How Is Liability Distributed among Members of a DAO?

In the absence of a legal wrapper, a DAO may be legally treated as a general partnership, meaning all members could face joint and several liability for the organization's debts and legal obligations. This means any single member could be held fully responsible.

Structuring the DAO with an underlying legal entity, like a Wyoming LLC, aims to limit liability to the member's contribution or investment, similar to a corporation.