The entire organization’s legal structure is tied to the treasury of an On-Chain Organization (OCO). The OCO’s tokens control the treasury. A treasury’s contract is simple to start: it only includes the initial capitalization and token distribution. The treasury augments the core treasury contract with other types of contracts such as: contributor contracts, management contracts, revenue contracts, vendor contracts, IP contracts, and illiquid asset contracts.
Contributor Contracts. If the treasury wants to incentivize contributors, it must approve new hires. Each hire will occur with the approval of a “contributor contract” that’s augmented to the treasury contract. From the onset of the contract, the contributor knows exactly what occurs in the event of termination, voluntary departure, or liquidation. For example, if the contract includes $100k payment in the event of severance, this money will be locked in smart contract escrow so that the OCO cannot choose to modify, minimize, or change the terms of termination.
Management Contracts. The OCO will delegate various responsibilities to management. For example, investors may establish that two co-founders can initiate contributor contracts. Their tokens are pledged in support of contributor contract initializations, modifications, and cancellations. Rather than having the entire OCO approve new contributor contracts, this responsibility will be delegated to those elected. Similarly, individuals may have controls over discretionary spending, but may need to get management-wide approval for large expenditures.
Revenue Contracts. If an OCO generates recurring revenue, it will be established as a smart contract. For example, a Lawyer Guild may allow clients to enter an indefinite retainer. Each month, a client may pay .1 ETH for access to a discord where they receive advice. If clients choose to cancel, there may be a penalty. Any possible penalties must be held in the equivalent of escrow to provide guarantees that there are funds for payment. For example, if there is a 3-month cancellation notice for canceling the retainer, there will always be .3 ETH locked. If payment fails, the cancellation trigger occurs automatically and the guild knows that it will still receive .3 ETH over the next 3 months. Perhaps there is a leniency period where missed payments can be completed retroactively and the cancellation process is nullified.
Vendor Contracts. This is the same as a revenue contract, but the OCO is on the “paying” side.
Illiquid Asset Contracts. This is particularly important for IP, content, and NFTs. These contracts define and contractualize what occurs in various events, including liquidation. Is IP given to specific individuals? Is it fractionalized? Is it auctioned and with proceeds going to the treasury? The contracts can only apply to on-chain assets. For example, if the OCO owns real estate, the deed must be on-chain so that the guarantees of smart contract execution occur correctly. The smart contract cannot guarantee anything that occurs off-chain.