Exploring the Shift from Foundations to DUNAs in the Crypto Landscape

Understanding the Transition from Foundations to DUNAs

The crypto industry is witnessing a significant shift in governance structures, moving away from traditional foundations towards Decentralized Unincorporated Nonprofit Associations (DUNAs). According to a16z crypto, DUNAs represent a new model that aligns closely with the decentralized ethos of blockchain technology.

What Are DUNAs?

DUNAs are described as non-profit associations specifically designed to provide a streamlined governance framework for crypto networks. Unlike traditional foundations, which often have expansive nonprofit structures, DUNAs focus on governance outcomes rather than operational management. They avoid the incentive misalignments typical of nonprofits engaged in product development by existing solely to reflect governance outcomes.

Legal and Financial Flexibility

Despite their non-profit designation, DUNAs are not tax-exempt and can engage in for-profit activities, including capturing revenue from protocol operations. The legal framework for DUNAs, such as the statute enacted in Wyoming, permits the payment of reasonable compensation for services within the DUNA ecosystem. This flexibility allows DUNAs to support token-based governance and economic models like programmatic buy-and-burn.

Implications for Network Builders

For those building crypto networks, the choice of governance structure is crucial. a16z crypto suggests using a foundation if the network requires a grant program, a company for development and products, and a DUNA for token governance. The latter, when combined with on-chain authority tools like BORG, ensures governance remains decentralized and efficient.

Expert Insights

Miles Jennings, Head of Policy & General Counsel for a16z crypto, emphasizes the importance of choosing the right governance structure. He advises on decentralization, DAOs, and the legal landscape, highlighting the advantages DUNAs offer over traditional foundations. For more detailed insights, the original article by a16z crypto can be accessed here.