dYdX DAO Playbook [Ops subDAO]

We are excited to share the dYdX DAO Playbook!

As a reminder, the dYdX Operations subDAO was formed with a goal to support the growth of a community-run dYdX DAO. As part of this goal, we have written a playbook to guide the community through the formation and governance of subDAOs. The playbook covers background information, governance procedures, operational best practices, legal frameworks, and the risks of subDAOs.

We are opening up this thread to feedback and comments on the playbook. We also plan on hosting a few different events, including an AMA, to go over the content and feedback.

We’re also aware that the dYdX DAO could migrate to a cosmos-based chain in line with the v4 migration. The document may be updated with cosmos governance procedures and operations processes to match the new environment.

Enjoy the read!


Hi Carl,

Thanks a lot for sharing the Playbook.

I have to say that i’m quite disappointed with the information set out in the Playbook. The research conducted is very high-level in nature and fails to provide contributors with the confidence needed to launch or take part in a ‘sub-dao’.

The most important aspect of launching these sub-DAOs (which we cannot launch by the way - as we are not even a DAO - hence I would merely call them ‘Community working groups’), is the legal requirements that would underly them.

Without having clearly outlined legal requirements in relation to the structures chosen/suggested, I fear community members will be posting proposals for the setup of a working group, with the proposal passing - resulting in these working group participants then being faced with the harsh reality that they cannot set up their working group within a certain jurisdiction due to tax reasons, onerous regulatory requirements, treatment of virtual assets under applicable law or a myriad of other matters. For example, a MAJOR oversight that was made here was that earlier this year the Cayman Islands was put on the FATF Greylist (which alone, creates serious uncertainty in regard to dealing in or from within such a jurisdiction).

N.B. I clearly acknowledge that these are mere mentions of structures and not legal advice. However, at least, if you’re going to delineate a potential structure that may be used, I expect sufficient and adequate information to be provided. You can put a hundred disclaimers re. this not being legal advice however, the fact is that a community member wanting to create a community working group will look at the website and most probably opt for one of those structures - with the result being potential waste of time, exorbitant expenses incurred, and regulatory hurdles that would not have been expected.

Without sufficiently detailed information in regard to the legal entity setup one ought to take when deciding to launch or take part in one of these community working groups, this will not work. I myself, would not be confident enough (based on this playbook), to take part, or suggest anyone to take part, in these Community Working Groups considering the substantial ambiguity you have presented in regard to the legal relationships that would underly these working groups.

I am very disappointed in the fact that this very important section of the playbook was merely a high-level analysis which could have been obtained by a mere google search. Actually, by a mere google search, one would have obtained a lot more than what was provided here.

Thanking you in advance,


Analysts at the office ask if this playbook is a cauldron mini-project.

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I agree with your post, but I’m curious what you are getting at wrt the FATF list. It looks like they’ve been on and off that list over the past few years, and it’s unclear what, if any, consequence this is of.

Overall, the Playbook isn’t clear enough in demonstrating how to set up a legal subDAO or it’s legal structure.

The practical effect is that what will likely happen is that people, when wanting to set up a subDAO, will just ask Reverie for help in structuring it, and it will likely go the Guernsey Trust route – that seems to be the easiest and cheapest way to set it up while minimizing taxes.

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There is a lot of detail that is missing here involved with setting up the legal structure of the subDAOs and how to seamlessly include subDAO members as trustees of the Guernsey Trust…

Also, has the DAO considered wrapping the Treasury in one of these structures or wrapping anything else in order to minimize liability for DAO members?

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Beyond the legal nuances, we believe that the playbook misses the challenges of creating an effective and nimble DAO.

Does this playbook project follow the procurement plan specified in the playbook?
Was the dYdX Community billed $90,000 for this playbook?

We apologize for the questions; although we have used the platform for a while, we have only recently begun to understand the DAO of DYDX.

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Hey @VonNeumann2022 !

Thanks for your reply. For clarification’s sake, the Cayman Islands has been on the grey list since February 2021 and the decision to maintain its grey list status was delivered earlier this year.

What happens in practice is that institutions undertake more enhanced monitoring, for their own business reasons, or as may be required by their own laws (eg EU directives). Hence institutions based in a greylisted country that engages in cross-border trade and other activities may be subject to higher levels of customer due diligence by financial institutions outside of that country. In practice, this means being more thorough processing and vetting clients and understanding the sources of their funds.

The greylist could mean that your national bank account would not accept payments from a greylisted country, that it would not want to provide you with banking services due to the added risk posed etc. etc.

Furthermore, with regard to the Guernsey Trust, Reverie itself is not adept in performing advisory services in relation to certain models that could be proposed for this ‘Sub-DAO’. This is substantiated by the fact that they are not even sure whether the current Guernsey Virtual Asset Service Provider regime applies to them with regard to the dYdX Grants Program (it probably does).

Hence, my worry is that the information posed is sub-par, high-level and will lead to fellow dYdX Community Members undertaking added legal risks and taking on legal risks which they should not undertake or take on in the first place. These are not sub-daos, they are Trusts which carry AML/CFT requirements, regulatory and legal implications, and legal risks. Their portrayal is not to be taken lightly and more detail was to be expected.


There is a lot of legal risk in doing this, especially in a jurisdiction with newly introduced laws regulating virtual assets. It has to be assessed rigorously. Furthermore, no legal wrapper (a term I am not a proponent of), comes without its cons. It’s a matter of evaluating these cons in light of the risk the community would be comfortable taking on - such as token holder liability for example.

Let’s keep in mind that in the OokiDAO case for example, the court stated that every wallet that’s ever voted on a proposal is deemed to be a partner in a general partnership (OokiDAO). A lot to assess and analyse.


Hi, she.trades!

I see your questions throughout the forums so I will do my best to paint the picture for you and your team.

Reverie runs the DGP the previous cost was 70,000/month to carry out the services. Reverie then took a small pay cut to 55,000/month, but at the same time was spinning up the Ops subdao netting them the 15,000/ month back that way. Now for the Ops playbook, it was part of the spin-up of the Ops Subdao 15,000/ month to carry out services and 90,000 for the playbook. The playbook was NOT a mini cauldron project it was carried out by the grants team themselves. Hope this covers everything I will link the relevant proposals so you can see the exact expenses as I only covered Reveries direct payment.

Ops proposal: https://dydx.forum/t/drc-dydx-operations-trust/21

Grants proposal: https://commonwealth.im/dydx/discussion/9570-dydx-grants-program-v15-renewal

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Hey ImmutableLawyer,

I can see how from the perspective of a reader with higher knowledge in a section of the playbook, that section might seem high level. The playbook is not meant to be an expert analysis on every little nook and cranny of launching a subDAO. A playbook like that would be 100 pages long and really hard to read!

Instead, we narrowed down the information so that it can be attainable at all levels. The information shared is everything that’s needed to go from 0 to 1. What might seem obvious to you, may not be so obvious to someone that hasn’t thought about legal entities before. Launching subDAOs isn’t just about legal entities, or about the proposal, or the contributors, it’s all of these things combined. By providing a friendly introduction to each concept, we make sure contributors are well-rounded in the task and understand where to seek expert advice (like with legal entities).

As far as your legal comments go — the playbook isn’t intended to provide definitive legal guidance. Rather, it’s meant to give readers a high-level intuition as to how to think about all things legal.

Thanks for the feedback!


Thanks @carlbergman for creating the playbook.

I feel this playbook is an appropriate document to guide the first subDAO contributors.
Also, The website is cool and attractive as always.

However, I also agree with the points mentioned by @Immutablelawyer

I have a experience about corporate governance and have a legal background.
One thing to keep in mind when operating a DAO is how to deal with ambiguous laws and regulations.

I think have a problem with the Legal Framework from another perspective.
It is about the reputation of the lawyer who wrote the article and his relationship with reverie.

As far as I have been able to find out, there is not much up-to-date information about the lawyer Kevin Chen.
Furthermore, I cannot access the website for homiaklaw.com.
We know the tragedy that these situations have caused. (Prager Metis collapsed while Grant Thornton is still alive.)

There is also an unavoidable conflict of interest between reverie and lawyer.
This is because if the purpose of the DAO playbook is smooth onboarding, it would be detrimental to warn of the risks.

In other words, with regard to the Legal Framework topic, it is necessary to have a lawyer completely unrelated to the reverie and community members in order to properly assess the risk.


Hi Carl,

Let me remind you that you charged the community $90,000 for a playbook with the following deliverables:

Matrix of legal entity options

(insufficient information - 3 paragraphs per entity - no reference to laws and regulations - could have obtained more information from google, contained factual inaccuracies, a summary of a summary basically)

Operational procedures (e.g. how to set up bank accounts, wallets, and the like)

(no detail was provided re. Setting up of banks, due diligence required and kyc/aml procedures undertaken) (re. Wallets, you just stated - set up a Gnosis safe and use these tools for recurring payments)

Legal agreements and templates

(these were also not provided and are thus another section which is missing).

Sharing recommended DAO tools

(only 3/4 were shared - can find more by, again, doing a google search) Tips on transparency and community engagement (do I really need to comment on this?).

@carlbergman , you seem to forget that i’m not a traditional lawyer but rather, that this is my bread and butter. I have advised on these matters in the past (and successfully) and can see through the sheer disappointment that is this Playbook.

For $90,000 - I did indeed expect 100 pages Carl. You recited already existing data and concepts, and used a lawfirm (which does not even have a website by the way) which provided ineffective data on these entities (you can obtain more detailed data from, again, Google).

Furthermore, I reiterate for the one hundreth time, you are NOT launching subDAOs here Carl - you need to stop gaslighting and manipulating the community into thinking so. You are launching Trusts which potentially trigger Guernsey’s Virtual Asset Service Provider laws (you do not even know whether your own trust - the DGP - triggers these laws - which it probably does).

In conclusion, for 90,000$ I did not expect a 'friendly introduction to each concept. Had I wanted to do that, I would have performed a google search and performed 10x the information contained in the Playbook free of charge. Let’s also be very transparent and clear here Carl - every section of the Playbook is high-level, not just the legal section.

Thanking you in advance.


Thanks, couldn’t agree more. 2 questions:

  1. Why do you think the Guernsey VASP regime would apply to Reverie?
  2. Why do you think the Trusts carry AML/CFT requirements?

Also, these trusts seem fairly easy to set up – you select the roles and have the agreement executed and viola – it’s done. If Reverie can’t facilitate this, then who else would be better for this role (given that the Playbook is pretty deficient on details)?


Hello sir!

The current DGP might trigger VASP laws (and Reverie was not aware of this but I had to point it out to them via Discord). Let me post my comment:

Anyone can be categorized as a VASP if the entity in question performs VASP services.

I’ll post my analysis below - this is not being done to be rude in any way but rather in the interests of dYdX and, in this particular case, also in the interests of Reverie. Let me elaborate.

On a Commonwealth reply a few months ago you stated that Reverie “convert DYDX to USDC as needed”, “we find that roughly 50% of our grants were issued in USDC, so it’s safe to assume a 25% to 50% conversion total”.

Under the new Guernsey Lending, Credit and Finance Law (which contains VASP-specific provisions), it is stated that: “persons shall not provide or carry on, offer to provide or carry on or hold themselves out as being willing to provide or carry on, by way of business, in or from within the Bailiwick, any of the following services or activities in relation to virtual assets

There is a list of virtual asset services, but these would be the ones that Reverie is carrying out through the Trust - well, actually, that the Trust is carrying out following the suggestion of Reverie (as Reverie is the enforcer of the Trust):

"(a) exchange between virtual assets and fiat currencies,

(b) exchange between one or more forms of virtual asset,

(c) transfer of virtual assets,

(d) safe-keeping and/or administration of virtual assets or instruments enabling control over virtual assets,"

Reverie is, exchanging between one or more forms of virtual assets (dYdX to USDC), transferring virtual assets (payments to grantees are transferred to such grantees), and safe-keeping and/or administration of virtual assets or instruments enabling control over virtual assets (it custodies the funds of the DGP allocated to it by the community). As per the above, persons shall not provide or carry on any of the virtual asset services listed in this section of the law (Refer to section 17).

To carry out the aforementioned, you’d need a VASP licence granted by the Commission.

Also, as per 17(3) any person who contravenes these provisions is guilty of an offence.

Refer to section 75 for the penalties that could be imposed."

“I mean no malice here - my worry is that for unincorporated bodies (the trust in this case) penalties are paid out of the assets of the Trust - i.e. the funds which were directed by the community to be used for grants.”

Furthermore @VonNeumann2022 - Re. AML/CFT - these apply to all types of bodies including Trusts. Furthermore, the setting up of trusts PROPERLY, should be assessed rigorously and not taken for granted as is being done by Reverie. There are several regulatory implications associated with operating a trust re. virtual assets, aml/cft. Whether or not Reverie is satisfying its obligations under Guernsey law, I do not know. Yet, they were not aware of these VASP laws (but proceeded to instruct community members to set up trusts anyways - thank god they refused).


Thanks for the reply. I wasn’t of the new VASP laws, and frankly, based on what you wrote, it seems that wrapping any kind of DGP in a Guernsey Trust is not going to be possible since all transfers are implicated, unless the Trust is licensed…

As far as AML, yes, they should be ensuring that grant recipients are not any kind of sanctions/restrictions list (geographically or otherwise).

Hi @Immutablelawyer Thank you for sharing your thoughts - we always appreciate different perspectives and feedback from the community. The published playbook is just the first version of the playbook, and was published with the intention of soliciting community feedback. It is meant to be continually iterated upon as a resource, and community input is an important part of that. As we learn more about operating and maintaining subDAOs, we will update the playbook where appropriate.

To answer your question on playbook scope - we aimed to provide sufficient detail on an overall structure, but the playbook has certain limitations. For example, this playbook is not meant as legal advice and is not intended as a substitute to legal counsel. The goal is to provide an initial structure for contributors to build off of. Additionally, we are limited in how specific we can be in certain areas. DAO Tooling, for example, looks different in Cosmos compared to Ethereum today. Any information published about DAO tools in Cosmos will likely be outdated by the time v4 launches later this year. We opted for simplicity and accuracy of information over including every possible piece of insight. We will update relevant portions of the playbook when new information is available.

To summarize - the goal of this playbook is not to account for all possibilities and edge cases, nor is it intended as a replacement for legal advice. Instead, this playbook is intended to offer practitioners insight into what it’s like to setup and scale a subDAO, using the experiences and lessons from the Grants Trust and Ops Trust. Nonetheless, it’s helpful to hear feedback on specific sections.

To answer the question on subDAOs:

DAOs are a subjective construct, and there are many definitions depending on your perspective. Similarly, subDAOs can be defined in different ways. The goal of this playbook is not to strictly define what DAOs or subDAOs should be, in all cases.

Instead, this playbook is an attempt to offer a perspective on potential operational and legal processes that can be helpful for users interested in setting up and scaling their own subDAOs. For this playbook, we define subDAOs strictly as contributors managing functions for a community - and offer some supporting structures to help make it a viable path forward.


Thank you for sharing your thoughts - it’s important that readers ask questions and point out areas they have feedback or questions on.

Your concerns around the DGP and DOT being subject to VASP licensing requirements are incorrect - it only applies to persons carrying out these services from within Guernsey itself, or if they are residents of Guernsey. These do not apply to the Trustees or Enforcers of the DGP or the DOT, so VASP licensing requirements do not apply.


Hi Derek,

Won’t waste a lot of time with my response here as it is apparent that you and your team are not knowledgeable in this area. I enjoy seeing you even lobby for Forum likes though - it is amusing.

As I said to Carl, you charged 90,000$ for a Playbook which lacks sufficient information in all areas that were promised. You are limited in how you can be in specific areas because you do not have the pre-requisite knowledge to be specific (this is a fact based on previous correspondence, podcast conversations, and overall approach).

I will reiterate because you disregarded my points (the usual Reverie tactic):

Let me remind you that you charged the community $90,000 for a playbook with the following deliverables:

Matrix of legal entity options

(insufficient information - 3 paragraphs per entity - no reference to laws and regulations - could have obtained more information from google, contained factual inaccuracies, a summary of a summary basically)

Operational procedures (e.g. how to set up bank accounts, wallets, and the like)

(no detail was provided re. Setting up of banks, due diligence required and kyc/aml procedures undertaken) (re. Wallets, you just stated - set up a Gnosis safe and use these tools for recurring payments)

Legal agreements and templates

(these were also not provided and are thus another section which is missing).

Sharing recommended DAO tools

(only 3/4 were shared - can find more by, again, doing a google search) Tips on transparency and community engagement (do I really need to comment on this?).

You opted for simplicity and accuracy - you achieved simplicity as this could have been drafted by an intern - and you failed in accuracy as the information is misleading. Furthermore, cease the narrative of ‘setting up a subDAO’ - such a thing does not exist Derek. I expect a certain level of competency which Reverie has shown a blatant lack of.

re. DAOs; Unfortunately Derek, you are not one to comment on DAOs as you do not have a single clue on this matter (again, based on fact, previous correspondences, etc.). A DAO is not a subjective construct at all - it is a north-star to aim towards which cannot be achieved unless you are - DECENTRALISED - AUTONOMOUS - and have an organised COMMUNITY. The dYdX Community is neither at this point. Thus, the inexistance of a DAO presupposes the inexistance of a sub-set of that DAO.

Again, you charged $90,000 for a document that has parts allegedly drafted by ChatGPT - and with information taken from other writers on DAOs, DAO Structures, etc.

All in all, an utter disappointment. Lest we forget that your co-founder was advocating for dictatorship models in DAOs, and was actually advocating for centralised decision-making in dYdX. How anyone expects you guys to have a clue re. what decentralisation is and how to achieve it - is beyond me. Blocking users that speak out will not work Derek.

There are only so many mistakes and bad repute you can take on before Blockchain Capital refuses to give you its voting power. When that happens, you will be out of this Ecosystem.

Have a good day Derek!

Hi Derek,

By the looks of it you’re trying to be a jack of all trades here. Your argument here is flawed.

Let me explain why - I enjoy educating Reverie.

  1. (1) Subject to the provisions of this Law, persons shall not carry on
    or hold themselves out as carrying on a business specified in Part A of Schedule 1 (a
    “financial firm business”) in or from within the Bailiwick except under the authority
    of and in accordance with the conditions of a licence granted by the Commission
    under section 23 (a “Part III FFB licence”).

You are carrying out these VASP Services from within Bailiwick as the Trust is set up in Bailiwick (Guernsey).

(2) Subject to the provisions of this Law, and without prejudice to
subsection (1), a Bailiwick body shall not carry on or hold itself out as carrying on a financial firm business in or from within any place whatsoever except under the
authority of and in accordance with the conditions of a Part III FFB licence.

You not only carry on a VASP Business - but you also hold yourself out as being capable of carrying this on as you submit proposals stating that you will set up a Trust to carry such VASP services by virtue of the Trust.

I have explained to your colleague Carl the numerous VASP services you are providing by way of business (as you are getting remunerated for them) - Custody of the community’s funds, Transfer of Funds (to grantees and transfer to other entities) and exchange of virtual assets for other virtual assets (conversion of dYdX Tokens to USDC).

By way of a sidenote, all of this was confirmed to me by the Guernsey Financial Services Commission. Hence, not only is my reading of the law correct (which you expect as I am a lawyer you know), but the GFSC has also confirmed that the operation of VASP service through a Trust (deemed to be an unincorporated body), would trigger VASP laws and that a Trust used for the manner Reverie is implementing it for is indeed, currently, triggering VASP Laws. Yes Derek, even where the Trustees are not Guernsey residents.

Your disregard for this fact will lead to loss of community funds once penalties are incurred. You are showing gross negligence in regard to your role as an Enforcer which directly breaches the Trust Deed.

Had you very flawed reasoning been correct, exchanges would offer their services through Guernsey Trusts to circumvent regulation. Some common sense is always beneficial.

Have a good day Derek!

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Nice to meet you @georgebeall with you critical mission to like Derek’s posts. First steps in the community are the most important!