dYdX DAO Playbook [Ops subDAO]

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


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.


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?

1 Like

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.


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

1 Like

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!

1 Like

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

Hey @carlbergman

I’m Traver from the Messari Governor team. We’ve been following dYdX governance and are excited to see the first iteration of the Playbook!

I wanted to chime in and emphasize what @derek stated; the notion of iterative governance is common practice in DAOs today. A better question might be whether the $90,000 publishing fee covers these iterations to the playbook or whether this is the final product for which the DAO will be billed.

As DAOs evolve, so do their general best operating practices. Many DAOs publish living documents that are intended to be iterated upon (e.g., Optimism’s OPerating Manual & Working Constitution). The Playbook is a solid start that prospective subDAOs can reference, and it’s encouraging to see a focus on expenses, balances, transparency, and accountability for new subDAOs.

We had one point of curiosity from the risks and pitfalls section of the Playbook: “Maintaining a decentralized protocol requires subDAOs to work independently of one another to avoid centralizing efforts.” If setting up independent legal entities restricts subDAO coordination, this is a valid concern, and it’d be nice to have an expansion upon the restrictions Reverie refers to. Coordination is the fundamental challenge DAOs face by adopting flat structures; if certain legal frameworks complicate coordination for these sub-units, then these restrictions should be communicated or addressed for new subDAOs to review.

Given the limited information available on V4 governance design, we are excited to see the progress made on behalf of the DAO in this first iteration. We look forward to seeing it evolve alongside the DAO.


Hi @t_norm !

Pleasure to have you on the dYdX Governance Forum. I myself am a user of the Messari Governance Portal and the Messari Token Reports as I use these on a daily basis in my profession (by way of an introduction, I am a Senior Legal Analyst with a crypto-focused regulatory consultancy firm).

The community’s frustration with the Playbook is that it fails to provide the needed clarity and basically reflects publicly available information - information which is free of charge. I shall link a few documents which are free and provide 30x the value and information than what this Playbook provides: (https://a16z.com/wp-content/uploads/2022/04/principles-and-models-of-decentralization_miles-jennings_a16zcrypto.pdf), (https://variant.fund/wp-content/uploads/2022/08/Sufficient-Decentralization-by-Marc-Boiron.docx.pdf), (Legal Framework for Non-U.S. Trusts in Decentralized Autonomous Organizations). These few research papers and even a post published by the Foundation itself, provide a lot more clarity (again, free of charge), as to what should be done and ought to be done than the Playbook the community got charge $90,000 for. I emphasize, these are free of charge. With regard to Reverie’s compensation, they are not an advisory/consultancy firm but are merely Grants Operators (this sub-par Playbook is an evidence of that fact) - hence, further iterations should not be charged by them but should be outsourced to competent third parties in this regard (chosen by the Community). In addition, Reverie is already adequately incentivised in the Community’s opinion (actually in the Community’s opinion Reverie is over-incentivised - I urge you to look at the Grants Channel discussion starting 5 days ago which has led to various active contributors and endorsed delegates leaving). Let’s keep in mind Reverie gets paid $55,000 per month to run the DGP and another $15,000 to run the Operations Trust. I think $70,000 per month for one client (being dYdX) is very fair compensation (especially in light of the sub-par service the dYdX Community is receiving - again this can be confirmed by venturing to the Discord Chat - I implore you not to take my word for it).

With regard to your comments re. Optimism, in my personal opinion, comparing this Playbook to the two documents cited above (which I personally reviewed and am satisfied with their contents), is an insult to Optimism.

The same Messari Article you posted contains an image of the dYdX DAO with Operations and Grants at the top and bottom. Operations and Grants are both controlled by Reverie. Now, if that is decentralised in accordance with Messari’s metrics of decentralisation, then i’d have to disagree with this reasoning. This in and of itself shows a very high-level of centralisation within the Ecosystem due to the over-reliance and what the community has now deemed ‘hijacking’ of the Protocol (through lobbied VCs - which were confirmed by Larry - co-founder of Reverie - in a message he has since deleted) (Had it not been for this VC vote Reverie would be out of the DGP - hence, the community did not want them to proceed with the DGP - Derek Hsue’s previous employer - Blockchain Capital - was lobbied to vote in their favour with almost half of the dYdX supply - a fellow community member has been investigating this since the vote - you can find an explanation post here: (Reverie's Alleged DGP1.5 vote manipulation: A Recap - #2 by RealVovochka). I want to also point out that recently, @RealVovochka also uncovered that Reverie paid Chaos Labs an undisclosed amount of $300,000 11 Months ago (coincidentally coinciding with the Chaos Labs seed round - just an observation made by several members - in no way shape or form an allegation).

Again, if, in accordance with Messari’s standards this is deemed to be decentralised, then i’d have to express my disappointment in this regard. Having followed Ryan Selkis and conversed with him in the past, I am sure that this is not Messari’s standard of decentralisation (I stand to be corrected).

I’d also like to add that these same persons you are currently praising were advocating for dictatorship in DAOs (In this regard - I implore you to make reference to minute 5:48 of the following podcast where Larry advocates for Dictatorship models in DAOs (What Lessons DAOs Can Learn from Corporate Governance | Larry Sukernik, Derek Hsue - YouTube). The goal of DAOs (which is the north-star I aim towards when thinking, commenting and contributing to this Ecosystem) is to provide users with a pseudonym-environment where contribution is appreciated, incentivised (may not be financial), and curated. However, Larry (founder of Reverie) seems to think that one of the founding cornerstones of our industry (a cornerstone first introduced by Satoshi Nakamoto himself), is actually one to be disregarded.

My reply to this statement (it contains an additional paragraph so feel free to type in a keyword of the text in the search button to read further):

As a last point, I cannot help but notice that the article you cited re. dYdX is written by Ryan Holloway, who happens to be (or so I am told), the brother of Max Holloway (a person that received $307,000 in grants funding since the start of the DGP - with his latest update on the largest grant he received for $125,000 being “Nothing yet! We would just like to initiate a conversation proactively regarding the changes to dYdX’s incentives for dYdX V4.” (by the way - he’s been working on this since August and was, I reiterate, paid $125,000 to complete it. 8 Months later, and the community has zilch). Furthermore, apparently Messari was given a 130k Grant by Reverie (dYdX Grant: Messari Quarterly Reports)? I’m sorry, but based on these facts, I cannot take your comment here as being based on your own impartial and independent view of what’s currently going on.

I also forgot to add that the current operators of this Forum (Reverie), have proceeded to censor this same Forum by choosing what to transfer from our previous governance forum (Commonwealth). Amusingly, they seem to have forgotten to migrate the following discussion (Commonwealth), which provides substantial detail in regard to Reverie’s abuses, lack of transparency, accountability, lack of willingness to take on community feedback etc. Again, maybe this is an oversight from their end (which is improbable considering they migrated all previous discussions in the DGP section). Sidenote, these same people also have - embedded in the current Forum’s Terms of Use - baked in that they have the power to ban anyone at will without providing any reason whatsoever. Their argument that these Terms were the same on the Foundation-administered Commonwealth is invalid - as the dYdX Foundation is impartial and independent, whilst Reverie is not (the fact that they did not migrate posts criticising them is proof of this).

We appreciate you contributing to the discussion. As I stated I am a fan of Messari, yet I hope your comment does not reflect Ryan’s vision and/or perspective on decentralisation. Having followed him for a while now, I am pretty sure he would have a very very different opinion than the one you posted above in relation to what’s currently going on.

It was a pleasure conversing with you Traver - I look forward to seeing Messari grow.

Wishing you the best,
Immutable Lawyer