TLDR: SafeDAO, a newly formed DAO, is experimenting with a participation agreement for its community that would define its participants, limit their liability, provide a mutual release from claims arising with the DAO, and create a complaint and resolution procedure. The proposal would have interested parties enter into a legal agreement with the DAO to protect themselves and SafeDAO.

SafeDAO is experimenting with a novel legal agreement for its newly formed DAO structure in hopes of protecting involved stakeholders. This experiment comes at a time when DAOs are increasingly looking to protect themselves and their stakeholders from liabilities. The reality is, DAOs today fall under a legal grey area with often unlimited liability to involved parties. Over the last few years, we have seen creative legal workarounds and experiments bridge and/or shield DAOs and their communities from some of these liabilities. Legal structures such as Wrapped DAOs (ie UNAs & Wyoming LLC) all serve as temporary solutions to a larger problem.

SafeDAO’s proposed experiment introduces a participation agreement that includes legal disclaimers and agreements for those wishing to get involved. The agreement provides a clear understanding of what a stakeholder of the DAO can expect during participation and interaction.

SafeDAO is an early-stage DAO that has only just launched its community. Governance tokens have only just been distributed. This infancy stage is an ideal window for the decentralized community to introduce novel and experimental ideas such as this.

The Participation Agreement

On September 28th, co-founder of Safe Christoph Simmenchen introduced SafeDAO’s inaugural proposal titled ‘SafeDAO Participation Agreement.’ SafeDAO Ecosystem Proposal #1 outlines a comprehensive governance participation agreement for the DAO and its relevant participants. The 14-page legal agreement is a laundry list of key terms, definitions, disclaimers, risks, and more. The proposal itself is straightforward — ratify the document as the legal governing code of SafeDAO. The actual legal document however is much more complex and dense. Safe’s agreement intends to provide clarity to those wishing to participate at the DAO, something sorely lacking in many DAOs today.

The proposal currently resides in the forum discussion phase awaiting community feedback. The initial feedback requests clarity on a number of clauses and its wording but the sentiment is overall neutral to positive. As the first proposal with minimal moving parts and technical implementation, it is likely to be voted on after possible amendments. In accordance with SafeDAO’s governance process, the proposal should move from Phase 1 to Phase 2 after six days of being posted to the forums. During Phase 2, the Safe community will have a chance to signal their opinion through an off-chain Snapshot vote. Any user who wishes to post a proposal needs a minimum of 20k SAFE to post to Snapshot. In order for the proposal to pass it also requires a quorum, or minimum amount voted, equal to 10M SAFE. Community consensus and agreement are important, especially with legal documents such as these. Amendments incorporating feedback are likely before the document moves to Phase 2.

Why SafeDAO Should Experiment

DAOs are finding themselves stuck between the old world and the new. Legal liability is creeping up and experiments to insulate DAO such as these are taking place. The creation of SafeDAO and its community has been an extremely well thought out approach to decentralization.

Safe and their products are core infrastructure for dozens of projects across the web3 ecosystem. Now we sit back and watch if their approach will work starting with SEP#1.

Should SEP#1 come to pass, DAO participants will be required to sign the agreement to participate and vote on governance proposals. What this means for its participation rate and engagement is to be seen. Getting the legal wording clear and understood is important to keeping the community engaged as well as protected. It’s important to note that the agreement can be changed and updated through the governance process should users find it too encroaching. Entrusted community members called Guardians can already be seen calling for delegation from tokenholders. An active governance base often leads to a healthy, diverse, and more mature protocol.

As we have come to realize there is no one way to DAO and the various approaches will work for some and fail for others. Only through showcasing the various experiments will we build the protocols of tomorrow. SEP#1 from SafeDAO will ideally showcase if legal disclaimers are protective, productive, and useful for DAOs and their relevant stakeholders.

We’ll be tracking this proposal activity closely at Boardroom, follow our newsletter to stay up to date. If you’re a voter in a protocol, make sure to get on the waitlist for the new Boardroom Portal. {{Brief02//safedao}}