Wyoming Legalizes DAOs with DUNA Framework for Decentralized Governance

The concept of limited liability has historically been a transformative force in business and governance. In the mid-19th century, the introduction of limited liability corporations (LLCs) in the UK and the U.S. allowed investors to protect their personal assets while enabling the rapid growth of large industrial enterprises. This shift, from unlimited liability to a structure that protected individual shareholders, also redefined corporate governance, embedding legal authority into shareholder control [1].

The LLC model was later extended to smaller businesses, with Wyoming pioneering the creation of the limited liability company in 1977. Initially met with little enthusiasm, LLCs gained widespread adoption in the 1990s after tax clarity and broader legal recognition were established. Today, they outnumber traditional corporations in the U.S. by more than ten to one [1].

Now, in 2024, Wyoming is making another significant move by extending the principles of limited liability and legal recognition to decentralized autonomous organizations (DAOs) through the Decentralized Unincorporated Nonprofit Association (DUNA). This legal framework allows DAOs to engage in traditional legal activities—such as entering contracts, appearing in court, and paying taxes—while preserving their decentralized governance structure [1].

The Uniswap Foundation has proposed that UNI token holders adopt a Wyoming-registered DUNA, to be called DUNI. This move would allow the community to maintain decentralized governance while ensuring that on-chain decisions are enforceable off-chain. According to the proposal, DUNI would enable actions like turning on protocol fees, funding innovation, forming partnerships, and addressing legal obligations [1].

Importantly, DUNAs are structured as non-profits, which means their primary purpose is not to maximize returns for token holders but to function as open blockchain infrastructure. This aligns with the original vision of many in the crypto space—to create value rather than extract it. As Miles Jennings and David Kerr explain, Wyoming law places a ceiling on the value a blockchain network can extract from users, which some in the community may view as a constraint [1].

Despite these innovations, DAOs have largely opted for traditional incorporation structures, such as those in the Cayman Islands or Switzerland, or have operated without formal legal existence. DUNAs, however, offer a new model that avoids sacrificing decentralization for legal recognition [1].

If the Uniswap community adopts DUNI, it could mark a pivotal moment in the evolution of decentralized governance. Just as the LLC once transformed business structures, the DUNA could redefine how blockchain communities interact with the traditional legal and financial systems. This would not be a speculative leap but a structural one, aimed at embedding decentralization into the fabric of global governance [1].

Source: [1] Did crypto just have its LLC moment? (https://blockworks.co/news/uniswap-duna-decentralization)