Primary Proposal: Should a HOPR Community Trust be established in the BVI to manage HOPR Community assets using governance processes established via the eighth HOPR governance experiment?

HOPR Governance v0.8 Community Trust Proposals
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British Virgin Islands

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A lot of (complicated leagel) questions been asked by the community. Reading the answers from the team I realize, they’ve put a lot of work, effort and thoughts into this proposal, presenting us with the best option currently available.

Therefore, I will support this proposal.

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I have to admit that we’re in somewhat uncharted territory here. A lot of lawyers we’ve talked to are positive about this setup (but they were also positive about Swiss Foundations, and that didn’t work out well. These things can be faddy. However, I would say that the legal reasoning seems to be a lot deeper this time.)

Still, I appreciate that more positive confirmation would be useful here. When I next talk with our BVI lawyers I’ll see if I can get a list of projects which have successfully leveraged this BVI setup.

From HOPR’s perspective, we’ve arrived at this decision through something of a process of elimination: it’s clear to us from the current regulatory landscape that the community would benefit from a legal wrapper (which wasn’t our initial intent). We originally thought of using Switzerland, but our own Swiss lawyers advised against it and instead suggested Cayman Islands or BVI. Cayman Islands vs BVI is interesting. Cayman Island allows some very unusual ownerless structures, but ultimately didn’t seem to have the checks and balances which BVI provides.

Simultaneously, a lot of our friends at other projects (Gnosis, Aragon, DXDAO, SushiDAO, SafeDAO, Arbitrum, etc.) have been running into various governance issues. Many of them are looking to transition out of their restrictive setups but are stuck.

Common jurisdictions which they’ve tried and we’ve discarded include Switzerland and Guernsey (another UK overseas jurisdiction). Standard reasons for discarding were:

  • Exorbitant tax rates
  • No meaningful liability reduction
  • Prohibitive identity checks for token holders
  • Overly complex legal structures which would require all token holders to enter into a covenant with each other.

One obvious question is “Well won’t we just get stuck in an unsuitable legal wrapper, just like those other guys?” Perhaps, but I (and many excited lawyers) think that a key difference is how narrow this setup is. Many of those projects I mentioned set up monolithic DAO structures to try and cover ALL of their governance. A key difference with our proposed set up is that each part of HOPR that needs governance (the Association, the community, the protocol itself) will have a different legal entity in what we feel is the most suitable jurisdiction.

Still, on its own I appreciate that’s not a very satisfactory answer.

I’m hoping that one of our legal advisors will be able to join us for Monday’s Twitter Space so he can provide more context here. Otherwise I’ll try to get it in writing. He’ll be more concise than me!

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Sure. I have that as part of our ongoing legal discussions. I’ll try to get the latest and clearest version on Monday.

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very interesting

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bvi？What does this mean for HOPR

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it is necessary to vote YES for this proposal. otherwise, legal uncertainty may harm the community in the event of disputes with regulatory authorities.

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I trust hopr team

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We are waiting for more information about the platform. And infographics of the structure of hopr.

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I also trust the team

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If it legal and allows save money\resources\time then I support this proposal.

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that’s right, electronic assets have not been recognized by regulatory authorities

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we must plan further until electronic assets are recognized by regulators

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what is BVI

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support this

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This is certainly a smart decision. Anything that improves the legal security of the DAO is a step forward.

In any case, I would like to know the motivation well, why want to find a legal figure that adapts and why not maintain a totally decentralized perspective and not attached to any national jurisdiction.

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Points in Favor:

  1. Asset Protection: Establishing a trust in the British Virgin Islands (BVI) can provide a legal framework to safeguard HOPR community assets, such as tokens and equity. This could offer protection against potential legal or regulatory challenges.

  2. Clear Governance Process: The proposal aims to utilize governance processes established through previous experiments. This implies that decisions regarding the management of assets will be made transparently and democratically, involving the community in decision-making.

  3. Stability and Longevity: The establishment of a trust could contribute to the long-term sustainability of the HOPR project. Having a structured legal entity could foster confidence among token holders and potential investors, ensuring the project’s stability.

  4. Asset Management: By pooling assets within a trust, the community could effectively manage and allocate resources for various purposes, such as liquidity provision, further development, partnerships, and other strategic initiatives.

Points Against:

  1. Centralization Concerns: Establishing a trust might concentrate decision-making power in the hands of a few trustees or individuals, potentially contradicting the decentralized nature of blockchain projects. This could raise concerns about centralization of control.

  2. Legal and Regulatory Risks: While a BVI trust may offer asset protection, it also raises questions about potential legal and regulatory challenges. The regulatory environment for cryptocurrencies and blockchain projects is still evolving, and the trust’s legality might be questioned in certain jurisdictions.

  3. Lack of Transparency: Although the proposal suggests utilizing governance processes, the specific mechanisms and criteria for decision-making within the trust might not be fully transparent, leading to potential misunderstandings or disputes among token holders.

  4. Long-Term Commitment: Establishing a trust could bind the project to a specific legal framework and jurisdiction, limiting flexibility in adapting to changing regulatory landscapes or global developments.

  5. Resource Allocation: While a trust could manage assets, there might be disagreements within the community about how these assets should be allocated. Decisions related to liquidity provision, development, and other activities could lead to conflicts among stakeholders.

  6. Token Holder Concerns: Some token holders might have reservations about the equity in HOPR RiSe being managed within the trust, potentially affecting the value and distribution of rewards.

Ultimately, the decision to vote “yes” or “no” on this proposal requires careful consideration of both the potential benefits and risks. Token holders must evaluate the long-term implications for the project’s governance, sustainability, decentralization, legal standing, and asset management before casting their votes.

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I would like to know what kind of expenses are incurred in the DAO, in addition to providing liquidity in the dexs.

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Thanks for the great summary! I would like to respond to this one:

I agree the processes aren’t currently clear, but this will be the focus of the remainder of August. I just didn’t want to dump all this info on everyone at once.

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I think it depends what you mean by “managed within the trust”. The token holders will be reliant on the trustees for certain things:

  • going to shareholder meetings
  • reporting transparency
  • acting correctly on community instructions

That’s certainly a trust assumption and raises logistical issues even if everyone is acting correctly.

But no actual decision making can be performed by the trustees here.