Dash Core Group has released additional details of its legal structure, including the irrevocable trust that owns Dash Core Group and can legally own assets on behalf of the network.
In a post by Ryan Taylor, CEO of the Core team, the organization’s legal structure as a C-corporation is outlined, which removed many of the severe restrictions imposed by a nonprofit foundation, which included the ability to work on developing and promoting Dash exclusively:
“The first entity is Dash Core Group, Inc. (a.k.a., DCG). DCG is a C-corporation established in the U.S. State of Delaware. C-corporations are taxable entities. We chose a C-corporation for a number of reasons, but there were two major attributes that made the decision obvious. The first is that the team’s previous structure – an Arizona non-profit foundation (specifically a trade association) – was prohibited from accepting donations over a threshold without identifying the donor in filings. Because the Dash masternode network is essentially an unincorporated association of individuals, we could not identify a path to complying with this requirement. In addition, there are substantial restrictions preventing non-profit trade associations from favoring the development of Dash over other cryptocurrencies, or prevents them from lobbying government agencies or lawmakers. The restrictions meant that in practice we would be unable to hire staff to work exclusively on features, business development, or marketing that would solely benefit Dash nor would we have the ability to represent the network’s interests with policymakers.”
Taylor notes that, unlike the previous foundation structure, the current C-corporation structure is obligated to pay taxes, however he foresees a constantly declining tax rate eventually approaching zero.
Additionally, Taylor described the structure of the irrevocable trust, and how it allows the network to own property such as the Core Group while avoiding revealing the identities of its members:
“The second entity in our structure is The Dash DAO Irrevocable Trust (a.k.a., The Dash Trust). The Dash Trust was established in New Zealand, which was selected for its strong reputation and well-defined trust laws. Because we don’t anticipate any DCG income distributed to the trust as a dividend, we did not optimize for tax haven jurisdictions. A tax haven jurisdiction would offer no tax savings, yet might carry a stigma. In addition, there are a substantial number of trustees that service New Zealand trusts, which provides us with significant choice for trust administration services going forward. The Dash Trust is established for the benefit of the Dash masternode operators. In the unlikely event that the Dash masternodes cease to exist (e.g., the network dissolves) there is a secondary beneficiary – International Red Cross – to which any remaining assets could be distributed.”
A clearer picture on how the DAO may govern the entities it owns
The post further goes on to explain the Dash Core Group’s structure as a corporation with a board of directors, the entirety of whose shares is owned by The Dash Trust. The Trust is governed by a board of trust protectors, with a temporary membership overlap between the two boards until the Trust’s first election of trustees in the first quarter of 2019. With The Dash Trust as the majority shareholder of Dash Core Group, trustees may be instructed by the masternodes to remove or replace members of Dash Core’s board:
“The masternodes will continue to leverage proposal funding as the primary mechanism to influence DCG. As long as DCG is performing to the satisfaction of the masternodes, no other action is required and the trust protectors are compelled to not interfere with the normal operation of DCG.
However, at any time, the DCG board can be evaluated and / or replaced by the trust protectors via direction from the masternodes. This process can be initiated at any time by the masternodes by submitting a proposal to the network which – if approved – triggers this process. The proposal must pass with a 10% threshold, just like other decision proposals posted to the network in the past. If a decision proposal passes instructing the trust protectors to either evaluate or explicitly replace all or some of the DCG board members specified in the proposal, the trust protectors must initiate that process. The trust protectors are ultimately tasked with representing the best interests of the Dash masternodes.”
In the past, Dash’s decentralization in theory was easily provable, while in practice existing groups maintained a relatively firm position. The establishment of these new legal structures will allow the network to truly behave in a decentralized way and not be beholden to any particular group or individual.
A groundbreaking setup for the world’s first DAO
Dash stands as the world’s first decentralized autonomous organization, or DAO. This has created one of the most decentralized projects in the world, with a structure able to come to consensus, support itself without any outside funding, and yet remain completely open to participation anonymously from anyone around the world. This has allowed Dash to self-run and self-govern without the need for outside influences, other governance structures, or funding. It has also led Dash to be one of the most innovative projects in the space, funding a sprawling ecosystem with teams all over the world, as well as one of the fastest growing merchant bases of any cryptocurrency.
Because of this unique situation, prevailing legal structures may not be appropriate for handling such an unprecedented organization. As such, the establishment of The Dash DAO Irrevocable Trust, and placing Dash Core Group under its direct ownership, breaks necessary new ground in the liaison between such radical organization structures and prevailing present-day legal jurisdictions.