According to a new social media post on February 1, the Maker decentralized autonomous organization, or MakerDAO, has approved the creation of a new fund dedicated to expenses related to legal defense.
MakerDAO is the issuer of the US dollar stablecoin DAI. As reported by the developers, Maker will allocate 5 million DAI to “reimburse legal defense expenses in the event of legal or regulatory actions against specific MakerDAO participants.” The post explained further:
“Initially, coverage will be provided to Recognized Delegates, Core Unit Facilitators, permanent Core Unit contributors, and active MKR holders. Legal action against the beneficiary must be directly related to their activities on MakerDAO.”
Explaining the decision, the developers noted that such costs could not be “passed through through traditional insurance.” Therefore, the MakerDAO Defense Fund will serve as a self-insurance tool for its participants. On the other hand, the pre-existing DAI foundation fund is used to take action against third parties who infringe Maker’s intellectual property.
Maker Governance approved the creation of a new Special Purpose Fund called the Defense Fund.
https://t.co/JVrUjhpDrx
The fund will reimburse legal defense expenses incurred by active MakerDAO participants in case of legal or regulatory action.
How will it work? ↓ pic.twitter.com/XNPbAafw9v
—Maker (@MakerDAO) February 1, 2023
Maker Governance approved the creation of a new Special Purpose Fund called the Defense Fund.
The fund will reimburse legal defense expenses incurred by active MakerDAO participants in the event of legal or regulatory action.
How will it work?
The organization stated that an external technical committee would manage claims and payments with the authority to recommend approval or rejection of payments based on submitted claims. Simultaneously, a control committee will review the technical committee’s recommendation and have the final say on the claim. Upon approval, funds are disbursed in lump sum amounts.
Although not unique to Maker, the DAO industry has faced growing concerns about the legal status of many entities and what statutes would apply to their relevant operations.. Among other things, experts say that developers can sometimes be pressured by community members to perform illegal tasks, which would not stand up as a legitimate defense in most courts of law.
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