Reports by a new social post on Feb. 1, Maker decentralized autonomous organization, or MakerDAO, has approved the creation of a new fund dedicated to expenses related to legal defense.
MakerDAO is the issuer of the DAI United States dollar crypto stablecoin. As informed by developers, Maker will allocate 5 Million DAI to “reimburse legal defense expenses in case of legal or regulatory action against specific participants of MakerDAO.” The post further explained:
” At the beginning, the coverage will be provided to Recognized Delegates, Core Unit Facilitators, Core Unit permanent contributors, and active MKR holders. The legal action against the beneficiary must be directly related to its activities at MakerDAO.”
In introducing the decision, developers noted that such costs couldn’t be “transferred through traditional insurance.” The MakerDAO Defense Fund will this is why serve as a self-insurance tool for its participants. On the other hand, the pre-existing DAI foundation fund is used to take action against third parties that infringe on Maker’s intellectual property.
Maker Governance approved the creation of a new Special Purpose Fund was known the Defense Fund.
The fund will reimburse legal defense expenses incurred by active MakerDAO participants in case of legal or regulatory action.
How will it work? ↓ pic.twitter.com/XNPbAafw9v
— Maker (@MakerDAO) February 1, 2023
The organization indicated that an external technical committee would manage states and payouts with authority to recommend the approval or rejection of payouts according to claim submissions. Simultaneously, a controlling committee will review the technical committee’s recommendation and have the final say on the claim. Upon approval, funds are paid out in lump sums.
Although while not unique to Maker, the DAO industry has faced mounting concerns over the legal standing of numerous entities and which statutes would apply to their relevant operations. Between numerous items, specialists say that developers can be, at times, pressured by community members to perform illegal tasks, which would not hold up as a legitimate defense in most courts of law.