Nail your DAO: Getting your legal and financial set up for a scalable DAO
Jan 17, 2023
There's a lot of charm around the idea of setting up your DAO: from finding the right community of people with matching visions and interests to contribution-based rewards and decentralized decision-making. DAOs have a very intuitive character. However, many founders are hesitant about setting up their own DAO given the uncertainty and the lack of infrastructure. There is certainly a lot to consider in order to avoid accidents like that of bZx DAO.
The Pillars of Creating A DAO
Vision— The first step towards launching any project is asking yourself what is that you want to achieve and how do you want to achieve it. This is particularly important when setting up a DAO because your vision is the first key to sourcing your community.
Legal Framework — Regardless of all its particularities, a DAO is still an organization of people working together to achieve a common goal and receiving compensation for their input. This setup needs to be regulated by law to guarantee the rights of each party. DAOs have various options for the legal setup at the moment.
Organizational Design — A scalable DAO is the one that manages to leverage the excitement and engagement that arises from decentralization while staying efficient. Therefore, it is recommended for DAOs to set up an organizational chart leveraging workings groups also known as guilds and committees.
Governance Model — There is no guideline for the governance model your DAO needs to have. Every DAO has different needs. You need to choose the governance model that aligns best with your vision and incentivizes your community the most. It is important to discuss the proposal submission process and set the ground for voting through consensus checks.
Treasury — Treasury is the fuel that keeps the DAO engine running. Therefore, a shared wallet is needed to allow the treasury committee to perform the actions needed such as fundraising, token & NFT sales, and reward distribution. This is where multi-signature wallets come into the picture.
source: Starting a DAO: The Definitive Guide to Creating a web3 Community
Bootstrap Your DAO Creation Process with the Multis x KALI Collab
At Multis, our mission is to build the financial infrastructure needed by every web3 organization. That's why we took it upon ourselves to build, on top of Gnosis Safe, an all-in-one treasury management tool that allows DAOs to gain clarity & control over their finances.
Multis helps DAOs get their finances in order through many features that include tracking wallets across 6 different chains to generate shareable insights dashboards, and our integration with Quickbooks, as well as offramp and crypto-crypto swaps. However, treasury is the last pillar of DAO setup. Every DAO founder must do the necessary checks to make sure they are setting up a fully legal entity.
Given the absence of clear jurisdiction, legal setup is one of the biggest hurdles founders face, involving: (i) setting up a bank account, (ii) structuring an entity to limit their liability, (iii) raising funds in a quick and efficient manner, and (iv) forming contractual relationships with consultants and service providers.
Luckily, the founders of KALI identified these challenges and simplified the steps needed to form a DAO LLC. The KALI app allows users to :
Launch governance tokens based on Compound-style voting
Create NFTs that represent LLCs backed by Delaware law
Hire service providers from partners like Twali
Manage LLC operations entirely on-chain with proposals and voting
Multis and KALI obviously share the same vision of providing the proper infrastructure for web3 builders. That's why we decided to team up through a mutual integration providing every web3 founder the opportunity to choose the proper setup for their DAO and get their finances in order right from the beginning in just a few clicks:
Users can start by completing the legal procedure and then move to set their Multis accounts:
Or if they are already on Multis, they can always go back and do things the right way with Kali:
More details on why or why not a DAO might pursue a corporate form as an LLC can be found on KALI's blog.