AMKT DAO Fallback Constitution
AMKT (the “index token”) is an index token established for the benefit of its holders.
This constitution and the smart contracts implementing AMKT acquisition, trading, and governance together constitute the entirety of how AMKT operates.
In this constitution, unless context indicates a contrary intention:
- AMKT, AMKT token are defined as synonyms and are the index token created by the DAO, backed by the Custody Account, and serviced by the Service Entity.
- AMKT holder, Current AMKT holder are defined as synonyms and are defined as the current human or institutional holder of an AMKT token.
- AMKT Protocol, Protocol are defined as synonyms and are the protocol and smart contracts implemented by the DAO to allow operations on and governance of AMKT tokens.
- Commencement Date is defined as the date of commencement of this document as the functioning constitution of the Protocol as determined at the sole discretion of the Fallback Entity.
- Constitution Quorum is defined as a voting quorum consisting of two-thirds of current AMKT supply.
- Constitution Proposal is defined as any proposal made to change the Constitution.
- Custodian, Institutional Custody Provider are defined as synonyms and are defined as the corporate entity responsible for holding the collateralized assets backing AMKT tokens.
- Custody Multi-Signatory, Custody Multi-Sig are defined as synonyms and are the Signatories authorized to perform custodial actions for the DAO.
- DAO is defined as the aggregate of the participants in the protocol holders of AMKT, collectively implementing the AMKT token operations.
- Fallback Entity is defined as the corporate entity designated to take governance actions in the event those actions are not performed in a timely manner by those tasked with governance under this Constitution.
- Fallback Entity Change Quorum is defined as a quorum consisting of two-thirds of the current AMKT supply.
- Governance Multi-Signatory, Governance Multi-Sig are defined as synonyms and are the Signatories authorized to perform governance actions for the DAO. Dispute resolutions are handled by the Governance Multi-sig as it ultimately gets to interpret proposals in accordance with the constitution.
- Merchant, Verified Merchant are defined as synonyms and are corporate entities permitted by the DAO and verified by the Service Entity to mint, burn, and/or sell AMKT tokens.
- Protocol Fee Change Quorum is defined as a voting quorum consisting of two-thirds of current AMKT supply.
- Proposal Threshold is defined as the amount of AMKT needed by a Verified AMKT holder to advance a proposal to an adoption vote. In order to make the system maximally accessible while limiting spam proposals, a low, constant, but not insignificant quorum of 0.1% of AMKT supply is the default Proposal Threshold. The Governance Multi-Sig can always propose.
- Resolution Quorum is defined as a percentage of the voting power cast in a single proposal required for such proposal to be considered to have been resolved in any direction.
- Service Entity is defined as the corporate entity designated to perform regulatory verification of AMKT holders and Merchants and to open and maintain the Custody Account.
- Service Entity Change Quorum is defined as a voting quorum consisting of two-thirds of current AMKT supply.
- Signatory, Steward are defined as synonyms and are defined as an individual elected to perform governance or custodial actions as part of the Governance Multi-Signatory or the Custody Multi-Signatory.
- Standard Proposal is defined as any proposal made by verified AMKT holders excluding proposals to make changes to the Constitution.
- Steward Election is an election to elect one or more Signatories to the Governance Multi-Signatory or the Custody Multi-Signatory.
- Time periods used in this Constitution are defined as follows:
- Constitution Lifetime is defined as indefinite.
- Constitution Reset Time is defined as three (3) years following the Commencement Date.
- Service Entity Change Period is defined as three (3) years following the Commencement Date.
- Protocol Fee Change Period is defined as three (3) years following the Commencement Date.
- Steward Election Period is defined as three (3) years.
- Verified Current AMKT holder is defined as a Current AMKT holder who has undergone sufficient verification (as defined in this Constitution) to be permitted to participate in the governance of the AMKT token.
- 1.Each issued AMKT token represents a share of the AMKT collateral assets.
- 2.Each AMKT token provides the holder with the ability to participate in AMKT governance, subject to the verification steps defined below.
- 3.AMKT tokens shall be fully redeemable as explained below.
- 1.A member of the public (a prospective buyer) may purchase one or more AMKT tokens by purchasing them directly from an exchange, as minting is reserved for Merchants in the network.
- 2.Only Verified Merchants may directly mint index tokens. A prospective Merchant must deposit funds in the smart contract and pass any required checks before AMKT tokens are issued by the protocol. Merchants may be whitelisted by the DAO to mint AMKT directly through the protocol by:
- 1.Applying to the Service Entity for Know Your Business (KYB) verification; and
- 2.Passing such checks as the current Service Entity requires. The Service Entity may impose such checks upon a prospective Merchant in accordance with the existing laws, regulations, and best practices of their legal jurisdiction, but must in all cases include checks sufficient to comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations under United States securities law.
- 3.Once purchased, AMKT tokens may be bought and sold in decentralized markets without additional checks.
- 4.An AMKT holder is considered to be “Current” if they can prove current holdership of one or more AMKT tokens.
- 5.Any current AMKT holder may become “Verified” by:
- 1.Applying for verification to the current Service Entity; and
- 2.Passing such checks as the current Service Entity requires. The Service Entity may impose such checks upon a current AMKT holder in accordance with the existing laws, regulations, and best practices of their legal jurisdiction, but must in all cases include checks sufficient to comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations under United States securities law.
- 6.Any current AMKT holder may redeem their AMKT token for the underlying reserve assets of the index in the proportions defined by the protocol methodology by first passing the above verification, and requesting redemption from the protocol, which is subject to any fees adopted by service providers.
Any Verified Current AMKT holder may be granted two types of governance powers: proposing power and voting power.
- 1.A standard proposal may be made by a Current Verified AMKT holder if they hold a minimum of a Proposal Threshold amount of AMKT (the proposer). A proposal may be made by:
- 1.A proposal being publicly posted at the designated location for a change to the DAO by the proposer, and the Current Verified AMKT holders notified (where possible); and
- 2.The proposal is put forward for a vote by the Current Verified AMKT holders.
A positive vote to adopt the proposal by a Resolution Quorum results in the proposal being approved.
- 1.In the event a Resolution Quorum cannot be reached after 14 days, the designated Fallback Entity may cast a deciding vote to accept or reject the proposal. Such a vote must be cast by the Fallback Entity within 30 days after a Resolution Quorum fails to be achieved.
- 2.In the event that a Resolution Quorum cannot be reached in (A), and the Fallback Entity fails to take explicit action to approve or reject the proposal as in (B), the proposal is automatically rejected.
Any Current Verified AMKT holder may propose or vote for changes to this constitution no earlier than the Constitution Reset Time, unless otherwise proposed by the governance multi-sig.
- 1.The constitution may be modified by:
- 1.a proposal being publicly posted at the designated location for a change to this Constitution by any Current Verified AMKT holder who possesses at least a Proposal Threshold amount of AMKT tokens; and
- 2.a positive vote to adopt the change by a Constitution Quorum.
A positive vote to adopt the proposal by a Constitution Quorum results in the proposal being approved.
- 1.In the event a quorum cannot be reached after 14 days, the designated Fallback Entity may cast a deciding vote to accept or reject the proposal. Such a vote must be cast by the Fallback Entity within 30 days after a Constitution Quorum fails to be achieved.
- 2.In the event that a quorum cannot be reached in (A), and the Fallback Entity fails to take explicit action to approve or reject the proposal as in (B), the proposal is automatically rejected.
- 1.The Fallback Entity is initially set to be Alongside Finance Inc., a Delaware corporation with its principal place of business at 340 S LEMON AVE #2531 WALNUT, CA 91789 USA.
- 2.The Fallback Entity may be changed by a Fallback Entity Change Quorum no earlier than the Constitution Reset Time, or by designation of a new Fallback Entity by the current Fallback Entity.
- 1.The Service Entity is initially set to be Battery Labs Ltd., a British Virgin Islands company with its principal place of business at Rodus Building, P.O. Box 3093, Road Town, Tortola VG1110, British Virgin Islands.
- 2.The Service Entity will create an account with an Institutional Custody Provider and will have a legal relationship with the provider determined by a contract (the "Custody Account"). The Company will be acting as an agent on behalf of the token holders as a service provider to the DAO participants.
- 3.The Service Entity may be changed by a Service Entity Change Quorum no earlier than the Service Entity Change Period after the Commencement Date of the protocol, or by designation of a new Service Entity by the current governance multi-sig.
- 4.The Custody Account will be controlled by a 3 of 5 Custody multi-sig as elected by the DAO, during Election Periods (see the section on Multi-sig Elections). The Custody Multi-Sig will grant members “Authorized Signatory” roles in the Custody Account, as in the ability to initiate transfers and changes to the account settings (initiations need to be approved by consensus), to approve or reject consensus activities.
- 5.In the event of a passed proposal to replace the existing Service Entity, there will be a 5 months minimum grace period, with no unreasonable delays past that point during which the newly designated entity will need to set up the new account with a Custody Provider. A Service Entity change will occur in four steps:
- 1.A passed proposal by the DAO electing a new Service Entity
- 2.A passed proposal from the new Service Entity accepting the duties
- 3.A successful verification and KYB as needed by the previous Service Entity of the new Service Entity
- 4.A successful verification as needed by the previous Service Entity regulatory oversight
- 5.Transfer of the assets during a grace period from the original Service Entity to the new Service Entity, each responsible for the fees incurred in their respective accounts.
- 6.The Service Entity may at its sole discretion choose a new Institutional Custody Provider for as long as it remains as the elected Service Entity, in the event of an Institutional Custody Provider shutdown or regulatory change.
- 7.While the Service Entity holds the legal relationship with the Custody Account, it does not have operational control over the assets under custody, as the control will be relinquished to the Custody Multi-sig, as defined in the Multi-sig Elections section of the constitution and voted in by the index token holders.
- 8.As made available by the Custody Account provider, some underlying Index assets that are on deposit with the Custody Account will be available to be staked. This serves as a natural performance incentive for the Service Entity to perform its duties on behalf of the participants of the DAO, while still ensuring solvency and redeemability to index token holders in a safe manner.
The primary purpose of fees within the protocol is to maintain the sustainability of the index. These fees are to compensate the Service Entity for paying for any operating costs that may arise (such as the Custody Account and its fees), maintaining the frontends that enable better usage of the smart contracts by the participants in the system as well as compensate for providing services to the DAO participants if necessary.
- 1.The index charges an administrative fee, set to be the same as that protocol when this Constitution took effect . This fee is paid out by the DAO through inflation of the underlying token to the Service Entity.
- 2.Protocol fees may be changed by a Protocol Fee Change Quorum of the Current Verified AMKT holders no earlier than the Protocol Fee Change Period after the Commencement Date of the protocol, or by designation of a new protocol fee by the governance multi-sig.
- 3.The protocol fee may not be changed to be lower than the operating costs of the Service Entity, ensuring that it can remain solvent and be able to perform its services to the DAO Participants.
AMKT is intended to be a benchmark of innovation in decentralized systems that are enabled by advances in cryptography and/or mechanism design. Because innovation in decentralization, cryptography, or mechanism design are the only valid metrics for inclusion by thematic fit, inclusion cannot be based on things such as (but not limited to) the mere existence of a tokenized representation of something on a blockchain whose value is mostly unrelated to these types of innovation and any affiliation with political causes/personal beliefs.
A non-exhaustive list of assets that fail this criterion are stablecoins, wrapped tokens, tokenized derivatives, synthetic assets, tokens that are tied to physical assets, tokens that represent claims on other tokens, etc.
While there might be a very large list of assets that have a thematic fit, index construction involves drawing a line somewhere for pragmatic reasons. Common examples of exclusion criteria based on implementation considerations include (but are not limited to) low trading volume.
The asset must not be considered a security in the jurisdictions in which the Service and Fallback entities are located. This helps ensure AMKT DAO is compliant with local regulations of its service entities and able to operate without regulatory scrutiny that could threaten the continuity of AMKT DAO and AMKT. Any proposal that does not comply with regulatory requirements may be removed by moderators.
No set of actors should seek to influence the set of assets included in the AMKT index or the constituent weighting on the basis of any measure not set forth in the community-approved methodology.
Once a list of assets has been decided upon according to the asset inclusion criteria in this constitution, they must be weighted.
On a regular basis, a proposal will be submitted by the DAO to rebalance the index to reflect the latest market proportions.
- 1.Tokens must meet the following eligibility factors to be considered eligible for index consideration. Criteria changes for eligibility are set by the DAO through the same governance process:
- 1.Custodian Support – Must have a secure institutional custody solution by a licensed and reputable service provider to facilitate the implementation of the index. This ensures a digital asset pool with market maturity supported by a custodian’s vetting process, evaluating both security and legal risks, as well as market demand.
- 2.Free-Floating Price – Must not be pegged to the value of any asset, including fiat or crypto collateralization, algorithmic strategy, or other means,
- 3.Evidenced Cooperation with Regulators – Notwithstanding commitments to decentralization, the token policy must show a willingness to corroborate with regulatory agencies during potential or ongoing investigations.
- 2.The rebalancing must as much as possible reflect the changes in the crypto market ecosystem in a non-discretionary fashion so as to remain true to its mission. As such, the index may not be rebalanced into a methodology that would deviate from the goal of the DAO.
- 3.A positive vote to adopt the proposal of a reconstitution of the index by a Resolution Quorum results in the proposal being approved. A reconstitution proposal may only be passed if no other reconstitution proposal has been passed in the previous 3 months and the multi-sig interprets this reconstitution to be in line with the constitution. The multi-sig is the final interpreter and arbiter of this decision. In the event of extreme market turbulence, the DAO may propose an emergency reconstitution revisiting eligibility criteria amongst current constituents as to ensure the index continues to represent the market and ensure solvency to the index token holders.
- 4.A positive vote to adopt the proposal of a rebalancing of the index by a Resolution Quorum results in the proposal being approved. A rebalancing proposal may only be passed if no other rebalancing proposal has been passed in the last month and the multi-sig interprets this rebalancing to be in line with the constitution. The multi-sig is the final interpreter and arbiter of this decision. A rebalancing proposal may not introduce or remove current constituents, as such actions are reserved to reconstitution proposals.
AMKT is governed by AMKT holders themselves. AMKT holders can propose to change anything about AMKT and its implementation provided the proposed changes adhere to the constitutional values set forth in this document.
Some party is required to interpret the constitution and that party is the multi-sig, a DAO-elected set of individuals who are initially appointed prior to the deployment of AMKT and subject to elections every Steward Election Period thereafter. Each Steward Election will consist of designating which parties (and respective cryptographic identifiers for use in a multi-sig contract) will carry out AMKT DAO's will (off-chain and on-chain) in light of the constitution.
In the case of a signatory’s incapacitation or abdication, the remaining signatories will replace that signatory by changing the cryptographic identifier on the multi-sig.
At inception, the multi-signature signatories will be chosen a priori by the Fallback Entity. Governance will be split into two separate multi-sigs:
- 1.Governance Multi-Sig: Interpretation of proposals and changes to the constitution (7 of 11 signatories)
- 2.Custody Multi-Sig: Execution of movements within the Custody Account (3 of 5 signatories). The Custody Multi-Sig will grant members “Authorized Signatory” roles in the Custody Account, as in the ability to initiate transfers and changes to the account settings (initiations need to be approved by consensus), to approve or reject consensus activities.
- 3.Both Governance and Custody Multi-Sig elections will occur every Steward Election Period, first incurring one Steward Election Period after the Commencement Date, for a period of 1 month. During this period, Verified Current AMKT holders may propose new multi-sig signatories to be added and existing ones to be removed with a positive vote to adopt the change by a quorum consisting of two-thirds of urrent AMKT supply .
- 1.In the event of an elected multi-sig signatory choosing to leave a multi-sig, the current multi-sig will hold a vote outside elections to elect a new signatory.
- 2.In the event the Governance Multi-sig falls below 9 signatories, the DAO may conduct emergency elections in order to elect new signatories to reach 11 signatories.
- 3.In the event the Custody Multi-sig falls below 4 signatories, the DAO may conduct emergency elections in order to elect new signatories to reach 5 signatories.
- 4.In the event there are no Current Verified AMKT Holders, the Governance Multi-sig will have sole discretion to approve or reject proposals.
- 5.Prior to the Constitution Reset Time, the Governance Multi-sig will have sole discretion to make smart contract changes in accordance with the DAO Constitution.
In the case where all of the following occur, the index token will automatically dissolve:
- the Fallback Entity dissolves, enters bankruptcy administration, or otherwise ceases normal business operations through federal, state, and local legal filings
- the DAO has not designated a new Fallback Entity
- no Current Verified AMKT holders exist.
Upon dissolution of the index token and no AMKT holders exist, no new AMKT tokens will be available to be created. In the event of a dissolution, the Service Entity and Fallback Entity would no longer have to provide services to the DAO, as the Custody Account will no longer have any assets.
In interpreting the scope, authority, and meaning of the provisions of this Constitution, the following guiding principles apply:
- 1.AMKT tokens. An AMKT token is considered current if it has been minted, and has a holder.
- 2.AMKT holders. An AMKT holder is considered Current if that person currently provably holds at least one AMKT token. An AMKT holder is considered Verified if that person has received proof of verification from the Service Entity.
- 3.Merchants. A Merchant is an institution that looks to mint or redeem index tokens directly from the protocol. A Merchant is considered Verified that Merchant has received proof of verification from the Service Entity.
- 4.Governance iteration. Current Verified AMKT holders should keep governance proposals small, so that this constitution may be iterated in incremental steps.
- 5.Forking. No fork of the smart contracts constituting all or a portion of AMKT will be considered valid unless they are operational on the canonical blockchain used by AMKT. In the event of disagreement, the Fallback Entity may issue a ruling as to the canonical version of AMKT.
- 6.Constitution lifetime. This Fallback Constitution will remain in effect for the Constitution Lifetime or as changed in according to the procedures set out in the section Changes to the Constitution.