OpenLaw|DAO is a platform to crowdsource model legal-wrappers for limited liability DAOs to more efficiently organize around digital assets online.
DAOs at core involve managing value and rewarding related contributions, commonly digital treasuries for the development of open source projects, like Ethereum through “grants” to independent software developers. While this has introduced more fluid ways to cooperate through the trust-minimization of blockchain records and programmable assets, the persistent likelihood of related disputes merits investigation of how “trial ready” these DAOs are.
For example, in the event that a DAO contractor initiated a lawsuit against an identified DAO address holder, that unlucky DAO member could receive the entire liability of the disputed contract as a member of an unincorporated general partnership after a court renders its judgement for damages.
Clearly this is hardly ideal, but good news (!): it is also highly preventable with open legal tools, such as standardized forms of Articles, Operating Agreement and Bylaws available on OpenLaw|DAO to register limited liability companies in New York and Colorado (and more to come!) to act as legal proxies for DAOs and their financial engagements.
See, e.g., this video demonstrating Limited Cooperative Association formation:
Now, let’s take a step back and reflect on how any of this might even get started:
Imagine we have a loose group of online collaborators who would like to get more organized, and related to that end, develop and maintain open-source software with tentative plans to form a limited liability DAO related to this project if it begins to progress fruitfully.
Following this familiar story and thinking on how to use Ethereum to track early contributions or “sweat equity” that often falls through the cracks, we can knock out a basic form of DAO Articles that references a Github code repo and deploys a token minting program on testnet for marking various DAO member events as we lean into things (avoiding “gas costs” for now, but still benefiting from a (more or less) distributed ledger that relates to online addresses that can securely receive funds).
We’ll come back to this token program in a few, but for immediate purposes, we can understand these Ethereum tokens as a convenient way to track our nascent DAO membership and address balances for future reference if things become more advanced for our new collaborators.
1: “DAO Treasury Representative” executes TokenMint Articles:
In the few steps pictured above, we can hash out basic organization references and get a TokenMint program that can be managed through other OpenLaw forms, such as DAO membership agreements:
2: DAO Members execute Contributor Covenant:
After executing the DAO Contributor Covenant (based on this widely-used form for OS projects), the new DAO member will then receive 1 token from the TokenMint we just deployed every “1 minute” as default in the Ethereum call embedded therein to act as their minimum reward for engagement:
This ERC20 token minting action can be watched directly from the OL Contract Execution screen, and also paused, say in the event that a contributor withdraws from the DAO or fails to uphold their covenants or other contribution responsibilities:
Now, down the line, we can imagine how this streamed ERC20 value might be “accounted for” on formation of a limited liability DAO, in terms of awarding LLC Membership Units, or otherwise, to redeem payments for “real” mainnet value in the form of DAI or other ERC20s by using other OL forms for DAO Operations:
3: DTR uses DAO MultiToken Payment Form to reward contributions tracked by TokenMint:
For more examples of how OpenLaw|DAO can work to make payments and DAO accounting more efficient on Ethereum, check out these additional videos showing DAO transactions for sale of goods:
LINK transfer ⬡:
DAI transfer ◈:
By end of writing this article,
40 Tokens and counting ~~~