Why We Invested in MIDAO

We’re thrilled to share more about our investment in MIDAO, a company establishing unparalleled legal and regulatory structures for DAOs (Decentralized Autonomous Organizations). A DAO is a new and innovative way for people to organize themselves around a shared mission through technology. Traditional corporations are typically centralized in a specific geography, have hierarchical leadership structures, keep information contained to certain parties, and share profits with a select few. DAOs, on the other hand, are completely decentralized in terms of geography, are typically community-led, publish activity transparently on the blockchain, and democratize profits. Given these key differences, it can be extremely challenging for a DAO to operate within our current regulatory structures. Adam, who’s been an entrepreneur since his teen years and has spent over a decade researching blockchain technology, found this challenge when he was consulting for DAOs in recent years. One of Adam’s clients was offered a $1 million grant. Although this was very exciting, the team knew they’d need a legal entity before they could accept the grant. They soon discovered that all existing legal options demanded named boards of directors, collected personal information on all members, and used antiquated paper recordkeeping—all of which were inherently incompatible with the transparent, decentralized nature of a DAO. Motivated by this realization, MIDAO set out to develop a legal and regulatory framework for DAOs. DAOs are intrinsically different from other organizations because the technology used to track members, manage assets, and enact governance are all run on the blockchain. Thus, they require an innovative approach to organizing from a legal perspective. The Marshall Islands DAO LLC, their flagship offering, is the first and only legal entity designed specifically for DAOs that is endorsed by a sovereign nation. MIDAO’s approach doesn’t require a named management team or officers, tracks blockchain wallet addresses instead of names, and allows all corporate actions and recordkeeping to be done on the blockchain. This groundbreaking solution enables DAOs to achieve true decentralization and still maintain all the benefits and protections that legal entities offer traditional organizations. At The LegalTech Fund, one of our investment theses is centered on using technology to reduce regulatory burdens. These days, ‘regulation’ might not be the first thing that comes to mind when you think of blockchain technology. However, we believe the long-term success and adoption of this tech depends on building an infrastructure that can coexist with regulations. That’s why we are so excited to partner with MIDAO as they build the foundation for legal entities in a decentralized environment. We also commend Adam and his team on the dedication and creativity required to build a solution and relationship from scratch in partnership with the Marshall Islands. Please welcome MIDAO to The LegalTech Fund family, and let us know if we can connect you to learn more.