DAO (Decentralized Autonomous Organization): The Digital Structure of the Future

A DAO is a digital organization (such as a business or a community) built on blockchain technology and governed by smart contracts. It operates without a physical office or a centralized executive—management is carried out collectively by its members through governance tokens.

🔹 Well-Known Examples of DAOs

• MakerDAO – a decentralized credit platform

• Uniswap – a decentralized crypto exchange

• Aragon – a toolkit for creating and managing DAOs

🔹 Core Features of DAOs

• Blockchain-based: DAOs are created and operate on decentralized blockchain networks.

• Self-governed: Internal rules (similar to corporate charters) define the purpose, decision-making process, and structure.

• Automated operations: Transactions, payments, and contracts are executed via smart contracts.

• Decentralized control: Governance is performed through voting by token holders (governance tokens), reflecting collective decision-making.

🔹 Benefits of Using DAOs

• Full transparency: All decisions and transactions are recorded on-chain and visible to participants.

• Operational efficiency: Automation reduces the need for administrative management.

• Borderless participation: Members can join and vote from anywhere in the world.

🔹 How DAOs Work

• Tokens are distributed based on defined criteria (monetary contribution, work input, airdrops, etc.).

• Proposals are submitted, discussed, and voted on using governance tokens.

• Once approved, smart contracts execute the decisions automatically (if programmed).

🔹 Legal Aspects of DAOs

• Legal recognition: Most countries do not yet recognize DAOs as legal entities (exceptions: Wyoming, USA; Liechtenstein).

• Participant protection: Limited legal mechanisms exist to enforce rights or resolve disputes.

• Regulatory compliance: DAO activities—especially those involving token issuance—must comply with rules such as the EU MiCA Regulation (for more details read here).

• Smart contract risks: Coding errors may lead to financial loss, often without the possibility of reversal.

🔹 Where Are DAOs Used?

• DeFi (Decentralized Finance)

• NFT and digital art communities

• Investment syndicates and fundraising DAOs

• Crowdfunding platforms and startup governance

🔹 Legal Support for DAO Projects – by Zilver

The legal team at Zilver offers comprehensive assistance for DAO-related ventures:

• DAO model analysis and risk evaluation

• Jurisdiction selection and DAO/LLC registration

• Drafting bylaws, governance policies, and smart contract documentation

• Compliance support for AML/KYC, taxation, and GDPR

• Structuring of hybrid models: DAO + traditional company to combine flexibility with legal and tax efficiency

Whether you're launching a DAO or looking to legalize an existing decentralized project — Zilver Law Firm helps ensure your venture is secure, compliant, and ready for global growth.