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The Defense Fund will be created immediately following approval coming directly from the Marker Government. The Defense Fund is expected to play a sizeable role in reimbursing active MakerDAO participants for all of their legal costs. This development has been shared by Maker through its official Twitter handle.
The maker further said that the dedicated fund will have the possibility of 5 million DAI acting as a means of self-insurance, a risk management technique that allows it to cover costs in the future when risks cannot be transferred through traditional techniques.
Called Special Purpose FundThe Defense Fund will come in handy during situations where legal or regulatory action needs to be taken against certain participants of MakerDAO.
Coverage under the Special Purpose Fund will be prioritized in the following way:
- Recognized Delegation
- Core Unit Facilitator
- Core Unit Permanent Contributor
- MKR holders
Claims and payments will be finalized after being reviewed in two separate steps. First, an external technical committee will issue recommendations on approval or denial of payments. This will be based on claims that have been submitted to insurance and risk management experts, members of which ultimately comprise an external technical committee.
Following recommendations drawn by an external technical committee, it will turn to the Supervisor, who will review the recommendations for the final call. Supervisors have the right to approve recommendations or reject them with explanations. This entire process can be seen in the Claim Procedure Manual.
Special Purpose Funds are only meant to cover legal defense costs. They will be paid in lump sum once the claim is approved by the external technical committee and financial supervisor.
Currently, Maker has made Special Purpose Fund proposals available on the Maker Forums.
It is important to note that the funds will not cover operational costs, and the approval of claims will be strictly based on the rules set out in the Claims Procedure Manual.
Makers are a group of builders working to build DAI, a digital currency that has unlimited utility, regardless of owner. Utilizing tokens has no set time as they are available throughout the day and night. Known as unbiased currencyMaker claims to have developed something that provides stability in a decentralized way.
According to details shared by Maker, more than 400 apps and services have started integrating Dai with their infrastructure. This includes DeFi platforms, wallets, and games, among many other services.
The establishment of the Special Purpose Fund follows the announcement regarding the integration of the Dai Saving Rate with a 1% increase. The Defense Fund will serve as a means of self-insurance for MakerDAO participants only.
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