Should we ask Cartan Group to scope setting up the DAO to accept funds?

I appreciate your discourse, and I doubt I can say anything to fully change your mind. However, I would like to inform that certain risks are definitely not unfounded and much of what you laid out is not so simple in practice.

  • Regarding SEC punishment, declaring APE a security would immediately remove it off of US exchanges - price would plummet. APE could survive, but we are dead in the water thinking this would thrive on DEX trading alone. Furthermore, this is far from an inconvenience if we are looking at mass adoption. Closing doors to the US market is not a reasonable option - full stop.
  • Without this legal wrapper entity, participants in the DAO could be individually responsible for the actions of one another (general partnership law). Look at Ooki DAO where voters of the DAO are being named specifically in the lawsuit (doxxed or undoxxed). It does’nt matter where someone is operating, US regulators’ long arms will reach if any US persons are involved. The SEC is even trying to claim jurisdiction over Ethereum because Ethereum nodes are “clustered more densely” in the U.S. than in any other country.
  • Special Council are absolutely putting themselves at risk personally, particularly the present council who could be thought to “lead” ApeCoin at inception. Given the scale of this DAO, they are needed.

There is no way that a digitally based international DAO needs to overcompensate towards the rules of a US based regulatory body.

  • The genesis of this DAO was very centralized, unlike anons in the space contributing to something like Spirit DAO (though if regulators really wanted to turn their attention, we’ve seen they could doxx just about most any wallet they want - people are not really as careful as they portray). There is clearly a direct line to US founders of Yuga where this all began, plus this is operating at a far greater scale.

I completely agree with stuffing innovation, but it’s not the DAOs fault. That’s US regulators not providing clarity at this time. Finally, let’s be honest here, no one is going to entrust a muli-billion dollar ecosystem that they have invested hundreds of millions of dollars into just to throw the keys to full decentralization immediately. But it’s terrific that we are along for the ride since inception, with the prospect of going more towards decentralization. It won’t be an overnight process so we need to work under the constraints as best we can. You may believe it is overcompensating, but I believe it is being prudent.

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Excellent debate gents - @BoredApeG @Mantis👏🏽

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Blockquote

I want to just chime in here quickly and note that every grant requires KYC. The Bluetail grant request will require you to KYC, even if your companies are requesting the grant.

Interesting discussion here.

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As much as I’d love to figure out a way to accept funds, I wonder if now is the right time to do so with everything going on with FTX. The regulators are going to come hard after the space now and are already looking into ApeCoin.

I agree with @Vulkan here. The regulatory landscape is unclear and they’re regulating by enforcement rn.

I’m interested in @BoredApeG’s idea of funding ecosystem projects. It could be a good workaround for now.

Regarding what’s going on with regulations, I wonder if it might be in our best interest to be pro-active regarding them. I’ve been talking to @Vulkan about possibly writing an AIP donating money to an organization like Coincenter or the DAO becoming a member of the Blockchain Association. That way we could actually help shape these regulations that will be incoming. Would love everyone’s thoughts on this.

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What a wonderful comment :clap:

Agree on many points you laid out above. Regulations are coming and are needed to add clarity and guidance, protect consumers, and build trust and safety.

In my opinion, this DAO has a unique opportunity to engage in thoughtful discussion with lawmakers, regulators, and others to ensure this regulation provides the points I mentioned above while still allowing for innovation.

As @adventurousape mentioned above, we have been working on forming a proposal to proactively donate to an organization like Coincenter and/or become a member of an organization like The Blockchain Association to potentially be involved in these discussions and at least become more aware of them.

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Glad we’re talking in more depth here…I think it’s good for the DAO…

I appreciate your discourse, and I doubt I can say anything to fully change your mind.

I don’t think my mind needs to be fully changed, because I think people know in their hearts that I’m right on some points. My stance can be modified with legit discussion, but not with what I hear most people saying, which is “regulation is coming!” so “trust the team!” BS.

So let’s talk.

declaring APE a security would immediately remove it off of US exchanges - price would plummet. Furthermore, this is far from an inconvenience if we are looking at mass adoption. Closing doors to the US market is not a reasonable option - full stop.

This is what I’m talking about in being caught up in the US bubble. Your perception of what would happen even if APE was declared a security TODAY is just overblown and full of unsubstantiated fear hype. Let’s take a look at APE LPs.

Put the exchanges in order by 24 hour volume and the first US exchange APE is listed on, Coinbase, doesn’t show up until #9 on the list. Add that to the next, Kraken, and APE would lose 4.38% of its trading volume. Not nothing, but far from catastrophic.

APE could survive, but we are dead in the water thinking this would thrive on DEX trading alone.

We can’t go from thinking “APE on US exchanges” to “DEX trading alone.” It’s 100% just not true. The folks who put up APE liquidity were very smart in making sure the vast majority of LPs were in exchanges registered in BVI, Seychelles, Singapore, etc. Fact is, trading still would thrive.

declaring APE a security would immediately remove it off of US exchanges

What it means to declare something a security is that it must register with and be accepted by the SEC before it can be put on US exchanges. Nothing more. It’s not a death sentence.

Look at Ooki DAO where voters of the DAO are being named specifically in the lawsuit

That’s a CFTC case regarding margin trading, so the application to what I’m talking about is marginal. It’s also a fishing expedition. In this and other cases like LBRY vs. SEC, the government agencies are targeting less powerful entities to establish precedent. Ooki DAO was targeted because it’s not even that active any more. Even so, a16z is coming to its defense as well as many other interested parties with money. A lawsuit is not an automatic loss. Although I am keeping up with the “victories” the agencies take. A moment to look at LBRY vs. SEC, which the SEC recently won:

tl;dr - Courts will now rule in favor of the SEC based on the “economic realities” of how a token is used, not the formal language. This is the 3rd case upholding this precedent. Meaning? APE is traded on exchanges speculatively. No amount of holding-treasury-in-APE-alone or saying-APE-is-a-utility is gonna stop them from trying to securitize APE under the LBRY precedent. But why did they attack LBRY and Ooki and not APE? Because APE has more lawyer money. We should be fighting now and establishing new precedent, not bending and scraping to government agencies that are going to sue you anyway.

I don’t understand the strategy, unless the strategy is to obtain privileges for APE alone through personal connections in government. Dude, Circle, the most compliant company in the world, paid $10.4M in fines to the SEC. Coinbase has had legal actions against it, and Brian Armstrong is a sycophant. What “constraints” do you think accepting will let you avoid a showdown?

The SEC is even trying to claim jurisdiction over Ethereum because Ethereum nodes are “clustered more densely” in the U.S. than in any other country.

Of course they are. Another fishing expedition. We shan’t even get into how everybody celebrated the move to PoS, and those of us who really KNOW this space could see this coming a mile away.

Short lesson on the SEC: It fools you into thinking it has more power than it actually has. When it says “We won’t go after bitcoin” it means “We can’t go after bitcoin. There’s no one to sue.” While Ethereum was PoW, it had this same power. Now that ETH is PoS, it doesn’t. The environment crap was a 100% smokescreen. This isn’t about law or correct behavior. This is about power. The SEC will take all the power it can, and that’s it.

Point is, this DAO trying to comply with stuff that hasn’t even been detailed yet won’t stop the government from fishing. Playing nice just means you preemptively give them whatever they want so you don’t face a lawsuit. And you still might get sued. So the point of your preemptive give was what?

(doxxed or undoxxed)

And how do you expect the court will levy punishment on an undoxxed wallet, or even a doxxed one for that matter, should the “owner” deny claim to it? This is a scare tactic to force people into preemptive compliance (mind you, compliance with nothing at this point), and it’s working on a lot of people.

Special Council are absolutely putting themselves at risk personally, particularly the present council who could be thought to “lead” ApeCoin at inception.

100% I agree with this. So anyone who doesn’t want to have this conversation in reality, not fear, should step aside.

Given the scale of this DAO, they are needed.

I don’t think so. Maybe people are more comfortable with a pyramidal structure.

It won’t be an overnight process so we need to work under the constraints as best we can.

What constraints? Right now you’re making them up. And they won’t help you, because if the government wants to go fishing and target you, they will. At least define what these constraints are for me, taking into account the new information I’ve brought debunking the securities catastrophe many people are making up in their heads as well as the reliance of APE on US exchanges.

@Lost

The Bluetail grant request will require you to KYC, even if your companies are requesting the grant.

A fine point. I may stop the proposal wholesale depending on how this is conducted. We’ll see… :wink:

@adventurousape

I’m interested in @BoredApeG’s idea of funding ecosystem projects. It could be a good workaround for now.

Bluetail is an ecosystem project! So I sincerely hope the KYC process doesn’t stop it from happening. But even if it does, understanding the defi within it can be a huge step forward for the DAO to sustain itself even if it must function under these hypothetical “restraints.” I hope people will attend the Twitter Spaces I will conduct, likely on Wednesday.

Hopefully we can continue discussion with more facts, more new ideas, and less fear. What an exciting time to live in — a chance to change the world! Move bravely!

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Ape Foundation will need to be sure that the DAO isn’t voting to fund projects originating from countries that are sanctioned, or individuals who have a history of terrorism, among other criteria. This has been discussed with admins on a few occasions.

I hope this isn’t something that prevents you from continuing to follow through with Bluetail. I had assumed by the nature of your original proposal that you are doxxed through Cxmmunity, or otherwise, so this is news to me. I would have brought it up sooner. I do want to see Bluetail come to life.

-Lost
:gorilla::orange_heart:

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Ape Foundation will need to be sure that the DAO isn’t voting to fund projects originating from countries that are sanctioned, or individuals who have a history of terrorism, among other criteria.

Cxmmunity is squarely (against my wishes) founded in the US. So no worries there. But if I have to KYC like an individual, even though this is a company effort and that’s likely where funds will be housed, that will stop the process. Out of principle. So we’ll see.

originating from countries that are sanctioned

This is my major problem with DAOs from this side of the world. Sanctioned by whom? Rhetorical question. Sanctioning bodies controlled by… wait for it… the US. Problem for me. And not because I’m affected by it. We’re clean as a whistle. But there’s some builder in North Korea that can’t participate in crypto, and this is a huge problem for me. Larger goal is to solve this.

Regardless of whether Bluetail comes to life with this DAO, there are ideas within it that must be on record. So I’ll continue on until my principles force me to stop. Twitter Spaces this week!

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Yes, open conversations are good for everyone. We could be chilling at an ApeCoin bar one day shooting the breeze about stuff like this :sunglasses:

I’ll keep my response focused on the underlying issue with your points…
What is the value of APE if there are effectively zero use cases?

That will be the reality if APE was classified as a security. Let’s ignore all the potential back and forth legal battle and assume APE is declared as a security as you mentioned TODAY…

  • Yuga Ecosystem (including Otherside) cannot build utilizing APE (i.e. no more ‘powered by ApeCoin’) in web3. Can’t integrate it in Otherside game, can’t be used for payments, no staking rewards, etc.
  • Ecosystem Fund would not be able to issue funds for AIPs

Those two alone will be enough to nuke the ecosystem making it very difficult to recover (we know how this space moves and how hard it is to regain trust & momentum). Also, the hurdle for mass adoption would be improbable with a securities designation.

This is what I’m talking about in being caught up in the US bubble. Your perception of what would happen even if APE was declared a security TODAY is just overblown and full of unsubstantiated fear hype. Let’s take a look at APE LPs.

If companies like Yuga itself, cannot integrate APE then APE LPs will be irrelevant. APE doesn’t secure a useful blockchain like Bitcoin or Ethereum that it could find a way to live on with fees. APE will hold trivial value if it can’t achieve the goal of mass adoption if every interaction needed to be in a fully doxxed environment.

What it means to declare something a security is that it must register with and be accepted by the SEC before it can be put on US exchanges. Nothing more. It’s not a death sentence.

Again assuming a final designation of security, it IS a death sentence. You have to think about this in a practical sense: if APE is supposed to be for the web3 economy, how could it be that if we require anyone we distribute it to have it be doxxed?

What constraints? Right now you’re making them up. And they won’t help you, because if the government wants to go fishing and target you, they will. At least define what these constraints are for me, taking into account the new information I’ve brought debunking the securities catastrophe many people are making up in their heads as well as the reliance of APE on US exchanges.

The securities designation is absolutely a catastrophe once you think through the practical implications of it. The government is already targeting: we know the SEC is already probing Yuga, therefore, It is a reasonable assumption to think that ApeCoin Foundation already received a letter as well and it has already been complying with requests.

Playing nice just means you preemptively give them whatever they want so you don’t face a lawsuit. And you still might get sued. So the point of your preemptive give was what?

On the contrary, the Foundation hasn’t given them whatever they want.

We should be fighting now and establishing new precedent, not bending and scraping to government agencies that are going to sue you anyway.

The Foundation is already fighting and looking to set a precedent (even if not in a formal lawsuit sense) - you might not be seeing that? Why force a lawsuit when the SEC already may be deterred? What the SEC wants is to regulate everything under the sun, but the steps taken by the Foundation is going to make it difficult for them. The Foundation appears to be playing nice on the surface like having people there to respond to inquiries (SC), but it’s actually playing hardball with its structure and operations. Specifically for the SEC, it wants to take on cases it can win and it doesn’t want to get embarrassed. So does the SEC want to tackle a not-for-profit foundation that doesn’t even earn revenue and simply grants out tokens to individuals & entities that it fully doxxes? Much harder to take on vs. another entity that keeps issuing/selling its own tokens to fund on-going operations, yes?

I’ll conclude with this…it would truly be great to one day be sitting with you in an ApeCoin Bar that is one of hundreds across the world paying for the bill with ApeCoin run by a businesses and payment processes who didn’t have to worry about the SEC coming after them. I know you’re going to fight it, but for that vision to be achieved at scale, ApeCoin Foundation/DAO needs to be a guiding example for US regulators, being amongst the very best of DAOs. I also envision a future Senate committee hearing one day and we’ll have ApeCoin represented there. Now that SBF is gone, perhaps there is an eventual future where ApeCoin can be the ‘darling’ of crypto :slight_smile:

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I just wanted to chime in on a few things. :slight_smile:

In my opinion, no. I’ve always seen it as a means to create a perpetual funding machine for public goods grants, and incentivizing contributors in the DAO including the Special Council and ApeCoin Administrators. I think you’re on the same page there. The divide I think comes “profits,” which I believe was also addressed by @BoredApeG. With a cost basis of $0, any exchange of APE for something else of value would be considered profitable for the DAO, even if those assets were allocated to another AIP.

I largely agree with everything @Mantis is saying around decentralization, I just have to recognize it’s not realistic given the relatively low number of contributors. Decentralization is a process, and it takes a very long time. :sweat_smile:

I think we should go through with the AIP. We’re only gathering resources here, we don’t need to act on anything.

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Discourse literally told me to STFU,

so without sucking all the air out of the room…

Sauce? I want to know how you know this is the case for sure, 100% that’s what would happen.

Ok sorry Discourse. I’m just trying to be passionate and engaged here jeez. I mean, everybody complains about lack of involvement… :rofl:

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I’ve been immensely enjoying this conversation especially the debate between you and @BoredApeG

Such a thorough and sophisticated discussion! Don’t hold back @Mantis

My 2 cents on your dialogue with BoredApeG:

While I understand and respect where you’re coming from (literally lol), I tend to be more concerned about some of the ramifications of being too bold too early especially in the current extremely volatile environment where we’re squeezed from all corners.

Adoption levels are quite low across the board, in fact we may be seeing more people exiting (crypto and NFTs) these days due to various reasons than people who may be joining for the first time!

I feel like your ideas @Mantis are very valid both from an ideological perspective and pragmatic perspective but perhaps not the right time now for rocking the metaphorical boat with risky actions that may in reality go either way! We simply can’t afford any more blows to our ecosystem at this stage.

The potential trade offs for having more money into the treasury feel unnecessary and too risky to me at this juncture!! Also we need to remember that this kind of revenue is not even guaranteed because it would depend on the profitability of whatever AIPs that are gonna channel revenues back to the DAO. The whole scenario is like playing 3D chess while the rules also keep changing!!!

I wouldn’t be throwing the baby out with the bath water though! I’d like us to keep thinking of innovative ways to perpetuate DAO’s funding ability in the future. The treasury may look sufficiently loaded right now but depending on how the price of Apecoin develops over the years and how many projects are funded, the reality is that we will run out of funds eventually! So it’s nice to think of ways to increase longevity of our funding ability beyond the original allocation of Apecoin to the DAO’s treasury.

I’ve had a similar idea to this effect that would fund the staking contract beyond the current 3 years term. It’s connected to the DAO, AIPs and the role of the builders within our Apecoin community. I will think more about it and submit as an idea after I’ve discussed the possibility with Horizen Labs.

Bottom line:

  • I agree with the need to somehow fund AIPs on a perpetual basis via a new funding mechanism.

  • I don’t think accepting revenues directly into the DAO is the only way or the best way of achieving this, especially not under the current climate.

  • I’d like to see more innovative thinking around this challenge that doesn’t put us in a potentially vulnerable situation vis-à-vis US regulators. This concern is not purely out of fear! I don’t see the role of regulators as 100% negative and don’t really believe that 100% decentralization of finance is either possible or desirable!

Once again, special thanks to @zheerwagen for posting this idea and to @Mantis and @BoredApeG for the very intelligent debate!

Will be following the conversation with great interest! :v:

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A way to increase the Ape Treasury could be to implement mechanisms that bring ApeCoin to the treasury. An example taking Axie Infinity as a referance, they use their token (AXS) to breed Axies and a fee % goes directly to the treasury. Another one, they mint a token and to withdraw it you have to pay a base fee of 3 USD which again goes back to the treasury. Also, everytime they make a sale, a base fee of 4.25% goes to the treasury, I believe they have the biggest treasury of Web3 atm with over 1B+.

So, potentially Otherside will be a crucial part in this, and also other projects related to the ApeCoin ecosystem will potentially help to increase the size of the treasury down the line.

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hahaha :laughing:

ps: no need to reply

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This is good. These are the most important ideas I’m pushing, and other reputable Apes like @Feld have commented they agreed with me in other posts.

The rest is just, I dunno. You guys do what you want :laughing: as long as we stay building

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Hello again everyone!

I was fairly surprised from the start when I heard that our DAO wasn’t set up to received “assets” from any sort of initiatives, so I figured there are at least 5-10 DAO’s that ARE that we should learn from.

I’m thinking specifically of MakerDAO and how they were able to both deploy $500M into US Treasuries and another $1.6B onto Coinbase in order to fund their core teams and the treasury as a whole.

So I’d like to get the ball rolling on this initiative by providing the first bit of research we can take a good look at. :slight_smile:

This article from DyDx (a decentralized futures trading platform) shows how we can use a Guernsey purpose trust to: “Hold fees received from the applicable protocol to be distributed directly to other Purpose Trusts carrying out functions for the DAO; or serving as a finance and operations hub for the DAO.”

It goes on to specify how we can perform off-chain activity like owning a bank account, real estate, property, assets, etc all while complying with tax obligations, and having limited liability for DAO contributors.

We all know it can be done because it’s already been done before. We’re not the first DAO to generate revenue, and we’re certainly not the first DAO to do it legally. :person_shrugging:

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gm gm Amp,

I’m just wondering if there is a legal gray-area that ApeCoin DAO falls into where we may not technically be seen as a token DAO and more as a Social DAO – is there a difference, does it matter, what were the original reasons that the lawyers guided us to not accept revenues, does that affect our non-profit status according to Cayman Islands law, etc, etc.

In case you’re wondering, nope, I have not read the article :laughing: (but I do know that the Guernsey Islands not as warm as the Caymans).

SSP -:v:t4:

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GM SSP! :slight_smile:

Definitely good questions for the Special Council, Cartan, or maybe even the BAYC founders themselves, if they were heavily involved during the creation of the DAO. I hope this will all be covered as a part of this scoping process.

From my understanding, the Foundation would remain a non-profit entity in the Caymans responsible only for providing grant funding to AIPs. However, we can set up a new “Sub-DAO” structure using this framework to operate the treasury and any revenue generating activity.

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Thanks for the clarification. A SubDAO makes a lot of sense.

SSP :v:t4:

ps - Guernsey still not as warm, but let me know how it goes when you set-up the SubDAO offices:sun_behind_small_cloud:

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Unlike @ssp1111 , I actually read the document… this is great initiative @Amplify , which I am for initially because it seems to protect the main DAO from having to submit itself to any wrapper, which is what I consider the best way forward.

Basically, setting up a new structure, wrapping and funding that structure, and letting it interact with off-chain/regulated entities. That’s an acceptable compromise in my book.

I do hope, however, that AIPs and other actions that have nothing to do with the US can still be funded through the core DAO. It seems as though this entire structure is made to protect the DAO from US scrutiny, which does not necessitate submitting the entirety of all DAO activities to such scrutiny. Binance showed the way here and is a good template to follow.

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