The Uniswap Foundation is the regulatory body of the world's largest decentralized spot cryptocurrency exchange. Recently, the foundation proposed to incorporate its governance organization under the 'Decentralized Unincorporated Nonprofit Association' (DUNA) legal framework in Wyoming, USA, and establish a new legal entity called 'DUNI'.
This new legal entity will provide a legal framework while retaining the existing governance structure of Uniswap DAO, enabling it to hire service providers, sign contracts, and fulfill regulatory and tax compliance obligations. If the proposal passes, Uniswap DAO will become the largest decentralized organization to adopt this legal framework to date.
According to the proposal, the plan will allocate UNI tokens worth $16.5 million for settling past tax obligations and establishing a legal defense fund. The foundation expects that the bill from the IRS will be less than $10 million to resolve any outstanding tax payments and penalties.
The foundation stated in the announcement that adopting the DUNA legal framework would pave the way for Uniswap to open the 'fee switch', allowing some liquidity provider (LP) fees to be allocated to the DAO treasury. Uniswap Foundation's General Counsel Brian Nistler stated:
"Under this legal framework, the scope of what DUNA can do, participate in, and trade will vastly expand, which clearly lays the groundwork for future 'fee switch' votes, while formalizing the operation of Uniswap governance and protecting the participants in collective decision-making."
As a DUNA, the organization is prohibited from distributing dividends to members and may not make additional distributions except to pay service providers 'reasonable compensation' or reimburse reasonable expenses. Nistler emphasized:
"While we have adopted this legal framework, it does not change the decentralized nature of Uniswap governance or the DAO."
As this proposal is being put forward, other protocols in the cryptocurrency space are also reclaiming some powers and operations that were originally managed by the community back to the core team to enhance decision-making efficiency. For example, the LayerZero Foundation plans to acquire the Stargate cross-chain bridge, while NFT giant Yuga Labs has proposed to dissolve the ApeCoin DAO. Nistler stated:
"For me, the biggest breakthrough in this industry is not just bringing things on-chain, but reinventing how to operate as a voluntary and collective decision-making body. DAOs have fallen a bit behind in this regard, but I believe the DUNA entity is a way for DAOs to enhance operational standards, gain protection, and continue collective participation to drive the future they want to maintain."
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