How To (Legally) Form A DAO In The US - part 1

How To (Legally) Form A DAO In The US - part 1
How to legally form a DAO in the US

First off. This is not legal advice, or advice at all. These are the uninformed opinions of a  dude in his early (mid?) 30s okay, so like please disregard.

P.S. Don't worry, XO is not going off and doing random crypto stuff now, we're still buying sober SaaS's at super prices. This was just a fun weekend hack. DAO's are super interesting, and perhaps the future of our entire industry but no big deal.
For the XO history buffs, you might recall that XO started out as a DAO-ish thing in 2019. I put a collective together to try and build companies under a DAO structure. I was starting with a community, then DAO, then world domination... lol. Version 1 didn't work for a number of reasons.

It morphed into what XO is today, but the history of the company is rooted in crypto. I had started out with the brand NoCo ( which stands for No Company and have thought DAOs are the coolest thing since sliced bread for a while, but never had an easy, legal way to play with the concept.

The Boring Legal Stuff!

Apparently I'm the last person to learn about this but late last year 2021 the state of Wyoming formally recognized a DAO as a subtype of an LLC (basically a DAO now has the same limited liability as an LLC)!

I applaud this kind of state "innovation". With limited legal clarity in other states, I imagine a ton of U.S. crypto folks are going to flock to form their DAO in Wyoming if they're not already in Puerto Rico. The alternative has been costly lawyers drafting docs from scratch and permanently residing in legal gray area in Delaware. I'm certain Delaware will follow. If you read the short doc (which is actually readable!), there are some lovely definitions and a formal, simple agreement. It's great!

Some juicy parts I will not comment on because I'm not a lawyer but strike me as INTERESTING:

A membership interest may also be characterized as either a digital security or a digital consumer asset as defined in W.S. 34-29-101, if designated as such in the organization's articles of organization or operating agreement;

ok. I'll comment a little, "either a digital security or a digital consumer asset". This is really really key. One is a security. That's pretty clear. Lots of legal clarity around securities in the U.S. enforced by our very own S.E.C. The other though, a "digital consumer asset"... let the games begin! Should we have a Digital Consumer Asset Committee? Perhaps.

But if you know anything about securities, basically everything is securities fraud. One thing that still makes me a little trigger shy is that in an earnest attempt to create a "digital consumer asset" (like actually earnest), you might be committing securities fraud. That's tough bc securities fraud is a serious thing, and also because basically everything is securities fraud.

If the articles of organization filed pursuant to subsection (a) of this section does not include a publicly available identifier as required by W.S. 17-31-106(b), the person filing shall have thirty (30) days to provide the publicly available identifier to the secretary of state. If the publicly available identifier is not provided within thirty (30) days, the secretary of state shall dissolve the decentralized autonomous organization.

This is super cool. a public identifier. So clean.

Except as otherwise provided in this chapter, the articles of organization and the smart contracts for a decentralized autonomous organization shall govern all of the following: [...] All other aspects of the decentralized autonomous organization.

Uh. yeah. correct. dope.

Membership interests in a member managed decentralized autonomous organization shall be calculated by dividing a member's contribution of digital assets to the organization divided by the total amount of digital assets contributed to the organization at the time of a vote; or

Ugh, so this to me is super 'security' ish. There's some language in here about other kinds of non-security DAOs, but then they go back here and specifically callout 'assets contributed' which implies security... which implies security fraud if you try to make your thing not-a-security. Seriously, everything is securities fraud.

If all members do have not contribute contributed digital assets to an organization as a prerequisite to becoming a member, each member shall possess one (1) membership interest and be entitled to one (1) vote;

But then they bring it right back and (super important) use "or". So there is a path for non-security stuff!

The final part is about dissolution. This is super interesting.

[Dissolution  can happen by]... vote of the majority of the members of a member managed decentralized autonomous organization;

so like basically all this short squeeze stuff of the future could actually shut the DAO down? Let me explain. If you had an activist that ended up buying a controlling interest, they could actually just shut the whole thing down.

A recent proxy might be Elon Musk's investment in Twitter. According to this doc, if Twitter was a DAO and Elon bought 51%, he could basically shut the DAO down. Now I don't know why someone would do that but the fact there is clear legal downs for forcing a DAO to be shut down strikes me as odd. Although I guess this is true of any corporation. anyways. would bet my life savings that some shenanigans will fall out from this.

But overall this is a lovely doc. Bravo Wyoming!

Forming A DAO

Before you go through this form. You need a registered agent in Wyoming. I used It was $25. It was a little confusing but on step 3 you can search for this registered agent and it will populate everything for you.

  1. go here


4.  Registered Agent in Wyoming. Set this up before you start.

5. Additional articles. Please consult a lawyer, I didn't. Probably going to mess this part up in some unfixable way...

Here's what i put into my article detail (dear god ask someone smarter than me about what you should put in here):

The entity is a decentralized autonomous organization.

All Smart Contract addresses will be publicly listed on

The DAO will be managed by members and management will be conducted algorithmically as set out in the Smart Contracts.


The rights of members in a decentralized autonomous organization may differ materially from the rights of members in other limited liability companies. The Wyoming Decentralized Autonomous Organization Supplement, underlying smart contracts, articles of organization and operating agreement, if applicable, of a decentralized autonomous organization may define, reduce or eliminate fiduciary duties and may restrict transfer of ownership interests, withdrawal or resignation from the decentralized autonomous organization, return of capital contributions and dissolution of the decentralized autonomous organization.

You'll immediately get a cert

You can then go to the site and get an EIN number immediately.

And boom! I'm now the proud founder of my very first LEGAL DAO!!!!

all in, it was $127.00 and took about an hour. You could then go to Mercury (our bank of choice) and submit a form for a bank account. and that's about it. super painless.

More DAO experiments and shenanigans to come.


  • wait for next week's post before you take any action based on this info. Some things went haywire after I submitted this.