XDAO Protocol Grants Legal Status to 367K DAOs on TON

XDAO, a pioneering protocol built on The Open Network (TON), has successfully enabled more than 367,000 decentralized autonomous organizations (DAOs) to obtain legal status. This groundbreaking initiative automates the legal recognition process for these organizations, significantly enhancing their operational capabilities and legitimacy in the digital landscape.

Streamlining DAO Creation

In a recent announcement, XDAO revealed that it has streamlined the process of creating DAOs, allowing them to achieve legal status more efficiently. An XDAO spokesperson shared insights with Cointelegraph, explaining that the protocol provides a standardized framework for various “sub-entities” within its legal structure. “Basically, those sub-entities exist both in relation to each other and outside entities that had acknowledged their existence and assented to some articles of the XDAO Labs’ Constitution,” the spokesperson elaborated.

Legal Framework and Jurisdiction

XDAO has designated Singapore as the primary jurisdiction for resolving disputes that may arise. This choice of jurisdiction is crucial, as it provides a clear legal framework for DAOs operating under its protocol. The protocol also facilitates the signing of legally binding documents through Web3 wallets, enhancing the operational capabilities of these organizations.

Innovative Use of Technology

One of the standout features of XDAO is its integration with Telegram, allowing DAOs to archive their transactions using a Telegram bot. This innovative approach raises questions about the security and practicality of using a messaging platform for legal frameworks. When asked about this, the XDAO spokesperson stated that agreements formed through the messenger are valid in “most jurisdictions.” However, they also acknowledged certain limitations, particularly in areas such as real estate and securities, which require more formal procedures for contract formation.

Significant Information Storage

The Telegram bot not only facilitates transaction archiving but also allows DAO participants to store significant information. It can even be utilized for basic Know Your Customer (KYC) procedures, ensuring compliance with regulatory standards. This feature is particularly important as DAOs navigate the complexities of legal recognition and operational legitimacy.

Smart Contract Compliance and Arbitration

When discussing how their smart contract compliance models would function in arbitration scenarios, XDAO provided clarity on the process. The spokesperson indicated that parties could establish valid arbitration agreements through messenger or e-signature methods, such as Docusign and Ethsign. This requires that the identities of the parties involved are firmly established and that there is a clear intention to adjudicate any disputes that may arise.

Recognized Dispute Resolution Procedures

“Arbitration is a commonly recognized dispute resolution procedure, which exists under influential international conventions. Those conventions do not specify the exact way of making an arbitration agreement, apart from it being in writing,” the spokesperson explained. This flexibility is crucial for DAOs, as it allows them to navigate disputes in a manner that aligns with international standards.

Incorporating Arbitrators into DAOs

In cases where payment is required for arbitration, XDAO has proposed a solution that involves adding an arbitrator to the DAO with the right to a key vote. This mechanism enables the arbitrator to sign transactions with their digital signature if the parties involved fail to reach a consensus. This feature not only enhances the governance of DAOs but also ensures that disputes can be resolved efficiently and fairly.

Conclusion

The XDAO protocol represents a significant advancement in the legal recognition of decentralized autonomous organizations. By enabling over 367,000 DAOs to achieve legal status, XDAO is paving the way for a more structured and legitimate operational framework in the digital space. As the landscape of decentralized organizations continues to evolve, initiatives like XDAO will play a crucial role in shaping the future of governance and legal recognition in the blockchain ecosystem.