DAO LLC Formation Guide: Step-by-Step Wyoming DUNA Setup

Decentralized Autonomous Organizations (DAOs) are revolutionizing how communities coordinate around shared goals, but operating without a legal entity exposes members to significant liability risks and regulatory uncertainty. Wyoming's pioneering DAO legislation provides a legal framework that offers liability protection while preserving decentralized governance.

This comprehensive guide walks you through forming a Wyoming DAO LLC, from initial planning through post-formation governance integration. Whether you're wrapping an existing DAO or forming a new decentralized organization, this roadmap provides the practical steps, cost estimates, and document templates you need to establish legal entity status in 4-8 weeks.

Why Choose a Wyoming DAO LLC?

Wyoming became the first U.S. state to recognize DAOs as legal entities when its DAO Supplement¹ took effect on March 9, 2022. The framework offers several advantages:

Liability Protection: Members are shielded from personal liability for the DAO's obligations, limiting risk to their capital contributions.

Regulatory Clarity: Explicit statutory recognition eliminates the uncertainty of operating as an unincorporated general partnership, where all members face unlimited personal liability.

Governance Flexibility: Wyoming law explicitly allows smart contracts to govern DAO operations, creating legal recognition for on-chain governance mechanisms.

Tax Efficiency: DAO LLCs receive pass-through taxation by default, avoiding double taxation while allowing flexibility to elect C-corp or S-corp treatment if beneficial.

Member Anonymity Options: While the Corporate Transparency Act requires beneficial owner reporting to FinCEN, Wyoming itself doesn't mandate public disclosure of member identities.

Low Compliance Burden: Minimal annual reporting requirements (license tax of $60-$200+ depending on assets) and no state income tax make Wyoming cost-effective for ongoing operations.

Wyoming DAO LLC vs. DUNA: Choosing Your Structure

Before beginning formation, understand whether a DAO LLC or DUNA (Decentralized Unincorporated Nonprofit Association) better fits your organization's needs.

Wyoming DAO LLC (W.S. 17-31)

Best for:

For-profit DAOs generating revenue and distributing profits to members
Investment DAOs or tokenized venture funds
Protocol DAOs with revenue-generating business models
DAOs with fewer than 100 members

Key characteristics:

For-profit structure allowing profit distributions
No minimum membership requirement
Can issue equity-like membership interests
Pass-through taxation (default) with C-corp election available
Full LLC liability protection

Formation cost: $100 state filing fee + $15,000-$50,000 legal fees

Wyoming DUNA (W.S. 17-32)

Best for:

Nonprofit infrastructure projects and protocols
Community governance DAOs without profit distribution
Open-source blockchain networks
Public goods projects

Key characteristics:

Nonprofit structure (no profit distributions to members)
Requires minimum 100 members
Designed for public infrastructure and community governance
Provides liability protection for members
Tax-exempt status potential (requires separate IRS application)

Formation cost: $100 state filing fee + $20,000-$60,000 legal fees (complexity of nonprofit structure)

This guide focuses on Wyoming DAO LLC formation. If you're considering DUNA structure, consult legal counsel experienced in nonprofit DAO formations.

Understanding the Formation Timeline

Plan for 4-8 weeks from initial planning to operational DAO LLC:

Weeks 1-2: Planning and Document Preparation

Define governance structure and membership model
Draft or finalize smart contracts
Prepare Articles of Organization
Draft Operating Agreement
Secure registered agent

Weeks 3-4: Filing and Processing

File Articles of Organization with Wyoming Secretary of State
Obtain EIN from IRS
Provide smart contract identifiers (within 30 days of filing)
Open bank account or multi-sig wallet

Weeks 5-6: Governance Integration

Deploy or update smart contracts with LLC information
Integrate on-chain voting with legal entity
Document governance procedures
Prepare membership documentation

Weeks 7-8: Operational Setup

Establish compliance calendar for annual reporting
Implement bookkeeping and tax compliance systems
Document formation for members
Set up communication channels for legal entity matters

Expedited formation is possible in 2-3 weeks with advance preparation, but allow buffer time for smart contract audits and governance integration.

Complete Formation Checklist: 20 Steps to Wyoming DAO LLC

Phase 1: Pre-Formation Planning (Week 1)

Step 1: Define Your Management Structure

Wyoming allows two management structures:

Member-Managed: Members collectively manage the DAO through voting (on-chain or off-chain). This is the default structure and most common for DAOs.

Algorithmically-Managed: Smart contracts autonomously manage operations with minimal human intervention. Important limitation: Algorithmically-managed DAOs must use smart contracts that can be updated, modified, or upgraded.² Immutable smart contracts cannot form the basis of an algorithmically-managed Wyoming DAO LLC.

Action: Document whether your DAO will be member-managed or algorithmically-managed in your formation plan.

Step 2: Determine Membership Model

Define how members join and participate:

Token-based membership: Ownership of governance tokens equals membership
Contribution-based membership: Members admitted through capital contributions
Application-based membership: Members admitted through proposal and vote
NFT-based membership: Holding a specific NFT grants membership rights

Action: Specify membership admission criteria and voting rights calculation (one-member-one-vote vs. token-weighted voting).

Step 3: Identify Smart Contracts

Wyoming law requires identifying "any smart contract directly used to manage, facilitate or operate the DAO."³ This includes:

Governance contracts (voting, proposals)
Treasury/multisig contracts (Gnosis Safe, etc.)
Token contracts (if tokens represent membership)
Core protocol contracts (if they govern DAO operations)

Action: Document blockchain addresses and contract identifiers for all governance-related smart contracts. If contracts aren't deployed yet, prepare to provide identifiers within 30 days of filing or face automatic dissolution.

Step 4: Choose Naming Convention

Your DAO name must include a specific designation: "DAO", "LAO", or "DAO LLC".⁴

Examples:

Acme Protocol DAO LLC
Builder Network DAO
Startup Fund LAO

Action: Check name availability through the Wyoming Secretary of State business search and reserve your name if desired ($50 reservation fee, valid 120 days).

Step 5: Secure Registered Agent

Wyoming requires a registered agent with a physical street address in Wyoming (no P.O. boxes).

Options:

Professional registered agent service: $125-$300/year (Northwest Registered Agent, Registered Agents Inc., Wyoming Agent, etc.)
Wyoming attorney: Typically $200-$500/year
Wyoming office location: If you maintain physical presence in Wyoming, you can serve as your own agent (free)

Action: Contract with registered agent service or identify your Wyoming agent before filing.

Phase 2: Document Preparation (Week 2)

Step 6: Draft Articles of Organization

The Articles of Organization are your DAO LLC's foundational document filed with the state. Wyoming requires specific provisions:⁵

Required provisions:

DAO Statement: "This organization is a decentralized autonomous organization."
Entity Name: Include required DAO/LAO/DAO LLC designation
Registered Agent: Name and Wyoming street address
Management Structure: "This DAO is member-managed" or "This DAO is algorithmically-managed"
Smart Contract Identifier: Publicly available identifier (blockchain address) of smart contracts used to manage the DAO. May be provided within 30 days via amendment.
Notice of Restrictions: Required statutory notice stating:

"NOTICE OF RESTRICTIONS ON DUTIES AND TRANSFERS: The rights of members in a decentralized autonomous organization may differ materially from the rights of members in other limited liability companies. The Wyoming Decentralized Autonomous Organization Supplement, underlying smart contracts, articles of organization and operating agreement, if applicable, of a decentralized autonomous organization may define, reduce or eliminate fiduciary duties and may restrict transfer of ownership interests, withdrawal or resignation from the decentralized autonomous organization, return of capital contributions and dissolution of the decentralized autonomous organization."

Organizer Signature: Name and signature of organizer (person forming the DAO)

Optional provisions that provide additional clarity:

Statement of purpose or business activities
Initial members (if desired for clarity)
Duration (if not perpetual)
Voting requirements and quorum definitions
Dispute resolution mechanisms

Action: Use the Wyoming Secretary of State's DAO LLC Articles of Organization form⁶ as your template and customize with your specific governance provisions.

Step 7: Draft Operating Agreement

The Operating Agreement supplements the Articles of Organization and smart contracts, providing detailed governance procedures.⁷ While not filed with the state, it's a critical internal document.

Key provisions to include:

Membership Provisions:

Membership admission procedures
Membership interest classes (if multiple types)
Voting rights calculation (token-weighted, one-member-one-vote, etc.)
Member withdrawal procedures (if permitted)
Transfer restrictions on membership interests

Governance Framework:

Proposal submission procedures
Voting procedures (quorum, approval thresholds)
Integration between on-chain and off-chain governance
Emergency decision-making procedures
Amendment procedures

Financial Provisions:

Capital contribution requirements (if any)
Profit and loss allocation
Distribution procedures
Treasury management
Accounting and reporting

Smart Contract Integration:

Hierarchy of governing documents (smart contract precedence)
Procedures for updating smart contracts
Conflict resolution between smart contracts and written agreements
Off-chain enforcement mechanisms

Fiduciary Duties:

Definition of fiduciary duties (Wyoming allows reducing or eliminating standard LLC fiduciary duties)
Good faith requirements
Conflict of interest procedures

Dissolution:

Dissolution triggers
Wind-up procedures
Asset distribution upon dissolution

Wyoming Statute Precedence: Remember that where Operating Agreement and Articles conflict, Articles control. Where Articles and smart contracts conflict, smart contracts control.⁸

Action: Engage legal counsel to draft Operating Agreement customized to your governance model. Budget $5,000-$25,000 for comprehensive operating agreement drafting depending on complexity.

Step 8: Prepare Governance Documentation

Document how your on-chain governance integrates with the legal entity:

Governance procedures guide: Written documentation of how to submit proposals, vote, and execute approved actions
Multi-sig procedures: If using Gnosis Safe or similar, document signer responsibilities and execution procedures
Member onboarding documentation: Materials explaining legal entity structure to new members
Compliance policies: AML/KYC policies if required for your activities

Action: Create governance documentation repository (GitHub, Notion, or similar) accessible to all members.

Step 9: Deploy or Audit Smart Contracts

Before filing, ensure your smart contracts are:

Deployed and operational (or deployment scheduled within 30 days of filing)
Audited by reputable security firm if handling significant assets
Documented with clear specifications of governance functions
Upgradeable (if choosing algorithmically-managed structure)

Action: If contracts aren't deployed yet, prepare deployment plan to execute within 30 days of Articles filing to avoid automatic dissolution.

Phase 3: Filing and Formation (Weeks 3-4)

Step 10: File Articles of Organization

Submit Articles to Wyoming Secretary of State:

Filing options:

Online: https://wyobiz.wyo.gov/Business/FilingSearch.aspx (fastest, 1-2 business days)
Mail: Wyoming Secretary of State, Business Division, 200 West 24th Street, Cheyenne, WY 82002-0020
In-person: Same address as mail filing

Filing fees:

$100 filing fee
$4 credit card processing fee (online filing)

Processing time:

Online: 1-2 business days typically
Mail: 5-10 business days
Expedited options may be available for additional fee

Action: File Articles online for fastest processing. Retain certified copy of filed Articles for your records.

Step 11: Provide Smart Contract Identifier (Within 30 Days)

If you didn't include smart contract identifiers in the original Articles, you have 30 days from filing to provide them via amendment or face automatic dissolution.⁹

Amendment filing:

Use "Articles of Amendment" form
$50 filing fee
Include complete blockchain addresses for all governance contracts

Action: File amendment immediately upon contract deployment if contracts weren't deployed at Articles filing.

Step 12: Obtain Employer Identification Number (EIN)

Apply for EIN from the IRS even if you don't plan to have employees. You'll need the EIN for:

Opening bank accounts
Tax reporting
Paying contractors
Entering contracts

Application process:

Online: IRS.gov/EIN (instant issuance during business hours)
Mail/Fax: Form SS-4 (4-6 weeks processing)

Cost: Free

Action: Apply online at IRS.gov for immediate EIN issuance. Use your registered agent's Wyoming address as the DAO's address.

Step 13: Open DAO Bank Account or Treasury Wallet

Establish financial infrastructure for the DAO LLC:

Traditional bank account:

Required if you'll receive fiat payments or pay traditional expenses
Challenging for DAOs: many banks decline crypto-native businesses
Crypto-friendly banks: Mercury, Relay, Brex (review current policies)
Requires EIN, Articles of Organization, Operating Agreement

Multi-sig wallet as treasury:

Gnosis Safe on Ethereum, Polygon, or other EVM chains
Squads on Solana
Configure signers (typically 3-of-5 or 4-of-7 for security)
Document which signers have legal authority to bind the LLC

Hybrid approach (recommended):

Multi-sig wallet for crypto treasury
Bank account for fiat operations and compliance
Clear procedures for moving funds between accounts

Action: Set up both crypto treasury and fiat bank account. Budget 2-4 weeks for bank account approval process.

Phase 4: Post-Formation Setup (Weeks 5-6)

Step 14: Update Smart Contracts with LLC Information

Integrate legal entity status into your on-chain governance:

Update governance documentation to reference DAO LLC legal name
Add LLC formation details to DAO's on-chain metadata (if supported)
Implement any necessary smart contract updates to align with Operating Agreement
Document that proposal execution binds the LLC legally

Action: Deploy contract upgrades or document updates reflecting LLC formation.

Step 15: Establish Governance Integration Procedures

Document how on-chain and off-chain governance interact:

Proposal execution authority:

Which on-chain actions bind the LLC?
Who has authority to execute approved proposals off-chain?
What approval threshold is required for various actions?

Signatory authority:

Designate specific multi-sig signers as authorized to bind the LLC
Document their authority in Operating Agreement or board resolution
Establish backup signers if primary signers become unavailable

Legal action procedures:

How does the DAO enter contracts as the LLC?
Who is authorized to sign legal agreements?
What approval process is required?

Action: Create clear written procedures that bridge on-chain governance and legal entity actions.

Step 16: Implement Member Documentation

Create systems for tracking membership:

Membership register:

List of current members (may be pseudonymous with internal identity mapping)
Membership interest percentages or token holdings
Admission dates
Updated as membership changes

Admission documentation:

Membership agreement or subscription agreement
Acknowledgment of Operating Agreement terms
Representations and warranties from new members
AML/KYC documentation if required

Action: Establish secure system for membership records. Consider off-chain encrypted storage linked to on-chain addresses.

Step 17: Set Up Bookkeeping and Tax Compliance

Implement systems for financial tracking and tax compliance:

Bookkeeping:

Crypto tax software (TokenTax, CoinTracker, CoinLedger)
Traditional accounting software (QuickBooks, Xero) for fiat transactions
Reconciliation between on-chain and off-chain records

Tax considerations:

Pass-through taxation (default): Members report distributive share of income on personal returns. DAO LLC files Form 1065 (partnership return) if multi-member or disregarded entity (no filing) if single-member.
C-corp election: File Form 8832 within 75 days of formation or with first tax return. DAO pays entity-level tax; distributions to members taxed again.
S-corp election: Limited utility for most DAOs due to restrictions on shareholder types and number.

Action: Engage crypto-specialized CPA to establish tax compliance procedures. Budget $3,000-$10,000 annually for tax preparation depending on complexity.

Step 18: Establish Compliance Calendar

Set up reminders for ongoing compliance obligations:

Wyoming requirements:

Annual License Tax: Due by first day of anniversary month. $60 minimum (LLCs with Wyoming assets under $300,000) or $0.0002 per dollar of assets over $300,000.
Registered Agent: Maintain registered agent continuously; file change within 30 days if agent changes.
Smart Contract Updates: File Articles amendment within 30 days of changing smart contracts used to manage the DAO.

Federal requirements:

Beneficial Ownership Information Report (BOIR): File with FinCEN within 30 days of formation under Corporate Transparency Act. Report individuals with 25%+ ownership or substantial control.
Annual tax returns: File appropriate returns based on tax classification.
1099 reporting: Issue 1099s to contractors and service providers annually.

Action: Create digital calendar with compliance deadlines and assign responsibility for each filing.

Phase 5: Operational Launch (Weeks 7-8)

Step 19: Communicate Formation to DAO Community

Announce LLC formation to your community:

Publish formation announcement explaining liability protection and legal status
Update DAO documentation and website with LLC information
Provide members with governance documentation
Host community call or AMA to answer questions
Update third-party integrations (CoinGecko, DefiLlama, etc.) with legal entity information

Action: Prepare communications plan for transparent announcement of LLC formation.

Step 20: Ongoing Governance and Compliance

Establish practices for maintaining compliance:

Regular governance review:

Quarterly review of governance procedures to ensure on-chain/off-chain alignment
Annual Operating Agreement review and updates as needed
Smart contract audit schedule for upgrades

Compliance monitoring:

Monthly financial reconciliation
Quarterly compliance check-ins with legal counsel
Annual comprehensive legal review

Documentation practices:

Maintain records of all governance votes and executed proposals
Document major decisions affecting the LLC
Retain all tax and financial records per IRS requirements (minimum 7 years)

Action: Assign compliance officer or committee responsible for ongoing legal and regulatory compliance.

Real Cost Breakdown: Budget for Formation

Understanding the complete cost structure helps you plan appropriately:

State Filing Fees: $100-$260

Articles of Organization filing: $100
Articles amendment (if filing smart contracts separately): $50
Name reservation (optional): $50
Certified copies (optional): $10 each

Total state fees: $100-$260

Registered Agent: $125-$500 annually

Professional registered agent service: $125-$300/year
Wyoming attorney as agent: $200-$500/year
Self-serve (Wyoming address required): $0

First-year registered agent cost: $125-$500

Legal Fees: $15,000-$50,000

Basic formation (simple governance): $15,000-$25,000

Articles of Organization drafting
Operating Agreement (standard template)
Formation filings
Basic governance documentation
Limited smart contract review

Comprehensive formation (complex governance): $30,000-$50,000

Customized Articles of Organization with complex provisions
Sophisticated Operating Agreement with detailed governance
Smart contract legal review and integration
Multi-sig setup and documentation
Tax planning and structure optimization
Regulatory compliance analysis
Membership documentation templates
Ongoing formation support through launch

Factors affecting legal fees:

Complexity of governance structure
Number of smart contracts requiring review
Multi-jurisdictional considerations
Securities law analysis for token structures
Customization vs. template documents
Attorney experience with DAO formations

Cost-saving strategies:

Use template documents for straightforward structures
Complete smart contract development before engaging formation counsel
Limit scope to formation only (defer operational counseling)
Use fixed-fee arrangements rather than hourly billing

Smart Contract Development/Audit: $5,000-$100,000

If developing custom governance contracts:

Simple multi-sig only: $0 (use existing Gnosis Safe)
Custom governance development: $20,000-$75,000
Smart contract audit: $5,000-$50,000 depending on complexity

Many DAOs deploy before formation, so this may be a sunk cost not directly attributable to LLC formation.

EIN Application: $0

Free through IRS website.

Banking/Financial Setup: $0-$3,000

Business bank account: $0-$50 (monthly fees vary)
Multi-sig setup: $0-$500 (gas fees for deployment)
Crypto accounting software: $500-$2,000/year
Initial CPA consultation: $500-$1,500

Total Formation Costs

Minimum (DIY with templates): $100 state fee + $125 agent = $225

Not recommended: significant legal risks without customized documentation

Basic professional formation: $15,000-$25,000

Appropriate for straightforward governance structures
Uses template documents with customization
Includes essential legal review

Comprehensive formation: $30,000-$50,000

Recommended for complex governance or significant assets
Fully customized documentation
Extensive legal review and integration
Tax and regulatory planning

Ongoing annual costs: $2,000-$10,000

Registered agent: $125-$500
Wyoming annual license tax: $60-$200+
Tax preparation: $3,000-$8,000
Legal compliance review: $2,000-$5,000
Accounting/bookkeeping: $1,200-$6,000

Operating Agreement Template Provisions

While your operating agreement should be customized by counsel, here are essential provisions to include:

Article I: Organization and Formation

1.1 Formation. The Members formed a limited liability company
under the Wyoming Limited Liability Company Act and the Wyoming
Decentralized Autonomous Organization Supplement on [DATE] by
filing Articles of Organization.

1.2 Name. The name of the DAO LLC is [FULL NAME].

1.3 Purpose. The DAO LLC is organized to [STATE PURPOSE], and to
engage in any lawful activity permitted under Wyoming law.

1.4 Registered Agent. The DAO LLC's registered agent is
[AGENT NAME] at [WYOMING ADDRESS].

1.5 Duration. The DAO LLC shall continue perpetually unless
dissolved according to this Agreement and Wyoming law.

Article II: Smart Contract Governance

2.1 Smart Contract Integration. The DAO LLC is governed by
smart contracts deployed at the following addresses:

- Governance Contract: [ETHEREUM ADDRESS]
- Treasury/Multisig: [GNOSIS SAFE ADDRESS]
- Token Contract: [TOKEN ADDRESS]

2.2 Precedence. Where provisions of this Operating Agreement
conflict with the Articles of Organization, the Articles of
Organization shall control. Where provisions of the Articles of
Organization conflict with the Smart Contracts, the Smart
Contracts shall control.

2.3 Amendments to Smart Contracts. The Smart Contracts may be
amended through the governance process specified in the Smart
Contracts. The DAO LLC shall file Articles of Amendment with
Wyoming within 30 days of any change to the Smart Contracts
used to manage the DAO.

2.4 Off-Chain Enforcement. In the event Smart Contract
provisions are not executable on-chain, the Members shall take
all necessary off-chain actions to effectuate the intent of
approved proposals.

Article III: Membership

3.1 Admission of Members. New Members shall be admitted through:
(a) Acquisition of Governance Tokens [if token-based]; or
(b) Approval by vote according to governance procedures [if
application-based]; or
(c) [OTHER ADMISSION METHOD]

3.2 Membership Interests. Each Member's Membership Interest
shall be calculated as [CALCULATION METHOD, e.g., "proportional
to Governance Tokens held" or "one vote per Member"].

3.3 Voting Rights. Members shall vote on matters through the
Governance Smart Contract using [VOTING MECHANISM]. A quorum
requires [PERCENTAGE]% of Membership Interests. Approval
requires [PERCENTAGE]% of votes cast.

3.4 Transfer Restrictions. Membership Interests [ARE/ARE NOT]
freely transferable. [IF RESTRICTED, SPECIFY RESTRICTIONS].

3.5 Withdrawal. Members [MAY/MAY NOT] voluntarily withdraw.
[IF PERMITTED, SPECIFY PROCEDURE AND CONSEQUENCES].

Article IV: Management and Operations

4.1 Management. The DAO LLC is [MEMBER-MANAGED/ALGORITHMICALLY-
MANAGED].

4.2 Authority. Management authority is vested in [THE MEMBERS
COLLECTIVELY/THE SMART CONTRACTS]. Decisions are made through
governance proposals voted on according to Article III.

4.3 Signatory Authority. The following individuals are
authorized to execute agreements and bind the DAO LLC on matters
approved through governance:

[LIST AUTHORIZED SIGNERS WITH TITLES]

4.4 Multi-Sig Execution. Treasury transactions require approval
of [NUMBER] of [NUMBER] multi-sig signers. The current signers
are:

[LIST SIGNER IDENTIFIERS - NAMES OR PSEUDONYMS]

Article V: Financial Provisions

5.1 Capital Contributions. Members [ARE/ARE NOT] required to
make capital contributions. [IF REQUIRED, SPECIFY AMOUNTS AND
TIMING].

5.2 Allocation of Profits and Losses. Profits and losses shall
be allocated to Members in proportion to their Membership
Interests.

5.3 Distributions. Distributions shall be made [SPECIFY TIMING
AND METHOD] as approved through governance proposals.

5.4 Tax Treatment. The DAO LLC shall be treated as a
[PARTNERSHIP/DISREGARDED ENTITY/CORPORATION] for tax purposes.

Article VI: Fiduciary Duties

6.1 Standard of Care. Members and those with management
authority shall discharge their duties in good faith, with the
care an ordinary prudent person would exercise under similar
circumstances, and in a manner they reasonably believe to be in
the best interests of the DAO LLC.

6.2 Limitation on Fiduciary Duties. To the fullest extent
permitted by Wyoming law, traditional fiduciary duties of
loyalty and care are [MODIFIED/ELIMINATED] as follows:
[SPECIFY MODIFICATIONS].

6.3 Good Faith Requirement. Notwithstanding Section 6.2, all
Members and those with management authority must act in good
faith.

6.4 Conflicts of Interest. [SPECIFY CONFLICT OF INTEREST
PROCEDURES AND DISCLOSURE REQUIREMENTS].

Article VII: Dissolution

7.1 Dissolution Events. The DAO LLC shall dissolve upon:
(a) Approval by vote of [PERCENTAGE]% of Members;
(b) Failure to approve any proposals or take any actions for
one year pursuant to W.S. 17-31-109(a)(v);
(c) Entry of decree of judicial dissolution;
(d) [OTHER DISSOLUTION TRIGGERS]

7.2 Winding Up. Upon dissolution, the DAO LLC shall [SPECIFY
WIND-UP PROCEDURES, ASSET DISTRIBUTION, RESPONSIBLE PARTIES].

Real-World Examples: Successful Wyoming DAO LLCs

American CryptoFed DAO LLC

Structure: First DAO formed under Wyoming law Purpose: Operating cryptocurrency and payment networks Notable aspect: Filed SEC registration (Form 10 and Form S-1) for token offerings, testing interaction between DAO structure and securities regulation Lessons: Demonstrates feasibility of SEC-registered DAO LLC, though regulatory path remains complex

Protocol DAOs Using Wyoming Wrappers

Multiple DeFi protocols have formed Wyoming DAO LLCs for their governance structures, including:

Treasury management DAOs: Utilizing Wyoming LLC for liability protection while managing community treasuries
Investment LAOs: Limited Algorithmic Organizations structured as Wyoming DAOs for venture investing
NFT community DAOs: Projects forming Wyoming LLCs to provide legal structure for community governance

Multi-Sig Community DAOs

Small community DAOs (100-1,000 members) frequently use Wyoming DAO LLC structure with:

Gnosis Safe multi-sig treasury
Snapshot voting for governance
3-of-5 or 5-of-9 multi-sig for execution
Member-managed structure with token-based voting

Typical setup:

Formation costs: $20,000-$35,000
Timeline: 4-6 weeks
Annual maintenance: $3,000-$7,000

Governance Integration: Connecting On-Chain and Off-Chain

The most critical implementation challenge is bridging on-chain governance with legal entity operations.

Multi-Sig Treasury Integration

Gnosis Safe setup:

Deploy multi-sig wallet on your chain of choice (Ethereum, Polygon, Arbitrum, etc.)
Configure signers: Select 5-9 trusted community members or core team members as signers
Set threshold: Require 3-of-5, 4-of-7, or 5-of-9 signatures for transaction execution
Document legal authority: In your Operating Agreement, designate the multi-sig signers as authorized to execute transactions on behalf of the DAO LLC
Establish procedures: Create written procedures for:
- How proposals approved on-chain get executed through multi-sig
- Communication protocols between governance and signers
- Signer replacement procedures
- Emergency procedures if signers become unavailable

Best practices:

Distribute signers geographically and across time zones
Use hardware wallets for signer keys
Implement regular signer key rotation schedule
Maintain backup signers who can step in if primary signers exit

On-Chain Voting Integration

Snapshot voting setup:

Create Snapshot space for your DAO
Configure voting strategies: Token-weighted, quadratic voting, or other mechanisms
Set proposal parameters:
- Minimum proposal threshold (prevent spam)
- Voting period (typically 3-7 days)
- Quorum requirements
- Approval thresholds
Establish proposal types:
- Binding proposals: Directly executable on-chain (token transfers, parameter changes)
- Advisory proposals: Require off-chain implementation by signers
- Constitutional proposals: Amending Operating Agreement or Articles
Document execution authority: Specify in Operating Agreement which proposal types bind the LLC and who has authority to execute approved proposals off-chain

Integration checklist:

Link Snapshot space to multi-sig wallet
Document which on-chain actions require governance approval
Establish timelock between proposal passage and execution (24-72 hours typical)
Create appeals or veto mechanisms for emergency situations
Implement safeguards against governance attacks

On-Chain Governance Contracts

For DAOs using custom governance contracts (e.g., Compound-style Governor contracts):

Legal integration requirements:

Audit governance contracts: Ensure security and correctness before formation
Document contract functions in Operating Agreement: Specify which contract functions constitute official DAO LLC actions
Establish upgrade procedures: If contracts are upgradeable, document legal authority and approval requirements for upgrades
Create emergency procedures: Define process for critical situations requiring rapid response
Link legal entity to contract: Consider including LLC information in contract metadata or linked documentation

Governor contract considerations:

Proposal threshold requirements
Voting delay and voting period
Quorum requirements
Execution timelock
Emergency admin functions and limitations

Hybrid Governance Models

Many successful DAOs use hybrid on-chain/off-chain governance:

On-chain governance for:

Treasury allocation and spending
Protocol parameter changes
Token distributions
Smart contract upgrades

Off-chain governance for:

Operating Agreement amendments
Hiring decisions
Legal entity matters
Partnership agreements
Non-executable strategic decisions

Implementation approach:

Tier governance decisions: Create decision matrix specifying which decisions require on-chain vs. off-chain governance
Document in Operating Agreement: Specify approval requirements for each category
Establish working groups or committees: Delegate certain operational matters to subgroups with reporting requirements
Regular synchronization: Ensure on-chain votes that affect legal entity are reflected in corporate records

Converting from Unincorporated DAO

Many existing DAOs operate without legal entity status and want to add liability protection.

Conversion Process

Option 1: New Formation (Cleanest Approach)

Form new Wyoming DAO LLC and migrate operations:

Form new DAO LLC following the formation process in this guide
Transfer assets: Move treasury assets from unincorporated DAO to DAO LLC-controlled wallets
Update governance: Migrate governance to new entity (update documentation, smart contracts if needed)
Communicate transition: Announce to community that governance now operates through LLC structure

Timeline: 4-8 weeks

Advantages: Clean start, no legacy liability issues, clear formation date

Disadvantages: Requires community approval and coordination, potential tax implications on asset transfers

Option 2: Conversion of Existing Entity

If your DAO already operates as a Wyoming LLC but wants DAO designation:

File Articles of Amendment adding required DAO provisions (statement of DAO status, smart contract identifiers, notice of restrictions)
Update Operating Agreement to reflect DAO governance
Provide smart contract identifiers within 30 days

Filing fee: $50 for Articles of Amendment

Timeline: 1-2 weeks

This option only works if you're already a Wyoming LLC. Non-Wyoming entities must form new Wyoming DAO LLC.

Asset Migration Considerations

Tax implications: Transferring assets from unincorporated DAO to DAO LLC may trigger taxable events. Consult tax counsel before migration.

Ownership structure: Determine whether existing DAO participants become members of new LLC automatically or must opt in.

Smart contract updates: If your governance contracts reference the old unincorporated DAO, update to reference the LLC.

Historical liabilities: Consider whether unincorporated DAO has potential liabilities that could affect new entity. May want indemnification provisions or liability separation strategies.

Ongoing Compliance and Maintenance

Formation is just the beginning. Maintain compliance with these practices:

Annual Wyoming Filings

License Tax (Annual Report):

Due by first day of anniversary month of formation
$60 minimum (LLCs with assets under $300,000 in Wyoming)
$0.0002 per dollar of assets if over $300,000 in Wyoming
File online at wyobiz.wyo.gov
Late filing penalty: $50

Smart Contract Updates:

File Articles of Amendment within 30 days if smart contracts change
$50 filing fee
Update all blockchain addresses

Registered Agent Maintenance:

Maintain registered agent continuously
File change within 30 days if agent changes (no filing fee)

Federal Compliance

Beneficial Ownership Information Report (BOIR):

File within 30 days of formation under Corporate Transparency Act
Report individuals with 25%+ ownership or substantial control
Update within 30 days of changes
File at fincen.gov/boi

Tax Returns:

Multi-member DAO LLC (partnership tax treatment): File Form 1065 (partnership return) and issue K-1s to members annually by March 15
Single-member DAO LLC: No separate filing (disregarded entity); report on member's personal return
C-corp election: File Form 1120 (corporate return) annually by April 15 (or 15th day of 4th month after fiscal year end)
Quarterly estimated taxes: May be required depending on income levels

1099 Reporting:

Issue 1099-NEC to contractors and service providers receiving $600+ annually
Issue 1099-MISC for other reportable payments
Due January 31 following tax year

Governance Compliance

Meeting and voting records:

Maintain records of governance proposals and votes
Document execution of approved proposals
Retain for minimum 7 years

Operating Agreement updates:

Review annually and update as governance evolves
Amend through governance process specified in Operating Agreement
Distribute updated versions to all members

Smart contract audits:

Audit upgrades before deployment
Maintain audit reports
Disclose audit findings to members

Financial Compliance

Bookkeeping:

Maintain accurate records of all transactions (on-chain and off-chain)
Reconcile monthly
Separate DAO LLC finances from personal finances

Bank account maintenance:

Keep minimum balances to avoid fees
Review statements monthly
Update bank on governance structure changes if needed

Multi-sig wallet security:

Regular security audits of access controls
Review signer list quarterly
Update signer keys annually or after departures
Test execution procedures periodically

When to Seek Legal Counsel

While this guide provides comprehensive information, engage experienced counsel for:

Complex governance structures: Custom voting mechanisms, multiple token classes, algorithmically-managed structures

Securities law issues: If your tokens may be securities, need Reg D offering, or planning secondary market trading

Significant assets: DAOs managing $5M+ should invest in comprehensive legal review and ongoing counsel

Multi-jurisdictional operations: Operating in multiple states or countries requires coordination of legal requirements

Regulatory inquiries: Any contact from SEC, CFTC, FinCEN, or other regulators requires immediate legal counsel

Disputes or litigation: Member disputes, contract disagreements, or legal claims need experienced litigation counsel

Tax planning: Complex tax situations, international members, or significant income require specialized tax counsel

Employment questions: If hiring employees (not just contractors), need employment law guidance

Intellectual property: Significant IP assets require specialized IP counsel for protection strategies

Key Takeaways

Wyoming DAO LLCs provide liability protection while allowing on-chain governance, making them the leading legal structure for for-profit DAOs in the U.S.
Budget $15,000-$50,000 for formation depending on complexity, plus $2,000-$10,000 annually for ongoing compliance.
Plan for 4-8 weeks from initial planning to operational DAO LLC, including time for document preparation and governance integration.
Smart contract identifiers must be provided within 30 days of filing Articles or the DAO automatically dissolves—deploy contracts promptly.
Operating Agreement should bridge on-chain and off-chain governance with clear procedures for executing approved proposals through legal entity.
Choose between member-managed and algorithmically-managed structures based on your governance model, with algorithmically-managed requiring upgradeable contracts.
Wyoming DAO LLC works best for for-profit structures, while DUNA is designed for nonprofit infrastructure (requires 100+ members).
Ongoing compliance is minimal but essential: annual license tax ($60+), beneficial ownership reporting (FinCEN), tax returns, and smart contract update notices.
Multi-sig integration is critical for bridging on-chain treasury management with legal authority to bind the LLC.
Formation is just the beginning: Maintain corporate records, integrate governance properly, and review compliance annually.

Next Steps

Ready to form your Wyoming DAO LLC? Follow this action plan:

This week:

Review this guide with your core team
Decide between DAO LLC and DUNA structure
Define your governance model (member-managed vs. algorithmically-managed)
Begin drafting membership and voting structure

Next 2 weeks:

Engage legal counsel experienced in DAO formations
Secure registered agent in Wyoming
Audit or deploy governance smart contracts
Reserve your DAO name with Wyoming Secretary of State

Weeks 3-4:

Finalize and file Articles of Organization
Draft Operating Agreement
Obtain EIN from IRS
Open bank account and treasury wallet

Weeks 5-8:

Provide smart contract identifiers (if not in original filing)
Integrate on-chain governance with legal entity
Document governance procedures for community
Launch with DAO LLC structure operational

Ongoing:

Implement compliance calendar
Establish bookkeeping and tax systems
Review governance quarterly
Maintain corporate records

Resources

Wyoming Secretary of State - Business Division

Website: sos.wyo.gov/business
Phone: (307) 777-7311
Email: business@wyo.gov
Business filing portal: wyobiz.wyo.gov

Wyoming Statutes

DAO Supplement: W.S. 17-31-101 through 17-31-115¹
LLC Act: W.S. 17-29-101 et seq.
DUNA Act: W.S. 17-32-101 et seq.

Federal Resources

IRS EIN application: irs.gov/ein
FinCEN beneficial ownership reporting: fincen.gov/boi
Corporate Transparency Act guidance: fincen.gov/boi-faqs

DAO Resources

a16z crypto DUNA guidance: a16zcrypto.com
Wyoming DAO FAQs: sos.wyo.gov/Business/Docs/DAOs_FAQs.pdf

Need DAO Formation Guidance?

Astraea Counsel helps DAOs implement Wyoming DAO LLC and DUNA structures while preserving decentralized governance. We provide entity formation, operating agreement drafting, smart contract integration, and ongoing compliance counsel. Explore our Corporate & Transactions services.

Related Resources

DAO Liability After Lido - The unlimited liability problem this solves
DeFi Protocol Legal Structure - Comparing all legal structure options
DAO Employment Classification - Contributor vs. employee tax classification
Treasury Management for Crypto Companies - Managing DAO treasury and multi-sig wallets
Digital Assets & Blockchain Practice - Comprehensive DAO legal counsel
Contact Us - Discuss your DAO formation

Disclaimer: This article provides general information only and does not constitute legal advice. Every DAO's situation is unique, and you should consult qualified legal counsel before forming a legal entity or making governance decisions. Wyoming law and federal regulations continue to evolve, and you should verify current requirements before relying on any information in this guide.

Wyoming Decentralized Autonomous Organization Supplement, W.S. 17-31-101 et seq., available at https://sos.wyo.gov/Forms/WyoBiz/DAO_Supplement.pdf ↩ ↩²
W.S. 17-31-106(d) ("An algorithmically managed decentralized autonomous organization may only form under this chapter if the underlying smart contracts are able to be updated, modified or otherwise upgraded.") ↩
W.S. 17-31-104(b)(iii) (requiring articles to include "a publicly available identifier of any smart contract directly used to manage, facilitate or operate the decentralized autonomous organization") ↩
W.S. 17-31-105 ("The name of a decentralized autonomous organization formed or operating under this chapter shall contain the words 'decentralized autonomous organization' or the abbreviation 'DAO', 'LAO' or 'DAO LLC'.") ↩
W.S. 17-31-104 (Articles of organization requirements for DAOs) ↩
Wyoming Secretary of State, DAO LLC Articles of Organization Form, available at https://sos.wyo.gov/Forms/Business/LLC/DAOLLC-ArticlesOrganization.pdf ↩
W.S. 17-31-106(a) ("The articles of organization, smart contract and operating agreement, if applicable, of a decentralized autonomous organization may define, reduce or eliminate fiduciary duties.") ↩
W.S. 17-31-106(c) ("In the event of any conflict between the articles of organization and the operating agreement, the articles of organization shall control. In the event of any conflict between the articles of organization or the operating agreement and the smart contract, the smart contract shall control.") ↩
W.S. 17-31-104(c) ("If the statement required under subsection (b)(iii) of this section is not included in the articles of organization initially filed, the decentralized autonomous organization shall have thirty (30) calendar days from the date filed to provide an amendment to the articles of organization that includes the statement... If a decentralized autonomous organization fails to file an amendment as provided by this subsection, the limited liability company shall be dissolved.") ↩