DAOs For Corporate Governance: Use Case & Legal Liability Challenges Unveiled

In this latest piece, Dr. Wright explores the possibility of using decentralized autonomous organizations, or DAOs, as legal entities that can replace corporations. The article is part of a series of insights on blockchain and its potential use beyond the world of finance, particularly in corporate governance and public administration.

More information is available at https://www.drstevenawright.com/daos-vs-pbcs-for-public-administration-and-social-policy-entities/

According to Dr. Wright, DAOs offer a means of automating and decentralizing corporate governance while ensuring transparency and eliminating bureaucratic bodies like boards of directors, which can significantly reduce costs. “Early implementations of DAOs to automate organizational governance and decision-making were intended to support individuals working collaboratively outside the traditional corporate form,” he wrote.

Dr. Wright, however, recognizes current legislation, which views DAOs as partnerships and not a separate entity, as a potential roadblock. He explained that due to the lack of limited liability, the personal assets of DAO participants are at risk should the company face legal or financial issues.

DAOs can also find potential uses in social policy implementation, as Dr. Wright states that DAOs may have an advantage over B-Corps, which are still subject to the decisions and whims of board members.

Dr. Wright proposes a corporate structure based on the DAO model, which encodes social policy as smart contracts. Smart contracts are immutable and executed only after certain conditions are met, reducing or eliminating the risk of deviating from an organization’s policies and objectives.

“In contrast to other e-government approaches not based on legal entities, both B-Corps and DAOs provide the advantage of an entity focused on a specific purpose. DAOs arguably provide a more automated and transparent solution than B-Corps,” he added.

Dr. Wright has also written about other viable use cases of DAOs, such as operating large-scale infrastructure. It can be accessed through https://www.drstevenawright.com/daos-and-adss/

With over 50 patents and numerous journal publications, Dr. Wright has been globally recognized for his contributions to discussions about new technologies and the ethical and legal challenges they present. A more comprehensive discussion can be found in his book, ‘Ethics, Law, and Technology Adoption’.

Interested parties can access more of Dr. Wright’s insights by visiting https://www.drstevenawright.com/

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Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Research Raptor journalist was involved in the writing and production of this article.