DAO Foundation

We want to ensure that Prosper is a truly decentralized protocol going forward and will continue to improve on the extent of community-driven governance. While currently many DAOs continue to exist with no legal structure at all, it creates a lot of potential risk factors for its members.

We are rebuilding Prosper for the long-term and it is critical for us that it is being done in the best way possible. We formed a Cayman foundation company and are in the process of assigning all intellectual property and assets related to Prosper to such Cayman foundation company (for more information on how foundation company structure works, check out this article), which is a common approach used by decentralized Web3 protocols to have a legal entity.

Having a legal entity that represents Prosper’s DAO in the real world is valuable for a number of reasons:

• It is a nonprofit and has no shareholders—allowing us to codify that the foundation will act in the benefit of DAO members (i.e., PROS token holders)

• It is capable of holding assets—in this case, ownership title of Bitcoin miners

• It is capable of entering into contracts with other commercial entities—in this case, service contracts or agreements with various industry partners

• It limits liability for DAO participants for the actions of the DAO

We sometimes use DAO, foundation or PROS token holders interchangeably which might have created some confusions. To clarify—foundation is the legal entity representing the DAO, and token holders are members of the DAO.

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Reminder: this does not represent any legal advice; for more detailed discussion or information on this topic you may check out online resources or consult a legal professional