NEW - DIAGRAM:

https://miro.com/app/board/uXjVO-vhLZ4=/?share_link_id=983110859745

Here is a new proposal for how documents in the real world might be signed on behalf of a DAO. This is intended as an open essay and is not a definitive guide nor is it legal advice. Thoughts and contributions are welcome!

Process Flow for Decentralized Authorization:

1. A community vote occurs resulting in the need for the DAO to execute a written agreement in the real world (“Execution Event”)

2. Members of the community multisig review the community vote and ensure it was conducted in accordance with standard practice

3. The multisig signs off on an “authorization” to bind the DAO

4. The “authorization” is plugged into a smart contract (Ricardian)

5. The Smart Contract also contains an independent contractor agreement, to be signed by an interested volunteer

6. The DAO creates a bounty of $100 DAI (or stablecoin) and offers it to a pool of volunteers for the sole purpose of signing the real world document with DAO “authority”

7. The independent contractor agreement conveys a limited purpose power of attorney with the contractor for the purpose of signing as the DAO’s agent. The PoA specifies with great detail what the signer is authorized to do, and for what purpose. The PoA also specifies that all other powers / rights are expressly prohibited.

8. The independent contractor agreement is minimal but contains a mutual indemnity (the Signer pool will be doxed and KYC’d). So long as the Signer is acting within the scope of their authorization they are covered by the DAO, but if they sign outside scope of authorization (or any other document) - they are liable to the DAO and/or counterparty.

9. A doxed and KYC’d volunteer accepts the independent contractor agreement and signs it using their associated wallet (the “Signer”)

10. The Signer executes the written agreement on behalf of the DAO

11. The Signer is paid $100 DAI (or stablecoin) - either from the DAO’s treasury or through an automated escrow release function

12. The smart contract auto-terminates upon completion

13. This protocol will decentralize the signature function within the DAO (could be set so different person has to accept each bounty per epoch, etc)

Additional Considerations:

• The multisig steps listed above may not be necessary at all. Depending on the “structure” of the DAO, these steps may be skipped and/or automated

• If applicable, the mutisig members would also have indemnity from the DAO so long as acting within scope of their authorization under the Operating Agreement (or other vesting source)

• A DAO implementing this function could further employ a control of ensuring that no more than five (5) bounties are awarded to any given individual signer in any year, to stay below the 1099 threshold for reporting. (Or the bounty amount could be increased up to the 1099 limit - this is not a necessary feature but simply called out for convenience)

• Counterparties may rely on apparent authority principles, however, for more formal signature requirements - part of the smart contract operation could also include auto-generation of an official document (similar to an officer’s certification) on CityDAO letterhead showing the authorization has been granted to the signer.

• Either way, the smart contract would also have a read-only output for use in the real world to the extent necessary

• NEW - The indemnity in Section 8 could be replaced by an insurance pool. Or…

• NEW - Posting a Bond. The signer may be required to post a bond (say an NFT for example) and to place it into escrow - perhaps even the same escrow address as the bounty. The signer then performs their duty, and the bounty and NFT will be released back to the signer upon successful completion of the signature, proof of work, and official termination of the underlying agreement between the signer and the DAO

• [Differences between U.S. recognized DAO business entities and true DAO protocols]

NEW - DIAGRAM:

https://miro.com/app/board/uXjVO-vhLZ4=/?share_link_id=983110859745

Here is a new proposal for how documents in the real world might be signed on behalf of a DAO. This is intended as an open essay and is not a definitive guide nor is it legal advice. Thoughts and contributions are welcome!

Process Flow for Decentralized Authorization:

1. A community vote occurs resulting in the need for the DAO to execute a written agreement in the real world (“Execution Event”)

2. Members of the community multisig review the community vote and ensure it was conducted in accordance with standard practice

3. The multisig signs off on an “authorization” to bind the DAO

4. The “authorization” is plugged into a smart contract (Ricardian)

5. The Smart Contract also contains an independent contractor agreement, to be signed by an interested volunteer

6. The DAO creates a bounty of $100 DAI (or stablecoin) and offers it to a pool of volunteers for the sole purpose of signing the real world document with DAO “authority”

7. The independent contractor agreement conveys a limited purpose power of attorney with the contractor for the purpose of signing as the DAO’s agent. The PoA specifies with great detail what the signer is authorized to do, and for what purpose. The PoA also specifies that all other powers / rights are expressly prohibited.

8. The independent contractor agreement is minimal but contains a mutual indemnity (the Signer pool will be doxed and KYC’d). So long as the Signer is acting within the scope of their authorization they are covered by the DAO, but if they sign outside scope of authorization (or any other document) - they are liable to the DAO and/or counterparty.

9. A doxed and KYC’d volunteer accepts the independent contractor agreement and signs it using their associated wallet (the “Signer”)

10. The Signer executes the written agreement on behalf of the DAO

11. The Signer is paid $100 DAI (or stablecoin) - either from the DAO’s treasury or through an automated escrow release function

12. The smart contract auto-terminates upon completion

13. This protocol will decentralize the signature function within the DAO (could be set so different person has to accept each bounty per epoch, etc)

Additional Considerations:

• The multisig steps listed above may not be necessary at all. Depending on the “structure” of the DAO, these steps may be skipped and/or automated

• If applicable, the mutisig members would also have indemnity from the DAO so long as acting within scope of their authorization under the Operating Agreement (or other vesting source)

• A DAO implementing this function could further employ a control of ensuring that no more than five (5) bounties are awarded to any given individual signer in any year, to stay below the 1099 threshold for reporting. (Or the bounty amount could be increased up to the 1099 limit - this is not a necessary feature but simply called out for convenience)

• Counterparties may rely on apparent authority principles, however, for more formal signature requirements - part of the smart contract operation could also include auto-generation of an official document (similar to an officer’s certification) on CityDAO letterhead showing the authorization has been granted to the signer.

• Either way, the smart contract would also have a read-only output for use in the real world to the extent necessary

• NEW - The indemnity in Section 8 could be replaced by an insurance pool. Or…

• NEW - Posting a Bond. The signer may be required to post a bond (say an NFT for example) and to place it into escrow - perhaps even the same escrow address as the bounty. The signer then performs their duty, and the bounty and NFT will be released back to the signer upon successful completion of the signature, proof of work, and official termination of the underlying agreement between the signer and the DAO

• [Differences between U.S. recognized DAO business entities and true DAO protocols]