How Does a DAO Differ from a Traditional ‘Limited Liability Company’ (LLC)?
An LLC is a legally recognized entity with limited liability for its members and a formal operating agreement. A DAO is a code-based organization that often lacks legal recognition and its members face uncertain liability.
The LLC has centralized management; the DAO uses decentralized, token-based governance.
Glossar
Liability
Exposure ⎊ This quantifies the potential financial downside an entity faces from its obligations, whether stemming from unhedged positions in options or from collateral shortfalls in lending protocols.
Legal Recognition
Jurisdiction ⎊ Legal recognition within cryptocurrency, options trading, and financial derivatives hinges on establishing clear jurisdictional boundaries for regulatory oversight, a challenge amplified by the borderless nature of digital assets and decentralized finance.
Limited Liability
Shield ⎊ Limited liability is a legal principle that restricts the financial responsibility of an owner or investor in a business to the amount of capital they have invested.
Token Ownership
Attribution ⎊ Token ownership is cryptographically established by the possession of the private key corresponding to the address holding the asset on the ledger, providing immutable proof of control.