This post explores the legal standing of DAOs and provides insight on how to structure your DAO to minimize liability for its members. A DAO, aka Decentralized Autonomous Organization, leverages blockchain technology to empower a group of people to reach a consensus over the state of their organization. I originally coined the phrase “Decentralized Autonomous Company” in 2013 to describe Bitcoin. The thinking was that Bitcoin was autonomously achieving its purpose without reliance on any centralized infrastructure.

A smart contract is computer code that deterministically executes an algorithm to determine property rights according to the signed statements of individuals. They enable a community to efficiently and unambiguously reach a shared consensus on who owns what.