The following is not legal advice, and we are not experts. Seek professional legal advice for your specific project needs.
Every project has some governance. Even a purely hypothetical model train project in your basement is governed by you as the sole director. When two or more parties are involved in a project, it is important to agree to governance up front to avoid and arbitrate disagreements.
Governance is typically done by organizing the project as a corporation, non-profit, foundation, or another contractual format.
There are three basic organizational structures we recognize: informal, incorporation, and decentralized cooperation.
If there is only one person working on a project, it is an informal dictatorship. The project has no legal or organizational identity outside of the person.
If that person incorporates the project, the corporation will exist under a legal jurisdiction and most likely have its own bylaws. This provides a layer of protection between the stakeholder and the user, but also formally enters the project into a world of rules, regulations, and obligations.
On the opposite extreme, the project could organize itself and even its code around a cryptocurrency token, creating a custom, tech-powered governance model. Blockchain technology is making experimentation in the area of governance easy for the first time in human history, and Deginner is committed to facilitating innovation in this area.
This is the natural state of any project. One or more individuals are contributing to it under no special organizational structure. They may have determined a license and ownership of the project, but these are held in the names or pseudonyms of the individuals.
- Most github repositories.
- A website about an individual person, regardless if the content is business or social oriented.
- Basement startups (new, high tech)
- Microenterprises (any age, often in undeveloped area)
The most traditional method of formalizing a project is incorporation. This gives the project a separate legal identity from its contributors. This new identity can now enter contracts, raise and manage funds, and otherwise act independently of said contributors. Of course, it is just a shell without the people behind it.
The legal jurisdiction determines many key aspects of how a corporation will function and what obligations it will have. For instance, incorporating in a certain state could give tax advantages, but also may come with additional regulatory or reporting requirements.
Depending on the jurisdiction, there may be different types of incorporation available for a given project. In the United States, for example, there are C-corps, S-corps, LLCs, Non-profits, Not-for-profits, and more.
Corporations have shareholders, who own stock in the company and often have voting rights. In addition, most corporations have a board of directors, as well as an acting cheif executive.
Corporations can have internal rules of governance, known as by laws. In fact, this is usually required, and many standards and templates are available for different jursidictions.
The term Decentralized Cooperation (abreviated "DC") comes from the backfeed project, and is described by them as:
the spontaneous contribution of agents eager to achieve a common goal,
with no central coordinating, monitoring or ruling authority.
In fact, many variations on this definition are being experimented with, as recent technological advancements have unleashed orders of magnitude more freedom than ever before. Though we will use the term Decentralized Cooperation, we want to provide some examples of similar terms.
- Open Venture - A for-profit project or business that uses primarily open source technology to achieve its goals. The broadest term defined on this page, it also encompasses informal projects.
- Appcoin -
Allocate scarce resources in the network using a scarce token – an “Appcoin”. Users need this Appcoin to use the network. Owners of scarce resources get paid in Appcoins.(startupboy.com) Examples are Etherium, Storj, and Factom. - Tiered Network - By creating specialized tiers within a distributed network, roles and responsibilities can be managed. The protocol and network participants enforce governance. Examples of this are Dash, and Decred.
- Git Guild - An as-yet experimental governance model using git and PGP. Developed and used by Deginner.
A DC is often times used in coordination with a corporation. For instance, a foundation could be established with a board and ownership of intellectual property and funds. This foundation is a legal entity whose sole purpose is to protect and facilitate the operations of the DC network.
It is possible that a DC could also control a legal corporation through a combination of by laws and technical protocol. As far as we know, this has not yet been accomplished in practice.