MakerDAO to set aside 5 million DAI for legal defence

The developers behind the decision stated that the expenses related to legal defence cannot be covered by traditional insurance

  • Published:
  • 06/02/2023 04:46 PM

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MakerDAO has approved the creation of a fund dedicated to covering expenses related to legal defence. This was announced in a tweet on February 1.


MakerDAO is the creator of the Dai stablecoin, which is pegged to the US dollar. The developers have stated that 5 million DAI will be set aside to reimburse any legal defence costs in case of legal or regulatory action taken against specific participants of MakerDAO.

The announcement further explained that the legal defence coverage would initially be provided to certain individuals, including Recognized Delegates, Core Unit Facilitators, permanent contributors of the Core Unit, and active holders of MKR. The legal action taken against the beneficiary must be directly related to their activities within MakerDAO.


The developers behind the decision stated that the expenses related to legal defence cannot be covered by traditional insurance. As a result, the MakerDAO Defense Fund has been created to serve as a self-insurance tool for its participants.

On the other hand, the existing DAI foundation fund is utilised to take legal action against third parties that infringe on MakerDAO's intellectual property.

MakerDAO stated that an external technical committee would be responsible for managing claims and payouts. The committee will have the power to recommend the approval or rejection of claims based on submissions.

Additionally, a controlling committee will review the recommendations of the technical committee and make the final decision on the claim. If the claim is approved, the funds will be paid out in a single payment.

In the decentralised autonomous organisation (DAO) industry, there have been growing concerns over the legal standing of many entities and the laws that should apply to their operations.

Some experts believe that developers can be pressured by community members to carry out illegal actions, which would not be considered a valid defence in most legal courts. This is not a problem specific to MakerDAO but is a concern in the overall DAO industry.

The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash