The Constitution of Aegis DAO

PREAMBLE

We, the tokenholders of Aegis DAO, establish this Constitution to formalize the principles, processes, and powers that govern our decentralized autonomous organization (DAO). It defines the relationship between AEG tokenholders and the Aegis DAO Foundation, ensuring the Foundation faithfully executes the community's collective will.

This Constitution serves as the supreme governing document for the Aegis ecosystem, providing a framework for decentralized governance of the Aegis YUSD protocol and related ecosystem components.

ARTICLE I: MISSION AND VALUES

The mission of Aegis DAO is to establish and nurture a self-sustaining, open, and transparent ecosystem that benefits all AEG tokenholders. Aegis DAO shall pursue the following objectives:

1. Ecosystem Expansion and Community Engagement

Drive ecosystem growth through strategic partnerships, educational initiatives, and open collaboration. Cultivate an inclusive, active community by fostering continuous dialogue and shared opportunities for innovation.

1. DAO Decision Implementation and Web2 Integration

Execute Aegis DAO directives efficiently while bridging decentralized protocols with Web2 systems, creating a more seamless and interconnected user experience.

1. Regulatory Alignment

Aegis DAO acknowledges its obligations under applicable anti-money laundering (AML), counter-terrorism financing (CTF), and related financial regulations. We uphold robust compliance protocols to prevent illicit activities, protect personal data, and adhere to relevant legal frameworks, ensuring that all transactions and disbursements meet regulatory standards without compromising core community principles.

1. Protocol Development

Govern and enhance the Aegis YUSD protocol—a Bitcoin-backed stablecoin delivering real-time transparency, stability, and yield—while remaining independent of traditional fiat banking systems.

1. Values-Based Governance

Ensure that every governance action reflects the fundamental principles of decentralization, transparency, security, sustainability, and inclusivity, safeguarding the DAO’s long-term success and community trust.

ARTICLE II: DEFINITIONS

1. Aegis Governance Token (AEG): The native governance token of Aegis DAO, which grants holders the ability to propose and vote on decisions affecting the protocol, ensuring decentralized governance and alignment with community interests.

2. Aegis Protocol: The decentralized blockchain infrastructure developed and maintained to provide secure, efficient, and transparent financial solutions for AEG tokenholders.

3. Aegis DAO: The decentralized autonomous organization that governs the Aegis ecosystem. Aegis DAO manages decisions related to the Aegis protocol, treasury, and ecosystem growth.

4. Aegis YUSD: A bitcoin-backed stablecoin governed by Aegis DAO. YUSD is designed to provide real-time transparency, stability, and yield generation while maintaining independence from the fiat banking system.

5. Foundation: The Aegis DAO Foundation, a Cayman Islands foundation company established to facilitate operations, including (but not limited to) managing connections with Web2 service providers other third-party entities to support the decentralized ecosystem.

6. Foundation Directors: Individuals responsible for overseeing the operations of the Foundation.

7. Foundation Supervisor Council: The independent oversight body ensuring compliance with Cayman Islands law, the bylaws, and tokenholder interests.

8. Tokenholders: Holders of AEG tokens who participate in governance.

9. Major Tokenholders (MT): Tokenholders who hold more than 5% of AEG tokens.

10. AIP: Aegis Improvement Proposal, a formal proposal submitted by AEG tokenholders to suggest and implement changes or improvements to the protocol or governance structure.

11. Aegis DAO Treasury Wallet: The wallet of Aegis DAO, used for managing reserves, funding development initiatives, and handling community incentives.

12. Aegis Insurance Fund: A Dedicated fund established to safeguard the DAO and its tokenholders against unforeseen risks and liabilities.

13. Preliminary Check: An initial voting stage similar to a temperature check, conducted off-chain to gauge community interest before formal on-chain voting.

14. Delegate: A trusted party to whom AEG token holders can delegate their voting power to vote on their behalf.

ARTICLE III: GOVERNANCE STRUCTURE

Section 1: Tokenholder Authority

Governance decisions shall be made through token-based voting. AEG tokenholders can submit proposals and vote on major decisions.

The ultimate authority in all matters concerning the Aegis DAO rests with the tokenholders. Tokenholders must approve all significant changes or strategic decisions through the established governance process.

No proposal may be approved or implemented that would compromise the protocol's security, disrupt the funding rate yield mechanism, interfere with custodial operations, or alter core protocol functionality to introduce unacceptable risk to the ecosystem or user funds.

Section 2: Foundation Structure

1. Foundation Directors

Foundation Directors are responsible for executing the DAO's will as expressed through approved proposals and community votes. They must always act on behalf of the DAO, ensuring that every decision reflects the collective will of the token holders and adheres to DAO-approved mandates.

Directors are not authorized to make unilateral decisions without clear guidance and approval from the DAO governance processes. Directors must carry out DAO-approved decisions, manage assets, oversee operations, and implement strategies strictly following DAO objectives. Directors are prohibited from making unilateral decisions that could impact the DAO without prior approval from tokenholders or following the established governance process.

1. Foundation Supervisor Council

The Foundation Supervisor Council is established to ensure compliance with Cayman Islands laws, the bylaws, and the interests of tokenholders. The Supervisor Council also ensures that all decisions made by the Foundation Directors are carried out strictly by DAO mandates, emphasizing the decentralized nature of decision-making and shared responsibility among all stakeholders.

The principle of decentralization and transparency must guide the Council's actions. The Supervisor Council is an independent oversight body responsible for monitoring all activities carried out by Foundation Directors to ensure adherence to the bylaws and preventing conflicts of interest.

The Council verifies that Foundation Directors strictly follow DAO mandates and cannot act beyond their given authority. At its own discretion, the Supervisor Council has the authority to remove or replace Foundation Directors if they fail to fulfill their duties, act against the interests of the DAO, or otherwise breach the bylaws.

The Supervisor Council holds a special veto right that allows it to initiate a new vote on any proposal previously approved by tokenholders. This veto power can be exercised when the Council determines that a proposal may potentially harm the DAO, compromise protocol security, or violate applicable laws. When the Council exercises its veto, the proposal must undergo a new voting process with additional information provided by the Council explaining the concerns that prompted the veto. This ensures tokenholders can make fully informed decisions on matters that may have unforeseen consequences.

Section 3: Tokenholder Rights

Tokenholders have the right to:

1. Vote on protocol changes and ecosystem developments.

2. Submit proposals for consideration by the community.

3. Receive transparent reporting on all DAO activities.

4. Exercise oversight to ensure that no approved proposals compromise protocol security, disrupt yield funding rate mechanisms, interfere with custodial operations, or introduce unacceptable risk to the ecosystem.

ARTICLE IV: FINANCIAL MANAGEMENT AND TREASURY

Section 1: Aegis Insurance Fund

The Aegis Insurance Fund is a dedicated fund established to safeguard the Aegis YUSD protocol and its tokenholders against unforeseen risks and liabilities. This fund is managed transparently, with clear guidelines outlined in this Constitution.

Section 2: Aegis DAO Treasury Wallet

The DAO's main treasury wallet holds reserves, distributes funds for development, and manages community incentives. This Constitution defines the process for managing the Treasury Wallet, including procedures for proposing, reviewing, and executing withdrawals to ensure all actions are transparent and aligned with the community's collective decisions.

All withdrawals from the DAO Treasury Wallet must be authorized through the governance process, ensuring transparency and collective decision-making regarding the utilization of community assets.

ARTICLE V: DISPUTE RESOLUTION

Section 1: Dispute Process

1. Notice and Initial Resolution

A formal notice must be provided in case of a dispute between tokenholders or between tokenholders and the Foundation. The parties involved are required to attempt an initial resolution through discussion within 30 days. During this period, all parties are encouraged to resolve the dispute through mediation and open dialogue to maintain harmony within the DAO.

1. Mediation Process

If the dispute cannot be resolved within the initial 30 calendar days, an official mediator, who is independent and acceptable to both parties, may be appointed. The mediator will facilitate further discussions to resolve the dispute amicably. This process must be completed within an additional 15 days.

1. Arbitration

If the dispute remains unresolved after the mediation process, it will proceed to arbitration in the Cayman Islands. The arbitration must be conducted in accordance with the rules of the relevant arbitration authority in the Cayman Islands, with each party bearing its own costs unless otherwise decided by the arbitrator. Arbitration decisions are binding and not subject to appeal.

1. Dispute Register

All disputes, including their nature, resolution steps, and outcomes, must be recorded in a formal dispute register maintained by the Foundation. To foster accountability and transparency, this register will be made accessible to tokenholders upon their request.

1. Community Feedback

In the event of similar recurring disputes, token holders will be invited to provide feedback on how to prevent similar disputes in the future. Proposals for systemic changes can be submitted through AIPs for community voting and approval.

ARTICLE VI: EMERGENCY PROCEDURES

Section 1: Emergency Situations

An emergency procedure may be activated in the event of an emergency that poses a significant risk to the DAO's operations, assets, or community. This procedure ensures timely and efficient decision-making to mitigate potential threats and safeguard the DAO's interests.

Section 2: Activation of Emergency Procedure

1. Emergency Proposal: Any member of the Foundation Directors, the Supervisor Council, or the MT with a critical concern may submit an emergency proposal. This proposal should clearly define the nature of the emergency, the risks involved, and the immediate actions required.

2. Expedited Review by Supervisor Council: Upon receipt of an emergency proposal, the Supervisor Council will conduct an expedited review within 24 hours to determine its validity and urgency.

3. Emergency Voting: If deemed valid, an expedited voting process will be initiated, with a reduced quorum requirement to facilitate prompt action. Tokenholders will be notified immediately through all available communication channels to participate in the vote.

4. Temporary Powers: Under the guidance of the Supervisor Council, the Foundation Directors may be granted temporary powers to execute critical actions needed to mitigate the emergency. These actions must remain within the scope of protecting the DAO's assets, community, and operational continuity.

Section 3: Reporting and Accountability

1. Post-Emergency Review: Once the emergency has been resolved, a full report detailing the actions taken, funds utilized, and the outcome must be compiled and published for tokenholders within 72 hours.

2. Feedback: MT will be invited to review the emergency actions and provide feedback. Proposals for improving emergency procedures or addressing any gaps observed during the emergency may be submitted through AIPs for community voting.

Section 4: Preventive Measures

1. Risk Monitoring: The DAO shall continuously monitor risks, including market volatility and security threats, to prevent emergencies from escalating.

2. Insurance Fund Maintenance: The Aegis Insurance Fund shall be maintained and periodically reviewed to ensure adequate coverage for potential emergencies.

ARTICLE VII: RELATIONSHIP WITH TOKENHOLDERS

1. The Foundation serves the best interest of the tokenholders, ensuring that regulatory compliance and operational needs are managed in accordance with DAO-approved directives. The Foundation must always act to uphold the DAO's principles of decentralization and community benefit.

2. Tokenholder Authority: Tokenholders retain ultimate control over all significant decisions related to the governance of the DAO. While Foundation Directors may take operational actions independently, they must strictly align these actions with DAO-approved mandates and cannot unilaterally decide on any matters that impact the community. All strategic or impactful decisions must be subject to tokenholder approval.

3. Transparency: The Foundation is required to maintain a high level of transparency by providing regular, comprehensive reports on activities, decisions, and financial matters. These reports must be made accessible to all tokenholders, ensuring full visibility into the Foundation's operations and promoting accountability.

4. Security Priority: The Foundation must prioritize the security of the protocol above all else, ensuring that no actions are taken that would compromise protocol security, disrupt the funding rate mechanism, interfere with custodial operations, or introduce unacceptable risk to users, even if such actions were requested through governance.

ARTICLE VIII: COMPLIANCE AND LEGAL OBLIGATIONS

1. Legal Compliance

The Foundation and Aegis DAO shall fully comply with Cayman Islands law and all applicable global regulations pertaining to decentralized finance (DeFi), anti-money laundering (AML), counter-terrorism financing (CTF), and other related matters. The Foundation must ensure that every operational and financial activity strictly adheres to these obligations, maintaining a secure and legally compliant ecosystem.

1. Regulatory Monitoring and Adaptation

The Foundation shall continually monitor emerging regulatory changes and promptly update Aegis DAO’s operations to meet evolving standards. This includes:

• Expert Coordination: Working closely with legal professionals to promptly identify, interpret, and implement regulatory updates.

• Transparent Communication: Tokenholders should receive clear, regular updates on all adaptations, thereby preserving transparency and community trust.

ARTICLE IX: INTELLECTUAL PROPERTY TRUST

1. Foundation as Trustee

The Foundation holds all intellectual property rights, including but not limited to trademarks, copyrights, patents, trade secrets, domain names, and brand assets (“IP Rights”) as trustee for the benefit of AEG tokenholders.

1. Foundation Duties

• Decision Execution: The Foundation shall execute decisions regarding IP Rights only upon DAO approval through the AIP Process.

• Record Maintenance: The Foundation shall maintain up-to-date records of all IP Rights under its custody.

• Non-Transferability: All IP Rights held by the Foundation are strictly non-transferable to any external party unless explicitly authorized by a DAO-approved AIP.

1. Automatic Vesting

All IP Rights created by Foundation employees, contractors, or contributors automatically vest in the Foundation as trustee. This ensures that any new intellectual property generated within the Aegis ecosystem is centrally held for the benefit of tokenholders.

1. Supervisor Council Oversight

The Foundation Supervisor Council shall:

• Monitor Compliance: Oversee the Foundation’s adherence to its trustee obligations.

• Intervene if Breach Occurs: Take appropriate measures if the Foundation breaches its trust duties.

• Review Emergency Actions: Evaluate any emergency IP protection actions to ensure they remain within the authorized scope.

1. Emergency IP Protection

Any emergency action to protect IP Rights requires:

1. Immediate Threat: A pressing risk to the IP Rights that cannot wait for standard governance timelines.

2. No Time for Regular Voting: Demonstrable urgency that precludes the usual AIP voting process.

3. Supervisor Council Approval: Formal consent from the Council to initiate emergency steps.

4. Subsequent Ratification: A mandatory follow-up vote by tokenholders to confirm or overturn the emergency measures.

3. No Threats to Organizational Stability

Any AIP (Aegis Improvement Proposal) or governance motion that is reasonably determined to jeopardize the stability, security, or core operations of Aegis DAO shall be deemed invalid and shall not be approved under any circumstances. This includes proposals that may:

1. Compromise essential protocols or intellectual property;

2. Introduce excessive legal, financial, or operational risk; or

3. Undermine the fundamental interests and stability of the DAO or its community.

Any such proposal found to pose these risks may be vetoed or declared null and void by the relevant supervisory or governance bodies.

ARTICLE X: GOVERNANCE PROCESS

Section 1: Types of Proposals

Governance occurs through the AIP (Aegis Improvement Proposal) system. AIPs are formal proposals to change protocol parameters, allocate treasury funds, modify governance processes, or make other significant decisions affecting the ecosystem.

Types of proposals include:

1. Constitutional: Changes to this Constitution or the Foundation Bylaws

2. Protocol: Changes to smart contract functionality, parameters, or infrastructure

3. Treasury: Allocation of funds, investment strategies, or financial decisions

4. Strategic: New products, partnerships, or ecosystem expansion

5. Community: Grants, incentives, or educational programs

Section 2: Proposal Requirements

Each AIP must include:

1. Title: A clear, descriptive title

2. Author: The individual or group submitting the proposal

3. Type: The proposal classification

4. Summary: A concise overview of the proposal's purpose

5. Motivation: Rationale explaining benefits to the Aegis ecosystem

6. Specification: Detailed requirements

7. Implementation: Process for executing the proposal

Section 3: Proposal Process

The AIP process follows these stages:

3.1 Phase 1: Preliminary Check

• Initial proposal discussion on the community forum to gather feedback

• A Snapshot poll or equivalent to gauge community interest

• Requires proposer to control at least 0.01% of Votable Tokens

• Serves to identify whether a proposal should progress to a formal vote

3.2 Phase 2: Formal Submission

• AIP is submitted via the governance portal

• Must be properly classified

• Must be submitted by an address controlling at least 0.5% of Votable Tokens (or by Foundation Directors or Supervisors)

• Provides time for community review before voting begins

3.3 Phase 3: On-Chain Voting Period

• Tokenholders vote on properly submitted AIPs

• For Constitutional AIPs, a 15% quorum of all Votable Tokens is required

• For non-Constitutional AIPs, 10% quorum of all Votable Tokens is required

• Passing requires more "in favor" votes than "against" votes

3.4 Phase 4: Timelock Period

• Constitutional AIPs: 5-day waiting period

• Non-Constitutional AIPs: 2-day waiting period

• Allows stakeholders to prepare for changes or exit if desired

3.5 Phase 5: Implementation

• Foundation Directors or other designated entities execute the approved AIP

• Implementation details must follow the specifications in the proposal

• Implementation status updates must be provided to the community

Section 4: Voting Requirements

For a proposal to be valid and binding:

1. Quorum Requirements:

   • Constitutional AIPs: At least 15% of total Votable Tokens must participate

   • Non-Constitutional AIPs: At least 10% of total Votable Tokens must participate

2. Approval Thresholds:

   • Constitutional AIPs: Requires 67% supermajority of participating votes

   • Non-Constitutional AIPs: Requires a simple majority (>50%) of participating votes

Section 5: Vote Delegation

AEG token holders have the ability to delegate their voting power to trusted delegates who can vote on their behalf. Delegation:

1. Transfers voting rights but not ownership of tokens

2. Can be revoked at any time by the token owner

3. Does not affect the tokenholder's right to transfer their tokens

4. May be partial (delegating only a portion of one's voting power) or complete

Delegation helps ensure broader participation in governance by allowing token holders who may not have the time or expertise to actively participate in every vote to still have their tokens represented in governance decisions.

As a recommended practice, delegates should:

1. Maintain clear communication channels with their delegators

2. Be transparent about their voting philosophy and decision-making process

3. Actively participate in governance discussions

4. Represent the interests of their delegators faithfully

ARTICLE XI: COMMUNITY VALUES AND PROTOCOL DEVELOPMENT

Section 1: Core Values

The Aegis DAO community shall be guided by these foundational values:

1. Decentralization: Ensuring that decision-making power is distributed across the community and not concentrated in a few hands.

2. Transparency: All governance decisions, particularly around YUSD, are conducted transparently, with full information disclosure to stakeholders.

3. Security: Prioritizing the security of the protocol, treasury, and user assets above all else.

4. Sustainability: Building for long-term ecosystem health rather than short-term gains.

5. Inclusivity: Creating an ecosystem where all participants can contribute regardless of their token holdings, while respecting proportional voting rights.

Section 2: YUSD Protocol Development

The Aegis DAO shall govern the development and evolution of the Aegis YUSD protocol with these guiding principles:

1. Bitcoin-Backed Stability: Maintaining YUSD as a bitcoin-backed stablecoin with reliable pegging mechanisms.

2. Yield Generation: Optimizing and securing the yield generation capabilities of YUSD for the benefit of users.

3. Banking Independence: Preserving YUSD's independence from the traditional fiat banking system.

4. Continuous Improvement: Regularly evaluating and enhancing the protocol based on market conditions, user feedback, and technological advancements.

5. Ecosystem Integration: Promoting the integration of YUSD across the broader crypto ecosystem through strategic partnerships and technology bridges.

Section 3: Protocol Governance Actions

Governance of the YUSD protocol shall include, but not be limited to:

1. Protocol Upgrades: Technical improvements and new features implementation.

2. Parameter Adjustments: Modifications to risk management frameworks, collateral requirements, and operational parameters.

3. Strategic Partnerships: Integrations with other platforms and protocols.

4. Asset Management: Strategies for managing the Insurance Fund and other protocol assets.

All protocol governance actions must align with the DAO's core values and serve the best interests of the broader Aegis community.

ARTICLE XII: AMENDMENTS

This Constitution may be amended only through a proposal approved by AEG tokenholders, requiring a supermajority (67%) of votes cast with a minimum participation of 8% of all eligible tokens. All amendments must preserve the fundamental principles of decentralization and tokenholder sovereignty.

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