Decentralized Autonomous Organizations (DAOs) were initially conceived as an alternative to traditional corporate structures. However, the legal realities of early 2025 are challenging this model amid new demands.
The End of Entity-less DAOs
The DAO experiment began as a challenge to corporate orthodoxy, but the past two years have forced a rethink. Without a legal wrapper, courts have increasingly treated DAOs as unincorporated associations with unlimited liability. A prominent example is the case of Samuels v. Lido DAO, where court recognized token holders as effectively partners. Furthermore, regulators confirmed that these organizations cannot ignore legal standards.
Jurisdictions Race to Adapt
In response to the situation, several jurisdictions have rolled out new entity types for DAOs to address the need for legal personality and liability shields. In the U.S., Wyoming and Utah have led with the creation of structures such as DUNA and LLD. Offshore, the DAO LLC structure in the Marshall Islands is also gaining traction. In the UAE, the RAK DAO Association regime has been established, offering full corporate privileges to DAOs.
Reimagining Legal Wrappers in the DAO Ecosystem
Modern legal wrappers for DAOs are viewed as modular components that can coexist and adapt. This creates conditions for flexibility and resilience in structure, where each element has a defined purpose and legal aim. A modular approach allows different legal modules to be intertwined while maintaining decentralized governance. This direction provides protection for participants without undermining the autonomy of the DAO.
Legal structures for DAOs are not the end of the decentralization dream but its next evolution. The future interaction between technology and law is shaping a new vision where DAOs remain independent but become more secure and responsive to contemporary challenges.
