What Is a DAO LLC?

The next chapter of the evolution of the internet and finance is upon us. Thanks to blockchain technology, a decentralized peer-to-peer network of computers without a central authority where people can exchange data without the fear of censorship. It records the network’s transactions to a transparent ledger secured by uncrackable cryptographic methods.

 This technology later evolved into smart contracts, a protocol that started in the Ethereum network. It auto-executes the code written by its programmer/s.

 Smart contracts made it possible for decentralized autonomous organizations (DAOs), decentralized finance (DeFi), and decentralized apps (dApps) to exist. They have been gaining popularity since then. 

 What is a DAO?

 A DAO is a business structure of like-minded individuals native to the internet. However, unlike traditional businesses, DAOs do not have a central authority or a CEO that runs and controls the show.

 Instead, a DAO is governed by a computer code that is directly verifiable by anyone who wishes to since it is fully transparent by nature. Any changes to the protocol need voting. All members of the DAO are required to vote to pass or decline the change. 

 There are many models for a DAO. Usually, it is a token-based membership where members hold governance tokens in their crypto wallets.

By default, a member’s only identifiable information is their wallet address. Unlike traditional business structures, DAOs don’t need to register your real name. However, if the same wallet address transacts on a centralized exchange where a know your customer (KYC) ruling is imposed, the real identity of the wallet owner may be revealed. 

 What is a limited liability company (LLC)?

 An LLC is a form of business structure in the US that has the benefits of a sole proprietorship or partnership’s tax obligations. It also has a corporation’s limited liability. This protects the personal assets of a member of the LLC if a lawsuit is filed against the company. 

 Why is it essential to form DAO LLC?

The risk of failure in forming a DAO is relatively high, given that this technology is still in its infancy. People, by nature, will find someone to blame, which may ultimately lead to a lawsuit. Incorporating your DAO into a DAO LLC is imperative to protect your personal assets if your DAO gets sued in the future. 

It may be daunting to register a DAO LLC, given that not all US state sees DAO as a legal entity. Plus, there is also the matter of each state having different guidelines and regulations.

But there are companies now that can make forming a DAO LLC very easy and convenient for you. You can do it online and in the comforts of your own home.

These outfits can incorporate your venture where it can reap the most benefits. They can also help you get an Employer Identification Number (EIN) and set up a US business bank account. Other services include payment processing and filing taxes with the state and the Internal Revenue Service.