November 2023 Recap
LexDAO now with 33% more stuffing
November has flown by and we hope you all survived family gatherings and eating more turkey than you thought you could handle. As the Fall season comes to a close and we march toward the end of this year, we at LexDAO continue advancing our goal of bringing web3 education and resources to the community. Read on to see what happened this past month.
What’s New in LexDAO
This month’s newsletter features new content written by some of LexDAO’s contributors along with member highlights. Keep reading to learn more about what we’ve been working on.
Real Estate Tokenization: Splitting Property Rights Between Parties
Written by @haroldo_msn
In this third installment of the Real Estate Tokenization series, we will begin reviewing tokenization formats where property rights are split between parties. To review, Real Estate Tokenization is simply the on-chain representation of property rights. The complete bundle of rights associated with property ownership can be represented on-chain and thus the specific rights a token has determines what type of Real Estate Tokenization format is in use. As we explored in the previous article, Fee Simple Tokenization is where the entire bundle of rights is on-chain. Rental Interest Tokenization, on the other hand, includes the rights to possess and use the property and usually the right to exclusion as well. However, it excludes the rights to transfer or encumber the property. All references to tokenized/tokenizing in this piece refer to Rental Interest Tokenization unless otherwise specified.
Rental Interest Tokenization necessarily involves two parties: the grantor and the grantee. The grantor can be any person or entity with any combination of property rights to be assigned. The grantor may even hold tokens from a Fee Simple Tokenization of another Rental Interest Tokenization. Any combination is fine as long as the grantor has the rights that they wish to transfer, but for sake of simplicity we will assume a fee simple owner. The grantee is typically a DAO’s legal wrapper. The grantor would keep off-chain title in their name while transferring the specific rights to the grantee. The Tokenization frameworks applicable here are the same as in a Fee Simple Tokenization (“Single-Asset DAOs,” “Multi-Asset DAOs,” and “Dual Token DAOs”) and the grantee can utilize any one of these.
Once the assignment has been executed, the tokenization is complete and the DAO gains the ability to exercise control over the property, subject to the limitations specified in the assignment contract. The DAO’s internal quorum of token holders holds the authority to select tenants, set rental rates, conduct assessments of improvements and maintenance, and handle other day-to–day matters. Likewise all rents generated by the property would belong to the DAO directly, and the utilization of these funds becomes an internal matter for the DAO to determine.
Several platforms and protocols are already offering “property tokens” that use the Rental Interest Tokenizations. One structure that seems popular is a title-holding trust to which the grantee-DAOs are beneficiaries. The evolution of Tokenization formats continues with different property right combinations being set up between grantor and grantee (will we see Encumbrance Tokenization!?). This abundance of possibilities highlights the importance of comprehending the different rights and obligations that the different Tokenization formats and frameworks afford token purchasers. This article represents general analysis and should not be construed as legal advice. Complexities in tax and security laws may arise, and you should consult with your attorney to analyze how these matters may affect you.
DAO Pre-Constitutional Governance
Written by Clinamenic LLC
In the latest entry of its newsletter, Clinamenic LLC describes the importance of establishing sound governance processes and provides a free boilerplate template for organizations to specify key governance parameters. In the absence of a collectively recognized decision-making framework, group decisions often encounter difficulty reaching consensus or obtaining legitimacy in the opinions of participants and stakeholders. The "pre-constitutional" governance framework provided in this article is intended to mitigate such operational friction and provide a useful stepping stone on an organization's road to entity formation and operationalized governance.
To read more about this topic, check out Clinamenic LLC’s full article on pre-constitutional governance here and read its other articles here.
Competitors Grapple with the Artificial Intelligence and Copyright Law at Pepperdine Caruso School of Law’s National Entertainment Law Moot Court Competition
Pepperdine Caruso School of Law held its National Entertainment Law Moot Court Competition on November 10th and 11th and competitors from law schools across the country were in attendance to present arguments for and against copyright protection for training generative AI models using copyrightable works and the infringement of outputs created by these models. If you missed it in our last newsletter, the problem for the competition can be found here and the anonymous briefs and competition rules can be found here. As more courts begin to grapple with the issues presented by developing, training, and utilizing AI models, we will undoubtedly see significant changes to the way that these technologies are used and the protections that may be afforded to its developers as well as creators of copyrightable and other works.
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Check out our Discord and ask some questions (feel free to DM our Assistant Operator Cimply (Cimply#3820) with any onboarding questions).
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When you are ready to join, fill out this form and check out this post for all the information that you need to apply.