Member-Managed vs. Algorithmically Managed DAO LLC

The act that created the DAO LLC, 2021 Senate File 38, let the articles “define the decentralized autonomous organization as either a member managed decentralized autonomous organization or an algorithmically managed decentralized autonomous organization”. A company that did not choose was “presumed to be a member managed decentralized autonomous organization”.

Management followed the label. It was “vested in its members, if member managed, or the smart contract, if algorithmically managed”.

2022 Senate File 68 amended the Supplement. Two provisions now govern management:

• The articles. “A statement in the articles of organization shall establish how the decentralized autonomous organization shall be managed by the members, including to what extent the management will be conducted algorithmically” (W.S. § 17-31-104(e)).
• Where management sits. “Management of a decentralized autonomous organization shall be vested in its members or the members and any applicable smart contracts” (W.S. § 17-31-109).

The members are part of management in every DAO LLC. Smart contracts may share in it to the extent the articles state.

• How the members manage the company, and to what extent management is conducted algorithmically (W.S. § 17-31-104(e)).
• A publicly available identifier of any smart contract directly used to manage, facilitate or operate the company (W.S. § 17-31-106(b)).

The articles must be amended when the smart contracts are updated or changed, or when the identifier changes (W.S. § 17-31-107(a)).

• Upgradable smart contracts. “All smart contracts utilized by a decentralized autonomous organization shall be capable of being updated, modified or otherwise upgraded” (W.S. § 17-31-109).
• A natural person in control. A DAO LLC that “is no longer under the control of at least one (1) natural person” is dissolved (W.S. § 17-31-114(a)(v)).
• Duties of members. Unless the articles or operating agreement provide otherwise, members owe no fiduciary duty to the company or to each other, and remain subject to the implied covenant of good faith and fair dealing (W.S. § 17-31-110).
• Which document controls. Where the articles and a smart contract conflict, the smart contract controls, except on the matters the statute requires the articles to state (W.S. § 17-31-115).

However much of the company’s management is algorithmic, a deed, a lease or an account agreement still needs a signature from a person with authority. “A member is not an agent of a limited liability company solely by reason of being a member” (W.S. § 17-29-301(a)), and the articles and operating agreement “are effective as statements of authority” (W.S. § 17-31-115). See Who Can Sign for a Wyoming DAO LLC?

Wyoming Execution Agents is a Wyoming limited liability company organized for one purpose: to act as the named authorized signer for Wyoming DAO LLCs. A company names the office in its operating agreement. The office then signs a deed, a contract or a banking instrument for that company only upon a valid attestation from the Vaulnox SENTINEL Trusted Execution Environment, confirming that the company’s own governance approved that instrument. The office does not manage, advise or decide.