Web3 Lawyer Interpretation: The Essence of DAO Organizations, Creation Process, and Regulatory Status

DAO, as an emerging organizational form, is stirring up a wave of innovation in the Web3 world. It not only reshapes traditional organizational structures but also incubates a number of star projects. From all perspectives, DAO has received widespread attention. However, the definition and connotation of DAO vary in different contexts, making it difficult to grasp accurately.

This article will deeply analyze the following questions from the perspective of professional lawyers, combining the laws and practical experiences of various countries:

• The essence, advantages, and limitations of DAO organizations
• How to create a DAO organization
• The current legal regulation status of DAOs in various countries
• Can DAO serve as the issuer of tokens for RWA projects?

1. The Nature, 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 characteristics:

) 1. Decentralized organizational structure

• There is no centralized decision-making authority.
• All members participate in management decisions together
• Achieve automated operation through smart contracts
• Management rules are transparent and public

Advantages:

• Avoid the moral hazard of directors, executives, etc.
• The distribution of benefits is fairer and more transparent.

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) 2. Member-autonomous governance model

• Decision-making through token voting
• Eliminate hierarchical differences within the organization
• Promote equal communication and community atmosphere

Advantages:

• Avoid the negative effects of "one-person dictatorship"
• Increase member participation enthusiasm
• Achieve seamless connection between decision-making and execution

Limitations:

• Smart contracts have security risks.
• The decision-making efficiency is relatively low.
• The legal regulatory framework is still not完善.

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2. The Main Process of Creating a DAO Organization

1. Establish the organization's purpose and management rules
2. Write the rules as smart contracts
3. Test and audit the contract
4. Raise Initial Funds
5. Deploy the contract on the chain

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3. Current Legal Regulation of DAOs in Various Countries

) 1. UAE

• Release the "DAO Association Regulations"
• Granting DAO independent legal status
• Specify the technical requirements and governance structure of the DAO
• Establish an external regulatory framework

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) 2. United States

• Wyoming passed the "DAO Organization Supplementary Act"
• Allow DAO to register as a limited liability company
• Tennessee Code Revision, recognizing the legal status of DAO

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4. Can DAO serve as the issuer of tokens for RWA projects?

• A DAO registered as an independent legal entity can issue tokens directly.
• DAOs that exist only on the chain need to undergo legal wrapping.
• The specific situation needs to be assessed in conjunction with the project and local regulations.

![Web3 Lawyer's Latest Interpretation: What Exactly is a DAO Organization? How to Create a DAO Organization? Can it Serve as an RWA Token Issuer?])https://img-cdn.gateio.im/webp-social/moments-ce49b21da4fb20eb623c374a6b8520cc.webp(

DAO, as an emerging organizational form, has become relatively mature on the blockchain. However, to further integrate into the real world, relevant laws and regulations still need to be improved. Project parties also need to 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 also Serve as a RWA Token Issuer?])https://img-cdn.gateio.im/webp-social/moments-2fe6485a82617a69a346caa481708d12.webp(