DAO Contracts the Next Frontier for Your Business
Consider a DAO for Your Next Business Opportunity
Did you know that there is a new way to fund companies, create unique joint ventures, and spark new start-ups? Even new business divisions, new product lines, and really any purpose imaginable now have a new vehicle to create a new online business entity.
A “decentralized autonomous organization” (DAO) is a blockchain-specific smart contract, which provides the guidance, and the governance to manage any new entity or project, created within the smart contract. The DAO is deployed on a distributed ledger, outlining the rules, decision-making, and group consensus and allowing for a large group of participants to get involved.
DAO contracts are gaining momentum in many states in the US due to the many benefits they offer. These contracts leverage blockchain technology to create a self-governed and decentralized organization where decision-making is not centralized but instead involves all members of the organization.
One of the key benefits of DAO contracts is their transparency. The way they are designed ensures that all transactions are visible to all members, making it impossible for any one person to manipulate the system to their advantage. Additionally, since DAOs eliminate the need for intermediaries and other middlemen, they can help reduce costs for businesses and individuals.
The legal landscape for DAO contracts in the US has been evolving in recent years, with Wyoming being the first state to pass legislation recognizing DAOs as a new type of legal entity. The number of DAO states has now reached 5 as of this writing, with the State of Utah joining the legal legislation recognizing DAO contracts.
Which States have passed legislation for DAOs?
- Wyoming was the first State as of July 2021.
- Tennessee in April 2022
- Vermont, in 2018, applies to any company “that utilized blockchain technology
- Utah, March of 2023
Other states, such as Colorado and California, are also exploring similar legislation. As more states recognize the potential of DAOs, we can expect to see more widespread adoption of this innovative approach to organizational management.
While each of these states has specific nuances on setting up a DAO in their state, each provides a unique way to leverage a new contract vehicle to scale your solution to a wider audience than ever before. Some early examples of DAO’s include:
1). ConstitutionDAO was formed in November of 2021 to purchase an original copy of the United States Constitution. The DAO raised $47 million in Ether but lost to another bid on Sotheby’s auction. It was an incredible first experiment and showed the power that a DAO could quickly gain fuel for its purpose. The experiment showed how even though the DAO did not win the bid, the smart contract provided the terms of deal, which included how funds would be distributed back in the event that the DAO bid did not win (see their website here: https://www.constitutiondao.com/ ).
2). Uniswap is one of the largest and most popular DOAs and operates as a cryptocurrency exchange. Anyone can join by holding a UNI token, which provides voting rights on the organization’s operations.
3). UkraineDAO was set up to be a fundraising vehicle for the Ukraine conflict. Numerous NFTs have been auctioned, including a Ukrainian flag that sold for $4.7 million to fund the Ukrainian cause.
While DAOs have had some big names like the ones noted above, they are picking up traction at BlockCerts with mid-level companies contacting us for guidance on the tools available to create and set up their DAO. We currently have numerous examples that we can’t share due to non-disclosures, but you will be hearing about many of these soon. We’re seeing very creative ways to do the following:
- Fund a blockchain, AI, and technology project to save money and accelerate growth.
- Create a pathway for private companies to fund new projects and new divisions by providing a token and reward to clients or even investors, without dilution of their company stock.
- Provide a way to attract fans and distribute a secondary token of value, NFTs, company assets, or other value through tokenization.
Consider a DAO for Your Next Business Opportunity!
While it might sound very complex, actually, we’ve created a simplistic way to get started, along with all of the tools needed to create your own DAO.
Contact us and we’ll share more!