AIP #22 - Abracadabra DAO Legal Framework: Bridging Worlds

AIP #22 - Abracadabra DAO Legal Framework: Bridging Worlds

Table of Content:

  1. Introduction
  2. Need for a Legal Structure
    a. Reasons for Introducing a Centralized Entity
    b. Objective of the Proposal
  3. Identifying the Problem
  4. Protection of Intellectual Property
  5. Voting Mechanism and Execution Steps

1. Introduction

Dear Abracadabra Community,

The murmurs have been making rounds in the past few weeks, and we’re thrilled to finally articulate our ideas on how we can fortify the Abracadabra DAO framework, establishing a robust connection between the Decentralized Autonomous Organization (DAO) and the conventional centralized world.

2. Need for a Legal Structure

Despite our commitment to decentralization, we’ve recognized the importance of introducing a certain degree of centralized legal structure. The purpose here is not to disrupt the decentralized nature of Abracadabra; in fact, it’s to protect it. Every crucial decision will continue to be governed by the SPELL token holders as it has always been.

The reasons for this are manyfold. Most importantly, it’ll help us protect our intellectual property rights, manage the DAO’s trademarks, and handle server expenses more efficiently.

3. Identifying the Problem

Currently, our protocol relies on community members privately paying for essential services like hosting and domains, leading to difficulties in defending our intellectual property rights. The existing structure even forced the DAO to migrate our blog from Medium due to a baseless copyright claim by the now insolvent project.

4. Protection of Intellectual Property

To solve this, we propose appointing a trustee or an attorney specializing in intellectual property rights. This entity would act on behalf of the DAO to register trademarks, manage server expenses, and protect the protocol’s intellectual property, while still keeping control in the hands of SPELL token holders.

5. Voting Mechanism and Execution Steps

The voting process is methodical, involving a series of snapshot votes that will determine the specifics of this trustee or entity. The aim is to ensure a democratic decision-making process that gives the community the power to shape this crucial transformation. Here’s how the voting process would be structured:


The initial vote will focus on choosing the jurisdiction. We propose four potential jurisdictions, with an additional ‘none of the above’ option. If a jurisdiction has been decided, we move on to the second phase of voting.

This will be the topic of voting for AIP 22.1.

Voting for phase I is now live for 72 hours hours. Vote here.


In the second stage, the DAO will present several potential solutions within the selected jurisdiction. These options might include legal offices, trustees, and attorneys that are familiar with and specialized in the decentralized space. The community will be invited to vote on these options.

This will be the topic of voting for AIP 22.2.

Further details on AIP #22.2 can be found here. Submissions for Options is now open and voting for AIP #22.2 will go live soon.

Currently the options proposed are in Line with a Swiss Association or swiss foundation:

Voting has now ended and Swiss Association has been decided by the DAO. Snapshot voting can be found here.


Following the conclusion of the second vote, we will move into the third and final voting stage. Here, the DAO will outline the detailed responsibilities and tasks we expect the selected entity to perform. This list of tasks will be put up for a final vote, serving as the ultimate seal of approval from the community.

This will be the topic of voting for AIP 22.3.

Option submission is now live for the next 24 hours, after which the vote will start. Snapshot voting can be found here.

Find more informations on phase 3 voting here.


This structured, multi-phase voting mechanism ensures that the transition of power to the new entity is entirely based on the collective decision of the community, keeping true to our core tenets of decentralization and democratic governance.

Remember, your voice and your vote matter in shaping the future of Abracadabra.

For the legal entity of our DAO, we are considering four jurisdictions:

  • Malta: friendly regulations towards blockchain & cryptocurrency
  • Switzerland: progressive government approach attracted protocols like Ethereum
  • Bermuda: regulatory framework specific to crypto businesses
  • Singapore: leading crypto hub; forward thinking regulatory authority

The 4 choices above are the one that will be subjected to voting for AIP # 22.1

We invite you to continue to share your thoughts here and on Discord, and cast your vote on the snapshots. Once the voting link is published, it’ll be added below here keeping the following proposal up to date.

All 3 phases of AIP 22 have now been voted upon by SPELL holders, and can be find below.

AIP 22.1 - Snapshot Vote
AIP 22.2 - Snasphot Vote
AIP 22.3 - Snapshot Vote


I really like this proposal, it’s been sole time in the making and it shows – it effectively addresses the need for a legal body to handle real-world dealings that pose hurdles for our DAO (like IP and servers today, but as the DAO grows, maybe other things)

In terms of the proposed jurisdiction, Switzerland looks promising to me. The Ethereum Foundation’s decision to choose this country was not without reasons. Its forward-thinking approach, neutrality, and robust professionalism make it a strong contender that aligns with our values at Abracadabra.

I particularly appreciate that this move doesn’t hint at centralization. Rather, it aims to bridge the gap with real-world legalities, while ensuring that our decentralized core remains unaltered. I value the fact that our treasury and DAO retain their decision-making powers, with the legal entity acting only as an executor of the collective will of SPELL holders, that can revoke it if it isn’t happy with it anymore.

Excited to see how this proposal evolves. Let’s make our voices and votes matter!


I also like this proposal. I think it’ll help Abracadabra protect IP and provide a more clear legal framework. I generally like Switzerland or Bermuda, mostly because these countries have historically provided a clear regulation. I’m not so sure Malta is a good option given the MiCA regulation in EU, which will be implemented in 17 months. I’m not sure that it’d actually apply, but its complexity cations me. I suggested to the team to provide a “non of the above” option. While I think this is a good option to have to allow stake holders to express their opinion, it’s better if these options are discussed before the actual vote. So I want to encourage that.


I strongly support the model outlined here. Seems like the perfect steps that will allow the DAO to interface with entities that are more centralised, such as lawyers, market makers, and filing for IP rights.

Personally speaking, I think Switzerland will be the best place to set something up, both because of the crypto friendly environment and because of the large number of project that have come out of Switzerland.

Something that I think is imperative though is that whatever we choose, we have to make sure that the DAO treasury and DAO independence is considered at the utmost priority.

Looking forward for the vote 22.1, and right now I am heavily leaning towards Switzerland, excited to hear more feedbacks.

What I can get from this vote is that this vote is not at all to centralise anything related to MIM or abracadabra, but simply to have a point of contact (that judging from the options can be a lawyer, an association or any other legal entity) that can represent the DAO when it has to interface itself with centralised entities such as market makers, service providers etc etc

So there is not centralisation of the DAO, its operations or treasury

All it will be is adding a point of contact that the DAO can use to interface with centralised players.

Kinda cool to my eyes🤷🏻‍♂️

1 Like

Our friends at Gearbox have also shared with me this option [GIP-34] Setting Up a Legal Structure for the GEAR DAO - Proposals - Gearbox Governance sounds super interesting and something that should be considered!

What do you think?

1 Like

"* IP holding for codebase: that is very important to have in the structure that should actually own it and control, because as we see with some “centralized DAO setups” eventually the company that holds it on behalf of the DAO, can just go raise equity and somewhat abuse the DAO trust. It is also important to have it in the DAO structure if there is licensing to occur or other things.

  • Domain rights, control over all media, etc. in case contributors leave and need to delegate to new members, whereas holding it on personal names is a risk (for everyone, operational risk).
  • Signing contracts with auditors as they require an IRL entity often.
  • Some small IRL payments that are otherwise risky to have on names of devs personally"

Sounds interesting… i like the idea of wrappers and funding when needed. Abra could do something like that, and something like this could also allow to end geoblocking right?

1 Like

I think that the geoblocking is something that isnt related to the legal framework around the IPs, but more on the general position that the US is taking against defi and crypto.

Just my opinion on the matter though

1 Like

I am in favor of a legal framework that protects the value generated by our contracts.

  1. the treasury should be distinctly isolated by all means from the framework

  2. strong consideration for residing in jurisdiction alongside the ethereum foundation

  3. in doing this, team will bolster relationships that will foster growth of liqudity in the MIM pools

  4. current team members will have a layer of protection that will allow them to build peacefully without anxiety from undue legal persecution

  5. people can participate in governance freely, without anxiety from undue legal persecution


totally agree with this. Point 1 needs to be the main priority.

1 Like

AIP #22.2 - Abracadabra DAO Legal Framework: Bridging Worlds - Phase II

Following the successful passing of AIP 22, the DAO decided to choose Switzerland as the preferred jurisdiction in which to look for a Legal Entity. It is now time for the DAO to accept options based on this jurisdiction, in order to move the creation of the legal entity forward.

It is important that options coming from the community are now able to be proposed for the DAO consideration. In order for these proposals to be accepted or considered, they need to adhere to a certain template.

These options might include legal offices, trustees, and attorneys that are familiar with and specialized in the decentralized space.

Note: this paragraph has been added to AIP 22 on 22/08/23


The following is a skeleton Template that can be used to structure any option to be presented to the DAO.

  1. Proposal: General

- Overview of Suggested Structure: Explanation of the Suggested structure, pros and cons.

- Management and Operations: Detailed Explanation of how operations will be managed.

- Major Use Cases: Examples of major use cases and uses.

- Control: Clear explanation of why the DAO will still be in control of the legal entity.

- Reporting: Reporting on the yearly expenses and operations.

  1. Proposal: Details

- Scope of Engagement: Overall engagement Scope.

-Responsibilities: DAO and Legal Entity Responsibilities.

-Proposed Structures

- Fees and Engagement Terms: Detailed explanation of the engagement terms.

- Costs Involved: Costs that the DAO has to incur to create and manage the Legal Entity.

-Focus and Goals

The main goal of this stage of AIP 22 is to allow DAO members to vote upon the Legal Entity Structure they prefer, considering both which legal entity is presented (i.e legal offices, trustees, and attorneys that are familiar with and specialized in the decentralized space, etc), what roles it can fulfill and ultimately the overall costs (both one off and maintaining cost for the DAO).

Options Submission and Voting

The following section will be amended adding any option that will be presented to the DAO in the next couple of days. To present an option, simply post a reply to AIP 22 titling it: [AIP22.2 - Option], our contributors and moderators will proceed to include it in the main AIP 22 text, mentioning who proposed it.

Option 1 - @tomcont - AIP #22 - Abracadabra DAO Legal Framework: Bridging Worlds - #11 by tomcont

Option 2 - @AlexDAObox AIP #22 - Abracadabra DAO Legal Framework: Bridging Worlds - #12 by AlexDAObox

Following this, voting on Snapshot will be posted and will last 72 hours, after which an option will be selected.

This will be the topic of voting for AIP 22.2

Snapshot voting starts Friday 01/09 at 14:00 CET. Voting can be found here.

[AIP22.2 - Option 1] → Swiss Association

Background on the Association

Proposal: General

Overview of Suggested Structure

In Switzerland, an association is an autonomous separate legal entity formed by individuals or corporate members.

Associations are composed of members, whereas foundations just require a foundation capital and a governing body in order to exist. According to Swiss law, there must be a minimum of two members to constitute an association.

An association acquires legal personality as soon as its intent to exist as an independent corporation is made apparent from its statutes, and the enrollment in the Register of commerce is required only in specific cases (i.e. if the association conducts commercial activities to fulfil its purpose, or if there are specific auditing requirements).

Associations may be established for a political, religious, scientific, cultural, charitable, social, or other non-commercial purpose.

The association I represent Switzerland has already prepared to accommodate the DAO needs, and is ready to start working with the DAO in days’ notice if this proposal was to pass. The association members have been involved in the blockchain and defi space for the last 3 years, and are skilled ecosystem players.

Management and Operations

The association’s general meeting is the supreme body and can appoint or dismiss the association’s management. Each member has one vote. The meeting will set the rules on qualification for membership and any admission or membership fees. The general meeting usually elects a management committee of officers who have day-to-day responsibility for running the association, including hiring staff and committing the association legally.

Major Use Cases

The purpose sets out the idea behind the association and its area of activity and is the reason why it was set up in the first place.

I.e. an association can support, develop and assist projects involved in the developing and distribution of open source software like DLT software, by making scholarships, maintenance allowances, registering and managing intellectual property rights, grants or awards tenable to entrepreneurs, students and individuals in industry and commerce. The Association can as well support the development of new features and capabilities of a blockchain project through the engagement of third parties.


Governing bodies of a Swiss Association are:

  1. Association’s General Meeting
  2. Board of Directors
  3. Auditors (if appointed)


A Swiss association must keep proper accounts, but can decide whether or not to be externally audited unless two of the three following conditions apply in two successive business years:

  1. Total assets of CHF 10 million
  2. Turnover of CHF 20 million
  3. Average annual total of 50 full-time staff

Proposal: Details

Scope of Engagement

Purpose of the engagement is the contribution to the development, growth and education of any activity related to Abracadbra DAO like:

  • Supporting the development of new features and capabilities for the Abracadabra platform, also through engagement of third parties
  • Supporting the Abracadabra community to increase the adoption and use of the Abracadabra platform products and services
  • Engaging with other projects and related communities to enabling partnerships and collaborations
  • Educating the blockchain community about the benefits and capabilities of the Abracadabra platform
  • Organizing events, meetups, and other community-building activities to promote the Abracadabra platform


The engagement of the association is related to specific activities and tasks, which are regulated through agreements between the DAO and the Association, with the consequence that the related responsibilities are linked to those agreements.

Proposed Structures and Engagement Terms

The engagement with the association shall be regulated by specific agreements related to specific activities and/or tasks

Fees and Costs Involved

The DAO shall support the Association by funding it through donations or by participating in the costs for the activities indicated in the agreements. The initial proposal is to allocate 20k USDT yearly for the maintaining cost of the association.

[AIP22.2 - Option 2 Daobox]

DAObox – Abracadabra Finance | Offer on the DAO Legal Wrapper Structuring

We have been following the discussions within the Abracadabra Finance DAO regarding the legal structuring of the DAO and establishing a proper legal wrapper for this purpose. After reviewing these discussions and gaining an understanding of the issue, DAObox wishes to present the following draft proposal to the Abracadabra Finance DAO concerning the structuring of the DAO and associated matters.

This is a bit of a longread, but given the complexity of the topic, even here we had to omit certain aspects and elements. We tried to structure this proposal in an easily understandable manner so that the Abracadabra DAO members could easily navigate this post and understand the main points even if they have no legal background. This post is further designed to allow the DAO members to educate themselves about the DAO legal structuring and major issues that have to be addressed. Even if the DAO decides not to engage DAObox, this information will be useful.


DAObox is a provider of infrastructure solutions for DAOs and Web3 communities. Founded by “crypto lawyers” from the AURUM Law Firm, DAObox has a strong background in working with Web3 projects and DAOs on various matters. These include both legal and non-legal aspects such as designing and forming DAOs, establishing governance procedures, implementing control and management systems, forming sub-DAOs, etc.

Our flagship product is the fully-managed DAO legal wrapper service. This comprehensive, turn-key solution covers all pivotal aspects involved in creating, operating, and maintaining DAO legal structures, also known as legal wrappers.

DAObox as a Service

The Daobox service, simply put, consists of creating full-fledged legal structures for DAOs which our team then manages and operates. To get a better understanding of how things work and why Daobox’s offering is unparalleled in the market, please refer to our recent Gearbox DAO Case Study.


During the formation phase, instead of placing this responsibility on the core DAO contributors, the DAO engages DAObox to act as a founder of the structure, undergo all KYC checks and screenings, and manage all company formation matters.

Our practice shows that the DAO’s contributors and multisig controllers often prefer to stay out of any legal arrangements, remain anonymous, and avoid any legal exposure, which sometimes results in a situation where there is no one who could take the lead in the creation and management of the DAO legal structure. And we designed our service to perfectly address these situations.


After incorporation, DAObox assumes the positions of director and supervisor (if required) in the newly established legal wrapper, and assigns the team to operate the structure and administer its day-to-day operations within the mandate and under the supervision of the DAO. In essence, DAObox conducts the actual administration of the legal wrapper, thereby negating the need for the DAO to hire C-level managers, service providers, and other personnel who would typically be required to manage and operate the new structure. Hence, DAObox covers all essential aspects of the wrapper operation as well.

Structuring Model

Our approach diverges from other models in the market, resulting in the creation of a legal structure that is entirely subordinate to the DAO and fosters its decentralisation. We know how to design such structures properly, recognising the intricate dynamics and unique interactions between the DAO and its legal wrapper. DAObox further guides the DAO on the matters pertaining to the DAO<>wrapper relations and how to design them in the most efficient manner.

For a better understanding of differences in structuring approaches, please refer to our recent article, in which we explain the oversights and errors made by Arbitrum DAO and Hector DAO in structuring their DAOs.

Legal Wrapper

A legal wrapper is fundamentally a legal entity with its own distinct legal identity and personality. The legal wrapper is not the same as a DAO, so it does not replace or absorb the decentralised organisation that continues to exist as is.

We suggest thinking of a legal wrapper as one of elements of the DAO ecosystem, like a contributor concentrating on a specific range of objectives designated by the DAO. This means that a DAO continues to operate on-chain, and the legal wrapper only takes charge of certain operations entrusted by the DAO, mostly taking place off the blockchain. Therefore, there might be many legal wrappers (legal entities) within the ecosystem of the project with different areas of responsibilities. For a better understanding of this approach, please refer to our framework for utilising legal wrappers in DAO ecosystems or this article on “BORGs” by Delphi Labs.

Proposal: General

Overview of Suggested Structure

The legal wrapper, as we envisage it, will serve a common goal and not any particular person or group; as such, the purpose of the legal wrapper will be to facilitate the assignments determined by the Abracadabra DAO regardless of who is “in charge.” To put it another way, even if all current DAO contributors decide to leave at once, the legal wrapper will continue to serve the needs of the Abracadabra DAO and protocol as long as it has resources.

Another crucial factor to consider is that by commissioning an external team to oversee and administer the DAO wrapper, the organisation can further cultivate and augment its decentralisation. In such an arrangement, the power won’t be monopolised by affiliates or core contributors, which acts as an additional safeguard employed by the DAO.

Management and Operations

As mentioned above, DAObox will assume all managerial positions in the newly established structure which have to be filled in. For example, in a foundation company, unless the DAO determines otherwise, this would normally include positions of director and supervisor (but would depend on the jurisdiction of incorporation as explained below).

In truth, the situation unfolds as described: DAObox effectively steps into the role of manager for the legal wrapper, assigning personnel to handle its affairs and daily business. Consequently, the DAO doesn’t need to allocate additional personnel or contributors to manage the operations of the legal wrapper, unless it chooses to or unless the volume of work exceeds the standard expected level.

Major Use Cases

The legal wrapper can be used by the DAO to manage those activities that cannot be carried out off-chain, e.g., hiring developers, renting servers, paying for services, subscriptions and infrastructure, including in fiat, giving grants, concluding agreements and so forth. The wrapper can be further used to hold, manage and protect off-chain assets, such as fiat funds, IP, trademarks, domain names, etc. Of course, the wrapper can further be engaged in on-chain operations on an as-needed basis.

Lastly, the legal wrapper protects the DAO members and multisig controllers against liability that is related to acts and activities of the entity – normally, the legal wrapper itself will be responsible for any transactions that it performs (excluding certain exceptions under the law).

In reality, the use cases for the wrapper are remarkably diverse, implying that it can essentially serve any purpose that the DAO deems necessary.


The issue of control is an important one as in the future, the legal wrapper may be holding and managing certain valuable assets belonging to the DAO (if DAO ever decides to transfer those to the legal vehicle). In short, although DAObox will be taking the managerial positions, the Abracadabra DAO will have the ultimate control over the legal wrapper and our actions will be limited by the mandate given by the DAO.

The constitutional documents, as designed by DAObox, will subordinate its governing bodies and management to the DAO and resolutions adopted by on-chain voting, whether via Snapshot or otherwise, to the maximum extent possible. Any such resolutions will be binding upon the legal entity and its management.

Furthermore, the constitutional documents will limit the authority of managers on the disposition of material assets and intellectual property held by the legal vehicle, entering into transactions the value of which exceeds USD $30,000 (or another threshold set by the DAO), and performing certain other material actions – any such acts will require the consent of the DAO. Normally, any spending of funds will be in accordance with the quarterly/semi-annual/annual plans (budget) adopted by the DAO.

As the legal wrapper will be subordinated to the Abracadabra DAO, the DAO can pass a resolution on replacing us as managers of the legal entity at any time, as well as on the change of the composition of the managerial bodies, and such resolution shall be binding.

Lastly, as part of a contingency plan, the DAO will possess the ability to designate a representative or assemble a team of trusted agents who will be endowed with the necessary authority to execute enforcement actions with respect to the wrapper as may be required to protect the DAO in any emergency situations.


We will be providing reports on the material operations of the legal wrapper and financial transactions on a quarterly basis so that everything stays transparent. Also, we will be here to respond to your queries and questions or (perhaps) hold AMA sessions if that would be desired.

Risks Assumed by DAObox

As managers and the only persons responsible for the operation of the legal wrapper, we are essentially taking all the risks arising in connection with the operation of the legal wrapper and DAO activities carried out via the legal entity. As mentioned above, the very need for such a service is, among others, dictated by the fact that any manager or controller of the legal entity can potentially be exposed.

For example, any document executed will have our signatures on it, and in any action that can in the future be brought against the DAO, whether due to regulatory reasons or otherwise, both the legal wrapper and we will likely be targeted. Other than legal, there are further reputational, economical, and regulatory risks involved.

As lawyers, we naturally feel more comfortable than others in dealing with the risks. While we implement mechanisms and practices aimed at mitigating major risks, it’s important to acknowledge that certain risks still persist and could potentially be quite serious and resource-intensive.

Proposal: Details

Scope of Engagement

With respect to the legal wrapper, DAObox will be acting as hired managers under the supervision and control of the Abracadabra DAO. The high-level scope of proposed engagement includes:

  • Designing the legal wrapper;
  • Drafting comprehensive constitutional documents;
  • Implementing control mechanisms, system of checks and balances;
  • Forming and incorporating the legal wrapper as founders;
  • Acting as director/manager/supervisor;
  • Administering wrapper’s operations and day-to-day activities;
  • Performing general legal supervision.


We expect these to be the main areas of our responsibility:

  • Representing and acting on behalf of the legal wrapper;
  • Supporting the legal structure;
  • Entering into contracts;
  • Engaging in real-world transactions;
  • Holding and protecting intellectual property, trademarks and domain names;
  • Owning and managing property and assets entrusted by the DAO to the wrapper;
  • Enabling access to fiat payments;
  • Engaging and managing contributors, service provides and personnel;
  • Issuing grants and similar incentives;
  • Engaging auditors;
  • Managing services, subscriptions, and infrastructure;
  • Business correspondence;
  • Improving overall reputation and appearance;
  • Fuelling decentralisation of the whole organisation.

We do not feel like our engagement with Abracadabra DAO has to be limited by hours of work at the moment, but if the engagement scales substantially resulting in the need for extra resources to be allocated, we will need additional (reasonable) funding to be provided to cover the expense.

Note that this offer does not cover any legal services and DAObox will not be acting as a legal advisor. However, both DAObox and Abracadabra DAO can engage AURUM Law Firm for any legal assignments or tasks.

Proposed Structures

First of all, we acknowledge that the Abracadabra DAO passed a resolution on the choice of jurisdiction for the anticipated legal wrapper. According to this resolution, the wrapper is to be established in Switzerland.

We do not consider Switzerland to be the most optimal location for structuring the DAO legal wrapper for reasons briefly outlined below. Consequently, our proposal is divided into two sections, each proposing alternative structuring options for the DAO’s consideration. Nevertheless, we respect the DAO’s decision and stand prepared to proceed with the structuring according to the resolution passed.


There are two types of Swiss structures to consider for DAO structuring: the foundation and the association. Our recommendation is to establish either one of these entities in the renowned ‘Crypto Valley’, the Canton of Zug, known for its favourable regulatory environment.

  1. Swiss Foundation

Swiss foundations are well-suited for use as developer-centric structures, wherein the core team establishes and manages the foundation. Many blockchain protocols, such as Ethereum, Solana, Tezos, and DYDX utilise the Swiss foundation structure to operate their grant programs. In such cases, the funds raised during the ICO are allocated to the foundation and then distributed by its board.

Here, the primary downside in terms of decentralisation is that these types of organisations cannot be effectively integrated under the governance of a DAO. This could potentially lead to governance challenges where the foundation’s board assumes unlimited control over the organisation, as occurred during the Tezos conflict. This may result in a loss of developmental momentum and lead to protracted legal battles that lasted three years in the case of Tezos.

The constitutional document is the Deed of Foundation. The wording of the “Purpose” is particularly important, as all subsequent activities of the foundation must be aligned with this purpose. The foundation must have a board consisting of at least three members, with at least one member domiciled in Switzerland. The board convenes a few times a year to decide on the foundation’s strategy and spending policy. The foundation can employ staff and management, with the managing director reporting to the foundation board. The founder initially decides on the board composition, and subsequently, the foundation elects its members through co-optation. The foundation can also own subsidiaries with operating businesses. Each foundation must appoint an auditor or audit company to review its financial statements.

Swiss foundations are subject to state supervision carried out by the Federal Supervisory Board for Foundations (FSBF), which means that the DAO won’t be able to appoint its own supervisor. The supervisory authority must ensure that the foundation assets are used in accordance with its purposes, which allows it to intervene in the operations of the foundation if it deems that the same is necessary.

  1. Swiss Association

A Swiss association is a more flexible structure, but has its cons. It must consist of at least two members who control the entity and can pass resolutions on significant matters, including changes to the purpose, statutes, or the election of the management. One member has one vote. The board of association is responsible for the day-to-day management.

While there are instances of digital voting within Swiss associations, we know, however, no examples of token ownership-based memberships within these associations. This necessitates the admission of as many members as possible to achieve adequate decentralisation at the corporate level; otherwise, as well as in the above example with the Swiss Foundation, a small group of members could jeopardise the whole structure.

Each association member must be admitted after undergoing identification procedures. This leads to uncertainty regarding whether the Abracadabra DAO will be able to assign a sufficient number of members to represent the organisation and ensure adequate protection against potential governance attack vectors.

Based on the foregoing, we consider a Swiss foundation to be a more preferable choice for structuring the Abracadabra DAO, as compared to a Swiss association. However, either structure can serve as a wrapper.

Cayman Islands

Since we consider the Cayman Islands ownerless foundation company to be one of the most efficient and flexible DAO legal wrapper structures that are currently available, we decided to mention it in our proposal. For a better understanding of the rationale, here are some of the advantages of a Cayman foundation over a Swiss foundation or association:

  • a tax-exempt status, which can be a struggle in Switzerland;
  • a much more cost-effective structure requiring fewer resources for both incorporation and facilitation of the structure;
  • a more straightforward and expedited formation process;
  • unparalleled flexibility in governance and management procedures – this structure can be tailored to the DAO’s specific needs and incorporate virtually any control and governance mechanisms, including real subordination to the DAO;
  • local directors are not required;
  • minimised reporting and accounting obligations, streamlining administrative tasks;
  • enhanced privacy provisions whereby corporate registers and information are kept private.

The Cayman foundations are used as a legal wrapper by Arbitrum, Hector, SushiSwap, ENS, Maker (RWA division) DAOs, and many other Web3 organisations.

Fees and Engagement Terms

The proposed terms of our engagement:

(a) A two-year contract, which term can be extended thereafter. This won’t limit the DAO in its ability to have additional management appointed, as well as remove DAObox as managers at any time by a DAO resolution;

(b) 60,000 USDC as an annual fee (120k for 24 months, payable upfront), covering design, set-up, facilitation, and day-to-day management;

(c) A one-time $SPELL token allocation: 0.15% of the total $SPELL token supply, subject to a 1-year lock-up, with a 1-year linear vesting period thereafter.

We believe that a $5k monthly fee is a more than reasonable price for the scope of engagement that we undertake, covering design and formation of the wrapper, assignment of the necessary personnel, managing and operating the structure, and everything discussed elsewhere in this proposal. Such an amount would barely cover the salary of a single professional manager if the DAO would need to appoint its own personnel, not to mention all other aspects of our responsibilities.

For DAObox, the stable fee covers the basic costs and operating expenses, while the token allocation serves as our additional incentive and compensation for the risks assumed in connection with the management of the DAO legal structure. However, should the DAO be uncomfortable with the token allocation, whether due to economic or other reasons, we can redesign the proposal in the token part, taking these concerns into account. Note that if the DAObox’s supervision and management services are not required, we can issue a proposal covering the design and set-up of the wrapper only.

Costs Involved

The costs involved in the formation and continuation of the DAO legal wrapper are not included in DAObox’s fees. The costs will depend on the jurisdiction and form of the anticipated wrapper.

DAObox can work with any local service provider chosen by the DAO on the formation and corporate matters, so if there is a preferred service provider – just let us know. The same relates to the appointment of a local director in the case of a Swiss foundation or association, so if the DAO would suggest a Swiss resident be appointed for this purpose, this would reduce the overall cost (specified below).

Below you may find the approximate costs of our service providers whom we can engage, if and as may be necessary:

Swiss Foundation: $11,700 – a one-time formation fee (CHF 10,000), plus $2,100 (CHF 1,800) and $8,200 (CHF 7,000) annually for local address and Swiss nominal director, respectively, as required by the law. The nominal director will hold a titular position on the board and won’t be engaged in operations. There is also a minimum initial capital requirement of CHF 50,000 to be funded in any form, including in the form of crypto. This is not a fee, so these funds will remain at the disposal of the foundation.

Swiss Association: $5,800 (CHF 5,000) – a one-time formation fee, plus $2,100 (CHF 1,800) and $7,000 (CHF 6,000) annually for local address and Swiss nominal director, respectively, as required by the law. The nominal director will hold a titular position on the board and won’t be engaged in operations.

Cayman Foundation: $7,000, covering formation costs, local address and services of a local registered agent for the first year. No other costs should normally arise.

I will be reviewing this forum from time to time and responding to your questions, so feel free to ask!

Legal Notice: This proposal is made by DAObox Inc. We are lawyers, but not your lawyers; nothing contained in this proposal or otherwise communicated by us on this forum is an offering of legal services or legal representation to any person.

[Option 2. DAObox. UPD: Re. Swiss Association]

Taking into account the latest resolution passed by the Abracadabra DAO, according to which the Swiss association was approved as the future legal wrapper, we are updating our initial proposal to be more relevant for this particular scenario. So, please disregard our previous proposals and comms in part of financials; our initial proposal in the forum post of August 31 will be updated as well.

Proposal to Abracadabra DAO:

(1) Option 2A (Structuring). We will (i) design the legal wrapper, including corporate procedures and DAO connection, and (ii) incorporate the wrapper as a Swiss association. Price: (a) $17,500 for setup and 1st year maintenance; (b) approx. $14,000 for maintenance starting from the second year. No token allocation. Note: Option A can be selected independently of Option B.

(2) Option 2B (Management). In addition to our Structuring Offer, DAObox will take management positions at the association (director’s, etc.) and will completely manage and administer the wrapper during a 2-year term. Price: (a) $5,000 per month, and (b) a one-time token allocation of 0.15% of the TTS, subject to customary vesting. Note: Services in Option B can be provided only together with Option A, therefore, if Option B is selected by the DAO, Option A will be deemed to be selected as well.

Terms relating to payments and allocations can be found in our initial proposal on this forum above.

We kindly ask the Abracadabra DAO to consider this proposal to be our final offer to the DAO, and update the governance proposal on Snapshot to reflect the changes.


1 Like

I’m glad to see some proactive movement toward protecting Spell against legal attacks. I can imagine US regulators coming after this project in the future.

AIP 22.3 - Abracadabra DAO Legal Framework - Swiss Association

Now that both AIP 22.1 and AIP 22.2 have passed, the DAO must execute a final vote to select the Swiss association that will act as the representative that will ultimately allow Abracadabra Money DAO to interact with centralized entities.

Based on forum discussions, two entities have emerged as suitable options to represent the DAO.

Option 1 - @tomcont - AIP #22 - Abracadabra DAO Legal Framework: Bridging Worlds - #11 by tomcont

Option 2 - @AlexDAObox AIP #22 - Abracadabra DAO Legal Framework: Bridging Worlds - #12 by AlexDAObox

In order to finalize the creation of the legal entity, the DAO must select one of the two options (and any other proposal posted in the next 24 hours).

Note: For both privacy and operational reasons, the DAO will not be required to post the name of the legal entity in the forum proposal, so long as it adheres with the agreed upon jurisdiction and template in the previous AIPs.

Further Details and Voting

Both of the posted proposals were deemed to contain sufficient details around costs, advantages, and disadvantages. Over the next 24 hours, additional proposals with similar amounts of detail will be considered by the DAO. In the event of new submissions, the above listed options will be updated accordingly. Operational costs of the association will be covered by the DAO operational treasury.

Following this period, the DAO will commence a Snapshot vote for members to vote on the final entity. The voting period will last for 72 hours.

Snapshot link will be posted here.

Future Changes in the DAO Legal Framework

In order to change the DAO Legal Framework, a new proposal must be created and a 72-hour voting period will be required. All proposals must contain a detailed explanation of the suggested changes and why they are required.

The template to be followed will be referencing AIP 22 as the main proposal. (i.e AIP 22.X - Update in DAO Legal Framework].

1 Like

@tomcont sounds like the better choice, much cheaper too!!!

[Option 2. DAObox. UPD: Re. Swiss Association]

Taking into account the latest resolution passed by the Abracadabra DAO, according to which the Swiss association was approved as the future legal wrapper, we are updating our initial proposal to be more relevant for this particular scenario. So, please disregard our previous proposals and comms in part of financials; our initial proposal in the forum post of August 31 will be updated as well.

Proposal to Abracadabra DAO:

(1) Option 2A (Structuring). We will (i) design the legal wrapper, including corporate procedures and DAO connection, and (ii) incorporate the wrapper as a Swiss association. Price: (a) $17,500 for setup and 1st year maintenance; (b) approx. $14,000 for maintenance starting from the second year. No token allocation. Note: Option A can be selected independently of Option B.

(2) Option 2B (Management). In addition to our Structuring Offer, DAObox will take management positions at the association (director’s, etc.) and will completely manage and administer the wrapper during a 2-year term. Price: (a) $5,000 per month, and (b) a one-time token allocation of 0.15% of the TTS, subject to customary vesting. Note: Services in Option B can be provided only together with Option A, therefore, if Option B is selected by the DAO, Option A will be deemed to be selected as well.

Terms relating to payments and allocations can be found in our initial proposal on this forum above.

We kindly ask the Abracadabra DAO to consider this proposal to be our final offer to the DAO, and update the governance proposal on Snapshot to reflect the changes.


UPD: We cannot edit our initial proposal as it was locked, so please consider the initial offer to be amended accordingly.

1 Like

Option A sounds like a more affordable option for sure!