Polkadot Purple Paper - Token Morphism Guidelines

Hi everyone - we have been working on preparing a proposal for the treasury. We are posting the relevant draft here on the Forum with the goal of getting feedback.

Thank you!

Context of the proposal:

In earlier phases of Web3 - namely 2017 and 2018 - there was extensive debate about the legal nature of tokens and the process for getting those tokens acknowledged by regulatory bodies such as the SEC. Amidst the frenzy of the latest bull run, those debates have somewhat subsided. In a post-FTX market, with even more scrutinous regulatory eyes fixed upon crypto, those debates and the need for best practices for undergoing regulatory recognition have reemerged as even more critical pieces of knowledge for web3 builders. In this environment, Polkadot’s efforts and ultimate success in the regulatory arena warrant study and dissemination to the wider web3 community. It is in this spirit that we submit our grant request to the treasury

We have already had informal discussions with the individuals most involved in the DOT related regulatory process, who all expressed initial interest in contributing to the initiative. Given this, we feel confident in our ability to fully develop our research themes.

The professionals we spoke with who manifested in general terms willingness to support the initiative are:

We applied at the w3f grant program and were guided to approach the on-chain treasury due to the legal nature of the research.

Problem statement:

  1. Web3 regulatory matters are complicated. Each project must obtain proper legal advice, but at the same time, there is no single, up-to-date reference point that they can rely upon for this process. These complexities and unknowns are one of the factors slowing the growth of Web3.
  2. Regulatory topics are often discussed through a technical lens. There is a significant lack of content oriented towards non-technical stakeholders.
  3. There is no easy-to-understand documentation of Polkadot’s unique process and outcomes achieved over the last three years of dialogue with the SEC.

Proposal Objective/solution/s to point 2:

We aim to produce a Research paper regarding the SEC DOT regulatory process, outcomes and recommendations for Dotsama and the wider Web3 ecosystem

Research will be conducted along the following themes:

  • The SEC no-action letter: What is it, when is it necessary, when is it not and what are the current trends?
  • Comprehensive analysis of key case studies between 2017-2022.
  • Token morphism: concepts and examples.
  • Polkadot case study: lessons learned from Polkadot’s process and dialogue with the SEC.
  • Best practices regarding token issuance.
  • Elucidation of applicable (and non-applicable) use cases of token morphism within Web3.
  • If feasible, a Parachain-oriented token issuance blueprint.
  • A set of findings relevant to the broader Web3 industry.
  • A brief comparative analysis of the US’ and civil law countries’ crypto regulatory frameworks.

Following research methods will be employed

  • Interview and dialogue with the actors who, on behalf of Polkadot, engaged in the conversation with the SEC, including Joshua Ashley Klayman, Angela Dalton, Daniel Schoenberger, and Peter Mauric.
  • Interview individuals having direct experience in token regulation in the US.
  • A brief review of the relevant literature.
  • Agnostic method: the research will not take a position about how Web3 should or should not be regulated. Its aim is solely to share the process and outcomes of Polkadot’s US regulatory journey.
  • Educational approach: the research will be aided by diagrams and visuals to make the topics comprehensible to a wide, non-technical audience.
  • Divergent opinions welcome: We will include a wide variety of opinions in order to provide consumers of our research with the maximum number of useful approaches.

How does this proposal change the network? How do the milestones of the project achieve the ultimate goal? List the solution and milestones to reach your goal.

Our research aims to explore the concept of token morphism and then create accessible, actionable content geared towards web3 builders - legally minded and non-legally minded alike - who have an urgent need to understand this important but somewhat esoteric topic. While the resulting content will not constitute legal advice, it will contain clear, actionable recommendations that will be relevant for many Web3 projects.

Who does this solution help?.

An in-depth study of Polkadot’s regulatory journey and success along with some key, ecosystem agnostic concepts which are as yet not well / widely understood, will help the Dotsama ecosystem learn from itself while also providing valuable guidance to the broader web3 space.

Milestones and tasks to include:

Milestone 1 - Literature Review, Data Collection and First Draft (2 months, 7388.37 DOT)

  • Run an internal research and documentation process, in order to prepare the interviews.
  • Conduct first round of interviews with relevant stakeholders.
  • Prepare and release an internal draft of the paper along with an inline documentation of the method and process used for the research under a CC0 License.

Milestone 2 - Feedback and Publication (2 months, 7388.37 DOT)

  • Absorb abd iterate relevant comment received, offering room for divergent opinions eventually submitted.
  • Publish the final paper which is easily and publicly accessible to non-technical readers along with an inline documentation of the method and process used for the research under a CC0 License.
  • Run one public presentation on our findings with Web3 foundation, Parity and wherever possible, through and with other industry communication channels.

Why Polkadot Network? Why did you choose to build in Polkadot? What is it about this network that encourages you to submit this proposal? If you have seen similar proposals before: why is yours different?

We are not aware of the existence of any other research project covering the same topics this research aims to address.


Team Leader

  • Raffaele Battaglini, LL.M.

Team Members

  • Dr. Alessandro Palombo
  • Davide Paoli, LL.M. - MBA
  • Luigi Cantisani, LL.M.
  • Selen Ekinci, LL.M.
  • Will Sauer

Ad hoc subject matter experts etc.

  • We expect to engage a variety of subject matter experts on an ad hoc basis. The specific individuals to be engaged will be determined as the research progresses and therefore they cannot yet be enumerated. However, the budget as currently presented includes the costs for these experts.


Contact Name: Raffaele Battaglini

Contact Email: raffaele@jur.io

Website: www.jur.io

Team Experience

Founder of Futura Law Firm S.t.a.r.l. S.B., he acts as legal advisor to Jur since its inception. A lawyer registered with the Turin Bar since 2009, he deals with extraordinary transactions and commercial contracts with a particular focus on the world of start-ups and new technologies. In 2006 he obtained an LL.M. in Innovation, Technology and the Law from the University of Edinburgh. Author and speaker, in Italy and abroad, of books, articles and conferences on technological issues such as blockchain, smart contracts, cryptocurrencies, Initial Coin Offerings, artificial intelligence, legaltech, Industry 4.0, 3D printing. Co-Organiser of Legal Hackers Torino, the first Italian chapter of the global Legal Hackers community. Raffaele is co-editor and co-author of the book “Blockchain and Smart Contracts” published by Giuffrè Francis Lefebvre in 2019 and co-author of “Smart Legal Contracts” published by Giuffrè Francis Lefebvre in 2021 and assisted several projects in regulatory matters across multiple jurisdictions.

Founder of Paoli Legal FZE, Davide Paoli was the Head of the Corporate and Criminal Corporate Law Department at Bin Haider Advocates & Legal Consultants. Davide is a specialist in cross-border corporate transactions and international IP law and has an extensive experience in criminal proceedings in Italy, UAE and the United States. His firm handles a portfolio of clients in the aviation/space, energy, advertising, automotive, sports, food, amusement parks, shipping, fashion, and luxury retail and trading industries. Fluent in Italian, English, German, and French, with a working knowledge of Arabic, Davide has extensive experience in the Middle East, both in the United Arab Emirates, Egypt and Lebanon. He was the Founding Member and Managing Director of Eptalex Dubai. His key areas of practice include white collar crime, extradition procedures, corporate and commercial, intellectual property, media and entertainment, insurance and reinsurance, legal tech and blockchain projects, and aviation and space law. He is a member of several international law bar associations.

Jur Founder, in Web3 since 2017, actively involved in the relationship with FINMA for obtaining a non-action letter. Prior to his transition into entrepreneurship, Alessandro became admitted to practice law in Italy, earned a Masters in Global Regulation of Markets (Sapienza and Lateranensis University) and a Ph.D. in Administrative Law (Sapienza University). He also gained direct experience in regulatory matters serving as Scientific Committee Member of San Marino Innovation, supporting the creation of the national legislation for token issuance. He also advised Oxford University’s Deep Tech Dispute Resolution Lab on topics across Web3 and dispute resolution. Alessandro will be focused on supporting the research with his direct experience regarding Jur and ensuring that the deliverables will be easy-to understand for other Web3 teams.

Lawyer at Futura Law Firm S.t.a.r.l. S.B. acting as legal engineer at Jur. A lawyer registered with the Turin Bar since 2019, he mainly deals with national and international contracts and corporate transactions, with a focus on the new technology sector. He carries out legal engineering activities for tech companies for the design of digital platforms and legal tech applications, in particular in the ODR sector. He holds an LL.M. in International Trade Law from the United Nations ITC-ILO campus and a Ph.D. from the University of Warwick. Lecturer at Italian and foreign universities and author of publications on smart contracts, contract law and ODR.

Lawyer at Futura Law Firm S.t.a.r.l. S.B. Currently enrolled in the Istanbul Bar Association. Graduated with honours from Yeditepe University in Istanbul, and graduated with LL.M in Comparative Law, Economics and Finance from International University College of Turin and University of Turin. She is pursuing a master’s degree in Entrepreneurship and Innovation at the University of Padua. Its legal field is private international law, in particular contract law.

Will Sauer is a technically-grounded operations leader with a proven track record across the startup and venture ecosystem. Most recently he spent 3 years as a back-end software engineer. Prior to that he ran Finance and Operations at a Series A / B startup in San Francisco and worked for several alternative investment funds.

Payment conditions: please specify any special conditions regarding the payment of this proposal.

Please include here:

  • What is the amount requested? Should this be divided on installments? Will each milestone represent a treasury submission?

The amount requested is 14776.74 DOT, delivered in two installments of 7388.37 DOT each, corresponding with the delivery of each milestone and separate treasury submissions. While our work includes an intermediate milestone, it will not be considered as a separate treasury submission given it will be a draft for public commentary.

  • How does this amount cover the work of the proposal? What tasks are to be included on the payment? Please allocate parts of the total request to the milestones explained above.

Milestone I: Will be completed with the publication of a public draft for comments 7388.37 DOT

Milestone II: Will be completed with the delivery of a final paper and presentation. 7388.37 DOT

  • Treasury timeline related to milestones: when are installments (if any) due

The first installment is due upon delivery of the public draft for comments and the completion of milestone 1.

The second installment is due upon delivery of the final paper and presentation for the completion of milestone 1.

  • What is the address of the fund recipient?

To be added at the moment of proposal submission

  • How can we contact the manager of the funds?

To be added at the moment of proposal submission

  • What exchange rate are you considering and why?

We considered as an exchange rate 1 DOT = $6.226 - the average price between Aug 2022 and today, February 6th?.

Source: Polkadot Historical Data - Investing.com India

  • Budget details.

1. Where senior is defined as professional with 15+ years experience and direct web3 legal knowledge e.g. LLMs or Ph.D.'s, and founding partners.
2. Representative of US market rate, intended for engaging individuals connected with SEC and other US regulatory bodies.
3. Representative of EU / MENA-based activities where the majority of work will take place.


Project will be comprised of a mix of scientific and interview-based research with external subject matter experts and the broader web3 community. Accordingly, the tempo and volume of the work will depend on logistical and personnel factors not fully within our control.

These rates and hours represent our best effort estimation of the total cost of the project but should not be construed as a definitive calculation of the ultimate total cost of the project.

If the ultimate total cost of the project should exceed this estimate, there is a possibility that we may submit a second proposal to cover the additional expenses incurred. Alternatively, we would be happy to receive this balance as a tip upon completion of the project.

Comments, Qs&As: Include here any public relevant information, questions and the respective answers covered on any of the communications channels pertinent to this proposal up to date.


  • The research is in no way a substitute for legal advice
  • The research may have a negative or partially negative outcome, in the unlikely event that shared best practices cannot be gathered

We’d love to hear about how you got to know about the Polkadot on-chain treasury: let us know, in a few sentences, how did you become familiar with the spending mechanism and the on-chain treasury?


This looks like a really good initiative and a very valuable use of treasury funds. I will be honest, $ per hours of lawyers are always a bit shocking to me, but I will let others in the industry call out what is fair and not.

Among all the bullet points I think this is the most important:

  • If feasible, a Parachain-oriented token issuance blueprint.

I would like to make this a concrete milestone, at least in a “as best as possible” way rather than an optional one. Perhaps it is too much to put legal backing behind “follow these steps”, but it would be good to have any kind of rough outline on how parachain teams can best prepare themselves for navigating securities law.


I’m pro almost any sort of legal research. Crypto is hugely in a regulatory vacuum, that’s why 50% of crypto media coverage is about regulation. Funding more initiatives like this will help a lot


Why do you quote the hourly rate of senior legal counsel if the resulting work is explicitly stated as not legal advice? The reason why this is so costly is because of the liability and the risks involved. For writing a legal paper that involves interviewing other counsel about their legal reasoning, it seems more appropriate to quote the rate of a legal researcher, which earns 60k USD / year.

1 Like

Hey @ale thanks for the proposal.

I think for other projects from the ecosystem to have a clear blueprint on how to do things right when it comes to regulations is crucial. I find the DOT regulatory process fascinating but a bit complex to understand for the common joe. A report like this could add so much value to the whole blockchain industry!

Thank you for the question. The reason we say it is not legal advice is that the final paper will not be a legal opinion on a specific case. The final paper will be legal research based on case studies and interviews. We will analyze laws and case law and interview experts in the field. This type of work must be conducted by involving senior and junior professionals together with legal researchers. The output will contain guidelines and, to the extent possible, a framework. We cannot define it legal consultancy because it is not conducted on a specific case. I will come back to this point more extensively tomorrow. I will elaborate more on the context and economic rationale for this proposal.

Thanks for your answer.

In understand why it is not legal advice, but that is also why I think you cannot justify an hourly rate of 400 to 600 USD. Such extremely high rates can only be justified due to very particular necessities, which I do not see met here. However, I am openminded about your reasoning. For comparison, law professors make less than 100 USD / h on average according to zippia. It is not a perfect comparison but they also produce such papers and legal research.

Interesting proposal but there are several glaring issues:

  1. Deep U.S. regulatory analysis must be done by U.S. legal experts who are U.S. citizens living and working in the U.S. Having a “EU / MENA-based” team makes zero sense. Would you pay an American living in LA to set up a regulatory strategy in Brussels? NO! Why not just pay a trusted U.S. law firm to write the analysis?

  2. Legal analysis that isn’t a legal opinion is of little value in a crypto ecosystem where trust is all but gone. Someone needs to put their legal reputation on the line, and a firm being paid to do so is incentivized in a way an ad-hoc group of researchers are not.

  3. The cost is much too low for this report to carry the weight that is needed. No one is going to listen to anyone who isn’t a top-tier securities lawyer, and $600/hr is less than half of their hourly rate in many cases.

1 Like

Thank you for the insights. We look forward to receiving more opinions. We will respond point by point conclusively shortly.

Just one note about the method we want to use here. This forum is a valuable space for dialogue. The value of dialogue decreases if we use fake accounts. Our own accounts are equipped with a history and a track record of commitment to the ecosystem. Newly created accounts do not allow us to give proper weight and frame correctly some remarks and ideas.

At the same time, using fake accounts confuses the Forum reader. Forum readers often fail to notice when there are accounts created for the sole purpose of responding to a comment. Hence, they might give equal weight to comments potentially driven by different and personal interests as to comments by people in Dotsama for a long time.

We look forward to collecting more opinions and answer to each one of them. Thank you!

I’m real!

Thanks, here are our observations:

  • As defined in the proposal, the team will involve US-qualified professionals (besides the one already identified). The majority of Dotsama projects are not US based. As the research is aimed at covering and giving guidelines to them as well, it is necessary to have a broader perspective by also covering cross-jurisdiction issues. As far as we know, to date, the majority of projects in DOT do not even have US exposure. It may indeed be useful that they do not have it until the token morphism process is completed.

  • The observation about the value of legal opinions in crypto is purely subjective and, therefore, represents a praiseworthy point of view, albeit an entirely personal one. Thank you for sharing your point of view on the topic. Our opinion, however, is that we are talking about two different things. On one hand, we refer to guidelines drafted by a research team, inclusive of multiple legal opinions, generating a specific operational value at a multi-jurisdictional level. You, on the other hand, raise the question - yet again: an extremely valuable one – that bears significant political elements: as you know this has been, is, and very likely shall remain, a very thorny matter for many lawyers and legal experts to express a final opinion on. Not many are lightheartedly inclined to expose themselves on such regulatory topics, even for stellar fee arrangements.

  • On the cost of security lawyers, we agree with your estimate. However, we believe that we can attract various types of US professionals, apart from those already listed, to stay within the projected costs, which remain cost estimates all the same.


Thank you for the insight. We understand your point of view and your willingness to contribute to the discussion. The concept of fees for consulting on such matters unfortunately follows different logics.
We made the initial proposal to do this research on a nominal fee basis as a Web3 Grant. See here as a reference. Through the back and forth we were asked instead to bill at market rates. We have done it accordingly. I think your feedback is helpful. We can work out of passion. But if we need to factor in real rates, these are pretty reasonable ones. We appreciate the input, however. Let’s see what Polkadot’s Governance has to say about this.

Hi everyone,

Thank you all for your participation and support! We appreciate that a large number of people are supporting this initiative.

This dialogue allows us to consider an evolution for this proposal considering the overall context. Jur is one of the ecosystem projects. In the spirit of decentralization, we play a diligent part and look forward to contributing to Polkadot as an ecosystem. Strategically, we believe it is central for the ecosystem, and Web3 in general, to set an active pace on this regulatory vertical ahead of the next cycle.

We do not have core regulatory matters, nor are we a Law Firm of any sort. As a future parachain, we are creating a DAO2.0 stack, opening up a vertical of tools and infrastructure for the Network State movement.

As a result, we are “constitutionally bound” to invite other people and teams to contribute and get in touch with us and advise on whether what we do and the way we do it makes sense. Through this activity, we are providing a service to the ecosystem. As such, our role is to make proposals and iterate them according to feedback. Polkadot decentralized Governance, as always, will decide.

Therefore, in an effort to act with the utmost respect to the interests at stake, we will do the following:

the Proposal opened here becomes Proposal 1 of a series of Proposals.

  • The team that will contribute to the proposal will be an autonomous “Token Morphism Purple Paper Team.” Jur stands as the initial catalyst for this strategic proposal.
  • we have activated channels to verify availability and costs to involve two primary firms with a historical presence in the US, which may be available to lead a neutral legal opinion on the subject matter to be added to this Purple Paper.
  • We will let you know about the output. If positive, we will formulate a second proposal aimed at integrating the current one. If possible, we will present the opportunity to enclose in the research a third legal opinion from an additional leading U.S. law firm.
  • This proposal will be submitted to Governance in the near future.
  • The Team will present feasible opportunities and alternatives, as subsequent Proposals. The decentralized Polkadot Governance will assess the viability of the best strategy to put in place.

Thank you again for the valuable feedback and ideas.


I still do not understand why you charge market rates for legal services to clients when you are writing a legal paper that is about the strategy of other lawyers.

My “logic” is that your project belongs to the market of research on legal topics. Hence, my comparison with an average salary of a US law professor.

Your rate that is 4 to 6 times higher can be justified when there is legal risk involved. That is not present in a legal paper. I would like to point out that you also did not give any counterargument to this, except alluding that I am a fake account – which I am not – and refering to a Web3 Grant that asks for market rates. My point is that your market rates are wrong. I also do not pay a surgeon to replace a light bulb.

Thank you for your input, as I said we appreciate that you are trying to help. We are here to answer any concerns or questions.

In this case, there is likely a misunderstanding. I will try to clarify. As I said, this research is not legal advice because it does not address specific cases. The targets of the research are both Web3 teams and related legal teams. As always, any framework goes general guidelines requires effective adaptation to a concrete case. The case of a Singapore-based Parachain team with a specific token model requires specific adaptations. This does not eliminate the intrinsic value of research as such. Please note that these are unavoidable principles in any legal matter. We can’t change these basic rules of how legal topics are addressed.

Let me explain with an example similar to yours. This activity is (among other things) intended to explain how to surgically operate in an unclear and uncertain, problematic, and confusing field. The explanation aims to facilitate both the work of future surgeons and the awareness of patients. What we propose is to select surgeons with concrete experience (on different topics and jurisdictions) at their own rate, with the goal of producing a valuable framework in an uncertain area.

Let me make a reverse argument. Let’s say you want to create a framework with which the next 100 surgeons (parachains) may operate. Each of these surgeons will have to rework and apply the general principles and advice to the particular case-this is true. However, the value of the framework is assumed to be high.

In this context, would you put a “medical researcher” who has never operated on a patient to do the framework, or would you prefer a team of experienced surgeons who have operated on patients of different types, with various specialties?

Let me know if this helps clarify your doubts.

*Regarding accounts - you are free to comment from any account. However, the value of the conversation would be greater if we used the accounts we always use on this forum. I wish we would all do that. Your account was created 4 days ago, and only engaged with this conversation.

Let me explain with an example similar to yours. This activity is (among other things) intended to explain how to surgically operate in an unclear and uncertain, problematic, and confusing field. The explanation aims to facilitate both the work of future surgeons and the awareness of patients. What we propose is to select surgeons with concrete experience (on different topics and jurisdictions) at their own rate, with the goal of producing a valuable framework in an uncertain area.

In your example, I would still find it wrong to renumerate a surgeon for such work at the same rate as for his “normal” work. He/she will consult on establishing this framework but he/she would obviously not do the high-risk and important work of operating on an actual patient. That is very similar to working on a client’s legal case vs writing about it in a research paper. The expertise is useful and should be renumareted correctly, but at a lesser rate.

I understand your point of view. I will elaborate a few points. Unfortunately, your perspective is technically incorrect. In terms of general principles, we have a different perspective. I hope it helps and thanks again for asking.

General principles.

Remaining in the analogy of the last two exchanges, I would advocate remunerating the surgeons working at the general framework (with concrete, multidisciplinary experience) equally or more, if not more than when they are operating. Their work indeed possesses leverage. It can generate 100x value or disvalue. In terms of principle, it’s essential to ensure the best professionals involved given the value (or disvalue) they generate.

Risk involved.

The risk involved for any professional in writing this research is high if not higher compared to normal legal activities because it includes also wider reputational risks, given he public nature of the work.

Let me clarify something that is usually given for granted, but I feel might help this conversation. The concept of risk your observation entails is also unfortunately not correct. Please interpret my words as clarification, not an argument. :smiley:

In a professional relationship, a professional will not take a risk blindly. This is not how professional relationships work in consultancy and surely in the legal field.

A professional assisting a Web3 team has the duty to point out clearly and plainly how some of the activities he provides do not eliminate the legal risk inherent in any entrepreneurial activity (especially in high-risk environments such as crypto). He will clarify how his purpose is, rather, to mitigate the risk of the Web3 team and project and with that he won’t be held accountable for the entirety of the risks arising from a specific activity.

In other words, for maximum clarity, let’s say that there is a Law Firm assisting a Parachain in Singapore. In case something goes wrong, unless the Firm acted in negligence, the Firm won’t pay the costs. There are risks that can’t be eliminated that the client accepts. Manifest negligence (to be proven) of course generates liability.

The logic is analogous to smart contract audits. The Auditor almost never takes full responsibility for his work. If you think for a second, this latter market dynamics is much more arguable. Code is objective and deterministic, law and human facts almost never are. Shouldn’t a SC auditor get full liability?

Market dynamics

However and mostly, besides diverging on principles, we need to take into account the existing market and how it works - a market we are not in a position to change. The professionals in consulting (and for sure in the legal area) make no distinction for the use of their time. A Partner in a Law Firm charges the same rate, all the time. These are well-established market logics we can’t change.

I hope this helps clarify your doubts. :grinning: Thanks for giving me the opportunity to clarify elements and notions that are adjacent to this conversation.

I hope they add value for the current proposal and for future ones in similar matters.