The hype around DAOs (decentralized autonomous organizations) is growing. In the course of this, an increasing number of DAOs are being established in Germany. The range of areas of applications is diverse: Community DAOs, NFT DAOs, nonprofit DAOs, etc.
But what should initiators and committed persons keep in mind when founding a DAO?
For a DAO to be successful and functional, the following four points are essential:
Code bearers for the MultiSig are often particularly committed members who first introduce themselves online and then stand for election. The election of MultiSig holders is usually one of the first votes in newly founded DAOs. If transactions must be signed by, for example, five holders, DAOs should choose at least eight MultiSig holders. This creates a cushion that helps the DAO retain acting capability in the event of illness or considerable time zone differences.
On the technical level, founding a DAO is achieved by means of open source programs that provide the technical requirements for both proposals and voting. Coding a completely separate smart contract on your own is therefore not required. The best known examples of such programs are Aragon, DAOstack or Snapshot, among others.
A certain level of technical know-how is necessary to define the rules for the DAO as well as some technical settings. However, programming is not necessary because everything can be configured via a user interface within the respective program.
The monetary costs of founding a DAO in Germany are relatively manageable. If one wants to establish a DAO on the Ethereum blockchain, for example, a fee of about 0.2 ETH is due to Binance. The time costs, on the other hand, are very intense. Keeping large communities informed and overseeing the many opinions and contributions can be considerably time consuming.
In contrast to isolated efforts and the state of affairs in the USA, for example, a DAO does not represent a separate legal form in Germany. Insofar as legal questions currently exist, in particular with regard to the liability of the participants, a DAO is generally considered to be a civil law partnership - in which all partners are personally and unlimitedly liable.
This can be countered by cleverly designing the organization, so that, for example, the DAO is set up as an association (not entered in the register of associations). However, this solution also raises questions as soon as the DAO pursues economic purposes. In such cases, a trust solution can be the means of choice.
More than ever, however, the principle that "it depends" applies to the establishment of a DAO from a legal perspective. A separate legal form does not exist for DAOs; each enterprise must be individually evaluated and designed. Otherwise, token holders face liability.
Do you have questions regarding the founding of a DAO in Germany? Do you seek professional expertise regarding legal or tax issues in connection with your planned DAO project? Do not hesitate and come to us. Our experienced attorneys and tax advisors will work with you to develop the optimal strategy. Your contact persons are:
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