For the past twenty one days I have been obsessed with a decentralized project called Higher. If interested in the origin lore you can read more here.

Legal systems around the world are struggling to keep up with the use of blockchain technologies, including smart contracts, cryptocurrencies, and digital assets. Decentralized Autonomous Organizations (DAOs) offer a new way of conducting governance and transactions, but the lack of appropriate legal rules creates uncertainty and risk. New Hampshire is considering a new legal entity law for DAOs that would grant them legal personhood and limited liability, but this is not yet widely recognized. The proposed New Hampshire Decentralized Organization Act aims to establish a legal framework that recognizes DAOs as legal entities and grants limited liability protection to participants.

DAOs are collaborative networks which are likely to have a unique role in the future. To determine this role, you need to be able to look beyond what is happening today. Like a toddler taking its first steps, the DAOs of today are immature, unsteady and likely to stumble.

Last Thursday, Wyoming Governor Mark Gordon signed the Decentralized Unincorporated Nonprofit Association Act, which is a landmark law that establishes a framework for recognizing DAO (decentralized autonomous organizations) as legal entities.

The struggling DeFi project Hector Network has entered bankruptcy proceedings in the British Virgin Islands. Consulting firm Interpath is awaiting final confirmation from the court to liquidate the remaining funds of the project. It is reported that the remaining assets of Hector DAO are worth $9.3 million. On February 19th, on-chain data showed that a total of $9.3 million worth of USDC and Ethereum were transferred multiple times from Hector DAO's known treasury wallet address to a new address in the GnosisSafe wallet. Interpath is currently waiting for the British Virgin Islands court to confirm its role as the receiver, which is expected to be determined on March 12th. After that, the company stated that it will continue to implement the plan to liquidate assets and distribute them to Hector Network investors.

A well-managed treasury is the key to the sustainability and growth of a DAO, ensuring that there are sufficient funds to support ongoing operations, to invest in growth opportunities, and to navigate challenging market conditions. Treasury management is accomplished primarily through investment, which for most DAOs involves spending on initiatives that aim to generate substantial value in the future. As long as the amount spent is less than the value accrued, the investment is generally a good one.

Almost all DAOs that exist today operate like public companies: there’s a token, ownership and decision-making is derived by tokenholdings. Now, if the DAOs only purpose is to turn a profit for their tokenholders in addition to some CSR initiatives, this is perfectly fine. However, some DAOs may prefer to be more akin to a community, in which case a pure tokenholder DAO makes it a plutocracy where a few wealthy whales effectively control the DAO, which is the shittiest possible outcome for a community short of a non-benevolent dictatorship.

DAOs are meant to be an abbreviation for Decentralized Autonomous Organization. Such an entity would actually necessarily require no governance. Adding in governance makes it definitely not autonomous and arguably not decentralized. Largely because crypto is all about tokens and speculation, DAOs have thus headed down the public companies model, with tokenholders as shareholders. The only real innovation here has been skirting securities laws and thus increasing accessibility to tokenholders.

Nouns Fork is a minority protection mechanism that allows Nouners to exit Nouns DAO (aka OG DAO), into a fresh copy of Nouns DAO, reusing their token IDs and art, and the Nouns governance system, and taking with them their fair share of OG DAO’s treasury into the fork DAO treasury. Nouners need to band together to meet the fork threshold to be able to fork. We launched V1 of Nouns Fork with a known griefing vector, which we’d like to better explore and explain, and ultimately decide if there’s a worthwhile solution we should build.

Why DAOs need to consider adding hyUSD — a Diversified and Yield-bearing flatcoin — to their Treasuries Here is an appeal to DeFi, DAOs, and anyone managing treasuries: listen carefully to the case being made here, and decide if you are operating in the maximally-efficient and risk-averse ways possible.