maker Foundation and it’s now being transitioned to the DAO.

MKR holders could choose to defund it or to propose another Core Unit to do something similar.

This is similar to the PE or Oracles Core Units, no? Bootstrapped by the Maker Foundation, handed to the DAO.

PE and Oracles also made their plans (and I’m glad they did) and proposed a Core Unit to the DAO to get funding.

Same as above. Plus, the Dai Foundation was announced a considerable time ago, and I haven’t seen anyone going crazy to propose alternatives (or raise any concerns).

Probably @sorenpeter can give a better answer, but why would Dai Foundation go rogue and risk losing their funding? To lose money over a trial? And get a bad reputation?

I don’t see the incentives’ alignment in your scenario.

On the other hand, why a Core Unit (representing Maker and the DAO) would violate the IP?
Also, I personally (I’m not sure if this has been discussed) that the world any Core Unit does for the DAO should belong to the DAO. If there’s a Foundation to protect that, even better, no?

Who is the DAO?
What happens when there are several opinions about what the Dai Foundation should do? Or even about what the DAO should do? How do you propose solving for that?

PS, pending approval, the Dai Foundation has offered two seats on the board. Probably choosing two representatives will be hard already.


I think you should see the Dai Foundation as an entity that will protect your IP from the “outer world”, instead of shaping the DAO through legal lawsuits (which sounds like the worst possible way of shaping a DAO’s vision).

3 Likes

Would the IP belong to the winning CU? No, that’s the point that @seth is making. That is, I think, the core thing of point 1.

Point 2. is related to the post I made a month ago. The DAI Foundation is not at the service of the DAO but here to control the DAO.

From the Trust Deed:

The Foundation must also ensure that the MakerDAO system […] act in accordance with the fundamental principles enshrined in the preamble of the Trust Deed.

Maybe there were reasons to structure it that way, would be happy to know as we are working on a Cayman Foundation that will take orders from the DAO (and could probably defend MakerDAO IP).

Nevertheless, while this structure introduces a risk for MakerDAO, we don’t have a choice anyway and the risk is not huge.

MKR vote? That’s usually what we do no?

3 Likes

I echo some of the points @juanjuan made above–but remember if the Community is not happy with the performance of the DAI Foundation, they can always push them out, Cut funding, or even worse–Fork the protocol. Or, you can even make a case of disbanding the entire Maker Community. So, all in all there are ways thru a decentralized community that things can be contain with checks and balances, IMO. And without a Community–ha, you have nothing–just ask A16Z.

Also, I do praise you for speaking your mind Seth–you tell it how you feel, while others might keep quiet. Good to hear you speak out. You’re keeping it real.

3 Likes

I was not under the assumption that there could only be one Core Unit, and the situation was “winner-takes-all”. Can there not be multiple Core Units with legal expertise defending Maker on different fronts?

This is great to hear, @SebVentures. Not sure how much you can share at this point, but I think this is an important topic that should not be overlooked. Happy to see that more people are working towards this.

MKR holders can choose not to fund the Dai Foundation (at the risk of being unprotected).

This is akin to a critical Core Unit transitioning from the Foundation to the DAO.

SES is working on scaling the DAO and bringing more Core Units to protect the moats of Maker. This topic definitely falls into that mandate.

@juanjuan the key point is not whether we can have one or many CU defending the IP. The DAI Foundation is the one that has IP rights and no one else will. The discussion stop from there.

The Cayman Foundation we are setting is just an illustration of ways to structure the CU at the service of the DAO instead of the opposite (and happy to understand why it couldn’t work if this is the case). Nothing to expect there regarding the IP.

2 Likes

Then maybe we should define mechanisms to change this?

I thought long about this. From my perspective (and I’m quite far from being a lawyer, so this might be wrong) it will be extremely interesting to see how this is implemented since the DAO doesn’t have any legal recourse. Maybe we create a Foundation to control the Foundation. :smiley:

The original comments mentioned “the way this proposal’s been brought to governance” and “the proposal’s implications”, following by “we have no choice”, and “the Dai Foundation is out there to control the DAO”.

Not sure how to solve this, but we have a lot of brains out there, so let’s RFC this proposal as needed to make it work.

Sorry - The link to the draft Asset Allocation Process wasn’t working. I have edited the proposal to add it (and apologies if I have screwed up something else in the process :wink: )

For quick access here is the link as well:

I do fully agree with all the points made by @juanjuan - couldn’t have written it better.

What made you draw that conclusion? Let me just make it clear that Dai Foundation never had and do not expect to have any authority over what shall happen with new IP a CU produces. This is a concern between Maker Governance and the CU.

As a community member it would make sense for me that IP created by funds from the Maker Protocol in general are made available as a public good to be used for the growth of the protocol. Dai Foundation can help in that regard for example as we see with the PECU assigning the copyright of their open source code to Dai Foundation, but Dai Foundation has no means of forcing this. This is for Governance to demand/CU’s to offer.

It is all in the eye of the beholder, but I don’t think calling Dai Foundation “a private team of individuals” is a very precise definition. The Dai Foundation itself is a non-profit foundation created under Danish law. It is under the purview of the Danish authorities to assure it only acts according to the mandate in its Trust Deed (as linked to in the proposal above). The board is obligated to act in that framework and cannot just choose to deviate from it at its liking.

@seth I also want to thank you for bringing up these questions for discussion. I do hope reading the draft asset allocation process helps, and look forward to your comments once you have read that.

5 Likes

I totally understand a word like “ensure” in the premable rubs the wrong way. It never was the meaning of the founder that Dai Foundation should act as an outside controller of the Maker Protocol, but purely to be a holder of what Maker IP that cannot be decentralized.

Please consider “ensure” as legalese speak for saying that when Dai Foundation makes decisions within its very specific mandate it shall ensure to adhere to the principles in the Trust Deed. Again, that mandate is very specific and limited, i.e. to safeguard Maker IP that its creators are handing over to Dai Foundation.

4 Likes

When Core Units were announced. Perhaps I’m mistaken but I was given the impression that neutrality is/was part of the goal in implementing the Core Unit model.

The underlying question here is: is the Core Unit model about creating a way for individuals from the Foundation to transition to the community or about creating a neutral basis upon which anyone, whether from the Foundation or the community, can make a proposal?

If it’s the latter, then staying neutral means that the Foundation should have made efforts to let the community know what it’s been doing and what resources are available for CUs to take responsibility for.

Instead, the Foundation has largely remained silent apart from the announcements about the transition to CUs and the CU proposals we’ve seen so far, which gives teams coming from the Foundation a considerable advantage over teams from the community when it comes to making proposals about how resources that have been managed by the Foundation thus far should be managed.

The Content team would have at least considered proposing an alternative had we been given the necessary information to do so but any time we’ve inquired about the properties, we’ve simply been told to wait for the Foundation to figure out what it wants to do.

This is the core of the issue: Saying MakerDAO’s IP “can’t be decentralized” makes sense in the context of the technical and legal limitations on managing IP but in a larger context, decentralization is about power and a team that’s committed to decentralization would work to ensure the DAO isn’t put into a position where they have to choose between their IP being protected and it being in limbo.

This conversation should be facilitated in a way that encourages transparency and the exploration of alternatives and that’s not what’s happening with this proposal.

Your guess is as good as mine but given the option, I prefer to work with CUs that “can’t be evil” over those who promise they “won’t be evil.”

This is the core of the other issue. If the DAO decides it wants a different team to manage the IP, is the Dai Foundation going to work with that team to give them what they need? If we sign off on this now, the Dai Foundation has the legal right to do whatever it wants.

I’d also like to see a better answer to @LongForWisdom’s concern about what happens in the event of a governance attack than “we’ll choose the best fork.”

From a legal standpoint, we should assume that the Dai Foundation is permitted to do anything it is not expressly forbidden to do.

The mandate makes reference to generalized “principles” the Foundation promises to support and gives the Dai Foundation broad powers regarding the management of the IP. In what way is the mandate “specific and limited?”

On page 5, it states: “The board of trustees is responsible for administering the intellectual property rights and trademarks assigned to the Foundation, see article 4, paragraph (b) of the Trust Deed, for the purpose of the long-term, positive development of the MakerDAO system at the board of trustee’s discretion."

If there’s language I’m missing that makes the Dai Foundation accountable to MakerDAO governance, please point it out.

4 Likes

Hi @seth
Thanks for your feedback. You raise important points, which I want us to provide a proper formulated response to, so will reply - please stay tuned

2 Likes

Hi @seth

  • The Dai Foundation is independent from the Maker Foundation and was created to hold the legal ownership and provide protection, not do active management of the IP assets. At present there are no Dai Foundation board members that are still employed by the Maker Foundation and this has been the case since Jun 15, 2021.

  • The Core Unit model is created by the community and the Dai Foundation uses this construct in the same way as everyone else to request a budget and as a vehicle for engaging with the community

  • It’s not the Dai Foundation’s role to comment on the intention of the core unit model, whether it is fulfilling that purpose, or the actions of the Maker Foundation during the period when the two ran in parallel.

As I understand it this is what the RFC process is for. We have posted our proposal and I encourage you to suggest changes to our proposal while you also are free to lay out alternatives that the community can explore.

Approving the Core Unit MIP does not change what legal rights Dai Foundation has.

We have on calls with community members acknowledged that we need to work out better guiding principles for how to handle contentious forks, and the board is committed to do that in close collaboration with the community. We will update the Core Unit proposal to make this more explicit.

The mandate of Dai Foundation is specific and limited in the way that the purpose of Dai Foundation only is to safeguard IP. For example, it is not part of the mandate to produce content about MakerDAO, nor to provide operational infrastructure for other CU’s, nor to be representing MakerDAO as a legal entity, nor to employ marketing or business development resources, and so on.
Dai Foundation shall protect the IP, not perform active management of it as illustrated in this figure which has been included in the DAO Asset Allocation Process proposal:

The Dai Foundation Core Unit will be accountable to MakerDAO governance in delivering according to the mandate described in this MIP. This includes having Maker Governance appoint two members of the Dai Foundation board

2 Likes