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Firm protocol is our interpretation of what the software core of internet-native companies should be. The protocol is non-custodial and allows founders to create and run a company whose basic rules and rights are controlled and enforced with code.
Companies running on Firm have stronger guarantees and tighter controls than fiat companies. A fiat company (a company with a legal core) has to rely on the threat of post-hoc legal repercussions for misconduct and breaches of trust. Internet-native companies can be very explicit about how power is delegated all the way from shareholders and companies are inherently transparent due to the fact it runs on a public blockchain.
At the same time, as Firm companies can also opt into having an off-protocol legal entity (bringing the same level of protections of a fiat company), and the nature of how companies are typically formed, we find ourselves in an environment which isn’t as adversarial as a DAO (e.g. a DAO that controls a large DeFi protocol needs to be designed in a highly adversarial way).
It is with these principles that Firm protocol has been designed in a way to always respect an explicit delegation of power from shareholders but enabling a sane operating model which companies need to be effective.
Firm protocol v1 is a system of smart contracts which revolves around two main feature groups:
- Captable and basic corporate governance: the captable of the company is fully on-chain and shares are represented with fungible tokens for different classes of stock. Shareholders have the right to elect the board of directors on-chain (resulting in the addition/removal from the main company multisig).
- Hustle-free use of funds with on-chain guarantees: in the same way that shareholders delegate their authority into the board, the board is able to delegate partial spending ability to the people running the daily operations of the company. This authority delegation pattern is recursively applied so that bucketed spending authority can go down to the lowest level of the company (e.g. a junior engineer can have a budget for out of pocket technical expenses, with an implicit authority delegation all the way from shareholders)