This is not legal advice. It is a list of questions and flags to take to qualified counsel in the relevant jurisdictions. Nothing here has been reviewed by a lawyer and nothing here should be relied on as a legal position.
Core framing and its weak points
SPEC.md frames payouts as protocol fee rebates for holding a token, not an investment contract promise. That framing depends heavily on facts, and regulators look at substance over labels. Questions for counsel:
- Securities or similar classification. Payouts to holders that come from a platform's fee revenue, scaled by how long a holder keeps the asset, could be argued to be profit sharing. Does the structure create an expectation of profit from the efforts of others in the jurisdictions where we operate or offer access? The tenure bonus increases the resemblance to a reward for passive holding.
- Creator role. Creators launch the tokens. Who is the issuer for regulatory purposes: the creator, the platform, or both?
- Platform as operator. Does operating the launchpad and a treasury that pays holders count as a regulated activity (exchange, broker, money transmission, collective investment scheme)?
Copy and marketing flags
- Never promise returns, income or yield, and never imply payouts are steady. This applies to site copy, docs, video, social posts, creators' posts and replies.
- Avoid words such as "earn", "passive income", "guaranteed", "APY", "APR" in anything public.
- Any market figure must be marked unverified until independently confirmed.
- Public examples must be labeled as arithmetic illustrations.
- Creators must be bound by terms that forbid return promises about their tokens.
Access and eligibility
- Decide on geoblocking or eligibility rules (for example, jurisdictions with strict token rules, and sanctioned regions).
- Decide whether any identity or eligibility checks are needed, and what the product does with the data it collects.
- Decide a sanctions screening approach for wallets receiving payouts.
Tax and reporting
- Payouts are likely taxable receipts for holders in many places. Decide what information the platform provides (epoch history export) and what it states (nothing that reads as tax advice).
- Platform and creator fee income have their own treatment. Entity structure is a founder and counsel decision.
Terms and disclosures
To be drafted with counsel:
- Terms of use, including disclaimer of returns, risk of total loss, no guarantees about payout timing.
- Treatment of delays, restatements and the 30 day expiry of unclaimed amounts. Confirm that expiry and rollover is acceptable.
- Dispute process and its non-binding nature.
- Limitation of liability for incidents, indexer errors and third party program failure.
Third parties
- The distributor, launch SDK, data provider and multisig software are third party. Check each license and terms for commercial use and any usage restrictions.
- Code copied from other repositories needs attribution and a license check. Do not import across repositories.
- Brand: confirm that the name DWELL and the chosen mark do not conflict with existing marks in relevant classes. Trademark search is not done.
Entity and custody
- Which legal entity owns the multisig and the revenue?
- Signer roles and their liability. The founder holding a signer role should be considered with counsel.
- Consumer protection: what happens if a bug underpays holders. Reserve policy and restatement policy should be reviewed.
Items needing a founder decision
- Choose counsel and jurisdictions to review. [FOUNDER GATE]
- Approve geoblocking and eligibility approach. [FOUNDER GATE]
- Approve terms and risk disclosure text. [FOUNDER GATE]
- Decide entity structure. [FOUNDER GATE]
- Decide whether the pilot proceeds before or after legal output (recommended: after, see ROADMAP.md).