March 2, 2023 – DENVER, US – Web3 and existing legal systems are not yet interoperable. This disconnect often means decentralized organizations are locked out of many of the benefits that corporations take for granted: Limitation of liability, a legal persona people can interact with, dispute resolution, certainty on their tax status, and many more.
LexDAO, a decentralized guild of legal engineers supporting DAOs and the Web3 community, and Q, a Layer1 governance framework, are partnering to end this detachment. LexDAO’s sister project, KaliDAO, has deployed its Wrappr infrastructure onto Q to help DAOs navigate traditional legal landscapes and governance issues while staying fully decentralized and on-chain.
The partnership kicks off today. The launch of Wrappr on Q will be accompanied by several workshops during ETHDenver held jointly by Q and LexDAO. DAO designers and contributors participating in these events will explore how to write and enforce private DAO constitutions for decentralized governance. They will also learn how the Wrappr x Q infrastructure can help them set up legal entities while keeping all elements of being an independent DAO intact.
“DAOs are exactly what the last letter of its abbreviation stands for – organizations. And throughout the world, the best kinds of organizations are regulated. Sadly, those regulations rarely account for the Ds and As of DAOs, but it does not mean the decentralized world should be forced to decide to either stay decentralized and autonomous or allow for fully established organizations,” said Kyle MacLean Smith, core contributor to LexDAO “I am excited to deploy Wrappr on Q to enable DAOs not only to set themselves up as legal entities but also to gain new functional ways for rule setting and dispute resolution.”
“Supranational organizations have difficulty establishing themselves and functioning in a world that is still dominated by individual jurisdictions and their laws. This is true especially for DAOs that are fully decentralized and autonomous without a centralized hub or a key decision-maker. But this doesn’t mean those organizations shouldn’t enjoy the benefits of incorporation.” added Martin Schmidt, the co-initiator of Q. “The Q, LexDAO, and KaliDAO Wrappr collaboration allows DAOs to enjoy the best of both worlds. DAOs can now have stronger governance and dispute resolution tools that function across borders and jurisdictions while being protected by a traditional legal wrapper. I’m excited to see Q achieve its mission, which was always to become a home for Web3 organizations that want to have an impact in the real world.”
How will it work?
Wrappr is a platform to launch and mint legal NFTs, such as limited liability "legal wrappers" for DAOs and wallets. For example, a developer receiving a grant often requires a legal entity, and Wrappr makes it easier to structure a pass-through LLC precisely with their receiving wallet. In other cases, a DAO may want to clarify its status as a non-profit association and remove partnership liability for DAO members, or a multisig investment club may wish to purchase equity through an LLC. Minting a Wrappr can also provide optimizations around tax jurisdiction, ownership of real world assets, and legal rights, such as ownership and transfer of intellectual property.
Q provides governance infrastructure for decentralized organizations to set non-deterministic rules enforceable in decentralized settings. These involve non-binary rules and decisions such as, “How should a DAO spend its money?” or “What assets should be qualified as collateral for DeFi lending?” With Q, such rules can be written into a project’s constitution, which the Q Community accepts upon integrating with the Q governance framework. Those rules, alongside the underlying Q Constitution (the ruleset binding the entire Q Ecosystem), are monitored and enforced by a second layer of Root Nodes (comprised of legal and natural persons) who ensure that things that can be coded have their place in the governance framework. Additionally, any disputes that cannot be resolved on-chain can be brought in front of private arbitration courts, where the pre-agreed rulesets (i.e., constitutions) act as legally binding documents and court rulings are executed on-chain by the Root Nodes.
The Q x Wrappr integration combines those two systems, creating a space for DAOs to launch, build, and scale. All while finding ways for seamless interaction with the traditional world. These DAOs will be able to remain fully decentralized and automated but can have a functional relationship with the “real world” in case of issues, disputes, regulations, or other events that cannot be resolved entirely in the Web3 realm.
To encourage DAOs to benefit from this new infrastructure, Q Development, the organization supporting the Q Protocol, has pledged support to the first 25 DAOs that deploy on Q using Wrappr by paying for open-source consulting and support via LexDAO’s LexClinic as well as setup costs.
LexDAO is an association of lawyers and technologists building legal standards and products based on blockchain smart contracts. LexDAO started, like many guilds, from a collection of passionate people with shared interests bound by a mission. This mission centers on delivering value and open-source legal tools to the Web3 ecosystem. It is formed as a cooperative, an unincorporated non-profit association under Wyoming law, that admits members through a DAO smart contract.
To learn more, visit lexdao.coop.
Q is a new type of economy, providing a framework for decentralized organizations to flourish. Based upon a novel Layer-1 public blockchain, complete with governance infrastructure, Q is a chain that unlocks the new evolution of organizations. Any protocol, community, or DAO can integrate with Q, instantly improving its governance’s quality and security. The human-centered, plug-and-play governance system makes it easy to launch bespoke, transparent, and fair processes for decision-making, enforcement, and dispute resolution. Q is a cooperation backstop when “code is law” cannot answer non-deterministic questions. It allows for automated efficiency and human complexity to co-exist, making organizations incorruptible and prepared for the unknown. Q takes us beyond code, beyond yes and no, into an incorruptible future.
To learn more, visit q.org.
Kali is a no-code, no-lawyer platform to create DAOs that can work with the real world through legal agreements and limited liability. While optional, these unique features allow Kali DAOs to move better between internet and IRL ownership and have complete governance without relying on legal intermediaries.
To learn more, visit kali.gg.
Wrappr is a platform to launch and mint legal NFTs, such as limited liability “legal wrappers” for DAOs and wallets. Users can select through premade options, such as LLC formation, or explore a gallery of other NFTs deployed by the public. Minting a Wrappr can also provide optimizations around tax jurisdiction, ownership of RWA, and legal claims, such as software licensing and IP. Users can also be sure that their Wrapprs are up-to-date with the best terms and legal frameworks as they are maintained in open source (opens new window) with a wide range of contributors. The premade options drafted by crypto lawyers for immediate use are LLC, Non-Profit and Charter NFTs.
To learn more, visit wrappr.wtf.