- MakerDAO will establish the Defense Fund with an initial amount of 5 million DAI.
- The Fund acts as a self-insurance vehicle and will only cover the legal defense expenses of certain MakerDAO participants.
- Funds will be secured in a multi-sig wallet, with the Maker protocol in control as the beneficiary.
MakerDAO, the decentralized autonomous organization (DAO) that issues the Dai (DAI) stablecoin and maker of the governance token (MKR), has announce Launching a new fund to be used in the event of legal or regulatory action involving DAO participants.
Maker’s team said the defense fund was created after the ruling voted on the private funding proposal. Accordingly, funds will be credited to the multisig wallet for this purpose, and this will be done in a single payment, the platform revealed on Wednesday.
MakerDAO Defense Fund of $5 Million
According to the platform, the fund will initially have a contingency budget of $5 million in the original DAI and will be used to reimburse legal expenses incurred by certain members of the community.
Specifically, the Defense Fund will cover recognized delegates, core unit facilitators, and permanent contributors. MKR holders are also part of the primary group of beneficiaries.
Thus, the defense fund is envisaged asA self-insurance tool for MakerDAO participants. However, those set to benefit (as noted above) must face legal action directly related to their activities in MakerDAO, the platform added.
“All claims and payments will be managed by an external technical committee composed of insurance and risk management experts. The committee will make a recommendation to approve or deny payment based on a claimread a portion of a statement posted to the Maker Twitter account.
Maker Protocol will control the funds as one of the parties to the defense fund’s multiple portfolio.