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SCOPE OF DAO GOVERNANCE The scope of DAO governance encompasses critical areas that require careful consideration and management and that should be described in the DAO governance design plan. These include business operations, communication strategies, token economics, and risk management: 1) Business operations and values: To provide consideration to organizational structure and operational efficiency, (a) define the decentralized and autonomous nature of DAOs, distinguishing them from conventional organizational structures; (b) explore methods for achieving operational efficiency through smart contracts and decentralized decision‐making processes; and (c) highlight unique operational challenges faced by DAOs. 2) Communication strategies: To ensure effective communication within a DAO, (a) discuss strategies for engaging and maintaining communication with DAO members, regulators, token purchasers, and the broader community; (b) emphasize the importance of transparency in communication to build trust and ensure informed decision‐making; and (c) outline mechanisms for resolving conflicts and disputes within the DAO effectively. 3) Token economics: To ensure a comprehensive understanding of token economics within a DAO, (a) define the purpose and utility of DAO tokens within the ecosystem; (b) address token creation, distribution, incentives, and governance mechanisms; and (c) discuss strategies for ensuring the longterm economic sustainability of the DAO. 4) Risk and security in DAO: To address the critical aspects of risk and security in DAO governance, (a) describe methods for identifying, assessing, and mitigating risks associated with DAO governance; (b) identify relevant regulatory requirements, and provide guidance on complying with them; and (c) discuss the importance of robust security measures to protect DAO assets and operations.

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