Wyoming’s DUNA Framework Could Pave The Way For Smart Contract-Powered Community Groups

A new legal framework offers fertile ground for innovation in community-based initiatives

Last month Wyoming passed groundbreaking legislation providing a legal framework for nonprofit DAOs or decentralized unincorporated nonprofit associations (DUNAs). This framework not only delineates essential organizational roles but also sets foundational regulations, ensuring DUNAs operate within a well-defined legal boundary.

Key Takeaways from Wyoming’s DUNA Legislation:

• Innovative Governance: Enables organizations to anchor their governance and operations in blockchain technology, using smart contracts for streamlined decision-making.
• Nonprofit Purpose: Mandates that any generated profits support the collective nonprofit mission, ensuring community benefits remain paramount.
• Operational Flexibility: Allows for the hiring of Administrators, facilitating efficient management within these decentralized entities.
• Asset Acquisition: Grants DUNAs the ability to hold tangible assets, broadening their operational scope.
• Membership and Protection: Requires a minimum of 100 members while providing comprehensive liability protection, safeguarding both members and administrators.

While Wyoming’s legislation goes a long way in carving out a clear legal path for decentralized organizations, its current scope only embraces entities with nonprofit intentions.

So what is considered a nonprofit in Wyoming? According to the Wyoming Nonprofit Network 2016 report, nonprofits in Wyoming include 501(c)(3) and 501(c) organizations, including Private Foundations, Public Foundations, and other groups such as civic leagues, social welfare organizations, and labor organizations.

Looking at the current DAO ecosystem, if you squint, you can kind of see how some existing projects could fit within this new framework. For example, Apecoin DAO has a mission to broadly support Web3 development for the public good. Or perhaps Maker DAO, which provides public exchange contracts for DAI, could fit the bill. But other initiatives, such as CityDAO, which has purchased 100 acres in Wyoming for development, don’t seem to easily fall into the DUNA framework — with the ’N’ or ‘nonprofit’ being the key missing piece. But with this legislation providing a meaningful legal framework, could more traditional nonprofit organizations start thinking about decentralization?

Certainly, and for good reason.

There could be tremendous transparency and stability gained from building organizational rules into the “code”, even hard-coding voting rights or operational procedures, to ensure governance norms over the long term. And tokenization of membership, accounts, and assets could super-power incentives and align capital, empowering participation in community-based organizations in a way not seen since the 1930s.

An example: Imagine migrating labor union participation to a decentralized framework. This could provide more transparency for participants and accountability for leaders. Voting is more transparent and seamless and it can be executed instantly, on-chain, and across geographic borders. Organizational protocols like elections or disbursements could be hard-coded, giving members more confidence in the long-term mission and conduct of the organization. Pooled member resources could be more easily tracked, and investment decisions could be more easily coordinated. This would be a powerful new engine for coordinating and directing community-based resources, ushering in an era of organized capital.

This would be a powerful new engine for coordinating and directing community-based resources, ushering in an era of organized capital.

Wyoming’s legislative groundwork is just the beginning. The real test lies in adoption and adaptation by both existing DAOs and traditional nonprofits exploring decentralization. The future may also see Wyoming addressing the needs of for-profit decentralized entities, further expanding this innovative legal landscape.

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