Here to Help: Questions to ask yourself when founding a DAO...from a legal perspective
So you're thinking about founding a DAO. Well, we reached out to our friend, LC Cole, web3 + blockchain attorney, to inquire what questions are prudent to ask when starting a DAO. *Please note that this is not legal advice*
3 most important questions to ask:
Who is the initial founding team/Who are the core members?
What are the rules/expectations?
What is your Token Distribution plan?
Let's dig in a bit more
Who is the initial founding team/Who are the core members? "This question is crucial not just to set roles and expectations, but because in the "Pre-DAO" stage, this core/founding team will likely be listed on any legal wrappers created to protect the entity and IP of the DAO. In the "Pre-DAO" stage, the legal wrapper is likely only protecting the core/founding team, whereas the legal wrapper will likely be adapted to protect the entire DAO once it launches fully."
What are the rules/expectations? "This second question goes well in answering the first because when creating the legal wrapper for the core members, you will be creating an operating agreement. That operating agreement could be the foundation of the governance for the DAO as a whole. While these rules/this agreement will change as the DAO goes from pre-formation to post-formation, the operating agreement will set the tone and possibly governance rules for how the DAO operates moving forward."
What is your Token Distribution plan? "If the token has an economic value or if it will be sold on an exchange, the assessment and legal wrapper needs may change dramatically. If the token is merely for governance then this is where you decide the weight: one token, one vote, a limit on the number of tokens any one wallet can hold."
Now go found that DAO!
There are a lot of factors to consider when moving forward with this process, but these 3 questions can help you get started. We suggest you find yourself a web3 attorney to help you navigate this process.
Now go out there, get to answering these questions, and get that DAO up and running! Hey, and when that DAO is operating, be sure to check out CharmVerse for your web3 community platform!
We would like to extend our appreciation to LC Cole for giving us insight into the legal world of web3. Thanks, LC!