IIP-33

IMPLEMENTED

Simple Summary

Public scrutiny plays a crucial role in ensuring the credibility and legitimacy of decentralized autonomous organizations (DAO). Any perceived unfair advantage or conflicts of interest can significantly undermine public trust, potentially leading to negative consequences for the DAO and its community.

In order to uphold transparency, fairness, and mitigate potential conflicts of interest, it is essential to establish a trading blackout period for our DAO council members and Illuvium Labs (Labs) team members in anticipation of major events, announcements, launches, or any other activities that may significantly impact token and NFT prices. This proposal aims to outline the framework of a trading blackout period to maintain the integrity of our DAO, promote trust among community members, and to avoid any public or regulatory scrutiny.

Objective

The primary objective of this proposal is to implement a trading blackout period for a duration of three days prior to major events, announcements, launches, or any other activities that may have a substantial impact on token and NFT prices. During this period, any person or group from the DAO council members and Labs team members who may have access to information not available to the public will be prohibited from engaging in any trading activities related to the DAO's assets which includes, but not limited to, $ILV token or any Illuvium NFTs such as Illuvials, Land, Illuvitars, etc.

Framework

Definition of Events: A broad but clear and comprehensive definition of major events, announcements, launches, and other significant activities that may influence token and NFT prices will be established. This will ensure a common understanding of the events covered by the trading blackout.

Communication and Notification: An internal discord channel will be established to notify DAO council members and Labs team members about upcoming events that trigger the trading blackout. The timing of the blackout should not be shared to the public to prevent front-running and protect confidential information. Communication of the blackout notification is covered by a NDA.

Duration of the Blackout: The trading blackout period will be set at three (3) calendar days preceding the identified events. This duration allows sufficient time for information dissemination and prevents the potential misuse of insider knowledge. A shorter or longer duration may be applied depending on the circumstances surrounding the confidential information and its possible effect on the DAO’s assets as may be deemed by the Illuvium Main Council.

Rationale

Enhanced Transparency: Implementing a trading blackout period demonstrates the DAO's commitment to transparency and equal access to information. It promotes trust among community members by ensuring that trading decisions are not influenced by insider knowledge or unfair advantages.

Prevention of Market Manipulation: The trading blackout mitigates the risk of market manipulation by preventing council members and team members from capitalizing on confidential information that could impact token and NFT prices. This protects the integrity of the market and fosters a level playing field for all participants.

Compliance with Current or Future Regulatory Requirements: By implementing a trading blackout, the DAO aligns with existing regulatory frameworks and insider trading regulations, reducing the risk of legal consequences. This adherence to regulatory requirements enhances the DAO's reputation and minimizes reputational and financial risks.

Conclusion

In light of public scrutiny and regulatory requirements, implementing a trading blackout for DAO council members and Labs team members in Web 3.0 is a crucial step to safeguard transparency, integrity, and investor trust. By doing so, the DAO can demonstrate its commitment to fair practices, regulatory compliance, and the long-term sustainability of its operations. By proactively preventing potential conflicts of interest and market manipulation, we can foster a stronger and more sustainable ecosystem for our community.

Test Cases

Web 2.0 Publicly Listed Corporations. Ex-OpenSea manager convicted in NFT insider trading: link. Former Coinbase Insider Sentenced In First Ever Cryptocurrency Insider Trading Case Link.