XDAO, a protocol built on The Open Network (TON), has enabled over 367,000 decentralized autonomous organizations (DAOs) to attain legal status. This initiative seeks to streamline the legal recognition process for DAOs, providing them with a standardized framework for governance and dispute resolution.
A New Era for DAOs
XDAO recently announced that it had successfully simplified the DAO creation process, ensuring that these digital entities could achieve legal recognition. According to a spokesperson for XDAO, the protocol establishes a standard for “sub-entities” within its legal framework. These sub-entities exist both independently and in relation to one another, operating under the XDAO Labs’ Constitution.
Singapore serves as the primary jurisdiction for dispute resolution, given that XDAO Labs is incorporated there. This legal structure provides DAOs with a recognized legal framework, making their operations more secure and transparent.
Legally Binding Agreements via Telegram Bots
One of XDAO’s most innovative features is its ability to facilitate the signing of legally binding agreements through Web3 wallets and a Telegram bot. This tool enables DAOs to securely store and archive their transactions while also conducting basic Know Your Customer (KYC) procedures.
However, an XDAO spokesperson acknowledged certain limitations, particularly regarding industries such as real estate and securities that require a prescribed procedure for contract formation. Despite these restrictions, agreements made through the Telegram bot are valid in most jurisdictions, provided all details and specifics are properly recorded.
Smart Contract Compliance and Arbitration
To ensure compliance in arbitration scenarios, XDAO allows DAOs to form legally recognized arbitration agreements using messaging platforms or e-signature services like Docusign and Ethsign. The spokesperson emphasized that arbitration is an internationally recognized dispute resolution process that does not require a specific format beyond being in writing.
Additionally, if a payment is required, an arbitrator can be integrated into the DAO with a key vote, allowing them to sign transactions digitally should the involved parties fail to reach an agreement.
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XDAO’s initiative represents a significant step forward in bridging the gap between decentralized governance and legal compliance, setting a new standard for DAOs worldwide.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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