Limited Liability Wasn't Handed Down From Above — And Neither Should Your DAO's Structure Be

Han Verstraete, in under 40 seconds, on why most DAOs eventually incorporate — and why that's not a betrayal of decentralisation.

Limited liability isn't an invention of the state. It's a bottom-up process that took centuries to arrive at — communities deciding that if they were going to take risks together, everyone's exposure should be capped to what they actually put in. The joint-stock company in 17th-century Holland is the same impulse a DAO has today, just five hundred years earlier and without a blockchain.

Seen that way, incorporating a DAO isn't something imposed from above — it's a groundswell of the same instinct that built the corporate form in the first place: a community protecting itself. When that desire for protection shows up in a project, the answer is usually straightforward: you should probably consider incorporating rather than leaving the DAO as an unwrapped, unlimited-liability association. That's what most serious projects end up doing.