PIP-26: Foundation for the Future

[Dermot (Dermot O'Riordan)]

Hi @zaatar

Thanks for your comments

While I can’t speak on behalf of the group without talking to them first, I think you will be pleased to know that our positions are not wildly different from yours. I think we are all aligned with wanting to create a sustainable Foundation that is well-placed to enable the DAO to be its best self.

We will discuss your response as a group and get back to you with a comprehensive response and suggested next steps. Before we do so, here is my immediate take on a few points you brought up:

@zaatar

With all respect, to say there is “genuine” risk is misleading. Criminal risk exists only if you act with criminal intent. Civil risk is negligible if you act reasonably and observe your legal obligations. The proposed Foundation supervisor, Campbell Law, will be keeping an eye out and can advise the Directors as needed to avoid any civil (or criminal) liability.(Also Jack has indicated that the Directors may set up their own corporations through which they’ll perform their Foundation roles, which will shield them from personal liability.)

Ultimately, the risk in question is not directly quantifiable. However, what is undoubtedly true is that any director of PNF puts themself under much greater scrutiny and legal risk than a typical contributor to the DAO. And using a corporation does not protect against the costs - both in terms of time and money - that can arise from claims from regulatory authorities or even spurious or bad faith claims from third parties against PNF and the directors themselves.

@zaatar

An Article of Association on voting recusal should be added to this PIP.

I’m fully aligned with protecting against conflicts of interest within PNF and the wider Pocket community. Directors are already subject to conflicts of interest rules per the Cayman Islands laws. And PNF’s Article 12 itself deals with conflicts of interest, stating:

a director may not have a direct or indirect interest or duty which conflicts or may possibly conflict with the interests of the Company

And the subsequent provisions of Article 12 deal with the procedures around such.

Additionally, Article 12.7:

A director may vote at a meeting of directors on any resolution concerning a matter in which that director has an interest or duty, whether directly or indirectly, so long as that director discloses any material interest pursuant to these Articles. The director shall be counted towards a quorum of those present at the meeting. If the director votes on the resolution, his vote shall be counted.

And 12.8:

Where proposals are under consideration concerning the appointment of two or more directors to offices or employment with the Company or any body corporate in which the Company is interested, the proposals may be divided and considered in relation to each director separately and each of the directors concerned shall be entitled to vote and be counted in the quorum in respect of each resolution except that concerning his or her own appointment.

So while I agree with you, I don’t believe that the Articles are the proper place to document this “recusal” provision, given that the articles relate to the powers of the Foundation. I believe the proper place to document such a provision would be in the Constitution, as that relates to the powers of the DAO. Further, I believe such a provision should be expanded to require the recusal of any voter where they stand to benefit from a vote passing.

As @JackALaing previously mentioned, it is beyond the scope of this proposal to amend the Constitution. I will discuss this with the rest of the team and get back to you on this point, but it would be my recommendation to wrap up this proposed amendment into the rest of the updates to the constitution. And in the meantime, any voter with a potential “interest” in this proposal - ie Nelson, Jack and I - should agree to publicly recuse themselves from this vote, which is what I had always planned to do in any case. And you can verify, not trust in this regard, as it is possible to check wallet addresses against the list of voters.

As an FYI, we also have an item on our immediate internal roadmap to implement transparency and conflicts of interest practices and policies into our daily operating culture, which will trigger notifications and disclosures beyond those legally required by the articles, ie in addition to those which affect board votes or DAO votes. This policy will be publicly released in due course.

@zaatar

What’s more, elections are good for the Pocket ecosystem. If community members know they have to vote every four years (could be a different number), they are more likely to stay abreast of the Foundation’s work and its contribution to the network - rather than just keep an eye out for misconduct. This will make DAO members’ votes on DAO issues more informed and enrich our DAO democracy. (“vote every four years” added after initial publication of this post)

While I agree with the general thrust of what you’re saying, four years is a huge amount of time. So the benefits of what you are suggesting are diluted somewhat. My personal internal recommendation to the rest of the prospective board was to take the first 12 months after our appointment to achieve everything we set out to do in the public roadmap and then put in place clearer mechanisms about director term limits and renewals, as well as the roadmap for onboarding new members to the board. I recommend spending more time deliberating about the mechanism(s) to achieve the goals you seek with this proposed amendment before committing anything to the legally binding statutes of the Foundation. Maybe one or two years may be more optimal. And there is much to consider about enabling prospective directors to put their names forward fairly. Let’s debate this in more detail. In short, I think this proposed amendment can be pushed to a later date. But we should publicly agree to a timeline to put such a mechanism in place, eg 9-12 months from the appointment date.