Discussion: Constitution of Merit Circle DAO


Summary and status of the discussions

This discussion thread suggests that MC DAO adopts a written constitution. The authors believe a written constitution in the proposed form will contribute to an increasingly decentralized, structured and efficient governance model. The tokenholders will, by adopting a constitution, also be seeking to strengthen MC DAO’s position as an autonomous organization.

The authors have prepared a version of a constitution, which they believe will best serve our DAO in its current state. The proposed MC DAO constitution can be found here.

The draft constitution will be subject to review and discussions for at least one month, providing each community member sufficient time to review and weigh in on the idea of a constitution and its content. After the review and discussions period, the authors will review the suggestions provided and consider whether any revisions should be made to the constitution before submitting it as an official proposal.


1. Why does MC DAO need a written constitution?

Since its inception, MC DAO has grown considerably. As with other DAOs, our DAO started out with a team of initial founders and contributors and has since grown into an organization with numerous activities being handled through a widespread network of contributors and participants. This includes multiple contributor teams contributing to MC DAO, e.g. the investment committee and multisig team empowered by MC DAO through governance proposals and consequential voting (to act in limited and specific circumstances for the benefit and on behalf of the DAO) .

DAOs are in their infancy, both from a technological perspective and from a governance and legislative perspective. They are a novel way of self-organizing with increased transparency and automation. We have thus far seen DAOs come in many shapes and forms, with differing degrees of decentralization and autonomy and there is currently no wide-reaching consensus as to how DAOs should be governed or clarification as to what formally constitutes a “DAO”. It is clear that the organization needs to be decentralized and autonomous to be able to be considered a “DAO” (i.e. all three letters in “DAO” must be true). However, the necessary degree of decentralization and autonomy that needs to be achieved by an organization in order to be considered a “true DAO” remains unclear to date.

Similarly to other DAOs, MC DAO has been and is constantly evolving and is in need of a proper and predictable governance system. It is the authors’ beliefs that we should continue to seek ways to become increasingly decentralized and autonomous in both our governance structure and daily endeavors (both in on-chain and off-chain activities). We believe a constitution in the proposed form is what our DAO needs to take the next step (but not the final step) in our evolution (see more on that below).

A written constitution will lead to MC DAO establishing a decentralized governance structure agreed upon by our community. Even though smart contracts are a key part of MC DAO’s ecosystem, they alone cannot govern communities - smart contracts, governance and further development require input through various “off-chain” activities (such as writing code or writing this thread).

Even though the idea of fully on-chain and trustless governance is an enticing one, we do not believe that the crypto space is there yet. For instance, if a proposal to implement or develop upgrades to a MC DAO product is approved, it will still require multiple decisions and activities to be carried out by one or more contributors in order to realize the approved proposal. Not all social and technical components are possible to encode into smart contracts. Behind many MC DAO activities, there is one or more teams of (trusted) appointed contributors. The constitution seeks to structure these trusted relationships and give tokenholders the ability to modify them.

Whilst MC DAO’s current governance model has been developed through various MIPs, it is still largely informalized and it lacks an approved governance procedure and structure. Even though MC DAO has created certain informational documents on how governance is structured (such as the Gitbook), the processes have not yet been compiled into one document. As our DAO continues to grow with multiple verticals, it will benefit from a governance structure that we are collectively aligned on as a DAO community. Structure is needed to create a resilient and well-run governance model that enables MC DAO to achieve its goals in a timely and secure manner in years to come. Such structure will also lay the foundation for further improvements and developments to our governance model.

Currently, MC DAO is governed by tokenholders, with multiple contributor teams being delegated certain limited powers through governance decisions (see for instance MIP-2, MIP-4, MIP-6, MIP-7, MIP-10, MIP-15, MIP-16, MIP-17, MIP-18, MIP-19, MIP-21, MIP-22 and MIP-23). Whilst many teams have been formally empowered through governance decisions (MIPs), certain other contributor teams have emerged more organically from our community over time. These teams have been and currently are conducting various work in the interest of MC DAO. For the purpose of continuing developing MC DAO in various manners, our DAO needs a system that incentivizes meaningful contributions from its community - the constitution will seek to formalize the framework for such a system.

Despite various contributor teams being delegated certain powers from time to time, it is clear that the tokenholders (through governance) remain at the core of MC DAO and expect to have a vital value-creation role in the community and development of MC DAO. This applies even if they do not necessarily have technical skills and are not developers or other highly active creative participants in MC DAO. Where the tokenholders have empowered contributor teams to handle and execute certain activities, the tokenholders are indirectly involved in decisions the contributor teams make, as they may (subject to enforceability either directly on-chain or otherwise off-chain, e.g. through agreements referring to governance decisions) intervene and change, revoke or otherwise alter the delegated powers. Thus, delegating certain authority to persons or groups does not invalidate decentralized governance.

The future success of MC DAO, as it continues to grow and evolve, depends on continuing aligning incentives of the various contributor teams with the preferences of the wider MC DAO community. The adoption of the constitution will seek to acknowledge the fact that governance (through MIPs) remains a key part of MC DAO governance, whilst at the same time not requiring that each day-to-day decision within MC DAO’s ecosystem is made directly by the collective group of tokenholders.

2. The objectives and overview of the proposed constitution

The proposed constitution has numerous objectives. Section 1 above already touches upon a few. Additionally, the constitution explicitly includes a description of the objectives in the section named “Preamble” (see that for further details).

Moreover, the constitution focuses on creating a framework that allows for a flexible governance structure, rather than attempting to set in stone a specific governance format with pre-set contributor committees, teams, councils, sub-DAOs, etc. Consequently, the constitution seeks to provide flexibility for our DAO to pivot and adapt in the event that technological developments or other factors require that we do so. It determines what governance actions are legitimate for MC DAO to take and to encode into MC DAO related smart contracts. Being a framework for how MC DAO shall be governed implies that decisions taken through MIPs will continue to be an important part of MC DAO’s governance in the future.

Furthermore, it seeks to define the scope of activity which MC DAO may engage in and sets out the vision, values and core principles that are steering for what MC DAO is attempting to achieve.

3. A “work in progress” - only a first version

DAOs are still novel organizations that are tokenholder or member led. There are currently no instruction manuals for building a constitution for an organization like MC DAO. Various other DAOs have implemented constitutions and inspiration may be obtained from these, but none of them are directly suitable or adequate for our DAO.

The draft constitution seeks to take a step towards creating the right governance structure, not necessarily a perfect one. An ambition has been (and should continue to be going forward) to make complex parts relating to MC DAO feel simple, in order for everyone in the community to have easy access to the technology, products and information relating to MC DAO.

We believe DAOs are fundamental to the success of many sides of crypto, but they are currently finding themselves in legal uncertainty with no wide-reaching consensus about a path to legitimacy. Most existing laws were not designed with DAOs in mind and the regulatory landscape concerning crypto and DAOs generally remains unclear. Multiple jurisdictions are considering various approaches for specific DAOs legislation (see e.g. in the Republic of Marshall Islands which recently adopted a law providing legal identity and limited liability for “DAOs”).

Although we are a DAO, we do not live in a vacuum from a legal perspective. In order to ensure longevity of MC DAO, we should seek to adapt and conduct our activities in accordance with applicable regulation as it finds its shape, and strive to work with regulators to educate them on the benefits of the various DAOs that exist in the crypto space.

In the meantime, we can only continue to act based on the information available to us at the relevant time and to create an environment that is as efficient as possible for our DAO. Points and aspects that need improvement will likely appear. The current form of the constitution is therefore, as pointed out earlier, designed to create a flexible governance structure, so that we can adapt as we learn about points of improvement and gain further clarification as the regulatory landscape becomes clearer.

We encourage every community member to review the proposed constitution in detail, even though we appreciate it is long. The draft constitution is by no means meant to be a “take it or leave it” offer by the authors; there will be set aside sufficient time for anyone to review and weigh in prior to proceeding with a vote on this one (see the “Status” section in the introduction for information on deadlines for providing input). We believe the best ideas are born through debate and therefore in our discussions we should be giving each other the benefit of the doubt and see if we can create something great together.


Although our governance model in all material respects has been functioning well to date, as it has provided our DAO a framework to continue its growth, we have admittedly also encountered a few challenges and realized that there are potential risks and room for improvement within our (and most other) DAO governance models.

We believe it is beneficial for our DAO to have a governance framework - which has been voted on by the DAO - in writing, rather than having a fragmented and informalized model of governance. This will allow us to enjoy increased prediction in terms of how governance functions and also provide us with simpler onboarding possibilities of new DAO members going forward.


Much of the rationale behind the constitution is explained in the sections above. The governance model (set out in the constitution) will seek to continue to keep MC DAO decentralized, whilst simultaneously empowering contributors to act in an efficient and coherent manner in accordance with the DAO’s wishes. See below a few points that we anticipate there could be questions in relation to and to which we have provided a rationale.

Will the constitution imply significant changes to the current manner MC DAO is governed?

The constitution does not attempt to conduct a full overhaul of our governance model, but rather put in writing how our DAO has been functioning in practice, with certain alterations. Thus, most of the changes implemented through the constitution should in all material respects not affect MC DAO or its community members in practice.

There are certain changes that deserve to be highlighted explicitly.

Article 7 defines and formalizes the MC DAO proposal process, including explanations as to what conditions must be met for proposals to be valid and what voting criteria must be met when voting on different matters. A potential issue that has been voiced by the community (known also for other DAOs) is that a limited group of people at some point may be holding a fairly high amount of the tokens in circulation, or may by other means sway a vote in their favor. To protect the tokenholders and MC DAO as a whole against internal takeovers and malicious attacks, this part of the constitution lays out (a) higher majority requirements for the percentage of votes cast that need to be in favor of a proposal, and (b) requirements for a higher percentage of circulating tokens that need to participate in a vote in order for it to reach quorum. The requirement of a simple majority (more than 50% of the votes) will still remain the standard rule, except for special circumstances explicitly listed in the constitution which require qualified majority (75% or more of the votes) or extra qualified majority (90% or more of the votes) to pass.

Additionally, article 7 introduces clearer (objective) criteria for how a governance proposal shall be processed. This will change the somewhat arbitrary process that we currently have, with no specific consensus as to how long a proposal shall be subject to discussions prior to proceeding to a vote and what criteria determine whether a proposal shall proceed to an official MIP vote or not. Proposals will as a main rule require a discussion time of 7 days, whilst proposals regarding certain specific matters will be subject to a 14 day or 1 month discussion period. The constitution also requires that each proposal must include a for/against poll to gauge community sentiment regarding whether a proposal should proceed to a vote or not. If 25% or more of the poll votes are in favor at the time of expiry of the discussion period, the proposal shall proceed to an official MIP vote.

Article 4 does, amongst other things, include provisions ratifying the current governance model pursuant to which tokenholders may delegate certain powers to contributors. We do not believe that micromanagement by the wider group of tokenholders is the way to proceed for a DAO. Reducing the need for governance in certain situations (governance minimization) does not however automatically imply that the DAO becomes less decentralized or autonomous. MC DAO will remain decentralized, as tokenholders will control how power moves within MC DAO, subject to enforceability either on-chain or otherwise off-chain.

Article 4 also points out that nothing in the constitution can be construed to bind any person to perform or carry out any activity or similar as a result of a “DAO Consent” (as defined in the constitution), i.e. MC tokens do not govern people in general, but can govern “on-chain” through code (which may indirectly govern people in various ways). For instance, we cannot enforce a MIP voting for Vitalik Buterin becoming a MC DAO multisig signer - that is not possible to enforce through code. Such decisions are thus in principle utilized for sentiment signaling purposes and not “binding”. Any decisions that cannot be enforced through code may however potentially be enforced through separate agreements in accordance with the applicable terms (e.g. through agreements referring to governance decisions).

Article 6 specifies that proposals that will require input from the community through multiple decisions (e.g. such as staking v2 required) will need to be published as discussions first, and polls (defined as “MPOLLS”) held, prior to proceeding to a proposal. Further, the article encourages proposal creators to first exchange thoughts and ideas with the wider MC DAO community through the discussion category or through other MC DAO channels for the purpose of gauging community sentiment before publishing an idea as a proposal.

Article 8 sets out the framework for a delegation system, but does not adopt it. Such a delegation system would need to be implemented through a separate MIP, in accordance with the framework set out in the constitution. Increasing tokenholder participation is important for a number of reasons. Lack of participation can result in inadequate monitoring of the various contributors, and in turn misalign the incentives of MC DAO. Furthermore, benefits may accrue in the form of increased decentralization with more persons/tokens participating in a vote, albeit indirectly by way of delegation. Delegates can potentially also make smart, informed decisions about complex, technical issues in a context where many tokenholders are unlikely to have the necessary time or expertise. To be clear, the authors will not be proposing to implement a delegation system together with the constitution; we merely wish to think ahead in case that is something that the DAO wishes to implement in the future.

There are various other articles of the constitution that could have been highlighted, but we do not believe it is sensible to go through them all in detail. The authors are however more than happy to elaborate on other parts of the constitution as well if necessary after the community has had a review of the constitution.

Will the adoption of a constitution render code and smart contracts less important?

That is definitively not the intention with this constitution. Adopting a constitution is not intended to diminish the importance of smart contract systems (where code is law) within our DAO ecosystem, but rather supplement and create the framework for such systems.

Our strong view is that MC DAO, as a blockchain native organization, should continue to, as much as possible, strive to utilize smart contracts and other crypto technologies in its various endeavors, including governance. The constitution in fact endorses increased use of smart contracts that enable enforcement by code and provides flexibility with respect to implementation of various on-chain solutions, e.g. on-chain governance (which we can implement in various ways as part of the DAO’s governance). Therefore the next steps in our evolution to becoming increasingly decentralized and autonomous should be to (to a larger extent) embrace the technologies that crypto has to offer.

How will the constitution be stored?

The constitution (if adopted through a proposal) is proposed to be stored and recorded on the Ethereum blockchain, e.g. through a NFT solution (such NFT could be held by the main MC DAO wallet) or other similar solutions utilizing blockchain technology. The draft version made available for the community’s review together with this discussion thread is for simplicity reasons made available as a simple PDF file.


There is no budget needed for implementing the constitution.


Copyright and related rights waived via Creative Commons CCO.


Thanks for the proposal and the concept constitution as provided. I welcome the fact that MC DAO has come so far already that we can even discuss the proposal of a constitution. MC DAO is blazing the trail again and leading in the space.

Eventhough some details will probably need amendments I will support the proposal and vote “Yes”

Thanks and regards


A big milestone for the DAO. Very satisfying to see the Merit Circle DAO contributors leading the way here with a constitution that is so comprehensive.

Governance is the most vital organ of the DAO. It is of the utmost importance that it is accessible, fair, and effective. I believe that this constitution, if implemented by the DAO, would make for a very solid governance framework. It will make the DAO more reliable as an organism, to both its own community and outside partners. This is important if the DAO wants to build a network of long-term partners, investors and contributors.

Thanks to @Cryptolawyer and everyone who has contributed to the effort so far, including all community members that have shown through discussions and proposals what elements the ground rules need to cover.


Appreciate it @tyghh! Assume you understood, but just to make it clear for others reading; this is not a proposal (yet), but a discussion thread. Each community member is of course still welcome to weigh in on the idea of a constitution and the content of the proposed constitution. To ensure that your comments are taken into account before a possible proposal, it would be great if comments/input are provided within 1 month following the post of this thread.

I would also personally like to thank the ones helping out with this and I’m looking forward to further discussions with the broader community!



Thank you @DAOCoreContributors and @Cryptolawyer for writing the constitution and creating this discussion.

Yet again, we are proud to see the Merit Circle DAO paving the road and leading the way for DAOs across the space. This new constitution is both thorough and extensive, and covers all aspects of how the MC community will govern the DAO. By adopting a written constitution which lays out a governance structure the DAO can follow, we expect developments within the DAO to run smoother, and follow a more formalized implementation process - a win for everyone.

Also those looking to join or partner with the DAO now have a clear readout on what the DAO stands for, and how it operates. Prior to this, the MC Gitbook was the main source of information for those willing to learn about the DAO. While the Gitbook provides a good basic understanding of the DAO and is important to have for those who don’t want to read 15 pages of long text, this constitution is far more comprehensive and provides a good alternative for those who wish to really delve into how the DAO works.

We are keen to hear what the MC community thinks, as no doubt there is discussion to be had on what the first official version of the DAO’s constitution contains.

We look forward to reading more responses!

Signed with left paw,
Witty Kitty - The Fresh Cat of Bel-Air



Hello @DAOCoreContributors and @Cryptolawyer , thank you for bringing forth this well-written, articulate and timely discussion to the community. It obviously took quite a bit of effort to formalize.

As anyone who has been in the digital asset space long enough can attest, there has been an ever-greater emphasis placed on regulatory clarity, sound governance processes, as well as overall transparency and user / stakeholder protection.

With the recent FTX / Alameda debacle fresh in our minds, it is fair to say that this trend towards
regulatory compliance, scrutiny and clarity will only increase. This is a sea change from the ICO/wild-west days of just a few years ago, but to be expected of a disruptive industry growing at lightspeed. In the interest of citizen and community protection, governments the world over continue to set forth formal guidance, paying a keen eye towards enforcement, and leveraging strong penalties to those who choose to misuse and abuse in any shape or form.

Establishing a well-thought out constitution, one with a sound governance framework and legal guidance as its cornerstone, is a good first step to addressing this regulatory trend, and acts as an insurance policy that not only protects Merit Core, but also provides better assurances generally of longer-term growth, health and solvency for the DAO, its community and token holders at large. A DAO without prudent thought dedicated towards regulation risks eroding their human capital, and as well, may eventually erode its treasury via legal defense if left unchecked. A sound gov. framework in place is a pre-emptive step addressing this.

By formalizing a well-thought out DAO governance model, one that takes advantage of the interplay between ’ code as law ’ & sound governance, we can go beyond ’ just a simple gitbook ', and account for necessary requisite legal protection for all contributing members, as well as lay out other various hierarchical foresight. In doing this, we not only remain at the leading edge of innovation in this area by setting a precedence for others to follow, but also protect the DAO and its treasury from aforementioned litigative risk.

I look forward to being an active member helping in this regard, and reading further feedback from the community about this milestone for the DAO.



Thanks a lot - I like the idea of constitution very much as we need to resolve the principal conflict between DAO governance from one side, legal and business constraints - from another.

I specifically like higher majority and higher quorum requirements for important votings.

And I specifically like the intention to avoid micromanagement by DAO votings and reducing the need for governance.

I have several remarks and questions:

  1. Purpose and objective section (1.1). I think that “to be a gaming DAO…, to invest, to develop…” are not purposes and objectives. It should be more like “to benefit tokenholders by…, to benefit cryptospace by…, to benefit society by… etc.”. Just wording as all of us understand the meaning.

  2. Treasury management (5.1) . I think that we need to address specific situations when some investments can not be displayed in transparent manner (ex. Project Firebrand & Roadslide). Generally - it is clear that not all the information related to DAO can be made transparent - could be good to have the instrument to define and manage that in a clear way.

  3. Remarks about voting:
    3.1. It is based on circulated supply and I never saw the clear formula for what we consider to be the circulated supply (locked stakes are in CS or not, vested rewards are in CS or not, DAO MC holdings are in CS or not etc). I would like to see the exact formula with the list of MC holding addresses which are considered not to be the part of CS, so everyone could easily calculate the CS himself.
    3.2. I think that voting weights should be included into constitution - it is equally important to quorum and majority rules. Same as for CS we also need to have clear formula (which might be changed but not easily). I think that it should be similar to formula used to calculate staking rewards. Right now BTW voting weights look unbalanced between MC and LP stakers.

  4. Decisions by the Tokenholders (4.2). I would specifically address the situations when DAO Consent can be enforced on-chain or otherwise but may lead to legal issues. I think we should restrict such decisions and get the procedure for that.

  5. Property rights. It is not discussed directly but indirectly in current draft:
    In 7.3.3a and 7.3.3c we assume that it might be possible (although requires higher quorum and majority) to change tokens distribution without agreement of holder. Or to change the voted staking rules (for example rewards as it is the most important part) after the staking is started.
    While in 7.4.10 we have “A decision which clearly results in one or more Tokenholders obtaining an unreasonable benefit at the expense and detriment of other Tokenholders shall be prohibited.”
    I think if we are serious about 7.4.10 then 7.3.3a and 7.3.3c should be impossible. I think the only reason for taking somebody’s tokens (or promised tokens - no difference) is a violation of explicitly written agreements with clear rules about penalties.
    So I’m wholeheartedly for 7.4.10 and would propose to make the protection of property rights more explicit in the text.

Thanks again, I think this job is very important!


Many thanks for the great and supportive replies @SadCatCapital, @K_Godel, @tommyq and @timour, and sorry for keeping you waiting with the response.

@timour, great comments and questions – appreciate it. See below my thoughts on them; I’m responding in the order that you mentioned them. Note that these are my opinions and I don’t speak on behalf of the other authors who may view parts differently.

1. Re. article 1.1: In article 1.1 the intention is to cover the “business” purpose and objective of MC, i.e. the scope of activities that MC DAO should be able to be engaged in. Article 1.2 is on the other hand meant to cover the more visionary and value based points that you refer to (for instance “contributing to revolutionizing the gaming industry by…”). Perhaps “scope of activities” of MC DAO or similar wording would make it clearer what the intention of article 1.1 is, rather than “purpose” and “objective”.

Based on this, I would like the content of article 1.1 to remain as is, but would be open to adjusting the heading and make corresponding logical adjustments to the wording otherwise to make clearer the intention of the article (as mentioned above). Let me know if that does/doesn’t make sense.

2. Re. article 5.1: Good point. I believe we agree that the main rule should be that information should remain transparent. The great thing about having assets on-chain, is that everyone in principle may audit and verify the assets and value of them themselves (treasury reports and treasury.meritcircle.io may be helpful in this regard, as they list the wallet IDs used by the DAO).

The issue in practice might however be, as you point out, that investments at times are made in projects that require confidentiality regarding certain sides of the investments, e.g. regarding the name of the project until the project itself makes a public announcement. If and when there are deviations from the main rule of transparency, one thing should be clear, and that is that the amount invested from the DAO treasury should always be disclosed, as was also done with both Project Firebrand and Roadslide that you mentioned in your examples. When the actual investment is made, it would also be reflected on-chain or in treasury reports. Thus, even if not all sides surrounding an investment are disclosed from the outset, the amount invested should/will be.

I think it may be difficult and not feasible to put in place a general rule that attempts to capture every situation that may arise in the future. Details on processes that should be put into place may vary from situation to situation and should therefore arguably be tailored for each situation that requires so. What we could do as part of the constitution is to set out some processes that could be implemented to define and manage these situations, in addition to include a more general reference to that more detailed procedures and processes may be implemented. I propose to adjust the second paragraph of article 5.1 as follows (adding also a third paragraph):

MC DAO’s treasury should, to the extent reasonably possible, be displayed in a transparent manner so that the Tokenholders can adequately audit the funding and operational spending of MC DAO.

There may be situations where certain details surrounding investments or treasury assets cannot be disclosed in full transparency due to confidentiality or other constraints. To increase accountability and transparency in such situations, the reasons for non-disclosure should be presented and alternative reporting methods considered by the MC DAO contributors privy to the relevant information. Information concerning the size of an investment should always be disclosed. MC DAO may implement procedures and processes for managing disclosures relating to investments or treasury assets that cannot be disclosed in full transparency.

To me it seems as if our DAO is moving further into the direction of transparency on various aspects, including treasury (e.g. with the developments on the treasury page). This is good and I’m looking forward to seeing further steps to be taken in this relation going forward.

3.1. Re. voting remarks: Circulating supply can be checked at e.g. Coingecko, Etherscan and the treasury page (frequently updated). To my understanding, tokens that are currently non-circulating are (i) early investor tokens (seed) that have not completed vesting yet, (ii) contributor team and advisory tokens that have not completed vesting yet and (iii) liquidity rewards (i.e. staking v1 rewards) that have not completed vesting yet.

All other tokens should be in the category “circulating” and are either (i) circulating in the general market, (ii) ready to be claimed as they have completed cliff/vesting but not yet been claimed, (iii) staked/locked (as you know, staked tokens have voting weight, so they need to be counted for), or (iv) held by MC DAO wallets (e.g. for community or team/contributor incentive purposes). What is displayed as circulating on-chain is however not equal to what is counted as circulating supply when counting quorum; MC DAO tokens (even if “circulating” on-chain) are not counted for, ref. article 7.4.2 last paragraph.

I agree that it might be somewhat “tricky” in practice to keep track of circulating vs. non circulating, whilst also deducting MC DAO tokens (would be a different quorum number each time we do a vote). What we could do, for the sake of simplicity, is to state that the quorum number should be updated each quarter (or more often if necessary) in accordance with the applicable circulating supply at the time, so that the quorum threshold doesn’t become a moving target each day. Another alternative is of course to stay with a fixed number as is. Interested to hear your thoughts on the various alternatives.

Good idea re. adding the list of MC holding addresses considered not to be part of circulating supply so that everyone can easier verify the applicable quorum number. I would suggest not to add them as part of the constitution directly, so that we avoid having to change the constitution if the DAO finds it necessary to move MC tokens from one wallet to another (will probably not be necessary, but nice to have the flexibility). There should be a list of the wallets somewhere, however, provided that the constitution is adopted (not equally important if we continue to have a quorum of “fixed” numbers not affected by circulating supply). What we could do as part of the constitution, is to add a sentence stating that the relevant wallets should be disclosed.

3.2. Re. voting remarks: That’s a good point. I agree it could be valuable to have it in here directly. The starting point pursuant to the current draft of the constitution is that each MC token has a vote (treasury tokens are however excluded), ref. article 7.4.2 (voting rights). This starting point may be modified if MC DAO otherwise decides in connection with staking, ref. the penultimate paragraph in article 7.4.2. That is exactly what MC DAO has done to date, in connection with MIP-19 and the current staking program, which I believe changed the voting weight in line with the staking bonus.

I think however that you are right in that voting weights may seem unbalanced between MC and LP stakers on Snapshot since staking v2 went live – might be caused by the moving LP values and might require a reset to the baseline on Snapshot (should be doable so that we get the accurate voting power as was intended through MIP-19).

I believe the voting weight is currently as follows:

  • 1 MC (not staked) = 0.5 in voting weight.
  • MC/ETH (in an amount equal to the amount of 1 MC) = 0.5 in voting weight
  • 1 MC staked (flexible) = 1 in voting weight
  • MC/ETH staked (in an amount equal to the amount of 1 MC) = 1 in voting weight
  • Voting weight is incremental if MC/ETH or MC is staked, i.e. from 0% (flexible) up to 500% (208 week lock-up). Some nuances in the range of 0% to 65% between staking v1 and v2 (up to 52 weeks lock), to provide some benefits to early stakeholders (see MIP-19).

The current voting weight structure provides increased voting power to those with “skin in the game” and commitment to MC DAO. As for bullet point no. 4 above, this implies that if you put 1 USD in LP you would then get the same if you would put 1 USD in MC only (assuming purchase is made at the same time). One could argue that LP tokens should get an additional voting weight bonus, but I believe the rationale is that these already indirectly obtain increased voting weight by receiving a higher amount of MC tokens in connection with staking, compared to those staking MC only.

The downside of adding the voting weight directly as part of the constitution instead of changing it in connection with any changes to the staking program, is that we would need to change the constitution if we were to change the voting weight in the future (e.g. if we were to choose to not have “staking” as a feature or change the voting weight bonuses). This could also be positive of course, as it would provide increased predictability. Currently changes to the staking program would require a higher qualified majority and longer discussion time, whilst changes to the constitution would require extra qualified majority and discussion time.

I’m therefore personally open to adding the voting weight as part of the constitution, which shouldn’t be too troublesome to do from a drafting perspective. Alternatively we can keep the wording more or less as is, with the reference to that the voting power may be changed through the staking program, ref. articles 3.4 and 7.4.2.

4. Re. 4.2: I don’t think that it’s necessary to implement explicit mechanics for such restrictions as part of the constitution. If we look at on-chain first; on-chain actions of MC DAO currently need to be signed and implemented by the multisig team(s). The multisig signers are not obliged to sign or execute transactions that would e.g. imply legal issues for them or MC DAO. Compliance with law (where applicable) is also highlighted as part of article 1.2 (i). In the event that we implement governance solutions that result in self-execution of decisions without needing the approval/execution of multisig (a true “code is law” mechanic), then indeed we would need to look into various mechanics to avoid malicious and unfortunate outcomes of decisions (e.g. emergency breaks, timelock etc.). However, stating in the constitution that on-chain decisions shouldn’t be executed if the execution would be considered in breach of applicable law wouldn’t solve any issue – that’s not how self-executable code works. The smart contract would simply execute if required input is provided on-chain, but certain emergency brake mechanics could potentially be implemented. In other words, we would need to solve it by other means than typing text in a document like the constitution.

As for off-chain, if there is a contract in place that e.g. refers to that “x” shall occur if governance vote states so, then such agreements would in practice always include provisions that state that the relevant contributor or contractor doesn’t have to carry out any action that would be considered in breach of any law applicable. Consequently, I don’t think adding further text on this issue as part of the constitution would be necessary.

Hopefully this added context provides some comfort to the point that your raise (which of course is an important one).

5. Re. property rights: I don’t think there is necessarily a contradiction between 7.3.3a and c on the one hand, and 7.4.10 on the other. For instance in relation to 7.3.3a, if we were to re-allocate certain tokens from the contributor team/advisory pool to general community incentive purposes, that would be considered a change to set token distributions. As not all tokens allocated for contributor team purposes have a specific recipient yet, you wouldn’t necessarily be taking away tokens from anyone in particular.

As for 7.3.3c, the conclusion of a staking program could e.g. become relevant if there were no further MC tokens allocated for that purpose – the conclusion would potentially (I think due to the mutability of the contracts) enable the unlock of the staked tokens for those who are in the situation that they remain locked in the contracts (which would be beneficial). Changes to the staking program may for instance be changes to the voting weight/bonuses or changes to the MC tokens allocated for staking purposes (e.g. we would need an increase after year 2, which would be a decision requiring higher majority).

Therefore I think we can remain serious about 7.4.10 even if keeping 7.3.3 a and c. However, I appreciate that there may be scenarios where a decision that could fall in under 7.3.3a or 7.3.3c may be somewhat troubling in relation to 7.4.10. What we could do is to add to 7.4.10 that such rule should be superior in case anything to the contrary should follow from the constitution.

Hope this answers your questions and comments - happy to discuss further!


Thank you very much @Cryptolawyer for very detailed and thoughtful answers - agree with very most of that!

1. Re. article 1.1 - yes, I think that change of heading from “purpose and objectives” to “scope of activities” or similar is a good idea - better fits the content of article.

2. Re. article 5.1 - fully agree.

3.1. Re. voting remarks:

In fact I just found that Coingecko documents the calculation of Circulating Supply in a following way (question sign near Circulated Supply value):
MC Coingecko

If it is a correct breakdown and correct addresses then I have no doubts in using it as a reference for quorum calculations, so I consider it solved - just would like the team to confirm.

3.2. Re. voting remarks

Let’s have a look at how it works till now - voting power weights in MIP-22 and MIP-23 votings were:

MC (MC not staked) - 0.5
SMC, SMC V2 (staked MC multiplied by coeff varying from 1 for flexible staking to 6 for 4 years) - 1
MCUNILP (MCUNILP not staked) - 134
SMCUNILP, SMCUNILPV2 (staked MC multiplied by coeff varying from 1 for flexible staking to 6 for 4 years) - 268

Ratio between staked and not staked tokens (0.5) - good. Using the same coeffs we use for staking rewards (1 to 6) - excellent. The question is ratio between MC and LP (268:1). In fact the price ratio between MC and LP at that time (MIP-22, MIP-23) was around 140-150 (according to my logs), so maybe the intention was to put the ratio equal to prices ratio with additional 2x for LP.

For all 2021-2022 votings prior to MIP-22 this ratio was set to 42:1 which is questionable as price ratio between MC and LP was changing a lot.

I think we just need a rule here - either we adjust ratio before each vote or once a quartal (or month). With price ratio between MC and LP or with additional coeff benefiting LP. Any should be OK - just to make it clear. Till now we never had a really competitive voting with 55%/45% so nothing bad happened so far but if one day we get that when making really important decision - unclear rules can cause severe conflict.

4. Re. 4.2 - here I rely on your opinion as I believe you are an expert and I’m not. Just wanted to make sure that DAO vote can’t for example enforce Merit Circle Ltd to violate contracts or commitments.

5. Re. property rights - here I would like to discuss a bit more as I believe that’s both an important and sensitive subject.

if we were to re-allocate certain tokens from the contributor team/advisory pool to general community incentive purposes, that would be considered a change to set token distributions. As not all tokens allocated for contributor team purposes have a specific recipient yet, you wouldn’t necessarily be taking away tokens from anyone in particular.

My opinion is that the contributor team pool (even though it is vested) is already the property of team (Merit Circle Ltd) even if exact persons and amounts might not be fully defined yet (could be reserved for new hires). We should distinguish between something already committed and something just reserved for specific purpose - if needed. I believe contributor and advisor rewards are committed while for example community rewards were just reserved (so remained the property of DAO and could be burnt). In theory we could also have conditional allocation (some results to be delivered to get the reward) but I don’t think that’s the case with contributor and advisory pool as of today.

For 7.3.3c the principal question would be is it possible to cancel or decrease 30M MC tokens already allocated for the 1st year. Or to change the weights. I think it should be impossible - we violate the rights of those who already staked, so we violate the commitment already “signed” by previous vote.

Do you think that 7.4.10 (with additional clause about its superiority) would be enough to manage the examples we are talking about in a clear way?


As an individual who has spent considerable time analyzing the supply figures, I would like to provide additional information on this matter. It is worth noting that the reported circulating supply on CG is not entirely accurate. After conducting an analysis, it is clear that the actual circulating supply is higher than reported.

The single staking contract currently holds 35.6 million MC, of which approximately 33.5 million MC is staked, and only around 2.1 million MC are locked staking rewards. Furthermore, the Sablier Streams contain around 6.5 million MC, which can be claimed at any time (for recent data, please refer to MC Sablier claimable MC). As a result, the actual circulating supply would increase by approximately 40 million MC.

Please note that these points have been taken into consideration in the vesting schedule table on the treasury dashboard.


Thanks @sub - good to know!

I also found one inconsistency by the way - if we consider MC V1 staked tokens to be out of circulation (35,650,452 on my screenshot) then we need also to exclude MC V2 staked - https://etherscan.io/token/0x949d48eca67b17269629c7194f4b727d4ef9e5d6?a=0x74adae862adcccf7a7dbf2f7b139ab56e6b0e79d - ~21M as of today. Though I’m a bit doubtful - is it correct for example to exclude flexible staking and expired staking which can be unstaked at any moment from CS ?

So it returns us to the question of having the correct definition and reference for MC circulated supply - seems currently it doesn’t exist. Maybe we can just switch voting quorum requirements from percentage of circulated supply to total supply or just to absolute numbers. And anyway end of this year CS will exceed 80% of total, so its calculation will not be so much important.

Props for the ones putting this all together. I think it is great to see this initiative as it shows the DAO is trying to stay ahead and explore. Allthough this is not really my ‘cup of tea’ (had to read it all a couple of times), I like the way it is getting shape. Looking forward to seeing a proposal in the future with some of the remarks made by fellow communitymembers embedded in the concept.

Kind regards,
Sir Dutchie

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Current Circulating supply
Thanks for the input @timour and @sub Technically all staked $MC and unlocked (but not yet claimed) $MC should indeed both be included. We will work to reflect this on the treasury dashboard and on Coingecko.

Regarding choosing a fixed percentage of circulating supply to set a quorum. We believe this will serve best in any potential future situation for the DAO. Let’s say for whatever reason a significant chunk of supply gets locked up (apart from staking) in the future, this would affect the circulating supply, but not the total supply. In an optimal situation, the quorum needs to be adjusted in accordance with the amount of MC that is available for voting.

The main difficulty in using circulating supply currently is that it is a moving target and (for now) hasn’t been optimally defined and displayed. The 1. define and 2. display part are easy to solve. The 3. moving target part is not easily solved, but will only have marginal effects if we update this every quarter. As you said, most of the supply will be in circulation soon. In this way, it will naturally become more aligned with a fixed % of total supply, but still protects against drastic changes.

1 Define
Total supply = max supply - burned MC
Circulating supply = total supply - locked MC (across all buckets)

2. Update / display
The circulating supply number will be checked monthly, displayed on the treasury dashboard and coingecko. Most of this process happens automatically through API endpoints and all can be checked on-chain.

The quorum number needs to be manually adjusted in the current governance system. As the circulating supply number changes, the quorum number needs to be changed to reflect the % value as agreed upon in the constitution. We would propose to do this quarterly, along with any other values that need to be updated in Snapshot (such as LP values deviating in governance weight). The mutisig team will be responsible to update this on a quarterly basis.

The aim is to move to a governance system where we can update these values live and automatically.

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Thanks @timour. Seems like we are aligned on your points 1 and 2.

As for points 3.1 and 3.2, I got nothing more to add than the helpful info from @sub and @DAOCoreContributors. I agree that we would benefit of having the mechanisms with regards to voting power clearly laid out somewhere (e.g. in the GitBook), although I think it’s pretty clear that staked tokens must be counted for as circulating (and thus towards the quorum), given that you can vote with them (they even provide you with boosted voting power). I will also think a bit more on whether that could be integrated properly as part of the constitution as well.

I’m fine with the proposal to carry out quarterly adjustments of the quorum number as discussed previously and mentioned by @DAOCoreContributors in their recent response. The constitution should be adjusted accordingly to reflect this.

Your understanding with regards to point 4.2 is correct.

Re. 5: You might actually be right in that the remainder of the tokens not yet distributed/emitted (more or less) have an intended recipient, and that future changes to token distributions are no longer a practical issue after we got rid of the remainder of the previously non-emitted tokens in the (former) community incentives pool (MIP-20). Tokens like these were the ones I originally had in mind when writing 7.3.3a. MC DAO holds a significant amount of tokens within its treasury which have no specific purpose yet, but these are already emitted and circulating, and deciding on their use case would not imply changes to set token distributions.

As for your comments to 7.3.3c, I agree that we shouldn’t cancel or decrease the 30m tokens already allocated for the 1st year of staking v2. I do think however, as mentioned in my previous comment, that there are scenarios where changes to the staking program may be done without being in conflict with 7.4.10. For instance, we are yet to decide on whether to allocate anything for year two of staking v2.

If we were to remove letters (a) and (c) from article 7.3.3, the result would be that such changes would be treated by the main rule, i.e. normal discussion time, simple majority voting and lower quorum requirements. Thus, I think keeping them both in there (at least 7.3.3c) makes sense so that we have periods of longer discussions and require a higher majority and quorum where proposals relate to such matters and are not in conflict with 7.4.10 (we could make it more clear that 7.4.10 would supersede if there is conflict).

Thank you very much @Cryptolawyer ! Let’s try to dig a bit deeper into the last remaining point of discussion - 7.3.3a,c & 7.4.10 - to remove all grey zones.

For instance, we are yet to decide on whether to allocate anything for year two of staking v2.

That means you assume that any proposal to allocate n tokens for next years falls under 7.3.3c and will require qualified majority of 75% and higher quorum. Here I have serious doubts. Extract from MIP-19:

We think it is best to set a new subsidy at the end of each year, so that it can be adjusted and fine-tuned to the live situation. It is very hard to plan four years out. Hence we also propose to have a yearly staking policy poll vote each September , where we decide on the next year’s subsidy.

I think these September poll votes shouldn’t be considered as changes to staking system - they are actually an integral part of this system. Requirement of 75% majority can, in theory, easily hang up the voting which will result in 0 tokens allocation and severe conflict with existing long term stakers. I suppose most of non-stakers will prefer small values or zero - to burn as much as possible, most of long-term stakers - max possible values, so frankly speaking I would prefer to see the poll with “weighted average” result here (when each voter puts number between 0 and max which is multiplied by his voting/staking weight - and then we take average). But if not - poll (or set of consequent polls with decreasing number of choices till it gets to final two variants) with simple majority should IMHO be much better option then 75%.

For 7.3.3a - if we can make clear that we are not touching tokens that have an intended recipient then I have no issues with that.

… we could make it more clear that 7.4.10 would supersede if there is conflict

I think it very important in any case.

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Thanks again @timour for putting some of these articles to the test and making me do some rethinking.

I think you’re right with respect to the voting on allocation for staking v2. After re-reading MIP-19 I agree these should already be an integral part of the MIP like you say, although the outcome could still be that 0 should be allocated following such poll. Nonetheless, the point I try to make is that there could be situations where decisions regarding changes to a staking program (e.g. introducing another staking pool with a different LP pairing) or winding down of it (e.g. we choose to wind it down with effect 4 years from today) may be possible without conflicting with the said 7.4.10. If we don’t include such decisions as part of the higher threshold/quorum bucket, they will be deferred to the main rule of 50%.

We can indeed make sure that the relationship between 7.4.10 and other articles is clearer, as discussed.

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I agree. Although I still see the collision about staking related voting - winding it down will require 75%, while allocating 0 rewards for next year(s) will require 50% - having even more grave effect on staking. Not sure though it can be resolved via constitution, so if there are no better ideas you can consider that as just a remark.

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Thanks @timour, appreciated. I think we are in agreement on how this should be treated and I will do some more thinking on how we can better align these provisions based on our discussions over the past few weeks.

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My apologies for the late response. Fortunately, I just have a few remarks that shouldn’t be of too big of a consequence. None of which relate to the earlier discussions, for which I thank @Timour and @Cryptolawyer for the lovely read, and further all contributors to the constitution for drafting this up.

Article 3.4 goes into staking the MC token, which feels off. It is just choice of wording really, but I do think that if we aim to be a leading DAO in the space, we should not be using the term ‘staking’ as we are not validating and securing the network. A more appropriate term would be ‘locking’ or ‘committing’ tokens. I do not assume to know the perfect term myself, I would just like to address the current one.

Typed too much before, so TLDR here
Article 4.3.3. and 4.3.4.
At several points in the Constitution is referred to the accountability and transparency of contributors. Even when I was more involved in MC DAO, I wasn’t aware of the operations of many contributors. I would like to propose including something along the lines that MC DAO keeps its community informed regarding operations of contributors as outlined in the ‘transparency and accountability routine’. This routine/process would have to be drawn up at a later date and could include several aspects which allow MC DAO community members to stay informed and updated on all developments MC DAO, including but not limited to, e.g. a monthly newsletter, a contributor homepage, etcetera.

Regarding the Governance Process
I would actually like to do the same for the governance process. Although much of the constitution is great to be included, I am of the opinion that the Governance Process itself does not necessarily have to be in here. However professional it may seem, much of it goes into explaining and outlining what needs to be included, which section covers certain topics, and what our way of governance is. None of which, in my opinion, has to be officially set in stone in a constitution. In the same way as the transparency and accountability, the constitution could also refer to the Framework for Governance Process. This would allow for easier adjustment to this process when needed without revisiting and amending the constitution.

I doubt the above will be discussed extensively, so I would like to address the following as well. It is still yet unclear what the specific steps of governance are. I’m aware the constitutions would like to allow for some flexibility, but from research I’ve done, existing processes are already chaotic and confusing. Therefore, I would suggest outlining the applicable governance process in the constitution including its steps and phases. This will make it clear to everyone what the process is.

Cheers, Niels