EOSIO DAO Legal in Wyoming, 49 to Go
On July 1, the American CryptoFed DAO became the first legally recognized DAO within the United States. DAOs are now considered by Wyoming to be limited liability companies that carry similar characteristics and responsibilities. The Wyoming Decentralized Autonomous Organization Supplement is certain to be the first of many crypto laws.
About American CryptoFed DAO
The company behind American CryptoFed DAO is mSHIFT Inc. It's been a leader in mobile banking. Through the Mobile Payments Industry Workgroup, mSHIFT works with regional Federal Reserve banks to enact change.
As its name might suggest, American CryptoFed DAO it's about decentralizing monetary systems. Decrypt overviewed the project, its potential impact, and spotlighted influence makers from both the private and public sector.
THE ADVANTAGES OF EMPLOYING A DOA
Employing a DAO structure over that of a traditional limited liability company brings several powerful advantages. It directly impacts the dynamic of leadership as well as the motivation behind decision making. It's important for DAOs to have the same rights as limited liability companies. The objective is to move forward with the greatest efficiency, something that blockchain communities know quite well.
Aaron Wright added insight to what Wyoming was doing. In a past Decrypt interview, Wright pointed to how the new law also makes it more economical and easier to form a DAO.
Why EOS over Ethereum
American CryptoFed DAO, is strongly rooted in Wyoming. It's CEO, Marian Orr, was mayor of Cheyenne. Orr has taken as far a pro blockchain position as to describe future companies where CEOs are obsolete. Instead, DAO governance relies on token holder’s voting on decisions enacted by smart contracts. Here's what she had to say about Wyoming’s role:
“Wyoming is the leading digital assets jurisdiction in the USA, and now, with this DAO law, Wyoming is arguably the top blockchain jurisdiction in the world,”
Her position on choosing EOS (from 2019) appears equally as strong:
...with high scalability, low latency and zero transaction fee, EOS was our choice. In our opinion, it is currently the best available public blockchain platform.
Regulatory Hurdles
A key battle blockchain developers initiated a few years ago was to insist upon a grace period proceeding subjugation to security laws. Not only did developers believe this necessary to avoid stifling new projects, but also, to do so would be misdirected and even unconstitutional.
Startup blockchain projects need time to become significantly decentralized. This is the motivation behind the three-year grace period suggested in the latest version of the Token Safe Harbor Proposal. SEC Commissioner Hester Pierce seems to support it.
ABOUT THE BILL
The Wyoming Decentralized Autonomous Organization Supplement outlines the following:
restrictions
transfer details
managerial method
membership
voting
dissolution
other aspects
Here’s how closely the law compares a DAO to an LLC:
“ A decentralized autonomous organization is a limited liability company whose articles of organization contain a statement that the company is a decentralized autonomous… “
The definition section goes on to say:
“ This chapter does not repeal or modify any statute or rule of law that applies to a limited liability company… “
Both the Wyoming Decentralized Autonomous Organization Supplement and the DAO’s structure, may determine fiduciary duties as well as ownership transfer. For example:
“ The registered name ... shall include ... ‘DAO’, ‘LAO’, or ‘DAO LLC.’ “
“ ...define ... as either a member ... or an algorithmically managed decentralized autonomous organization… “
About forming a DAO:
“ Any person may form a decentralized autonomous organization which shall have one (1) or more members… “
“ ...The person forming the decentralized autonomous organization need not be a member of the organization. “
“ ...maintain in this state a registered agent… “
“ An algorithmically managed decentralized autonomous organization may only form under this chapter if the underlying smart contracts are able to be updated, modified or otherwise upgraded… “
Considering the global nature of blockchain technology, it’s worth noting that the secretary of state cannot issue certificates to foreign-based DAOs.
Wyoming’s Impact in Blockchain Infrastructure
This same day (July 1) the law went into effect saw the following Senate filings:
SF0038 - Decentralized autonomous organizations. BlockChain/Technology [04/21/2021 - 07/01/2021]
SF0039 - Digital identity. BlockChain/Technology [04/01/2021 - 07/01/2021]
SF0040 - Wyoming Money Transmitters Act-amendments. Minerals [04/01/2021 - 07/01/2021]
SF0041 - Tax lien enforcement-amendments. Minerals [02/08/2021 - 07/01/2021]
SF0042 - Out-of-state state bank charter conversions. Minerals [02/08/2021 - 07/01/2021]
SF0043 - Wyoming energy authority amendments. Minerals [02/08/2021 - 07/01/2021]
CONCLUDING THOUGHTS
People are no longer asking why Wyoming is crypto friendly as was the case when the state supported the licensing of crypto banks. DAOs as limited liability companies promise to change how the state, and eventually America, does business. It empowers individuals who choose to be token holders. Through smart contracts, the health of an organization is drastically more resilient. Furthermore, there now exists a real capacity to enact positive change for a better future.
WHY EOS?
The main target audience of the EOS platform is decentralized applications (dApps). DApps are basically internet or mobile apps like YouTube, Facebook, and Gmail. But instead of having a central control point, it is decentralized!
For more on DApps, check out my guide here!
Ethereum is currently stuck at 15 transactions per second. EOS, on the other hand, raises the bar for transactions per second, targeting millions. This makes EOS both the most scalable blockchain in the industry and capable of handling any real-world application.
Did you know that there are 52,000 Facebook likes per second? Each “Like” creates a separate data flow that must be performed in the system. If EOS achieves these scalability goals, it becomes a great choice for an app like Facebook.
In July 2018, at the time of writing, EOS has successfully reached 1000 EOS transactions per second. The team did this during the testing period three months ago. Although it already provides a better service than Ethereum in this regard, it is still far from its main goal.
What about fees? According to the EOS white paper, there will be NO fees when sending and receiving money! The network is able to do this because it can earn newly created EOS coins by helping people confirm transactions (we will return to this in the next section).
The EOS white paper states that blockchain can confirm a transaction 99.9% in just 0.25 seconds and validate 100% after 1 second!
If EOS can achieve its goals in the near future and can perform millions of transactions for free, there will be no blockchain to compete in the industry.
I think main problem of the business world is that they rely on hierarchy and most of the companies are built on this, but world is changing and movements like this will put a stop to social order of companies.
This decision of Wyoming will bring a new system that build on the idea of unity, it is much safer and it reduces both the stress and pressure on coworkers, as well as the customers. Besides decentralization takes the power of authority, and spreads it to everywhere. I think in that sense the blockchain technology will make everything more manageable.
Speaking of EOS, I recently started to make my transfers by using EOS chain. I discovered the power of EOS thanks to you and other members of this community who informs us about its technology. I also want to accumulate some EOS on my portfolio (just waiting for the right moment :p). Therefore, it is no coincidence that they initiated this decision on EOS chain.
Thanks for the article!