[Proposal] Establish Fluid Foundation

Proposals
1

Summary

This proposal covers changes that move Fluid Protocol toward full community ownership and long-term sustainability:

  1. Establish the Fluid Foundation and transfer all Fluid Protocol IP rights to it, placing them under DAO governance control.
  2. Approve a $250,000/month grant from the DAO treasury to the Foundation to fund ongoing protocol operations, technical development, and growth.

Motivation

A DAO by itself is typically an unincorporated structure where decisions are made by token holders through voting. While this works well for transparent governance and on-chain execution, it exists in a legal gray area. As Fluid grows — particularly as we engage with institutional partners and navigate off-chain regulatory requirements — this needs to be addressed.

A foundation acts as a recognized legal entity that serves the protocol. It does not have traditional owners; it operates through custodians and directors who are responsible for maintaining and administering it in line with its stated purpose. Establishing the Fluid Foundation allows the protocol to meet AML, KYC, banking, and regulatory requirements when interacting with off-chain counterparties, without compromising the decentralized governance that token holders have today.

The constitution and intent of the Foundation are to serve the protocol and ensure the long-term sustainability of Fluid and the broader ecosystem. Funding and mandates will come exclusively from DAO grants, and token holders will continue to retain oversight over objectives, budgets, and major decisions as they do now.

Alongside the Foundation, the Fluid team is committing all intellectual property — frontend domains, smart contracts, and related assets — to the Foundation. Instead of these assets remaining with the team or early contributors, they will transition into a neutral, mission-aligned entity: the Fluid Foundation. This gives token holders real, enforceable control over Fluid’s IP for the first time.

Part 1: Establish the Fluid Foundation and Transfer IP Rights

What is the Foundation?

The Fluid Foundation is a purpose-built, non-profit legal entity (Cayman Islands) whose sole purpose is to hold and steward the Fluid Protocol’s intellectual property on behalf of the DAO. The Foundation has already been incorporated; this proposal authorizes the formal transfer of IP rights to it.

In legal terms, a foundation does not have traditional owners. It operates through custodians and directors who are responsible for maintaining and administering it in line with its stated purpose — which is to serve the protocol and ensure the long-term sustainability of Fluid and the broader ecosystem.

What transfers to the Foundation:

  • All Fluid Protocol smart contract code
  • Front-end interface code and related assets
  • The Fluid brand, trademarks, and associated IP

Once transferred, these assets belong to the Foundation — not to any individual, company, or labs entity. The Foundation cannot be owned; it is governed by its constitutional documents, which give $FLUID token holders ultimate authority. Token holders can direct changes to Foundation policy and, in an extreme case, dissolve the Foundation entirely through a governance vote.

How Foundation Governance Works

The Fluid team acts as custodians of the Foundation — not owners. We hold director seats to manage day-to-day operations, but token holders hold the ultimate power. Any significant decision can be brought to a governance vote, and the Foundation’s structure ensures that no single party can capture it.

This mirrors how some other mature DeFi protocols are structured: a legal entity that provides IP protection and operational clarity, fully accountable to on-chain governance.

Operational Transfer Timeline

The IP transfer and related legal work are expected to be completed by mid-2026. We are engaging a local Cayman Islands legal counsel to ensure the transfer is executed properly. We will share updates with the community as this process progresses.

Additionally, as part of this proposal, the team will work to transfer ownership of all EVM chain deployments (currently, only Ethereum is under direct governance) to DAO governance, further cementing community control over the full protocol.

Part 2: $250,000/Month Grant to the Foundation

Rationale

The DAO treasury is funded by protocol revenue. It is appropriate for the DAO to formally allocate a portion of that revenue to fund the team responsible for maintaining and growing the protocol. Routing this through the Foundation also enables the Foundation to meet off-chain obligations — banking relationships, legal agreements, regulatory requirements — that a DAO alone cannot fulfill.

We propose a $250,000/month budget for operations and management, distributed as a grant from the DAO to the Foundation. This covers:

  • Core engineering and smart contract development
  • Protocol operations and infrastructure
  • Business development and integrations
  • Security and risk management
  • General team and organizational expenses

The Foundation will use these funds to cover operational costs, including payments to the development company responsible for building and maintaining Fluid.

Implementation

Revenue is currently generated across multiple chains. We will consolidate revenue from all chains into the Ethereum treasury on a quarterly basis (or more frequently as the process matures), and the monthly grant will be disbursed from there. This grant will begin in the month following governance approval.

Summary of Changes

Item Current State Proposed State
IP Ownership Founding company entity Fluid Foundation (DAO-governed)
Team Funding Funded via past raises $250k/month DAO grant to Foundation

Next Steps

  1. Community discussion on this forum post — please share feedback, questions, and concerns.
  2. Snapshot vote pending community input.
  3. Legal execution of IP transfer to Foundation, targeting completion by mid-2026.

We believe these changes collectively represent a significant step toward making Fluid a truly community-owned protocol. We welcome all feedback.

6 Likes
2

According to DefiLlama, the Fluid Protocol has generated about $110K of revenue per month on average since inception, mostly driven by a boom in 2024. Assuming Jupiter Lend revenue to Fluid (also sourced from DefiLlama) remains stable at an average of about $149K/mo, this puts total revenue for Fluid at $259K/mo using current numbers. Venus Flux revenue is not included here as it has relatively low TVL (due to it being a recent product), which would impact the numbers only slightly.

Under this proposal, over 96% of this identified revenue would be flowing directly to the new Foundation. This feels like a very high price (and risk) to pay for the benefits outlined in this proposal, which ultimately boil down to:

  • IP ownership, and
  • Facilitating institutional access.

While these would benefit FLUID holders, two questions came to mind when evaluating the proposal:

  • Is the Fluid IP ever really at risk under the current structure?
  • Is an annualized $3M the right price?

We believe that the answer to both questions is a clear no. For this reason, we propose a different funding structure that will ensure long-term Foundation alignment in the form of a lower base compensation for the foundation, but also the addition of a ‘commission’ structure, where in times that the Fluid Protocol generates more revenue, the Foundation can still benefit from booms. A simple implementation could be as follows:

Foundation Compensation = max(B, R * f), where B is a base compensation amount, R is the protocol’s revenue, and f is the commission factor.

This way, FLUID holders can ensure that the Foundation remains aligned with the token holders, while still funding the Foundation correctly. For example, using a base compensation of $50K/mo and a commission of 50%, YTD the Foundation would have been paid out a total compensation of an estimated (using the same DefiLlama statistics) $550K, an extra $50K over what the current proposal is asking for. However, throughout early 2025, Fluid reported losses, which caused FLUID holders to experience a much larger drawdown than the wider market (CoinGecko FLUID vs BTC*). In a situation like this under the proposed structure, the Foundation would be getting paid the exact same as during revenue booms, no incentive for the Foundation to improve revenue, while holders bleed. During this period, the base compensation would be applied to allow the team to cover basic expenses. Note that these are just exemplary numbers to demonstrate the mechanism.

Overall, the proposal is tempting, but requires either:

  • A breakdown on how the $250K/mo will provide FLUID holders with adequate value, and drive protocol revenue long-term, or
  • A restructure of the compensation plan

before the Fluid DAO should apply this change.

1 Like
3

good move! strongly support

1 Like
4

Very supportive of this proposal.

Doing this before a potential equity+token ownership conflict arises is smart. Aave is going through similar discussions now but under tension. Fluid is getting ahead of it.

I think many in crypto want to understand how Foundation structures actually function day to day. Would be valuable if you could share more on:

  • How does a token holder actually exercise “ultimate authority”? What’s the process to propose changes to Foundation policy or challenge a director decision? Imagine someone tries to do a coup d’etat lol
  • Can the Foundation take on debt or liabilities that token holders would be responsible for??
  • What happens if the Foundation gets sued? Who bears the legal costs and liability? Curious how this works.

Since this is a new ‘meta’ for DAOs I think many are curious about practical functioning.

5

Hi,

Defillama data is incorrect; you can check more precise data at Token Terminal. For example, over the last 365 days, the revenue has been $10M.

The $250k monthly budget does not cover only IP ownership and institutional access. The Foundation will use these funds to cover expenses for the growth, engineering, risk, security, finance, marketing, and operational functions required to maintain and scale the protocol. To make it clear, the Foundation itself does not require a budget nor charge the DAO for its own operations.

$3M annualized, in my opinion, is not a high price for the Fluid team to maintain and develop the protocol. It is multiple times lower than the budget of any competitor’s funding.

1 Like
6

Hi Ignas,

  • Token holders have to submit a governance proposal for changing the foundation policy, etc.
  • The foundation is a separate legal entity, so any liabilities sit with the foundation itself. $FLUID token is not an equity token but a governance token under MiCA. Holding tokens does not mean holders have ownership (in a legal sense) in the protocol or the foundation (foundation does not have owners) - so that means token holders liablities are nil.
  • If the foundation gets sued, the foundation itself bears the legal costs and any liability.
    claims are made against the foundation, not against tokenholders or directors.

It is very important to understand that in the legal field, token holders and DAO have no rights; this is why we are creating a legal wrapper that can now have ownership rights over the protocol, and this foundation has no ownership. The Fluid Foundation is a purpose-built, non-profit legal entity (Cayman Islands) whose sole purpose is to hold and steward the Fluid Protocol’s intellectual property on behalf of the DAO.

7

Hi, just wanted to clarify that the numbers provided in the comment you quoted don’t match DefiLlama’s numbers, as you can see in this monthly revenue chart. The revenue reported in the last 365 days is $11.35M (higher than Token Terminal because it includes Fluid DEX revenue).

8

Thank you, I did not verify that statement myself, now it makes sense!

9

The current proposal has been escalated to a Snapshot vote.