Fundraising for DAOs is entering a growth phase. This should be no surprise, as making DAOs is easier than traditional companies and much more fun. Accelerating the trend of ‘always online’ finance, legal structuring can be done on KALI at a fraction of the time and cost of web2 solutions like Stripe Atlas.
Fundraising still has practical regulatory concerns regardless of technology. Who can purchase tokens and what stakes they have in a DAO will always raise legal questions and compliance headaches (to which we recommend retaining counsel).
An ‘all-bases-covered’ approach to DAO fundraising is necessary for greater web3 adoption. To thread these issues and empower our users, KALI legal engineers have automated compliance around transfer restrictions, purchaser whitelisting and treasury redemptions. Today, we are pleased to roll out this end-to-end solution for DAO fundraising that makes token sales easier and more legally secure.
With an improved deployment workflow integrating our V2 extension smart contracts, KALI users can now customize their own (a) governance token, (b) cap table, (c) legal structure, (c) purchaser list, and (d) token sale. Effectively, anyone can permissionlessly create and privately fund a limited liability venture in minutes. This is the power of web3 when combined with legal automation.
Let’s take this workflow in turn, shall we:
Token
KALI tokens are properly a DAO. They follow the ERC20 standard and represent voting weight over a built-in treasury. Holders can remain passive if they wish by delegating their voting weight to a representative. Token transferability can be turned on and off.
Unlike Syndicate and other investment protocols, a KALI token holder has complete ownership and control over their DAO contracts and portfolio of collected assets. They can leave at anytime and join another DAO with their fair share of the treasury through our implementation of Moloch-style ragequit (what we call the redemption extension). Redemptions can also be set to a timer, allowing more fine tuning of when economic rights kick in for a DAO.
KALI DAO tokens therefore can represent a variety of ownership schemes, such as company equity or more simply a signaling instrument.
Table
When deploying a KALI DAO token, founder allocations can be created from the very start. These tokens can be locked up into a vesting contract or escrow.
Structure
KALI DAOs and representatives can use our legal paperwork software to immediately create an LLC (as NFT) using our Ricardian Series LLC product, as well as register their own standalone LLCs in Delaware or Wyoming.
Where contributions to DAO might be for dues or donations (so, non-profit oriented), users can immediately attach legal protections as an unincorporated non-profit association or Swiss Verein.
More legal forms and international structures are being added based on user feedback (so stay tuned).
List
Before deployment, users can create an access (‘white’) list that restricts who can purchase membership. They can also, of course, run a public sale (based on feedback from legal counsel), and if structuring a private raise through exemptions such as Reg D, take advantage of the KALI accreditation master list (built in collaboration with Seed Club Ventures).
These access lists are tokenized under the 1155 standard. By default, they generate an SVG image branded for each access ID #, but can be updated with custom designs. For example, a KALI DAO token sale might be branded so that early investors get a neat collectible representing their participation in a seed round - it might then be updated seasonally based on the growth of the DAO.
The KALI access list however is much more. It is an open protocol for smart contract restriction. Any DAO platform can check 1155 token balances and reuse an access list for their own purposes.
Sale
Token sales can be programmed through deployment or by proposal. In deployment, users are given the option of public, accredited or custom purchase restrictions. A purchase token (including ETH), rate (that is, how many DAO tokens are sold per purchase token), total and individual cap can be set. Legal terms can also be attached, such as a form of LLC joinder, which will be pinned to IPFS and show up for review when anyone on the access list tries to access token sale.
If you have questions about our research, the KALI software, or want to join a community at the intersection of blockchain and legal systems, check out our discord server, and lurk our twitter. We promise, it will be worth your attention and time.