Inside the guide
A chapter-by-chapter look at what's covered.
1. What Is a DAO LLC, Anyway?
The traditional LLC requires named members, defined managers, and written governance. DAOs do not work that way. The Marshall Islands DAO LLC tracks membership through tokens, supports manager-less operation, and treats smart contracts as a legitimate source of governance authority.
2. Why Your DAO Needs a Legal Entity
The general partnership problem is no longer theoretical. Ooki DAO (CFTC, 2022) and Samuels v. Lido DAO (California federal court, November 2024) both ruled that governance participants face joint-and-several personal liability without a legal wrapper. Plus the practical reality: corporate personhood is the price of admission for banking, contracts, exchange listings, and counterparty trust.
3. Understanding DAO Governance Structures
Member-managed, manager-managed, or algorithmically managed. The RMI DAO LLC is the only structure that supports fully algorithmic management as a statutory matter. Pyth Network's operating agreement simply points to the Pyth governance smart contracts as the source of truth for the actions of the LLC. No directors. No managers who can override what the community votes for.
4. For-Profit vs. Non-Profit DAO LLCs
The most consequential decision in your structure, and one you cannot reverse. Non-profit: zero entity-level tax, no member tax obligation from holding governance tokens, statutory securities carve-out for governance tokens with no economic rights. For-profit: 3% Gross Revenue Tax (excludes capital gains, dividends, invested capital), distributions to members allowed. Plus the hybrid pattern (DAO LLC for governance, Delaware C-Corp DevCo for operations) and Series DAO LLCs for compartmentalized portfolios and sub-DAOs.
5. Jurisdiction Deep Dive
Honest comparison of the RMI DAO LLC against Wyoming DUNA, Wyoming DAO LLC, the Cayman Foundation, the Swiss Foundation, the UAE ADGM DLT Foundation, and RAK DAO. We believe the RMI is the right answer for most DAOs. We also explain when it is not.
6. Corporate Structuring for DAOs
Why most DAOs need more than one entity. The DAO LLC + DevCo pattern, why protocol separation matters as a liability shield, and when Series DAO LLCs make sense for investment DAOs running multiple portfolios or protocol DAOs spinning up sub-DAOs.
7. Compliance and Reporting
Beneficial ownership disclosure for 25%+ token holders (FATF compliance; affects almost no one in a distributed token). Annual filings without audits, without local law firms, without independent directors. The 2023 securities carve-out for non-profit governance tokens written into RMI law. Why governance token use does not trigger VASP classification.
8. The Registration Process
What to prepare, what to expect, what MIDAO provides. Registration starts at $9,500 and completes in under 30 days under the 2024 Regulations. Annual maintenance is light by design: keep your registered agent, update beneficial ownership if it changes, file the annual confirmation. Crypto payment supported.
Who this is for
DAO LLC is a legal designation, not an identity requirement. Most projects we work with do not call themselves DAOs. But this guide is for the ones who do.
If your project has token-based membership, on-chain governance, a treasury that the community controls, or any combination of those, you are operating something the law recognizes as a DAO whether you use the label or not. The question is whether you are operating it inside a legal entity or as an unincorporated association where every member faces unlimited personal liability.
The DAO LLC is for protocol builders securing on-chain governance with off-chain legitimacy. For NFT project teams formalizing treasury and decision-making. For DePIN operators with token-incentivized contributor networks. For meme coin teams transitioning from informal to compliant. For investment DAOs running compartmentalized portfolios. For any tokenized organization that needs counterparty readiness when banks, exchanges, lawyers, auditors, and regulators show up.
If you are building any of those things, this guide will get you oriented. By the time you finish reading, you will know whether the RMI DAO LLC is the right structure for your project, what the trade-offs are versus the major alternatives, and what the actual registration process looks like.
Trusted by hundreds of DAOs
The RMI DAO LLC framework is in production with the most active DAOs in the space. Pyth Network uses it for the governance entity behind Solana's largest oracle. MetaDAO built a futarchy-governed protocol on top of it. MoonDAO raised $8.3M and sent an astronaut to space. GMX, ApeCoin Governance DAO, Gnosis Guild, Elastos, Dope Wars DAO, Clipper/Admiralty DAO (the first-ever RMI DAO LLC), and a growing list of investment DAOs including Ranch DAO, Layer 2 DAO, and Based VC DAO all chose the structure. 250+ tokenized organizations have registered with MIDAO since 2022.
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Frequently asked questions
Can the membership list of a DAO LLC simply be the list of on-chain token holders?
Yes. The most common approach is to designate token holders as members of the DAO LLC. The operating agreement references the token contract address, and whoever holds the token at any point in time is recognized as a member with the corresponding voting rights. This allows fully on-chain membership tracking without any off-chain registry. Variations exist: some DAOs designate only core contributors as legal members while still giving token holders a governance vote.
Does a DAO LLC have to make all governance decisions through member votes?
No. The RMI law allows three types of management: member-managed (all members vote), manager-managed (a designated manager makes decisions), and algorithmically managed (a smart contract serves as manager). With algorithmic management, a smart contract can make decisions based on any rule set: futarchy, bonding curves, reputation scores, or any other mechanism. Member voting is one of many valid governance approaches.
Can a DAO LLC vote to remove a member from the legal entity even if they still hold the token?
Yes. This is one of the more powerful features of the DAO LLC. You can write into the operating agreement that members can be expelled by a vote (for example, a two-thirds vote). If an anonymous holder acquires 25%+ of tokens and refuses KYC, the DAO can vote to remove their legal membership. They keep their token on-chain, but they are no longer a legal member of the company. This separates the on-chain world from the legal-entity world in a way that protects compliance.
How many members are needed to establish a DAO LLC?
Just one. The requirement for multiple founding members is an old rule that no longer applies. (You also no longer need to do a medical test, which was actually required for some of the very early DAO LLC registrations when we were just getting started.)
What is the scope of liability protection for a Marshall Islands DAO LLC? Is it global, or only in the Marshall Islands?
The liability protection is global for any activity associated with the legal entity. The Marshall Islands does not concern itself with unrelated activity, and the limited-liability shield travels with the entity wherever it operates. That is the whole point of incorporating: separating the organization's liabilities from its members' personal assets, regardless of jurisdiction.
What is the tax rate for a for-profit DAO LLC in the Marshall Islands?
For-profit DAO LLCs are subject to a 3% Gross Revenue Tax. This applies to revenue from services or products. Importantly, it does not apply to capital gains, dividends, or investment income. So if a DAO's primary revenue is from protocol fees or service revenue, that is subject to the 3% GRT. If the income is from selling assets or receiving investment returns, it is not taxed. (Non-profit DAO LLCs pay no entity-level tax at all.)
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