This thread explores how businesses can enter into formal contracts with OpenGov. We are asking for feedback to set up the rails for this asap.
In short, we propose to amend the bylaws of the Polkadot Community Foundation (PCF) to allow the Marketing Bounty to instruct the PCF to enter into a contract with a service provider on behalf of the DAO. This will allow businesses to have a formal counterparty with a physical address, and get paid in fiat.
Entities doing business with Polkadot might encounter two practical issues:
Polkadot doesnât have a physical address. SubDAOs like the Marketing Bounty donât have a physical address. This can be a problem when an entity is writing an invoice and cannot address its counterparty as is required in some jurisdictions.
Polkadot doesnât pay in fiat. This can be a problem for entities that are not (yet) able to accept crypto payments for various reasons.
Crazy, right?
How can we enable those businesses to enter into relations with Polkadot? The depressing answer is we need a trusted intermediary.
PCF as intermediary
One answer that the ecosystem has found for this problem is to set up the Polkadot Community Foundation. It is a trust-minimized setup where a foundation in the Cayman Islands acts as a DAO Execution Vehicle (DEV). The Cayman Islands have created a legal backdrop where DEVs may only act as per instructions given by the DAO. The PCF foundational contract and bylaws are written in a way that Polkadot OpenGov may issue instructions to the PCF which then have to be executed by the Directors and the Directors may only execute instructions that are given by the DAO and are in accordance with the law.
Marketing Bounty x PCF
Now that the PCF has been set up, there is the opportunity to use it as a counterparty for contracts. The Marketing Bounty (MB) is one of the most active subDAOs in Polkadot and engages with a lot of service providers (SPs). Naturally, it is one of the first bounties to encounter the need to set up formal contracts.
Now the problem is that each instruction to the PCF needs to go through OpenGov (up to 35 days on-chain voting) and then legal staff around the PCF needs to get involved and a lot of costs would accumulate.
So we are looking to find a framework that minimizes the time and cost of setting up a contract. The ideal flow would be as follows:
Basic Flow
The MB off-chain agrees on a deal with an SP
The MB sends an on-chain instruction to the PCF to set up the contract with the SP
The PCF off-chain handles contract set up with the SP
Advantages
The PCF legally shields the subDAO curators who act on behalf of the DAO
The PCF can handle payment admin, which frees curators to focus on their core tasks
More businesses can enter into relations with the DAO
Create a portfolio of standardized contracts the PCF can enter into â to save time and costs later on)
Develop the amendment to the PCF bylaws and get it approved â to allow the MB to directly give instructions to the PCF
There will be costs associated with this process. The advantage is that a lot of it will be able to be reused in the future to extend the offering to other subDAOs. Also, I think we need to perform this work at some point in time, so the earlier, the better.
All of this will have to go through an OpenGov ref to get it funded and instruct the PCF to participate in the process
Get the amendments to the bylaws approved
I am not sure yet if this can be done by the same ref of step 1 or if we will need a second ref after the amendments have been developed
After this, the process should be ready to go.
Additional considerations
Contain risk: Contracts have to be risk-minimized in a way that they cannot incur additional costs that roll over into the responsibility of broader OpenGov.
To maintain transparency, we might want the PCF to quarterly report on the instructions it received and the status of the current contracts
A standardized set of contracts might not be sufficient in all instances, so we may want to get a consensus on whether the MB can set up new types of contracts if it pays for them. Or if every new contract has to be approved by OpenGov. The simpler option would be to give the MB more freedom when coming up with new contracts, but the risk has to be mitigated by limiting new contracts in a way that contains the risk as discussed above.
We donât necessarily need the PCF to set up contracts between the MB and other entities. Anyone who is willing to risk their name to act on behalf of the DAO or MB can do this. But whoever we choose for the job should understand their risk and the DAO needs to approve. As a minimum, subDAO members should be legally shielded.
Questions
What do you think of this?
What other factors should we consider?
The ideal timeline would put the first ref to a vote before Christmas.
Will the PCF act as an intermediary, or in what capacity?
Assuming that the PCF is an intermediary, can we also assume that all ambassadors are intermediaries?
If the contract is between the supplier and the PCF, how will you use the bounty funds to pay the supplier given that the PCF neither holds nor has authority over the Polkadot treasury?
On the other hand, if the contract remains between the supplier and Polkadot, what purpose does the PCF serveâsimply drafting a contract?
Honestly, it seems to me like just an additional layer of bureaucracy in an already perfectly functioning system.
Furthermore, who will be responsible for overseeing what the PCF does on behalf of the community?
Considering that the PCF has no direct connection to the treasury, it might not be seen as a credible partner by some suppliers, as it doesnât directly manage funds and lacks decision-making power over them. From a strategic standpoint, it seems somewhat useless, potentially serving only for the management of paperwork and documents. In this case, if the function is purely and merely intermediary, I would suggest adding a 2-3% fee for the intermediation, which should be used to cover operational expenses, with any surplus returned to the community.
No. Intermediary for what? Contracts? In theory, anyone could be appointed to act on behalf of the DAO. Itâs just not wise to do this without understanding the legal context.
A bounty would send instructions to the PCF via a child bounty that pays the PCF to act.
Please read the problem description to understand what the problem is.
According to the PCF bylaws, the community may appoint directors via OpenGov.
It is an option for those that want to do business with Polkadot but canât due to the reasons described in the problem section. If one doesnât trust the PCF they obviously wonât do business with Polkadot.
There is no need to invent an arbitrary charge that the PCF would ask from Polkadot, since there is legal costs involved anyways. We would need to determine a fixed price for what contract setup costs anyways. So no need to just invent something.
Thank you for the responses. I have also discussed separately with other people, and I understand that currently, this is the only existing alternative on planet Earth capable of intermediating between the Polkadot DAO (ar Opengov) and real-world businesses.
Anyone volunteering to represent the DAO is also taking the risk of being tried for some other stuff that is associated with happening in relation to the DAO.
The PCF is embedded in a jurisdiction that understands how DAOs operate and has created proper circumstances for a DAO to select legal representation.
The ability to receive fiat payments solves a key barrier for many traditional businesses that are not yet ready to accept cryptocurrency and by using PCF, businesses would have a formal counterparty with a physical address, and
It is unfortunate to observe another respected individual compromise their credibility by allowing others to exploit their voice and influence within the community. This proposal is a blatant attempt to bypass Polkadotâs existing legal infrastructure and leverage a more permissive jurisdiction to the detriment of the broader community. The fact that Polkadot already has a registered business address in Zug, Switzerland undermines the core justification for this proposal.
The Cayman Islandsâ reputation as a potential hub for financial opacity and tax avoidance provides an ideal environment for anyone looking to obfuscate their actions and shield themselves from proper scrutiny and accountability. This shift in jurisdiction raises serious red flags and strongly suggests that the curators are seeking to exploit the Cayman Islandsâ legal and financial frameworks to conceal their improper activities and misuse of Polkadot Bounty funds.
Why would the Marketing Bounty need to be so concerned with legal and contracts, when they refused to provide DOT Distribution reports and full complete reports for their expenditures â including how much each curator was paid from the Bounty?? This is obviously an attempt to avoid prosecution - this bounty and its curators should be removed immediately. The multi-sig wallet was made and controlled like the original bounty wallet - Iceberg Nodes + Giotto/Crane.
You guys arenât fooling anyone, this was the best legal advice and plan?!? - very disappointing Tommi.
I think youâre being a bit uncharitable and missing an important value in having a legal entity: The ability to sign and enforce contracts. If, for example, a bounty funds a company to perform some service and the company doesnât deliver, what recourse is there without some legal entity on the bountyâs side? Do you think curators as individuals should shoulder that responsibility? That seems like a recipe for empty curator sets and rampant grifting to me.
Polkadot does not have official representation in Switzerland. If you refer to the Web3 Foundation, it does not act as an intermediary for Polkadot.
The PCF has legally binding bylaws. The DAO can amend the bylaws and put there any transparency rules it wants to be enforced.
It seems you refer to the old marketing bounty. I canât speak for it, but as far as I remember, they had fairly good transparency where you could look up the individual invoices etc. I think the spending was very bad, but it was not intransparent. But you have to ask the curators of the previous bounty about that; which are different from the new bounty.
You might not be aware yet, but recently OpenGov strongly approved new Bounty Compliance Standards 1.0 | Polkassembly, that describe which transparency reports a bounty has to publish if it seeks further funding.
Uncharitable? For shits and giggles, letâs use your example. The bounty awards 1M DOT to a service company to promote a new meme coin. Out of the blue, the meme coin essentially is a rugpull and only allocates 1/10 of the tokens promised to the community. The promotion campaign is pointless and the service company refuses to return the 1,000,000 DOT. What responsibilities do you mean the curators are supposed to shoulder?
Taking on a bounty curator role with compensation is no joke and should be taken seriously. This is not a charity or a school project. Curators that are fulfilling bounties and documenting their work have nothing to worry about and should be confident the community will rally to support and rigorously defend their contributions. Opposing compliance or trying to restructure the legal framework by the same person that is responsible for monitoring governance to protect the community (OpenGov Watch) is a major red flag and should be investigated (KYC at a bare minimum, refusal warrants transferring that role elsewhere).
This proposal is very specific in nature and a topic that neither of you have brought up before, so what is the key driver for you to draft a proposal to restructure the legal framework of Polkadot? I donât know if it is just me, but Tommi you literally do not sound like yourself â what is going on, everything ok?
I have read through enough Giotto n frens debates to recognize your claim and concern that Polkadot has no official record in Switzerland or any location is true, but you do not recognize that was intentionally designed to establish decentralization. You are exploiting the decentralized structure and proposing to redesign Polkadotâs legal framework to be centralized through your foundation that you guys will setup and control in the Cayman Islands to protect bounty curators from being sued. Really?!?
The reality is that legal liability follows control and benefit. Those who control decisions, execute transactions, or benefit from violations face the highest risk. A corporate structure cannot shield individuals from liability for their own wrongful acts. Your best protection is doing things properly through the existing Swiss structure, not hiding in the Caymans.
You should fire whoever is advising you with this Cayman Islands idea. Setting up a Cayman Islands foundation would trigger regulatory red flags and increase personal legal exposure for everyone involved. Most importantly, an offshore structure cannot shield anyone from criminal liability, for AML violations, missing KYC documentation, or self-dealing. If proper procedures werenât followed and documentation is missing, changing jurisdictions wonât fix these problems â it will only make them more suspicious to regulators. Creating a Cayman Islands foundation to handle bounty distributions that already failed compliance requirements would be seen as deliberate regulatory evasion. This could trigger investigations and create serious legal consequences for everyone involved.
The real solution is straightforward: Use the existing Swiss-based structure, fix any missing compliance documentation, follow proper procedures, and maintain transparency. Curators should not be concerned if they can address the missing compliance documentation with verifiable records. Falsifying records or any additional misconduct will only increase personal liability and criminal prosecution.
I donât think the old marketing bounty paid 1 M DOTs to promote a memecoin, but I would ask you to show us some concrete feedback. In the meantime I will help you with your research, the only ones who have received funds, as far as I know, to promote a memecoin are in this proposal:
and they did not receive 1 M DOTs but much lessâŚ
But again, if you have evidence that the old marketing bounty used 1 M DOTs to promote that meme you refer to, I am also curious to see the reports.
@thewhiterabbitM - If you read my post again you will see that I was making an example and did not reference Lunar Strategy, did not mention the example was based on historical events, and did not mention DED as the memecoin. I was trying to understand Mister Coleâs question from his example - âdo we expect curators to âshoulder the responsibilityââ - so I just laid out a scenario as he described and did not understand his question/comment.
If I were to use Lunar Strategy in that example, they received close to $1M in DOT value across multiple referendums, grants, and bounty - not 1M DOT tokens.
Referendum 385: Provided 91,557 DOT(approximately $410,000) for the initial marketing efforts
Referendum 392: Allocated 50,000 DOT(approximately $225,000) for extended marketing activities
Community Grants: Various community grants contributed around $300,000
While itâs understandable to be cautious, itâs important to acknowledge the positive developments within the OpenGov and Polkadot community. The community is expanding and demonstrating increasingly thoughtful decision-making. Concurrently, curators are becoming more professional and discerning, making it unlikely that they would be swayed by âindecent proposalsâ for any bounty.
That being said, certain agreements necessitate a real-world entity, which the PCF currently fulfills. This intermediary role is crucial for facilitating some types of collaborations.
Can you provide details on what type of contract and with whom it is so urgent that you are asking the community to give up the current legal framework and decentralization - and to centralize Polkadot to the Marketing Bounty?!? This has to be a huge revenue driver and business opportunity that is once in a lifetime, no?
The typical response has been the trust me bro approach, but the marketing bounty lost the trust along with several million dollars worth of DOT to Giottoâs Sybil attack and this seems like another.
If the marketing bounty 2 curators can KYC/AML or can get the full DOT distribution from the original marketing bounty, - trust can be re-established. Why would anyone trust the future of Polkadot to people that are hiding their identities. Who is supposed to sign for PCF and who is making these decisions from the marketing bounty? Since Evan replaced Giotto and didnât hide his experience or background, why wonât he complete that step? Letâs use Deloitteâs KYC/AML until Polkadot tool is completed later this May. Iâll be your biggest cheerleader and supporter.
