Secure Your DAO/DeFi Project with a Legal Wrapper

The DAO as a community has no legal status and is thus fundamentally different from a traditional company. Nonetheless, DAO are often tasked with key decision-making for the governed projects, similar to stakeholders in traditional entities. For that, DAOs require a legal form to be able to sign contracts, act as counterparties, hire staff and external service providers or issue a token. A legal wrapper is therefore the representation of the DAO in an entity that is legally recognized. Apart from the above, the legal wrapper also provides a certain liability protection for the community, developers and other stakeholders, facilitates the implementation of on-chain governance votes and is often the first step in the way of truly decentralizing your project.  

There are many different legal forms under various jurisdictions to be considered for a DAO Legal Wrapper. However, due to crypto-friendly environment and legislation, Switzerland has emerged as the leading choice for many projects in the crypto and web3 space. This includes the likes of Ethereum, Solana, Cardano, Near or Tezos, DeFi projects such as Aave and many other web3 companies. While many project choose the legal form of a Swiss Foundation or Association, the exact corporate setup depends on your specific needs and goals.

For new projects, setting up a Legal Wrapper (often along with a development company) is best considered early on following the process of deciding the exact scope of the project, the tokenomics etc. Later on, the set-up can be more complex as you first need to align all relevant stakeholders but is still feasible and done by various projects.