The legal frameworks for DAOs in Delaware

DAO Legal Frameworks

The legally secure structure of DAO should be created for consumer protection and for unknown liability risk, as many consumers participate in the DAO. This has further encouraged the creation of a DAO legal framework. Mainly, there are four different options for setting up the DAO legal structure, including Wyoming DAO LLC and Delaware LLC in the United States of America, Cayman Island, and Switzerland.

In the real world, DAOs are represented as ‘legal wrappers’ for the external legal relationship and governance. These DAO legal wrappers are similar to a legal company having a legal structure in the form of b-corps, c-corps, LLCs, and DAO LAO. To resolve the DAO legal entity issues, the governance tokens are offshored to foreign jurisdictions, including the Cayman Islands, Switzerland, Singapore, Panama, and others. 

Further wrapping the DAO into a legal framework formed in such a jurisdiction. 

Additionally, it should be highlighted that a DAO Legal Wrapper must contain a section of the DAO to guarantee that it offers legal protection to its members and status legally binding to the decentralized governance system.

Formation of DAO as Delaware, LLC

Delaware LLC is an organizational form of business that is used for a variety of business purposes, including operating enterprises, holding companies, unique purpose entities, and specific transaction vehicles.

With the emergence of distributed ledgers and the growth of blockchain technology in commercial and corporate transactions, it has become an organizational form for distributed autonomous organizations as well. DAO could accrue the benefits of forming or establishing a legal entity in the jurisdiction of Delaware and LLC. The US state of Delaware has established a legal DAO as LAO(Legal DAO). This DAO legal structure allows members to invest in the decentralized platform in exchange for utility tokens. This legal structure is referred to as a DAO  ‘legal wrapper’, created by structuring DAO as an LLC to provide clarity on the applicable law, provide tax benefits, and limit the liability of the participants of such a system. Incorporating DAO in Delaware state provides much flexibility and a faster, cheaper process of incorporation. Moreover, it provides flexibility in choosing whether to make smart contracts public or private and to have on-chain operations freely and to make decisions that better align with the projects. Due to this, more and more projects have started to incorporate under Delaware LLC. Further, MetaCartel Ventures DAO LLC and The LAO have opted for legal status under the Delaware LLC Act.

Formation of DAO as Wyoming, LLC 

Wyoming Governor Mark Gordon signed Bill 38 in April 2021, which allowed Wyoming to recognize decentralized autonomous organizations (DAO) as legal entities, LLC (Limited Liability Companies). This came as an amendment to the already existing Wyoming Limited Liability Act. The new amendment in the law defines a DAO as an LLC, wherein the article of incorporation includes the statement that the company is a DAO. Subsequently, in July, DAOs to be formed as limited liability companies, i.e., DAO LLCs, became a law in the state of Wyoming in the US. This law also has been recognized in Europe and Germany due to the Treaty of Friendship, Commerce, and Navigation between the Federal Republic of Germany and the United States of America on October 29, 1954. 

As per the law, the decision-making in a DAO depends on the approval of more than fifty percent of the participating members in a vote participated by a quorum of 4 members. Further, the membership interest is determined as the member’s ownership share in the member-led DAO, which may be defined in the DAO’s smart contract or operating agreements. 

Our team of advanced patent attorneys assists clients with patent searches, drafting patent applications, and patent (intellectual property) agreements, including licensing and non-disclosure agreements.

Advocate Rahul Dev is a Patent Attorney & International Business Lawyer practicing Technology, Intellectual Property & Corporate Laws. He is reachable at rd (at) patentbusinesslawyer (dot) com & @rdpatentlawyer on Twitter.

Quoted in and contributed to 50+ national & international publications (Bloomberg, FirstPost, SwissInfo, Outlook Money, Yahoo News, Times of India, Economic Times, Business Standard, Quartz, Global Legal Post, International Bar Association, LawAsia, BioSpectrum Asia, Digital News Asia, e27, Leaders Speak, Entrepreneur India, VCCircle, AutoTech).

Regularly invited to speak at international & national platforms (conferences, TV channels, seminars, corporate trainings, government workshops) on technology, patents, business strategy, legal developments, leadership & management.

Working closely with patent attorneys along with international law firms with significant experience with lawyers in Asia Pacific providing services to clients in US and Europe. Flagship services include international patent and trademark filingspatent services in India and global patent consulting services.

Global Blockchain Lawyers (www.GlobalBlockchainLawyers.com) is a digital platform to discuss legal issues, latest technology and legal developments, and applicable laws in the dynamic field of Digital Currency, Blockchain, Bitcoin, Cryptocurrency and raising capital through the sale of tokens or coins (ICO or Initial Coin Offerings).

Blockchain ecosystem in India is evolving at a rapid pace and a proactive legal approach is required by blockchain lawyers in India to understand the complex nature of applicable laws and regulations.

Advertisement

Explaining The Decentralized Autonomous Organization (DAO)

Introduction 

A decentralized autonomous organization (DAO) is an emerging form of legal structure. With no central governing body, every member of a DAO typically shares a common goal and strives to act in the best interests of the entity. DAOs, which have gained popularity among cryptocurrency and blockchain technology enthusiasts, make decisions with a bottom-up management approach.

Therefore, there are various legal frameworks in different jurisdictions all over the world for the smooth operation of the DAO through, DAO members, voting system, proposal, and decision-making. 

What is the purpose of a DAO?

DAO stands for Decentralized Autonomous Organization, which operates transparently and autonomously, meaning independent of any human intervention. These organizations have their rules and structure written in codes known as smart contracts and do not have a hierarchical system, meaning no single commanding body behind decision-making. Decisions are made via a voting system on proposals during a specified period by those who have invested in these organizations or through algorithms depending on the type of DAO. These organizations are collectively owned and managed by their members only. DAO ownership is attained by selling tokens to the investors provided by the platform in exchange for virtual currency used on the blockchain on which the DAO code has been deployed. This provides voting rights to the token holders to accept or reject a smart contract-based business proposal. However, the legal status of DAOs is still uncertain. Despite the growth of the decentralized autonomous organization, the legal status has become a hurdle in its technological advancement and exposes risk to its members. 

Formation of DAO

The organization was launched on April 30, 2016, after the Ethereum protocol engineer, Christoph Jentzsch, released the open source for an Ethereum-based investment organization. It was first meant to operate as a venture capital fund for crypto and decentralized spaces. DAO, called earlier ‘The DAO,” was a decentralized platform that relied on crowdfunding through token selling. Those who bought these tokens became token investors and decision-makers. The idea behind DAO is to form an automated, decentralized platform wherein decision makers are the members of that platform, and decisions are taken collectively without the interference of a centralized governing authority. 

The general structure of DAO 

There are two stages for DAO; one is the Pre-DAO stage, and the other is the Post-DAO stage. DAO, initially in its pre-DAO stage, is a centralized project that is managed by its founders. Further, smart contracts are launched, tokens are issued, the members of the DAO are selected, the governance system is formed, and the DAO then enters the Post-DAO stage that fully decentralizes the ownership and the management.

The structure of the DAO includes a DAO governance system, a DAO constitution, DAO membership, a DAO voting rights system, and a decision-making process.

DAO members

The selection of members of the Decentralized Autonomous Organization is decided by the founders. They usually rely on a single criterion wherein a minimum limit of tokens is decided that a token holder possesses to become a member of DAO. However, there are other criteria to decide upon, such as the members of DAO, wherein those participants are welcomed who are contributors and play an important role in its work, such as validators, oracles, or creators, for example.

Voting Rights 

Once the members of the Decentralized Autonomous Organization are decided, the founders then structure the voting right mechanism that allows participants in the decentralized governance system of a Web3 decentralized project. The founders issue Liquidity Provider tokens to all the members of DAO as proof of the number of the project’s tokens staked by a DAO member. However, in other cases, founders may issue a separate type of governance token. These tokens must be non-transferable and non-tradable; otherwise, they will be considered securities.

Proposal making

Once the members and their voting rights are decided, subsequently, the founders determine which of the Decentralized Autonomous Organization members will have the right to create proposals and how many members must support it to put it to a vote of the entire DAO.

Decision making

The members of the DAO then participate in the decision-making by deploying their voting rights. These decisions include the issuance of additional tokens, burning of tokens, increasing liquidity pools, disposing of the treasury, and the like.

In summary

Decentralized Autonomous Organizations are internet-native organizations that are owned and managed collectively by their members. They have built-in treasuries that can only be accessed with the permission of their members. Decisions are made through proposals that the group votes on over a set period.

DAOs are a highly effective and extremely safe way to collaborate with like-minded people all over the world.  DAOs, as internet-native organizations, have the potential to completely transform corporate governance. As the concept matures, more organizations may choose to use a DAO model to help govern their activities.

Our team of advanced patent attorneys assists clients with patent searches, drafting patent applications, and patent (intellectual property) agreements, including licensing and non-disclosure agreements.

Advocate Rahul Dev is a Patent Attorney & International Business Lawyer practicing Technology, Intellectual Property & Corporate Laws. He is reachable at rd (at) patentbusinesslawyer (dot) com & @rdpatentlawyer on Twitter.

Quoted in and contributed to 50+ national & international publications (Bloomberg, FirstPost, SwissInfo, Outlook Money, Yahoo News, Times of India, Economic Times, Business Standard, Quartz, Global Legal Post, International Bar Association, LawAsia, BioSpectrum Asia, Digital News Asia, e27, Leaders Speak, Entrepreneur India, VCCircle, AutoTech).

Regularly invited to speak at international & national platforms (conferences, TV channels, seminars, corporate trainings, government workshops) on technology, patents, business strategy, legal developments, leadership & management.

Working closely with patent attorneys along with international law firms with significant experience with lawyers in Asia Pacific providing services to clients in US and Europe. Flagship services include international patent and trademark filingspatent services in India and global patent consulting services.

Global Blockchain Lawyers (www.GlobalBlockchainLawyers.com) is a digital platform to discuss legal issues, latest technology and legal developments, and applicable laws in the dynamic field of Digital Currency, Blockchain, Bitcoin, Cryptocurrency and raising capital through the sale of tokens or coins (ICO or Initial Coin Offerings).

Blockchain ecosystem in India is evolving at a rapid pace and a proactive legal approach is required by blockchain lawyers in India to understand the complex nature of applicable laws and regulations.

The legal frameworks for DAOs from around the world

DAO in Switzerland

In comparison to the other European jurisdictions and the Wyoming LLC model, Switzerland provides a much more flexible and easy-to-foundation model with moderation taxation, making it the most used jurisdiction for DAO. There are three commonly used DAO legal structures in Singapore, namely, the Swiss Foundation Law, the Swiss Association, Decentralized Autonomous Association (DAA), and the Private International Act (PILA).

The Swiss Foundation Law

For long-term decentralization projects, the Swiss foundation is the ideal legal entity. This Swiss foundation setup requires registration in a public registry, an irrevocable foundation deed, and supervision by a federal authority. However, for decentralized projects wherein activities evolve and mature with time, this legal entity is not very appealing.

Swiss Association

The Swiss Association provides more flexibility than the Swiss foundation. Further, it is a separate legal entity wherein having a resident board member is not required. Its members can be individuals or legal entities having limited liability. The geographically dispersed blockchain projects having a common goal or charitable purposes use the Swiss Association as DAO legal framework. Furthermore, the Swiss Association offers tax exemption. Tax exemption is also granted to commercial enterprises having an association as DAO legal framework, provided that the business is a subsidiary having charitable objectives. For NPOs and NGOs, they have been the entity of choice. Some of these are incorporated as associations, like the World Wildlife Fund, FIFA, and the like. 

The governing body of the association is the general assembly that appoints the board of directors, decides on the admission of members, and resolves all matters concerning the association’s articles of association. A recent use case for the Swiss Association is Libra.

A Decentralized Autonomous Association (DAA)

DAA helps to achieve a DAO with limited liability. The general assembly is the governing body of the association that appoints the board of directors, decides on the admission and expulsion of members, and resolves all matters concerning other corporate bodies in the articles of association.

Private International Act (PILA)

This is a newly developed legal entity that provides a DAO, a legal structure recognized under Swiss law. It allows DAO to exist as an internet native and also to be recognized under the Swiss legal order. Based on the theory of equivalence, the code of DAO is considered a governing law, and digital space is an online jurisdiction. This is a new type of DAO legal structure wherein a DAO is not created as per the law of a state and is recognized in Switzerland as a foreign company with rights and obligations. 

DAO in the Cayman Islands

Cayman Island is one of the jurisdictions that has been chosen by a lot of Cryptocurrency projects to create a DAO legal wrapper. The Cayman Islands Foundation Companies Act, of 2017 introduced a new form of legal entity known as a “foundation company”. This foundation company acts as an ideal DAO legal structure that functions as a civil law foundation, providing incorporated trust and retaining a separate legal personality and limited liability of a company. Furthermore, a “foundation company” can be structured without centralized shareholders, wherein all the decisions are made by the members of the DAO community. 

Foundation company as a legal wrapper

Each DAO maintains a register of its members, which must be synchronized with the register of foundation beneficiaries. In the case of a Cayman Islands foundation, the register is maintained privately, which provides flexibility and scalability for the DAO itself. Further, the Virtual Asset Service Provider Act (VASP Act), which regulates the transfer, exchange, custody, and issuance of virtual assets to the public in exchange for some considerations, has changed how decentralized projects in Cayman Island can operate. Furthermore, the foundation company also grants rewards from its treasury. This is only possible with DAOs having a Cayman Island foundation company as the DAO legal framework. MakerDAO is one example that has used foundations in Cayman Island and Switzerland. 

Conclusion

Different legal structures have been created for DAO to give it a legal personality and to eliminate liability risk. Some of these are Delaware LLC, Wyoming LLC, Foundation Company in Cayman Island, and Swiss foundation. Wyoming LLC is the most flexible DAO structure. However, it requires a lot of paperwork and information. On the contrary, Delaware’s setup is quick and cheap with moderate taxation, but it requires every member to be updated, and each member of DAO needs to be a member of an LLC.

Our team of advanced patent attorneys assists clients with patent searches, drafting patent applications, and patent (intellectual property) agreements, including licensing and non-disclosure agreements.

Advocate Rahul Dev is a Patent Attorney & International Business Lawyer practicing Technology, Intellectual Property & Corporate Laws. He is reachable at rd (at) patentbusinesslawyer (dot) com & @rdpatentlawyer on Twitter.

Quoted in and contributed to 50+ national & international publications (Bloomberg, FirstPost, SwissInfo, Outlook Money, Yahoo News, Times of India, Economic Times, Business Standard, Quartz, Global Legal Post, International Bar Association, LawAsia, BioSpectrum Asia, Digital News Asia, e27, Leaders Speak, Entrepreneur India, VCCircle, AutoTech).

Regularly invited to speak at international & national platforms (conferences, TV channels, seminars, corporate trainings, government workshops) on technology, patents, business strategy, legal developments, leadership & management.

Working closely with patent attorneys along with international law firms with significant experience with lawyers in Asia Pacific providing services to clients in US and Europe. Flagship services include international patent and trademark filingspatent services in India and global patent consulting services.

Global Blockchain Lawyers (www.GlobalBlockchainLawyers.com) is a digital platform to discuss legal issues, latest technology and legal developments, and applicable laws in the dynamic field of Digital Currency, Blockchain, Bitcoin, Cryptocurrency and raising capital through the sale of tokens or coins (ICO or Initial Coin Offerings).

Blockchain ecosystem in India is evolving at a rapid pace and a proactive legal approach is required by blockchain lawyers in India to understand the complex nature of applicable laws and regulations.

The Business Companies Act of the BVI 

BVI financial record-keeping system

According to the Business Companies Act, a corporation is required to keep financial records and underlying papers that can demonstrate the firm’s transactions. These documents may include but are not limited to, agreements, invoices, bank statements, and other documents of a similar nature. These records have to be stored away for at least five years if they are to be considered valid. Any location is acceptable for the storage of the documents; however, if the records are not held at the registered office, the company is required to inform the Registered Agent of the address where the records are being kept.

Annual Government/Renewal Fees of the BVI 

The number of shares that have been issued is used to calculate the number of annual license fees or franchise fees that must be paid. For a business that has a maximum share of 50,000, the annual fees that must be paid beginning in the second year and continuing on into subsequent years will be $450 each. The fees might reach a maximum of $1,200 if the registered capital of the firm is greater than 50,000 shares. A Registered Agent is obligated to make an annual payment to the Registrar in the amount that is specified.

BVI data privacy law

The introduction of the Data Protection Act, of 2021 (often known as the DPA) in the British Virgin Islands (BVI)  safeguards personal data that is handled by public and private organizations. The data protection regimes are comparable to the principles that are applicable in the United Kingdom and the European Union under the General Data Protection Regulation (GDPR). The major purpose of the DPA is to ensure the security of data and to encourage transparency and accountability in the processing of personal data. The DPA is applicable to all existing limited partnerships and incorporations in the BVI (collectively referred to as “Private Body”). A person who processes data in the form of commercial transactions, either directly or on behalf of a private business, is likewise subject to this regulation. This includes data processed on behalf of the body formed in the British Virgin Islands (BVI) or elsewhere outside of the British Virgin Islands (BVI).

BVI taxation law

Due to the fact that the vast majority of taxes are not required to be paid in BVI, the tax system in this jurisdiction is far easier to navigate than the definitive form of taxation used in other jurisdictions. The British Virgin Islands (BVI) do not have a tax on corporations, capital gains, value-added, sales, gifts, or inheritances. A payroll BVI tax on employees working within the territory, stamp duty (which only applies to the transfer of land and the transfer of shares in companies that own land), import duty, land tax, and a number of other minor ancillary taxes and permit fees are some of the other taxes that are imposed in the jurisdiction. The absence of taxes has made the British Virgin Islands (BVI)  a well-known tax haven for overseas investors.

Regarding offshore jurisdiction, for tax purposes, the company must comply with international obligations or global standards. Lately, there have been agreements between BVI and other countries like UK  and US in order to implement regulations to improve international tax compliance. The Tax Authority Act, BVI Limited Partnership Act 2018 has established International Tax Authority that supervises BVI’s compliance with international obligations in cross-border transactions. Apart from the above, BVI has imposed EU Union withholding tax on interest payments in the jurisdiction of persons residing within the European Union.   

Conclusion 

British Virgin Island (BVI) is one of the ideal places to initiate business with its flexible organizational structure, significant tax benefit, and hassle-free company establishment. Apart from that, a person can operate and carry out their business anywhere in the world with minimal financial reporting. However, there are some challenges with regard to a work permit, trade license, and audit requirements. Even if there is no legal need for a legal audit, companies might require an audited statement to prove the company’s lawful establishment in BVI. Apart from that, the Labor Code passed in 2010 requires a work permit which can take more than two months. Additionally, a trade license required to perform business in BVI may take around six weeks for approval, wherein a corporation must register with the Social Security Office and the Inland Revenue Department before starting operations.

Our team of advanced patent attorneys assists clients with patent searches, drafting patent applications, and patent (intellectual property) agreements, including licensing and non-disclosure agreements.

Advocate Rahul Dev is a Patent Attorney & International Business Lawyer practicing Technology, Intellectual Property & Corporate Laws. He is reachable at rd (at) patentbusinesslawyer (dot) com & @rdpatentlawyer on Twitter.

Quoted in and contributed to 50+ national & international publications (Bloomberg, FirstPost, SwissInfo, Outlook Money, Yahoo News, Times of India, Economic Times, Business Standard, Quartz, Global Legal Post, International Bar Association, LawAsia, BioSpectrum Asia, Digital News Asia, e27, Leaders Speak, Entrepreneur India, VCCircle, AutoTech).

Regularly invited to speak at international & national platforms (conferences, TV channels, seminars, corporate trainings, government workshops) on technology, patents, business strategy, legal developments, leadership & management.

Working closely with patent attorneys along with international law firms with significant experience with lawyers in Asia Pacific providing services to clients in US and Europe. Flagship services include international patent and trademark filingspatent services in India and global patent consulting services.

Global Blockchain Lawyers (www.GlobalBlockchainLawyers.com) is a digital platform to discuss legal issues, latest technology and legal developments, and applicable laws in the dynamic field of Digital Currency, Blockchain, Bitcoin, Cryptocurrency and raising capital through the sale of tokens or coins (ICO or Initial Coin Offerings).

Blockchain ecosystem in India is evolving at a rapid pace and a proactive legal approach is required by blockchain lawyers in India to understand the complex nature of applicable laws and regulations.

Incorporation of BVI Companies

BVI company registration

The BVI Business Companies Act also referred to simply as “the Act,” is the statute that is used to incorporate businesses in the British Virgin Islands, both offshore and locally. The Registrar of Corporate Affairs must receive a copy of the company’s Memorandum and Articles of Association from the company’s registered agent. “An application for the incorporation of a company may only be filed by the proposed registered agent, and the Registrar shall not accept an application for the incorporation of a company filed by any other person,” it states in the document. “An application for the incorporation of a company may not be filed by any other person.”

BVI company incorporation

Incorporation of the company is effective from the date the Memorandum and Article of Association are filed with the Registrar. If the incorporation conditions comply with the Act, the Registrar issues a certificate of incorporation and allows a unique number to the company. There is no requirement under the Act to issue shares at the time of incorporation, and neither the company is required to have a director at the time of incorporation. However, the appointment of a director is mandatory under the Act. The Registered Agent is required to appoint the company’s first director, and such a  director has the authority to issue shares to the shareholders. 

“Subject to this Act and to the memorandum and articles, shares in a company may be issued, and options to acquire shares in a company granted, at such times, to such persons, for such consideration and on such terms as the directors may determine.” 

In addition, there is no such criterion for approved share capital, which means that there is no requirement for a minimum amount of share capital. In accordance with the Act, a share may be issued either with or without a par value attached to it. When a corporation issues a share that has a par value, the consideration for such a share might come in any form; nonetheless, it should be at least equal to the par value of the share.

The regulatory framework of BVI

BVI’s legal system for business establishment stems from Delaware General Corporation Law, and as such, the Act follows principles and concepts similar to English Law. A company under the Act may incorporate as a company limited by shares; a company limited by guarantee that is not authorized to issue shares; a company limited by guarantee that is authorized to issue shares; an unlimited company that is not authorized to issue shares or an unlimited company that is authorized to issue shares. In addition, the Act allows “restricted purpose company” for incorporation in BVI, subject to some additional disclosure (a statement that the company is a limited purpose company and its purpose) that has to be made in the Memorandum of Association. Additionally, the BVI Business Companies (Amendment) Act, 2018 has extended the classes of companies that may be Segregated Portfolio Companies (SPC).  

BVI Limited Partnership Act 2018 

The Limited Partnership Act of 2018 is complied with by any limited partnership business that is recognized in the British Virgin Islands. In accordance with the provisions of the Limited Partnership Act of the BVI, a limited partnership can start out either with or without a separate legal identity from its participants, depending on the preferences of the founding general partner. A general partnership is also recognized in the British Virgin Islands, and its operation is governed by the Partnership Act of 1996. In this configuration, a partnership does not have a distinct legal personality from its constituent members, and all partners have complete culpability for the debts incurred by the partnership.

BVI economic substance act

A corporation is required to comply with the BVI Economic Substance Act and perennially submit or report relevant information pertaining to the operation of the business. For the purposes of taxation, the entity must disclose a degree of economic substance within the British Virgin Islands if it conducts activity that falls within the definition of “Relevant Activities.” If the corporation has its tax residence outside of the British Virgin Islands (BVI) or any of the “Listed Jurisdictions,” then the duty to demonstrate that it possesses substance will not apply to the company.

Our team of advanced patent attorneys assists clients with patent searches, drafting patent applications, and patent (intellectual property) agreements, including licensing and non-disclosure agreements.

Advocate Rahul Dev is a Patent Attorney & International Business Lawyer practicing Technology, Intellectual Property & Corporate Laws. He is reachable at rd (at) patentbusinesslawyer (dot) com & @rdpatentlawyer on Twitter.

Quoted in and contributed to 50+ national & international publications (Bloomberg, FirstPost, SwissInfo, Outlook Money, Yahoo News, Times of India, Economic Times, Business Standard, Quartz, Global Legal Post, International Bar Association, LawAsia, BioSpectrum Asia, Digital News Asia, e27, Leaders Speak, Entrepreneur India, VCCircle, AutoTech).

Regularly invited to speak at international & national platforms (conferences, TV channels, seminars, corporate trainings, government workshops) on technology, patents, business strategy, legal developments, leadership & management.

Working closely with patent attorneys along with international law firms with significant experience with lawyers in Asia Pacific providing services to clients in US and Europe. Flagship services include international patent and trademark filingspatent services in India and global patent consulting services.

Global Blockchain Lawyers (www.GlobalBlockchainLawyers.com) is a digital platform to discuss legal issues, latest technology and legal developments, and applicable laws in the dynamic field of Digital Currency, Blockchain, Bitcoin, Cryptocurrency and raising capital through the sale of tokens or coins (ICO or Initial Coin Offerings).

Blockchain ecosystem in India is evolving at a rapid pace and a proactive legal approach is required by blockchain lawyers in India to understand the complex nature of applicable laws and regulations.

The NFT Economy in Metaverse Gaming

Non-Fungible Token and metaverse 

The entire feature of owning a character and increasing its value implements a concept on which the metaverse land, and propertyis heavily based. The concept of Play-to-earn as imply enables users to earn and own items in the form of non-fungible tokens (NFTs). NFTs are another concept that has contributed to revolutionizing the gaming industry. The players’ characters are called Avatars which are unique for every player, aka NFT. The feature of uniqueness is ensured by blockchain, wherein their ownership is intact with the user. The avatars that the players own have a dynamic value that can be traded and sold in exchange for cryptocurrency and further swapped into real money. Apart from NFTs and characters, Players can also own other types of assets, such as land property and tools, which can be bought and traded in the NFT marketplace.

The metaverse gaming community

The metaverse gaming community plays a significant role in the development of metaverse games, which is also true of the gaming industry as a whole. In the metaverse gaming landscape, taking a community-oriented approach has resulted in the creation of enormous economic value. The creation of a forum in which multiple players can carry on conversations is an essential step in the process of growing a community on a gaming platform. According to the information disclosed in the patent, the multiplayer virtual reality game known as US6767287B1 is programmed in a manner that allows it to support multiple user communities. Evidently, the purpose of the invention is to connect multiple servers in order to bring together users from all over the world.

Inside the metaverse community

When players have the ability to govern, develop the game, and communicate with other users, a community has a greater chance of forming in a metaverse gaming setting. The prior art disclosure known as WO2022114456A2 describes a metaverse game system that is oriented on user interaction. This system gives users the ability to experience game content in an environment where virtuality and reality are combined. On the other hand, the value proposition of the project ought to be alluring enough for consumers to register for the gaming arena in the metaverse. In this regard, a number of different metaverse projects have created their games in order to generate economic value for the participants. Users can construct and establish original concepts by utilizing features of the platform such as the right to vote, the ability to produce NFTs, the sale of their assets, and the opportunity to meet other participants. In this regard, the prior art document US7780532B2 grants users the ability to construct a gaming environment and obtain ownership of such a gaming environment, including the ability to sell such ownership or a fraction of ownership in a certain gaming environment. This also leads to the ‘create to earn’ model, which is a concept in which game designers run the game studios and directly participate in the development of the game.

Conclusion

The game business was one of the very first sectors to begin incorporating metaverse into its products, making it one of the pioneers in this space. They intend to provide a gaming experience that is very near to reality.

Even though the metaverse sector has been moving forward at a fast pace in terms of innovation, it is still a ways off from recolonizing the gaming industry. There have been many advancements achieved on the subject of security and decentralization, but there is still a need for innovation in the experience that metaverse claims to deliver to its users. There is a significant amount of room for growth in the game industry thanks to the introduction of a metaverse, and a great number of organizations are continuously focusing their efforts in this direction. However much time it takes, when it is finally developed and properly integrated with all of the applicable technologies, the metaverse will transform the technology sector.

References

https://cointelegraph.com/news/new-tribes-of-the-metaverse-community-owned-economies

https://www.ft.com/content/76d40aac-034e-4e0b-95eb-c5d34146f647

https://www.youtube.com/shorts/oQig6L2BtOo

Our team of advanced patent attorneys assists clients with patent searches, drafting patent applications, and patent (intellectual property) agreements, including licensing and non-disclosure agreements.

Advocate Rahul Dev is a Patent Attorney & International Business Lawyer practicing Technology, Intellectual Property & Corporate Laws. He is reachable at rd (at) patentbusinesslawyer (dot) com & @rdpatentlawyer on Twitter.

Quoted in and contributed to 50+ national & international publications (Bloomberg, FirstPost, SwissInfo, Outlook Money, Yahoo News, Times of India, Economic Times, Business Standard, Quartz, Global Legal Post, International Bar Association, LawAsia, BioSpectrum Asia, Digital News Asia, e27, Leaders Speak, Entrepreneur India, VCCircle, AutoTech).

Regularly invited to speak at international & national platforms (conferences, TV channels, seminars, corporate training, government workshops) on technology, patents, business strategy, legal developments, leadership & management.

Working closely with patent attorneys along with international law firms with significant experience with lawyers in Asia Pacific providing services to clients in US and Europe. Flagship services include international patent and trademark filingspatent services in India, and global patent consulting services.

Global Blockchain Lawyers (www.GlobalBlockchainLawyers.com) is a digital platform to discuss legal issues, the latest technology and legal developments, and applicable laws in the dynamic field of Digital Currency, Blockchain, Bitcoin, Cryptocurrency and raising capital through the sale of tokens or coins (ICO or Initial Coin Offerings).

The blockchain ecosystem in India is evolving at a rapid pace and a proactive legal approach is required by blockchain lawyers in India to understand the complex nature of applicable laws and regulations.

Economy Aspect of Metaverse Gaming

Introduction 

Metaverse has changed the way we look at digital games with its immersive visual and virtual experience and use of emerging technologies. We saw the first wave of development metaverse when games like Minecraft and Roblox came. Today, tech giants like Microsoft, Meat, and Apple, although were involved in the gaming way before the metaverse came to light, have now spread their wings to metaverse gaming. Microsoft’s intent to acquire Activision shows its early step toward the metaverse arena. Similarly, Facebook has placed several patents which intend to cover all aspects of the metaverse, including facial expression trackingwearable magnetic sensor systemavatar personalization engine, and like. 

What is metaverse technology?

The phrase “metaverse” refers to a virtual world that brings together users from all around the world. The distinction that it makes from the technology that is now available is that it allows projects in the metaverse to harness new technologies like as 3D reconstruction, augmented reality, virtual reality, the internet of things (IoT), artificial intelligence, and blockchain. In other words, it is a world that exists in parallel with the real one and is in the process of implementing nearly everything that a human is capable of doing in the real world.

Metaverse Gaming and its Economic Aspect

As was just mentioned, the game industry has put a significant amount of effort into researching and experimenting with various technologies and ideas associated with the metaverse. Blockchain, non-fungible tokens (NFTs), and other similar technologies are among those that have the potential to completely transform the gaming industry. Recent efforts by game designers have focused less on the “fun” aspect of video games and more on the economics of the industry. Making it possible for players to obtain real-world benefits from participating in these games can be the key to retaining their attention and keeping them hooked. The following is a list of characteristics of metaverse gaming that contribute to the phenomenon’s economic value: –

Ownership of assets in the metaverse

Blockchain has helped developers create decentralized metaverse projects, introducing us to features such as proof of ownership and transfer of value. These features reflect in games as players can now permanently own a character, upskill it, increase its value, and trade it. Similarly, US patent US10786741B2 is a blockchain-based game where game assets are sold in the gaming platform from one user to another, resulting in the transfer of ownership over such items and beneficiary rights accordingly. The game assets are tokenized and are managed and governed via smart contracts. 

This is an example of proof of ownership, which, when combined with tokenization, can give each character a value that is completely unique from any other. In addition to this, players are not required to leave the game in order to access the metaverse. It continues to exist even after the session is terminated. The gamers get an experience that is almost identical to what they would have in real life thanks to these features. This near replica is further enhanced by augmented reality and virtual reality technology, which together produce an immersive three-dimensional experience.

Play-to-earn metaverse

One prominent feature for players who are motivated to engage in metaverse games is the opportunity to earn while playing. The play-to-earn metaverse trend includes rewards like in-game assets and tokens that provide scope to make money. These rewards can be monetized and exchanged or converted into the desired currency. For instance, prior art disclosure, US20190299105A1, includes a method for converting in-game digital assets like avatars, game currency, and tools earned to cryptocurrency. The prior art also allows players to acquire digital assets through fiat currency or cryptocurrency. 

How can one earn money by using Metaverse? 

Interestingly, earning rewards is not just restricted to asset exchanges; players can also earn by completing tasks or quests, winning over rival players, and improving in-game characters. On the other hand, the platform might not be able to provide instant money because the majority of in-game tokens, also known as NFT, are converted to crypto or fiat currency depending on their value. Staking is another method that users have at their disposal for utilizing the play-to-earn metaverse function. Players have the opportunity to earn by staking their assets or NFTs on any available platform and generating interest on those stakes.

References

https://cointelegraph.com/news/new-tribes-of-the-metaverse-community-owned-economies

https://www.ft.com/content/76d40aac-034e-4e0b-95eb-c5d34146f647

Blockchain ecosystem in India is evolving at a rapid pace and a proactive legal approach is required by blockchain lawyers in India to understand the complex nature of applicable laws and regulations.

Blockchain ecosystem in India is evolving at a rapid pace and a proactive legal approach is required by blockchain lawyers in India to understand the complex nature of applicable laws and regulations.

Blockchain ecosystem in India is evolving at a rapid pace and a proactive legal approach is required by blockchain lawyers in India to understand the complex nature of applicable laws and regulations.

Blockchain ecosystem in India is evolving at a rapid pace and a proactive legal approach is required by blockchain lawyers in India to understand the complex nature of applicable laws and regulations.

Blockchain ecosystem in India is evolving at a rapid pace and a proactive legal approach is required by blockchain lawyers in India to understand the complex nature of applicable laws and regulations.

Blockchain ecosystem in India is evolving at a rapid pace and a proactive legal approach is required by blockchain lawyers in India to understand the complex nature of applicable laws and regulations.

Blockchain ecosystem in India is evolving at a rapid pace and a proactive legal approach is required by blockchain lawyers in India to understand the complex nature of applicable laws and regulations.

Applications of ChatGPT Innovations

Introduction.

ChatGPT is an AI-enabled chatbot launched by OpenAI. This is built on top of GPT 3.5, which harnesses both supervised and reinforcement learning techniques that increase the model’s performance. With its utmost accuracy, the highly intelligent system of ChatGPT has already drawn immense attention. Consequently, we see a surge of ChatGPT applications around the different environments. With that said, here are a few viable ChatGPT applications.

Application in Software Development.

ChatGpt can be applied in the process of software development. The chatbot discloses a method wherein it provides a snippet of an accurate problem statement. For instance, when searching ‘find a unique element in two arrays in java’, the result generated by ChatGpat was not just the output of the code but also provided an underlying explanation of the code. What makes ChatGpt stand out from other applications is that the answers given by the searched questions are on point and accurate.

Build an AI-Based Startup or Application

ChatGPT enables a user to build Artificial Intelligence (AI) based company-like consulting services or use an element of ChatGPT in an existing fashion. One can offer chatbot services to businesses, create a chatbot template that can be customized by other users and sell it on a platform like OpenAI API Marketplace, promote products or services, generate information from potential customers, and use that information to generate leads for the business. Thus, depending on the business needs and goals, one may implement ChatGPT in the business. It also provides users with a manual or tutorial to build software which enables not just a developer or programmer but also a layman to build a fully functional tool. Accordingly, innovative companies use ChatGPT for developing a strong AI patent portfolio.

Application in a Software Company to Debug Code

Developers often find themselves stuck in the complex process of finding single or multiple errors in the code. This process is called debugging, wherein the software is run in a controlled environment, and developers check the code line by line to analyze and fix errors. Tools for this purpose are not easily accessible; even if it is, they are complex to implement. Fortunately, ChatGPT can be an excellent tool for developers to find errors or bugs in the source code with a single click. Not only can the application debug the code, but also provides a solution to fix that error. For instance, for the code, 

“public class SumOfNumbers1

{

Public static void main(Strain args[])

{

Int n1 = 225, n2 = 115, sum

Sum = n1 + n2

Sysytem.out.printIn(“The sum of numbers is: “+sum);

}

}”

the bot produced a corrected version of the code: 

“public class SumOfNumbers1

{

  Public station viod main(String args[])

  {

    Int n1 =225, n2 = 115,sum;

    Sum = n1 + n2;

    Syste.out,printIn(The sum of numbers is: “+sum)

  }

}”

Further, it also provided an explanation of the changes made. With the deployment of ChatGPT, developers and software companies can soon see an automated debugging process.

Unlock Difficult Questions

Applications like google, Alexa, and Siri provide results to questions submitted by users. However, when it comes to complex questions or sentences, all the existing chatbots or search engines fail to answer that. This is because they take each term and just return results that contain that search term. As a result, one can find themselves getting ambiguous results. In contrast, ChatGPT is an apt tool for giving answers to complex concepts. The reason why this is so intelligent is that it knows the context behind the question. This can especially be an excellent tool in the patent process; for instance, a patent attorney can search complex processes or methods used in the invention, which was otherwise difficult to get from a google search. This is the reason why ChatGpt is considered a ‘Google Killer’.

Application in Healthcare

An entity can use ChatGPT in the AI therapy app and help the end user reduce the symptoms of anxiety and depression of individuals. The ChatGPT application can be well designed and implemented to answer at a high therapy standard. ChatGPT implements a supervised and reinforcement learning technique that gives a highly accurate understanding of the context of the input. With easily accessible, it can revolutionize mental healthcare. Further, individuals can seek help from ChatGPT in planning their daily diet. Through this, one can plan their own meals while conveying the preferences and dietary requirements. 

Conclusion 

The ChatGPT is still in its early stage; its application is yet to unearth. The ChatGPT application is free to use, so anyone can use it without charge. With its heavy deployment, there are companies in a way to implement services to their business resources. However, the company, OpenAI, is planning to monetize the services provided by ChatGPT

Our team of advanced patent attorneys assists clients with patent searches, drafting patent applications, and patent (intellectual property) agreements, including licensing and non-disclosure agreements.

Advocate Rahul Dev is a Patent Attorney & International Business Lawyer practicing Technology, Intellectual Property & Corporate Laws. He is reachable at rd (at) patentbusinesslawyer (dot) com & @rdpatentlawyer on Twitter.

Quoted in and contributed to 50+ national & international publications (Bloomberg, FirstPost, SwissInfo, Outlook Money, Yahoo News, Times of India, Economic Times, Business Standard, Quartz, Global Legal Post, International Bar Association, LawAsia, BioSpectrum Asia, Digital News Asia, e27, Leaders Speak, Entrepreneur India, VCCircle, AutoTech).

Regularly invited to speak at international & national platforms (conferences, TV channels, seminars, corporate trainings, government workshops) on technology, patents, business strategy, legal developments, leadership & management.

Working closely with patent attorneys along with international law firms with significant experience with lawyers in Asia Pacific providing services to clients in US and Europe. Flagship services include international patent and trademark filingspatent services in India and global patent consulting services.

Global Blockchain Lawyers (www.GlobalBlockchainLawyers.com) is a digital platform to discuss legal issues, latest technology and legal developments, and applicable laws in the dynamic field of Digital Currency, Blockchain, Bitcoin, Cryptocurrency and raising capital through the sale of tokens or coins (ICO or Initial Coin Offerings).

Blockchain ecosystem in India is evolving at a rapid pace and a proactive legal approach is required by blockchain lawyers in India to understand the complex nature of applicable laws and regulations.