Introduction

The rise of Decentralized Autonomous Organizations (DAOs) represents more than just another blockchain innovation—it signals a fundamental challenge to centuries-old assumptions about how organizations should be structured, governed, and regulated. While much of the discourse around DAOs focuses on their practical applications in DeFi protocols and NFT communities, the deeper legal and theoretical implications remain largely unexplored.

In this installment of our Crypto Law Series, we dive beyond the surface-level regulatory discussions to examine how DAOs are disrupting the very foundations of corporate theory. From the concept of legal personality to the principle of centralized management, these decentralized entities are forcing legal scholars and practitioners to reconsider fundamental doctrines that have shaped business law for generations.

We sat down with Konrad Greilich, a Berlin-based Entrepreneur and researcher whose work stands at the cutting edge of blockchain law and organizational theory. Thanks to his doctoral research on DAOs and as co-developer of the groundbreaking Decentralized Science Pyramid Framework (DSPF), Greilich brings a unique perspective that combines rigorous legal scholarship with deep practical understanding of decentralized technologies. His recent research, published in Frontiers in Blockchain, adapts traditional organizational theory to the new realities of decentralized science and governance.

Greilich's expertise extends well beyond academic theory. He serves as a policy advisor, has participated in international legal dialogues from Vietnam to Berlin, and was editor-in-chief of a special Rethinkinglaw magazine issue focused entirely on DAOs. His work addresses the urgent challenges facing European jurisdictions: how to create legal frameworks that foster innovation while maintaining regulatory clarity and investor protection.

Our discussion explores three critical dimensions of this transformation: how DAOs challenge traditional corporate theory at its core, the evolution from hierarchical to token-based governance mechanisms, and whether these new organizational forms require entirely new legal frameworks or can be accommodated within existing structures. Drawing on cutting-edge research including the Decentralized Science Pyramid Framework (DSPF), we examine how the shift from "management coordination" to "algorithmic control" is creating what some scholars call a new form of "lex cryptographia"—a private legal system operating in the digital domain.

As DAOs continue to operate largely as "legal nullities" in cyberspace, the questions become increasingly urgent: Are we witnessing the evolution of existing legal forms, or do we need entirely new frameworks to address the challenges of pseudonymous participation, borderless collaboration, and automated governance? For jurisdictions like Germany and the EU, the stakes are particularly high—miss this technological wave, and risk being left behind in shaping the future of organizational law.

Greilich's analysis offers insights that go far beyond typical crypto law discussions to examine the theoretical foundations that will shape the future of corporate law itself. His warning is clear: "The EU specifically has to act quickly and create specialised legal forms to accommodate the unique characteristics of DAOs. The EU has to avoid missing out on the next technological revolution, if it wants to have a say in 'lex cryptographia' and attract DAOists."

1. Theoretical Foundations: Corporate Theory Disruption‍

How do DAOs fundamentally challenge traditional corporate theory, particularly regarding the concepts of legal personality, centralized management, and shareholder primacy? What new theoretical frameworks are emerging to understand these decentralized organizational structures?

Decentralised Autonomous Organisations (DAOs) fundamentally challenge core concepts of traditional corporate theory core concepts. Unlike conventional companies, DAOs operate without a central management or formal hierarchy, with their internal structure, interactions and operations governed mainly by self-executing software rules on a decentralised network. This shift replaces management coordination with algorithmic control and token-governance. With the concept of a "leaderless" organisation becoming reality, core concepts such as centralised management, legal personality, and shareholder primacy need to be reevaluated. Some reputable legal scholars even suggest that this dynamic innovation, driven by constant technological information availability, could lead to the end of traditional corporations and even more fluid concepts are needed.

DAOs typically exist as a "legal nullity" without a fixed physical address or conventional company seat, making their legal status within existing jurisdictions very unclear. Traditional legal frameworks, designed for centralised corporate forms, often fail to accommodate DAOs, leading to challenges in determining applicable law and the risk of multiple jurisdictions claiming authority. Currently, under the "numerus clausus" of corporate forms in Germany, most DAOs would be currently classified as partnerships, resulting in unlimited liability risks for members. 

The concept of user-lead organisations with token-based governance leads to a new kind of shareholder primacy, where the separation between ownership and control is less prevalent. DAOs enable ownership over digital protocols, tools and platforms in the hands of users. The decision-making power is distributed among all participants. Voting power can be earned through contributions, not just bought. This could not only lead could to the end of traditional corporations as some scholar suggest, but also dramatically influence the world of employment, social security and even the rule of law.

Lukas Weidener and I developed new theoretical frameworks to understand these structures and the internal workings of DAOs. The Decentralised Science Pyramid Framework (DSPF) adapts the Mintzbergs traditional organisational theory to the unique dynamics of decentralised science DAOs, and hopefully provides a systematic approach to understanding, navigating the structural and operational intricacies of DAOs.

2. Governance Evolution: From Hierarchical to Decentralized

Based on your research on organizational theory and DAOs, how do token-based governance mechanisms differ from traditional corporate governance in terms of legitimacy, accountability, and decision-making efficiency? What are the implications for corporate law doctrine?

Token-based governance mechanisms in DAOs diverge significantly from traditional corporate governance. Unlike the concentrated decision-making at the top of traditional hierarchies, DAOs encode decision processes directly into smart contract code, allowing for decentralised voting and collective participation by token holders. This "tokenomics" model replaces conventional management functions and hierarchies with cryptographic incentives where tokens can represent and reward not only financial value but also reputation, work, or voting rights, enabling participation regardless of financial capacity.

Legitimacy in DAOs is primarily established through technological mechanisms like protocols, smart contracts, and open-source reviews, shifting trust away from central authority and legal enforcement. The public and open-source nature of blockchain and smart contracts ensures "full procedural transparency," allowing all members and external observers to scrutinise the organisation's code and operations. 

However, the pseudonymity of DAO members can complicate traditional notions of accountability, as it limits the transparency of individual contributions and the enforcement of collective goals in a conventional legal sense. While the idea of "code is law" is prevalent, the practical reality often requires human adaptation and intervention. The lacking legal framework complicates accountability and responsibility allocation, Good actors understandably shy away from the mere appearance of control in this environment. Even though a high risk, high reward game like this naturally attracts some bad actors, I am seeing fewer completely anonymous DAO-Creators and contributors with significant influence.

In terms of decision-making efficiency, decentralised models can lead to slower consensus-building and challenges in managing diverse interests, especially as DAOs scale. The "anarchic production method" of DAOs, where individuals contribute autonomously, contrasts sharply with the delegated, efficient hierarchical structures of traditional stock corporations. Despite potential efficiency losses, proponents argue that this model fosters higher innovation and output. For corporate law doctrine, these differences imply a fundamental re-evaluation of agency theory, the role of management, and how legal accountability is attributed in distributed, pseudo-anonymous environments. There is a clear need for rules that acknowledge these distinct characteristics without stifling innovation.

3. Legal Entity Evolution: The Future of Organizations

Given your work on the intersection of blockchain and corporate law, do you believe DAOs represent an evolution of existing legal forms or require entirely new legal frameworks? How might this impact the fundamental assumptions underlying corporate law in Germany and the EU?

DAOs operate fundamentally different to traditional corporations and mostly exist outside of the legal systems as legal nullity in cyberspace. The impact of decentralized and globally distributed collaboration and workforces on the fundamental assumptions and needs of our legal and economic systems is substantial. DAOs are promoting a model, independent of national borders or legal systems, where ownership is in the hands of users and decision-making is meritocratic and participatory independent of national borders or legal systems. They challenge the conventional understanding of legal personality and liability in organisational law, necessitating tailored solutions that harmonise decentralised structures with accurate liability regimes. The reliance on smart contracts for automated enforcement and trust-building undermines the assumption that a state-backed legal system with a sole arbiter of trust and contract enforceability is imperative for functioning markets. This shift towards a "lex cryptographia," a private legal in the digital domain based on blockchain and smart contacts, openly calls into question the traditional role of courts, legal intermediaries, states and governments.

DAOs are not just a technological curiosity; they are a profound legal and organisational challenge that requires careful, forward-thinking responses from lawmakers. Attempts to classify them within the existing corporate structure are complicated, ambiguous and often lead to undesirable outcomes - like unlimited liability for members. The global and borderless nature of DAOs overstrains the established conflict-of-laws rules. It appears to me, that it requires an entirely new legal framework or significant adaptations of existing ones to bring them in the traditional legal system. 

Legal scholars need to develop concepts that combine the benefits of decentralised innovation with the rule of law. The EU specifically has to act quickly and create specialised legal forms to accommodate the unique characteristics of DAO. The EU has to avoid missing out on the next technological revolution, if it wants to have a say in “lex cryptographia” and attract DAOists.