MakerDAO announces a $5M legal defense fund

• MakerDAO establishes defense fund with first 5 million DAI.
• This fund will act as a self-insurance tool, covering only the legal defense costs of certain MakerDAO participants.
• The funds will be secured in a multisig wallet and managed by the Maker Protocol as the beneficiary.

MakerDAO, a decentralized autonomous organization (DAO) that issues the Dai (DAI) stablecoin and governance token Maker (MKR), announced Launch of a new fund to be used in case of legal or regulatory actions involving DAO participants.

The Defense Fund was created following a governance vote on the Special Funding Proposal, the Maker team said. The funds will therefore be added to Multisig his wallet for this purpose and this will be done in bulk, the platform revealed Wednesday.

MakerDAO’s $5 million defense fund

The fund will initially have a contingency budget of $5 million in native DAI, according to the platform, which will be used to reimburse certain community members for legal costs incurred.

Specifically, the defense fund covers recognized delegates, core unit facilitators, and permanent contributors. Active holders of MKR are also part of the primary group of beneficiaries.

Therefore, the defense fund is assumed to be:Self-insurance tool for MakerDAO participantsHowever, those set to benefit (as described above) must face legal action directly related to their activities on MakerDAO, the platform added.

“All claims and payments are managed by an external technical committee of insurance and risk management experts. The Commission will issue recommendations for approving or denying payments based on claims.‘, read part of a statement posted on the Maker’s Twitter account.

Maker Protocol will manage the funds as one of the parties in the Defense Fund multisig wallet.