MakerDAO will set up the Defense Fund with an initial 5 million DAI.
The fund acts as a self-insurance tool and will only cover legal defense expenses of specific MakerDAO participants.
Funds will be secured in a multisig wallet, with the Maker Protocol taking control as a beneficiary.
MakerDAO, the decentralized autonomous organization (DAO) that issues the Dai (DAI) stablecoin and governance token Maker (MKR), has announced the launch of a new fund to be utilized in the case of legal or regulatory action involving the DAO’s participants.
The Defense Fund has been created following a governance vote on a Special Funding Proposal, the Maker team said. Accordingly, funds will be added to a multisig wallet for this purpose, with this done in one lump sum, the platform revealed on Wednesday.
MakerDAO’s $5 million defense fund
According to the platform, the fund will initially have a contingency budget of $5 million in the native DAI and be used to reimburse legal expenses incurred by specific community members.
Specifically, the Defense Fund will cover recognised delegates, core unit facilitators and permanent contributors. Active holders of MKR are also part of the primary group of beneficiaries.
The Defense Fund is thus envisaged as “a self-insurance tool for MakerDAO participants.” However, those set to benefit (as listed above) must be facing legal action directly linked to their activities at MakerDAO, the platform added.
“All claims and payouts will be managed by an external technical committee composed of insurance and risk management experts. The committee will issue a recommendation to approve or reject a payout based on a claim,” read part of a statement posted on the Maker Twitter account.
Maker Protocol will control the funds as one of the parties to the Defense Fund multisig wallet.