BCT-2021-004
Agency: Wyoming Select Committee
Date: October 22, 2021
Authors: Christopher Allen
Testimony Link:
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Wyoming DAO Verbal Testimony
Mr. Chairman, distinguished Select Committee members, my name is Christopher Allen, and I am the executive director of Blockchain Commons, a “not-for profit” benefit organization incorporated here in Wyoming, founded to support open infrastructure for blockchain and digital identity technologies.
As a technologist and a long time supporter of Wyoming’s commitment to blockchain technology, I feel my particular role in regards to these DAO amendments is to focus my analysis of them from technical perspective, rather than a purely legal perspective.
I support these amendments as I believe they support decentralization by helping protect against vendor or platform lock-in, and in particular allow for Bitcoin-based & other UTXO blockchain to ability to create membership DAOs in addition to the algorithmic ones from the Ethereum platform.
In addition, I’ve looked at them from the perspective of future proofing them against changes in technology, and my key question is in regards to the section about governance by the majority of assets or a majority of members. Though I agree that the removal of old quorum language is good, as there are a number of uses for DAOs that serve to protect a common or public good, not solely the financial interests of its members or 1 member 1 vote. Many DAOs wish governance to have options for minority rights, or require supermajorities. Currently LLCs are able to consider more than the interest of the members (for instance in the past to protect family historical property). As a non-lawyer, I think these options are covered, I’d like the legal experts here to review to make sure that these features in LLCs are also available for DAOs.
I also have some minor concerns about the definition of control by natural person control. I’d like to see this clarified there exists a “principle authority” that has at some very specific form of control, such as control to dissolve.
I also was asked earlier this year about requirements for the public identifier that is registered by Secretary of State. I suggested that you leverage an international standard, W3C Decentralized Identifiers, which is being adopted by US Homeland Security. In addition, I would suggest requiring the Secretary of State to be careful to not be lock themselves a single DID method, to not source this new technology from a single company or using single platform. As far as which DIDs to accept, there exists a W3C with a Rubric for evaluating various DID methods.
I do support the adding the opportunity to leverage the chancery court on forced dissolution, as I will believe they special expertise of this. In addition, though I don’t believe the Secretary of State’s office is yet prepared to do this, in the long-term it is possible for the office to make available a cryptographic oracle that can trigger the first steps toward dissolution.
Separate from approving these amendments, I urge you to put on your agenda to resolve how DAOs can have synergy with your Series Corporation statutes. Many useful DAO governance architectures are enabled if we can support a Series DAO, and such form has advantages in respect allow the Secretary of State to hold DAOs accountable without sacrifing the ability for DAOs to serve organizations with fewer assets.
Less essential, but useful, is the opportunity to allow DAOs to also have low-profit L3C status, which is also enabled under Wyoming statutes. Many DAOs desire to govern public or common goods, and the L3C status allows them access to funding from foundations to support the common.
Thank you for your support for Decentralized Autonomous Organizations — I believe they demonstrate Wyoming’s leadership, and will offer important opportunities for the Wyoming economy. It has been an honor to be part of your efforts.