In smart contract technology, there lies the promise of melding programmable, automated business logic with real-world business structures. One group of blockchain developers has just taken a decisive step toward formalizing one such meld.
That group, dOrg, which characterizes itself as a “blockchain development shop,” announced this week it had registered the “first legally established Decentralized Autonomous Organization (DAO) under United States law.”
The idea was to set forth a blueprint other DAOs can follow in the future. The cooperative set up a Vermont-based company, dOrg LLC., and in the process linked that so-called “Blockchain-Based Limited Liability Company (BBLLC)” registration to dOrg’s DAO on Ethereum.
The advancement marks an interesting milestone. DAOs can be opened permissionlessly and borderlessly by any group that has the requisite know-how. Now, dOrg’s work points the way to a future in which any DAO can become an official legal entity in kind, suggesting these bodies may soon be plugging right into the heart of mainstream business circles.
To help actualize the initiative, dOrg’s members consulted with Oliver Goodenough, special counsel to one of Vermont’s top law firms, Gravel & Shea. Goodenough, who also works as a Vermont Law School professor, has since noted that dOrg’s DAO seems to be a first of its kind:
“dOrg asked us to help design a DAO legal wrapper after discovering the potential of BBLLCs. We believe that dOrg is now the first legal entity that directly references blockchain code as its source of governance. Its material operations and ownership interests are managed entirely on-chain.”
In a statement approved by an absolute majority of dOrg’s DAO members, the group noted the BBLLC registration process should become increasingly easy:
“We want to make what we just did accessible to anyone in the world. Ultimately, the process of configuring and deploying a legally registered DAO will be as easy as creating a social media account.”
OpenLaw Another Project to Watch
On Wednesday, ConsenSys-backed “smart legal contracts” project OpenLaw highlighted a new Ethereum dapp called Incomeshare.me, which allows students to tokenize income share agreements (ISAs) and participate in secondary markets for these agreements.
Simply put, ISAs are contracts in which students commit negotiated portions of future salaries in exchange for tuition funding. Incomeshare.me uses OpenLaw tech and Ethereum to host these contracts on a public blockchain.
In an explainer post, OpenLaw community member Josh Ma said secondary markets for such tokens could make ISAs more popular in general:
“As this alternative model for funding higher-education becomes more popular, enabling a secondary market would accelerate its adoption by providing liquidity and opportunities to mitigate risk, both attractive qualities for investors.”
The dapp is only the latest wrinkle added to the OpenLaw ecosystem. Back in May, OpenLaw was linked to two partnerships, one with the Loans Syndication Trade Association (LSTA) and the other with international law firm Latham & Watkins LLP.
As for the LSTA deal, the collaboration will see the association and OpenLaw builders team up on a pilot to automate a revolving credit mechanism via Ethereum.
Moreover, OpenLaw tech underpinned the Automated Convertible Note, which was built in collaboration with Latham & Watkins and was announced at this year’s Ethereal Summit NY. The system generates documents to “help startups raise capital with customizable market standard terms and optional digital token provisions,” ConsenSys said.
Similarly to dOrg’s work, OpenLaw’s system was also used in a proof of concept “limited liability digital association” earlier this year.
Last fall, OpenLaw had partnered with decentralized oracle project ChainLink to leverage the specialists’ real-time oracle functionalities. The move was a bid toward making OpenLaw’s smart legal contracts that much smarter and practical.