The Marshall Islands is a collection of over a thousand islands, most of which are grouped into coral atolls. It’s a geographically fascinating place in the Pacific Ocean that has long attracted divers, and now web3 folks looking for the Cayman Islands equivalent to domicile their decentralized entities. 

Today, the Marshall Islands is the only jurisdiction that explicitly recognizes the unique structure of decentralized autonomous organizations, or DAOs, and ensures limited liability to its members. MIDAO, co-founded by MIT graduate and entrepreneur Adam Miller, signed an agreement with the Republic of the Marshall Islands to be the sole provider of these DAO LLCs to the marketplace. At the time, there was no Wyoming DAO LLC – the first state in the U.S. to approve the first legally recognized DAO structure – or the states that followed. 

Miller, who was initially drawn to the Marshall Islands because he had business and political connections there, was involved in drafting a bill that was passed by parliament to help drive crypto innovation on the islands. 

For the island nation, which has historically only had two industries – fishing and shipping registry – adding a third revenue stream was attractive. The DAO drawcard is also about climate change, which is threatening the islands that are built on a coral reef. The entire Marshall Islands could be underwater in a number of decades, so they need revenue for land reclamation, to create sea walls, and other conservation efforts. 

Miller describes DAOs as ships – “they kind of live everywhere and nowhere at the same time. So, why not take the expertise you have in the shipping industry and apply it to the DAO industry?” he said. 

Read more: Utah’s Bill to Govern DAOs Increases the Pressure for a Federal Policy

“There’s something like 70,000 shipping companies, including 50 trading on NASDAQ and New York Stock Exchange, that are actually Marshall Islands companies,” Miller said. “The islands have a long history of being a popular place to domicile a business, partly because they base their corporate code off Delaware’s corporate code.”

The biggest problem with Wyoming, Tennessee, Utah and Catawba – the Native American tribe that created a Digital Economic Zone in North and South Carolina – is their location, Miller said. Most global organizations don’t want to domicile in the U.S. because of the nature of the business and also out of regulatory uncertainty. 

“There’s a lot of fear about what the U.S. government will do, whether it’s the executive branch, the SEC, the CFTC or a new government agency to regulate crypto,” Miller said. “People are afraid of it and are turning their sights elsewhere.” 

Miller believes the U.S. government will catch up. While he said the Marshall Islands is the best place for global DAOs right now, he hopes countries will follow suit with similar legislation, including the U.S. 

“The U.S. isn’t going to do something that destroys trillions of dollars in existing wealth, and many trillions of potential future wealth, that could emerge here and everywhere,” he said. “Even though digital currencies may be a threat to the U.S. dollar, the digital dollar may be the greatest opportunity for the dollar. Beyond currencies, there’s all these other uses for the technology, whether it’s DAOs, gaming, identity, privacy and social networking. I don’t see the government in the long run being a huge impediment to that.” 

A new substrate for human coordination 

Miller uses the Uber analogy to describe the future of DAOs. “Now all people are using ride sharing in all kinds of places where they never used taxis before because the cost of entry is an order of magnitude different to taxis. The same thing will happen with DAOs, where the cost of starting a DAO is as easy as it is to launch a website,” he said. “People will take something they would’ve done as a corporation or an LLC and now they’ll consider a DAO instead. But there’s also going to be DAOs popping up within families, communities, schools, and cities.” 

Miller believes we’re close to this cultural shift in how we organize ourselves, and with every market cycle there’s more interest in the space. DAOs are the way the world will eventually govern itself in the long run, he said. For example, in liquid voting for representatives. 

“Take a board of a private company or a representative of a government, and instead of voting for them every four years, you stake your vote with whoever you want to vote for. Whoever has the greatest stake is the winner, but you can also revoke your vote at any time and give it to someone else,” he said. A city could give people control over their local park rather than everyone having access to it. The applications of this governance are endless, said Miller. 

Decentralized technology is enabling democracy in ways not previously possible. It’s a new world of organizing people, from all around the world, and giving everyone a vote and voice.