Web3 Lawyer's In-Depth Analysis: The Nature, Creation Process, and Legal Status of DAO Organizations

In the Web3 world, the innovative concept of DAO has sparked wave after wave of transformative change. As an organizational paradigm based on blockchain technology, DAO not only reshapes our understanding of traditional organizations but also incubates important projects like Compound and MakerDAO that change the rules of the industry. From project parties to investors and ordinary users, there is a high level of attention given to DAO. However, when we try to define DAO, it presents a diverse appearance in different contexts.

This article will explore the following issues from the perspective of a professional lawyer, combining regulations and practical experiences from various countries:

• The essence, advantages, and limitations of DAO organizations
• The specific process of creating a DAO organization
• The current legal regulation status of DAOs in various countries
• Can DAO serve as the token issuer for RWA projects?

1. The Essence, Advantages, and Limitations of DAO Organizations

The core features of a decentralized autonomous organization (DAO) ( are "decentralization" and "autonomy". Compared to traditional companies, DAOs have the following significant characteristics:

) 1. Decentralized Organization Structure

DAO does not have a centralized decision-making body like traditional companies; instead, management decision-making power is shared by all members. Its operational rules are written into smart contracts and run publicly and transparently on the blockchain, avoiding interference from centralized management bodies. This structure effectively mitigates the moral hazard issues faced by traditional companies.

2. Member self-governance model

The DAO achieves autonomy through member voting. Members holding governance tokens can propose initiatives and participate in voting, with the entire process executed automatically by smart contracts. This model breaks the traditional hierarchical system, promotes equal communication among members, and increases participation.

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) Advantages of DAO

• Avoid moral hazards of centralized management
• More transparent and democratic decision-making
• Promote equal communication among members
• Stimulate member participation enthusiasm

Limitations of DAO

• Smart contracts have security risks.
• The decision-making efficiency is relatively low
• The legal status is still unclear, and there are compliance risks.

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2. The Basic Process of Creating a DAO Organization

1. Establish the organization's purpose and operating rules
2. Write the rules as smart contracts
3. Conduct rigorous testing and auditing of the contract
4. Raise funds through methods such as issuing tokens.
5. Deploy the contract on-chain to officially establish the DAO.

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3. Current Legal Regulation Status of DAOs in Various Countries

) 1. UAE

The "DAO Association Regulations" released by the RKA DAO in the UAE provides a clear legal framework for DAOs:

• Grant DAO independent legal person status
• Specified the technical requirements of the DAO
• Clarified internal governance and external regulation

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) 2. United States

Wyoming and Tennessee allow DAOs to be registered as limited liability companies, but the regulations are relatively simple.

3. Other countries

The Marshall Islands, Malta, and others have also introduced relevant regulations, but their impact is limited.

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4. Can DAO serve as the token issuing entity for RWA projects?

• A DAO registered as a legal entity can issue tokens provided it meets local financial compliance requirements.
• Pure on-chain DAOs cannot directly serve as the issuing entity for tokens and require legal packaging.

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V. Summary

DAO, as a new form of organization, has matured on the blockchain, but further integration with the real world still requires improvement of the legal framework. DAO project parties should pay more attention to compliance requirements to avoid potential risks.

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![Web3 Lawyer's Latest Interpretation: What Exactly is a DAO Organization? How to Create a DAO Organization? Can it Serve as a RWA Token Issuer?])https://img-cdn.gateio.im/webp-social/moments-2fe6485a82617a69a346caa481708d12.webp(