OpenLaw co-founder: Why the passage of the DAO bill is so significant

OpenLaw co-founder: Why the passage of the DAO bill is so significant

Original author: Aaron Wright

According to Wikipedia, a decentralized autonomous organization (DAO) is an organization represented by open and transparent computer code. One of its characteristics is that it uses blockchain technology to provide a secure digital ledger to track financial interactions across the Internet, and resists forgery through trusted timestamps and the dissemination of a distributed database. It is worth noting that Wikipedia states that the exact legal status of decentralized autonomous organizations is currently unclear. The bill discussed in this article provides a certain degree of legal support for the existence of DAOs.

OpenLaw is a development company that provides blockchain-based legal agreements, integrating legal agreements with smart contracts, and has also launched the first legal for-profit decentralized autonomous organization (DAO) architecture "The LAO".

On March 10, 2021, the Wyoming Senate Committee officially voted to pass the DAO Act. OpenLaw co-founder Aaron Wright first posted his live voting video on Twitter, and after the vote was passed, he explained why the Wyoming Senate Committee's formal vote to pass the DAO Act was significant. Lvdong sorted out the original text as follows:

This bill makes it possible to create an entity that is actually called “The DAO”; that’s really cool. This means that you will be able to transact with an organization called “XYZ, The DAO”.

A DAO can be whatever a developer wants. It can be unified, democratically governed, or algorithmically governed. Even more hierarchical structures can be explored (but, IMHO, that’s not that exciting).

The DAO format has no obvious legal constraints.

Well-intentioned DAO creators will have great freedom to organize affairs using a variety of legal documents, legal agreements, or smart contracts. This flexibility will enable people to effectively conduct governance and structural design of DAOs.

DAOs can operate in the “real world” and manage actual work risk. They are no longer toys; they can be real “players.” DAOs can hire people, and transact with other DAOs — all in ways that are outside the norm.

In the long run, the cost of creating a DAO should decrease because the creation of DAOs can be standardized (in terms of smart contracts and legal agreements).

Setting up a legally recognized DAO would probably cost a few hundred dollars instead of tens of thousands (at least in the US), which should allow multi-million (or even billion-dollar) DAOs to “bloom.”

Wyoming is exploring creating an API that would allow people to register DAOs. If so, then in the near future people will be able to set up their organizations from the command line. DAOs could be run as quickly as docker containers.

People can run their organizations on Ethereum, represent assets associated with those organizations on Ethereum, and manage their affairs on Ethereum through this bill and other Wyoming bills. That’s huge.

One of Ethereum’s core visions is coming true.