Legal set up
To DAO or not to DAO
The term “DAO” is not officially used for now in relation to 0VIX, except on some chats. What 0VIX has had from the beginning is a community.
DAOs don’t have a formal definition but it seems customary (including according to ChatGPT, as some have quoted it before) that they rely on tokens and on-chain decentralized governance mechanisms. Because a token is not issued yet, an on-chain voting system is not possible. However, since the purpose is to have a full-fetched DAO as soon as technically possible, the fundamental premises thereof are already live, namely a community with a decisive say on specific aspects.
DAOs are not yet fully understood by all, and each DAO is different. Some projects submit everything to the decentralized governance process, while others submit only part of the decisions to their community despite calling themselves DAOs. Also, some DAOs have a thriving public forum for discussions but extremely low participation in votes, sometimes only gathering a handful and frequently not reaching quorum (one random example would be https://dao.curve.fi/dao, but there are many more).
The very concept of decentralization is continuously debated and as a result, understood/applied in various ways. Some refer to progressive decentralization, others aim at sufficient decentralization while for example the new European regulation, MICA, requires full decentralization (and disintermediation). Which standard is the right decentralization standard for one to deserve calling themselves a DAO? That’s a question to be still answered for many DAOs, and one that probably won’t be answered anytime soon.
The 0VIX community is both active in chats and in votes (with 8,066 members on Discord alone plus Twitter, Telegram and other channels). Its role is clearly determined in the statutes of the 0VIX Protocol Association from the outset, and as of now, also publicly in a Community Charter.
Whether this community can be categorized as a DAO does not change anything for people involved with the project. The 0VIX Protocol is not supposed to benefit from any legal vagueness or be above the laws. It is thus not structured as to benefit from the uncertain shield offered by the criterion of sufficient decentralization. There is an Association on the one hand, and an autonomous protocol on the other hand, which currently can be merely paused in case of emergency. That’s it (also it’s not possible to remove users liquidity or move them between chains like some suggested).
The 0VIX Protocol Association was set up by the project initiators (see below) to, from the outset, provide legal certainty to the project.
It is a Swiss entity with a director and members whose powers are highly limited to the benefit of the community. Stated differently, the 0VIX Protocol is governed by an Association including two levels of power, one traditional (including a general meeting and a board), and another one that is decentralized (including the broader community, active contributors and the multisig). It is thus a hybrid model which allows everyone involved with the project to benefit from the limited liability of the Association with respect to any activities deployed in relation thereto.
For more details about Swiss Associations: https://www.kmu.admin.ch/kmu/en/home/concrete-know-how/setting-up-sme/starting-business/choosing-legal-structure/associations.html
To the extent permitted by law, the traditional general assembly delegated its decision power and the board delegated operations to contributors and the community.
As a result, the traditional organs of the Association are merely responsible for the structural aspects of the entity.
For the traditional level of the association, the Board still acts as the executive body, and for instance ensure the correct application of the present Statutes and any other internal regulations, as well as convene and organise the General Assembly.
The General Assembly is solely in charge of the adoption and amendment of the statutes, any decision on the dissolution or merger of the Association; the nomination, surveillance and revocation of the external auditor(s); the approval of annual reports and audited accounts; admission and exclusion of members (caveat: of doxxed members of the Association, not of community members); nomination, surveillance, discharge and revocation of board members.
The 0VIX Community is meant to ultimately encompass all token holders. Presently, as there is no token, it is open to anyone willing to contribute to the project;
At this stage, there were no specific guarantees in place to prevent unrelated and potentially ill-intentioned third parties from joining votes. The ensuing risk appeared, however, acceptable during a beta phase, and counter-balanced by the possibility of, if necessary, manually excluding any apparent spam voters. Moreover, with the launch of the token pre-mining, the final infrastructure was being prepared for the community to use. The current situation and the importance of decisions to be voted on, accelerated the process, and the intermediary governance mechanism, relying on the pre-mined protocol tokens, will be relied on from now on until any official token can be launched.
This being said, from day one, the Association ensured that all decisions pertaining to the community were already submitted for voting to the community; such as new asset listing, changes in rewards etc. Subsequently, once the community grows, becomes more active and the governance more mature, many more aspects should be voted on.
All active project contributors on the one hand, and the multisig on the other hand, are also included in the Association as distinct decentralized organs. Once the governance of the community will be finalized and the token will be live, the community will be offered direct rights and/or oversight over certain actions undertaken by the contributors and the multisig, as is the common practice with many other evolving DAOs.
Three people are listed on the 0VIX website as part of the team (“part of the Initiators”). The official title of some of them evolved over time as it became clear that 0VIX will be launched as a project involving the community, in a DeFi rather than CeFi manner, and the Association was set up to this end.
Many other project initiators choose not to disclose their identity, which is also common practice for most projects in the space. 0VIX initiators strongly believe that their expertise should be transparently offered to the community.
In hindsight, it appears that their visibility and role create confusion as many people assume 0VIX is like a traditional corporations with a CEO, employees and a hierarchical structures allowing it to follow traditional processes.
Initiators gave their idea to the 0VIX Protocol Association for further development. To avoid any conflicts of interest, they are not directors of that Association and as a result, do not have any power to legally bind the Association through their individual actions.
The 0VIX team became much broader than the Initiators. They are people motivated by the 0VIX project and placed under the umbrella of the Association. They are freelancers and also voluntary contributors working on offering a product to the community, making the community possible and enabling it with support and tooling.
Because of the type of product offered by the Association, it would be a fallacy to claim there is no initial team that has developed the code and aimed at offering an open source product around which a community can gather and grow. It would also be wrong to pretend there are no individuals showing up at conferences to talk about the product, no specific individuals who took on a more active role, especially in the context of the hack, to make things happen. It is yet important not to assume on what grounds these people act and whether their personal responsability is at stake or not.
The team as a whole, including notably the initiators, developers, community managers, and the legal counsel, mostly act under the umbrella of the Association, whether on a remunerated basis or not, along with the community itself.
When they act on a remunerated basis, they besides expose themselves to professional liability for any failures towards the Association. Some of the people yet have a mixed status, at times acting as voluntary contributors, in which case they are part of a decentralized organ of the Association, protected by its limited liability.