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Miles Jennings
@milesjennings
🚨Big News🚨Wyoming just enacted a game-changing law for web3. It creates a new entity for DAOs – the Decentralized Unincorporated Nonprofit Association (DUNA) – that’s been years in the making. @cowriellc and I provide everything you need to know below: https://a16zcrypto.com/posts/article/duna-for-daos/
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Miles Jennings
@milesjennings
2/ Wyoming’s new law will enable blockchain projects to operate within the bounds of applicable laws without compromising their decentralization. It also keeps them permissionless. This is a major breakthrough.
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Miles Jennings
@milesjennings
3/ Critically, the bill solves three key challenges DAOs face: 1️⃣ It gives them legal existence, enabling them to contract with third parties; 2️⃣ It enables them to pay taxes; and 3️⃣ It provides limited liability from the actions of other members.
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Miles Jennings
@milesjennings
4/ The DUNA solves these challenges without exposing consumers to additional risks. Anyone building a consumer-facing application on top of a blockchain network, like a social media app, would continue to use traditional entity forms.
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Miles Jennings
@milesjennings
5/ And even though it’s called a “nonprofit association,” the DUNA is able to both engage in profit making activities and pay reasonable compensation to DUNA members for any services provided to its ecosystem. This unlocks a huge design space for protocol economic models.
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Miles Jennings
@milesjennings
6/ Further, the DUNA could help strengthen arguments that the digital assets of a project are not investment contracts (aka securities) under the Howey test. From @cowriellc's and my article:
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Miles Jennings
@milesjennings
7/ This comes at a critical time. Regulatory and legal attacks are on the rise. Many allege that without a legal entity, a DAO is just a general partnership. That categorization would be catastrophic for DAO members, subjecting them to untenable tax and liability risk.
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Miles Jennings
@milesjennings
8/ The DUNA provides a much needed oasis from that risk without overly restricting how DAOs are currently launched and operated – It: 🔹safeguards decentralization; 🔹empowers DAOs to grow; 🔹enables development of economic models; and 🔹keeps blockchain networks open.
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