Hi tony,

Regarding the selection of board members, that will be performed by myself, dave hodgsons and david mansell. Should the trustees have any issues, or if we are not performing, which they would know as early as the end of Q3, they can remove us, shut the fund down or replace individuals. The governance structure is that way intentionally. How the trustees are selected, ive outlined in another post.

As for centralisation, I think i should outline the current issues with NCF as an example of why the centralisation you are talking about is actually exactly what the funds needs.

Currently the NCF has 5 cosignatories. I am one of them. I am also on the NCF committee to review and process proposals and milestones, so i see every moving part of the fund. The current committee is made up of volunteers, the majority of which are actually foundation employees.

To be more explicit:

24 committee members

14 are foundation

10 are not foundation

Approx 18 are inactive

Approx 6 are active or semi active Of which 2ish are community members

Approx 1-3, historically, verify milestones and review proposals because few want to do it, its a lot of work Milestone verification is always fewer, even though it’s more important

1 has the ability to make a transaction go through (me)

If i say no, it doesn’t go through.

This, is centralisation of power at its finest. The legal structure of the fund is decentralised, the management is geographically dispersed, but the power within the organisation is incredibly centralised. .

Generally i have taken up the lead role. This is partly due to my being a cosignatory and being quite active. This in itself is not so much of an issue, except that i shouldnt be the point of connection between decision and payment being processed. The other cosignatories of the fund are currently not and most likely will not be involved in the NCF processes. Therefore they relied on my vouching that milestones are completed and verified by committee.

Compounding this issue is that because the foundation has orders to remain “hands off” the fund, the decision making generally fell on the shoulders of volunteers, a very small minority of the NCF committee active participants. Generally there is little visibility for the cosignatories into the decision making process of the committee, and vice versa, so it would be very easy to falsify a payment. Given the fund is distributing 100’s of thousands of dollars regularly, this isn’t such a good system. This is not how the system should work and is difficult to fix without extreme measures that disrupts the status quo - hence this proposal.

It reached a point where possibly as few as 1-3 people, would review a proposal, or a milestone submission and because the majority of the committee are inactive, are foundation members, or a bit nonchalant or disinterested or busy, or over worked, its not done correctly in many cases and committee vote is practically non-existent and/or worthless. once approved and i would take a payment request to the cosignatories, announce the transaction and request they sign the transaction else nothing would progress at any kind of a reasonable pace.

This is a precarious situation, having one person as the connection, as one mistake or one bias decision could be deemed as an abuse of power.

There is also a legal concern. Many of us are publicly known, and if the funds distributed were ever used for criminal activity, the whole committee could be investigated by authorities with no resources or liability insurance. Thats not ideal by any means.

There does not need to be a legal entity in place for a centralised power structure to form and that is what has inadvertently happened. A transition to Nem Ventures would actually be far less centralised from a practical point of view, even if more central from a legal point of view.

Further, because there is literally zero oversight as to what happens to the funds, it’s quite possible that the funds paid out are embezzled, paid off to committee members to approve things, provided to terrorist organisations - which would probably have me investigated by a plethora of legal authorities and possibly put in prison, the project could just be an out and out scam and we wouldn’t know until its too late, a bill could be charged at 100x the value of what it should be to justify a payout and split the difference between entities involved. We just don’t know what happens to those funds, and we have zero legal protection for when something serious goes wrong - and at some point it will.

I understand the concerns about corruption and centralisation, and i share those concerns. The governance structure of Nem Ventures and the Trust has been set up to prevent such occurrences and move away from an already highly centralised, easily corruptible, easily cheated, broken system.

This proposal is intended to correct these issues and prevent any of this happening again while bringing sustainability to the ecosystem. Yes, it’s possible that there may be some malpractice by an individual or group with il-intentions, but with the oversight of the trust, audits and legal requirements of disclosure and so forth, the risk is MASSIVELY reduced and the onus of responsibility placed on those that can legally face retribution should there be malpractice and who also have an interest in making this initiative a success.

Finally, the current anon cosignatories could someday just simply decide “i want a bit of that”, send to an exchange, dump and walk off into the sunset on some tropical island. I doubt that would ever happen, but it IS a risk and possibility, and yes, it IS a possibility with the new trust, but its much less of a possibility because the parties involved would be known and legally accountable for the funds under their trust. This proposal is not about eradication of risk, or whether the fund becomes centralised or not. it’s about drastically reducing the risk already present and real, undoing the pre-existing power centralisation while bringing other initiatives and opportunities into the fray. I really cannot stress how serious the current issues and risks are, that are present in the current system and that get completely ignored. If the system worked well, this proposal probably would never have been written in the first place. Something has to be done.

The committee have done great things, and the successes so far are a testament to the work the committee has done, but the massive increase in demand on the fund has stretched the DAO organisation beyond repair and puts the fund itself at huge risk of complete depletion in less than 1-2 years. With little to no resources, the situation has deteriorated. Which is why i have formed a highly qualified team, with decades of experience and put this proposal to the community.

I really hope this sheds some light on the reasons as to why this proposal was born in the first place, and i hope now that those who did not realise the issues we are facing, that you will support this push to correct things.