Following Elon Musk’s legal challenges in Delaware, Balaji Srinivasan has proposed Decentralized Autonomous Organizations (DAOs) as viable alternatives for companies considering incorporation on both the Ethereum and Solana blockchains.
What Happened:
This coincides with Musk sharing an opinion piece from the Wall Street Journal titled “Delaware Is Trying Hard To Drive Away Corporations.”
Now, Srinivasan presents a potential solution for alternatives to Delaware. Among the three options he outlined, he highlighted the potential utilization of blockchain platforms, citing Ethereum and Solana as potential candidates.
He elaborated, noting that DAO laws have been enacted in both the United States (specifically Wyoming and Tennessee) and abroad (in the Marshall Islands). This development represents a novel type of fiat/crypto bridge, not intended for cryptocurrencies themselves but for crypto companies.
Srinivasan promotes the utilization of DAOs (Decentralized Autonomous Organizations) as a contemporary approach to corporate structure, harnessing blockchain technology for governance. These DAOs present a transparent and democratic business model that could function as an alternative to conventional incorporation practices, circumventing complexities encountered in states such as Delaware. Recent legislation in Wyoming, Tennessee, and the Marshall Islands has acknowledged the legitimacy of DAOs.
Why It Matters: In a recent development, a Delaware judge nullified a $55.8 billion pay package granted to Elon Musk by Tesla in 2018. Musk expressed his frustration, advising against incorporating companies in Delaware. This discontent arose following a court ruling in Delaware that invalidated his $55 billion compensation deal with Tesla.
The ruling on Tuesday scrutinized Musk’s 2018 compensation agreement, challenged by an investor due to conflict of interest and alleged misleading information from Tesla. Musk, who attempted to withdraw his $44 billion bid to buy Twitter, conceded defeat in Delaware. After a year with Musk leading the company, Twitter’s valuation decreased by $25 billion.
