Fluid DAO is considering a proposal to transfer all intellectual property of the DeFi platform to a foundation in the Cayman Islands, and to approve a monthly grant of $250,000 to fund its development and operations.
The proposal was submitted on Monday, February 23, by DMH, the COO of Instadapp, the company behind Fluid. It calls for the creation of the Fluid Foundation, governed by DAO votes, a well-known business setup for crypto organizations.
Under the plan, “all Fluid Protocol smart contract codes,” front-end interfaces, domains, trademarks and related assets would be transferred to the foundation. Once completed, the assets would be “owned by the Foundation – and not by any individual, company or laboratory entity,” DMH wrote.
According to the proposal, the foundation would have no owners and would operate through custodians and directors. Its sole purpose would be to store and manage the protocol’s intellectual property on behalf of the DAO.
“The Fluid team serves as trustees of the Foundation – not as owners,” the proposal said $LIQUID token holders maintain “ultimate authority” through governance.
Control remains with DAO
The proposal states that a legal entity is needed as the protocol, which now has a total value of more than $1 billion (TVL), expands and collaborates with counterparties off-chain. A basic structure would allow Fluid to meet “AML, KYC, banking and regulatory requirements” without changing how token-based governance functions, the proposal argues.
Token holders would also retain the power to change foundation policies or close them down completely. The proposal says that holders “may, in an extreme case, completely dissolve the Foundation through a board vote.” DMH further elaborated in a response to a comment on the proposal:
“It is very important to understand that token holders and DAO have no rights legally; this is why we are creating a legal wrapper that can now have ownership rights over the protocol, and this foundation has no ownership.”
To fund the structure, the DAO is being asked to approve a monthly subsidy of $250,000, or approximately $3 million per year from the treasury, which will be funded through protocol revenues. According to DMH, the budget would cover engineering, infrastructure, security, business development and general operational costs.
‘Foundation will bear the legal costs’
Fluid features a decentralized lending and borrowing protocol, as well as a swap interface. That combination gave Fluid about $1.2 billion in TVL and generated about $1.1 million in revenue in January, according to DefiLlama data. In August, the platform recorded record revenue of $1.52 million. If we take Fluid’s best revenue month yet, the subsidy would eat up about 16% of those monthly revenues.
Fluid’s TVL and revenue. Source: DefiLlama
If approved, the legal work to transfer the intellectual property is expected to be completed by mid-2026, with Cayman Islands advisors handling the process. The team also plans to move ownership of all EVM deployments under direct DAO management.
Some expressed concern about liability if the foundation were taken to court. DMH said in response that “if the foundation is sued, the foundation itself will bear the legal costs and any liability.”
In the last 24 hours, $LIQUID fell 6% from about $2 to $1.88, but has since recovered to $1.96.
The Defiant reached out to Instadapp for comment on the proposal but has not heard back at the time of writing.
Late last year, a fee-related dispute between the two main entities behind Aave – Aave Labs and Aave DAO – turned into a broader debate over how crypto organizations should be structured.