DAO Token Transferability: Property, Contract, and Technology

Abstract A Decentralised Autonomous Organisation (DAO) is a new form of digital enterprise that operates on blockchain networks. It enables a new model of collaboration through diverse capital contributions and equitable sharing of benefits and risks. This paper explores the legal dimensions of DAO token transferability, a vital aspect for the expansion of DAO operations. First, it evaluates how property law (including the proposal by the Law Commission of England and Wales for a third category of digital asset ownership) might apply to DAO tokens so as to mitigate legal risks and ensure smooth transferability. Secondly, it investigates the potential for DAO software protocols to implement contractual transferability restrictions and examines their technological design. Finally, it looks at the legal enforceability of such restrictions and the policies needed to support their legal recognition.