Understanding the Badger Association

General Discussion
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TLDR; Outlines relationship between BadgerDAO and its supporting legal entity, the Badger Association

  • BadgerDAO is governed by token holders
  • BadgerDAO controls the treasury, per the Treasury Management Policy
  • BadgerDAO is the principal and the Association is a supporting agent, they are independent, separate bodies of one another
  • The Association is financed by the treasury and thus by BadgerDAO

What is the Badger Association?

The Badger Association is a Swiss entity and has its registered office in Zug, Switzerland.

The bodies of the Association are:

What’s the Association’s Purpose?

The purpose of the Association is to foster growth of the BadgerDAO ecosystem; to enable technical and operational development by hiring and managing contractors, to progress strategy, partnerships, and to help evolve legal, security, and overall best practices in supporting BadgerDAO.

How was the Association created?

The Treasury Policy was approved by token holders. (BIP 89 - approved on April 29th, 2022)

The Treasury Council approved funding for the Association, and it’s been operating effectively for a year.

The core contractors have responsibility for daily operations, including work related to legal, regulatory, and overall safety, as outlined here: (BIP 93 - approved June 30th, 2022)

Treasury Council decisions, Badger Council decisions, DAO multisigs, transactions, and financials are all public.

Why is the Association an asset?

Accelerating global market access enables BadgerDAO to interact with the offchain world and complete due diligence to enable commercial partnerships. The Association also protects liability within these relationships.

A legal entity such as the Association is useful for the BadgerDAO in many ways. A legal entity not only facilitates invoicing and VAT collection for service providers, but can also own the deliverables created by service providers, and make them available to the general public under a permissive open source license.

Throughout 2023, the Association has fostered relationships to support the growth of the BadgerDAO ecosystem with 36 supporting providers. This work has enabled support for development, security, financial, legal and commercial innovation and to help daily operations of the DAO. The Association currently maintains contractual relationship with:

  • 20 service providers
  • 10 full time contractors; core development and operations
  • 6 part time advisory contractors

These are contracted providers with obligations to the Association with board oversight for quality and safety. Here’s examples of the service providers that have been engaged with the Association:

https://www.steakhouse.financial/ www.superside.com
https://www.gsr.io/ https://spearbit.com/
https://blockanalitica.com/ https://code4rena.com/
https://www.mme.ch/en/ https://greycastlesecurity.com/
https://www.bakermckenzie.com/ https://theblockchainrecruiter.com/

What’s the relationship between the DAO and the Association?

The objective has always been to keep ownership and control of the DAO with the token holders. This objective has been maintained with the Association structure, which is consistent with how BadgerDAO has always worked.

The Association folds into the Treasury Policy and Governance 2.0 BIPs.

Key highlights of the chosen structure:

  • DAO controls treasury (ownership unclear)
  • DAO controls smart contracts (via MSIGs, ownership unclear)
  • The Association has limited powers (just the Payments MSIG) and can only spend the funds it receives from the treasury

Here’s a summary of the possible relationship archetypes between DAO’s and legal entities.

1268Ă—788 120 KB

The relationship between BadgerDAO and the Association is a prime example of the Principal-Agent model (Option 2). In this model, the legal entity is an independent service provider that is engaged by the DAO to act on its behalf and promote the growth of the ecosystem. The legal entity co-exists with the DAO and does not act as a “legal wrapper”. This means that the legal entity does not protect the DAO and its members from potential liability. On the other hand, this model ensures that the control remains with the DAO.

The establishment and funding of the Association aligns with the Principal-Agent model, as the BadgerDAO decides what powers the Association shall have. The treasury and the supporting Treasury Council remain independent from the Association at all times. The BadgerDAO retains control of the treasury and decentralized MSIGs, except the Payments MSIG, which is used to pay the individual service providers engaged by the Association.

What’s the benefit of being a Swiss Association?

Contributors worked with legal counsel to select a jurisdiction for the entity. Switzerland objectively won the global jurisdiction analysis, as it is a crypto-friendly, neutral and sovereign jurisdiction with clear guidelines from its financial market authorities (FINMA) on crypto, offers a favorable tax regime, and a crypto-friendly banking industry.

The Swiss association (among all available entity types) was chosen for the following reasons:

  • The Swiss association has rights of personhood and can therefore hold assets, funds, enter into contracts (for example with developers) just like an LLC or foundation.
  • The Swiss association provides liability protection to the association members and board members, as only the association’s assets are used to meet liabilities.
  • The Swiss association is a flexible vehicle. The organization as well as the purpose of an association can evolve. The Swiss association is easily established and dissolved or moved if needed.
  • The Swiss association is not allowed to provide any financial benefits to its members, which means that the association cannot distribute any funds to its members in the form of dividends or other benefits.
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Thank you. I think a key point to highlight to keep BadgerDAO decentralized and not run the risk of the Association becoming too powerful is limiting the number of Association members on the board of directors that are also a part of the BadgerDAO Treasury Council. I’m not sure what the exact number should be but it should obviously be less than five.

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@Spadaboom given you are stepping down from your position as a member of the board of the association, can you elaborate a bit on the process of finding a suitable replacement?

because i remember reading in the articles of association that it is the association members as a whole (the dao) that elect (new) board members.

im wondering what this process will look like and when it will take place, given the board is currently a member short.

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Thanks for sharing and the update.

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Thanks Chris. Re read this and here is for those in a rush, a brief summary : The Badger Association, a Swiss entity, supports BadgerDAO by fostering ecosystem growth, managing contractors, developing strategy, and ensuring legal compliance. It operates independently but is financed by BadgerDAO’s treasury, facilitating partnerships and legal protection. The Association, governed by a board of directors, collaborates with 36 service providers and contractors to advance BadgerDAO’s goals.

This model aligns with the Principal-Agent model, maintaining DAO control while leveraging the Association’s capabilities. Switzerland was chosen for its crypto-friendly environment, legal clarity, and liability protection, making the Swiss association an optimal choice for BadgerDAO’s legal entity.

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@Lipp could you maybe share the bylaws of the association here? i think that would benefit all members of the dao greatly, and help understand the badger association even better :slight_smile:

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pinging board members @Spadaboom @Lipp and @dapp-whisperer once again; i am hereby requesting details on association membership, election/dismissal of board members and any other bylaws that might exist :slight_smile:

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Fair question! Respect

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We sincerely appreciate your continued engagement and dedication to the growth and success of our ecosystem. Transparency and accountability are indeed fundamental values within our community.

To address your recent inquiries regarding access to internal documentation, it’s important to reiterate that the Badger Association engaged by the DAO operates independently, maintaining its own internal procedures and protocols. Consequently, the internal documentation of the Badger Association falls outside the purview of the DAO’s review and will not be shared publicly. Given the sensitive nature of these documents and the potential for changes, we must exercise caution to prevent their unauthorized dissemination.

Please be assured that our commitment to open communication and collaboration remains steadfast. We will continue to provide updates and insights on matters within our domain of authority. Should you have any further questions or concerns, please do not hesitate to reach out. Your feedback is invaluable as we navigate the complexities of our ecosystem.

Thank you for your understanding and ongoing support.

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How much did the DAO just pay the Assn. lawyers for that response?

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This response raises concerns about transparency & accountability within this ecosystem. While they emphasize these values, their refusal to share internal documentation undermines these principles.

Im an eternal optimist, but there’s something ironic about this assertion that the Badger Association operates independently, therefore withholding internal documentation. Legally and technically, this seems to be problematic. Why?

1.As a critical component of the DAO’s operations, transparency should extend to all affiliated entities. Withholding information not only contradicts the DAO’s purported commitment to openness but also raises suspicions about the Association’s autonomy and its alignment with the DAO’s objectives.

2.citing sensitivity and the risk of unauthorized dissemination as reasons for non-disclosure sound insufficient. Transparency is not only about sharing positive developments but also about being accountable for decisions and actions, even when they may be subject to change. Without access to internal documentation, community members are left in the dark about crucial aspects of the DAO’s operations, hindering their ability to fully participate and contribute effectively. Common sense/logic?

While the commitment to open communication is mentioned in words , it must be accompanied by tangible actions, such as transparent sharing of relevant information. Without such transparency, trust in the DAO’s governance processes and decision-making is compromised, potentially eroding community confidence and participation in the long run. Again, common sense.

This response fails to address the core concerns raised regarding transparency and accountability. It falls short of the standards expected in decentralized governance systems, highlighting the need for greater transparency and inclusivity within the Badger DAO ecosystem.

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