According to a Feb. 1 tweet, MakerDAO has approved the creation of a new fund dedicated to expenses related to legal defense.
MakerDAO is the issuer of Dai, A stablecoin pegged to the U.S. dollar. As the developers put it, Maker will allocate 5 million DAI to “repay legal defense costs in the event of legal or regulatory action taken against specific participants in MakerDAO.” The post further explains. Initially, insurance will be provided to endorsed representatives, core unit promoters, core unit permanent contributors, and active MKR holders. Legal action against beneficiaries must be directly related to their activities on MakerDAO.
In explaining the decision, the developer noted that such costs cannot be "transferred through traditional insurance". As such, the MakerDAO Defense Fund will serve as a self-insurance tool for its participants. On the other hand, existing DAI Foundation funds are used to take action against third parties who violate Maker's intellectual property rights.
An external technical committee will manage claims and payouts, with the authority to approve or reject payouts based on claim submission recommendations, the organization said. Meanwhile, the Control Board will review the technical committee's recommendations and have the final say on the claim. Upon approval, funds are disbursed in one lump sum.
While not unique to Maker, the DAO industry faces growing concerns about the legal status of many entities and which regulations should apply to their associated businesses. In numerous projects, experts say developers can sometimes be pressured by community members to perform illegal tasks, which is not a legal defense in most courts.
