Onchain LLCs
Last updated
Last updated
"DAOs collapse the cost of creating and managing organizations by replacing slow and expensive paper contracts with fast and cheap smart contracts. With lower costs and higher speeds, we unlock new levels of organizational scale. We can have a larger number of small organizations where setting up a legal entity is far too expensive to be worth it (think larger than a Facebook group, but smaller than a company)" Joel Monegro - Placeholder VC
A legal advisor tweeted: "If an idea looks to become a full-time job and as soon as you have customers and you are signing bills and contracts, yes then it's a good time to incorporate." He continued: "Creating a Delaware C Corp or LLC at the early stage seems silly to me. Instead, you probably want a DAO Charter, or similar, that makes clear the 'rules of road' before things actually get interesting and there is a potential of 'public-facing liabilities'. At that stage, yeah sure, wrap that profit-generating DAO into a Delaware C Corp to help against the risk of adverse legal actions." #notlegaladvice
Over the last couple of years, Otonomos has been helping many in the community set up their legal entities around the world. Since 2020 lets you spin up limited liability wrappers on chain with your MetaMask wallet or Gnosis MultiSig. OtoCo’s flash LLCs can be used to hold a single asset, for instance, a patent or trademark, or a domain name. It could even be wrapped around code and hold a single smart contract to protect its creators from the legal liabilities that may result from releasing unstoppable code into the world. This will get us from the analog legal ledger where companies are currently legally midwifed to where they’ll be born and live in the future: onchain, controlled by private keys, and with shares as tokens.
"Like the Foreign Foundation, LLC and LCA structures, the UNA solves the 3 biggest challenges facing Entityless DAOs: (1) lack of legal existence (inability to contract or own property), (2) inability to pay taxes, and (3) potential unlimited liability. The UNA also addresses shortcomings of LLC structures and LCA structures. Unlike those structures, the UNA isn’t subject to the Corporate Transparency Act, which makes the use of LLCs and LCAs for network/protocol DAOs all but impossible."
