RealDAO SPV Concept - Work-in-Progress

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Problem to Solve for:

How can real world assets (“RWA”) be managed and used on-chain as collateral for MKR vaults, as assets controlled by DAO’s, and maintained in a legal permissioned status?


Single Asset LLC with code deference to a Single Asset Legal DAO’s (SLAO’s) can be used to allow for legal vessels to hold and manage real property assets or where applicable personal property via severance agreements. Once these real and personal assets are legally owned, it is a simpler lift to allow a DAO and its tokens to serve as the governance for a more complicated offering such as MKR loans against the SLAO assets.

Proof of Concept:

How can real property get tokenized?


One easy way is through severance agreements where by agreement, certain fixtures are separated from real property and treated as personal property. Washing machines, irrigation equipment, and even whole buildings can be severed from real estate and treated as personal property. This makes owning and financing real property assets by a DAO a much simpler lift as the tokens or NFT is personal property and can be held by DAO or minion which serves as a DAO controlled agent of the DAO.

Draft Severance Agreement here that takes a simple apple tree and servers from the real property so that it could be owned by a DAO via its NFT. RealDAO actually severed and tokenized an apple tree "Howie’s Apple Tree ‘’ and owns it as a DAO. The metadata can be constructed with the NFT to constitute a 3D digital locker and representation of the deal, so that all parties and legal agreements are appropriately documented.


Real Property License:

Real Property assets can be deeded directly over and owned by the SLAO. Once held in a special purpose entity they can agree that for contractual purposes a NFT will represent the “meeting of the minds”. To prove out this concept we took a License to access and use a part of real property allowing DAO members access to the river. The NFT here. The Metadata can be used to reference the real property, location, the legal agreements location (IPFS), parcel #, etc.

Example is the KML download. Which can link to IPFS download

Farm Example:

A more traditional concept is below. Really no impediment to having a SLAO own a farm directly and manage the DAO via the smart contract, and represent the farm vis the NFT with its bundles of metadata, legal agreements, and descriptions of property (legal description)

Promissory Note - Negotiable Instruments:

Another idea is to have the ability to make good old fashioned unsecured loans secured by promissory notes. The promissory note could be entered party to party. Then the NFT’s could be staked into a SLAO to borrow against the pool of promissory notes. Promissory notes can already be bearer instruments and in some cases have small carve outs from securities regulations. Here is a VERY rough example of a promissory note form as a proof of concept using some older escrow concepts. The NFT is here.

There has been some discussion of allowing community members the option to have loans made where traditional banking has been lacking. In this case Brian could borrow 10,000 DAI from Alice and sign a promissory note that is wrapped into a NFT (as best as it can legally). The NFT could be negotiated to the DAO (or the DAO could make the loan itself). Then the DAO could leverage its initial investment through borrowing against the pool of promissory notes. The DAO would have an enforceable promissory note against Brian upon maturity of the obligation.


Moloch DAO v2, and future upgrades Baal are great vehicles for special purpose legal wrapped entities for other DAO’s (such as LexDAO and RealDAO) to be able to customize to make digital organizations to handle real world assets. RealDAO is a DaoHaus Moloch v2 DAO, live on xdai chain. We have already established through simple innovations that a DAO can be constituted into a legal entity capable of owning real assets. RealDAO itself is a Delaware Ricardian Series, LLC

  • For more on the Ricardian system check out Ricardian LLC 🪐 - Ricardian LLC
  • Series LLC’s are probably not acceptable and useful in all US states for the purpose of holding real assets as they come with some legal uncertainty for the states that haven’t accepted them. It would make sense to just use an existing LLC with code deference structure. But they make working out the concept particularly useful (and cost efficient).

RealDAO has a basic xDAI DAO, but it serves more as a proof of concept. The DAO is used to signal governance votes for the signatures on a Gnosis multisig on mainnet.

Flow from Formation to Securitization

  1. SLAO shell is formed as LLC, registered, operating agreement and owners or members via the DAO

  2. Real Property or Assets are deeded or transferred to legal entity SLAO through a deed or bill of sale, etc. This constitutes real legal ownership for the assets. In other words they hold legal title.

  3. NFT and legal agreements for the DAO to manage the assets, the code deference and NFT deference agreement are formulated.

  4. This is an operating agreement that lays out how the membership interests are “certificated” as tokens and governed by the DAO contract and paper “agreements”.

  5. At this point the SLAO is basically a legal entity holding a RWA. The control of the RWA is “fractionalized” through the ownership in the DAO.

  6. SLAO agrees through governance action to hypothecate the RWA in a loan transaction.

  7. Vote on chain to borrow tokens against collateral.

1. Securitization Agreements where SLAO agrees to borrow and pledge collateral
2. Membership Interest Pledge agreements
3. Disclosures and documents could be signed
  1. The SLAO owners also agree to transfer the Moloch Shares to be controlled and held as possessory certificate shares. For example, the 5 NFT’s each holding 20% of shares.
1. Wrapping Moloch Shares in NFT’s through something like Charged Particles would effectively make these bearer instruments.
  1. Loans are often Pay or Else. The “or else” could be structured to be where upon default, the NFT’s (with Moloch shares nested) begin to change ownership.
1. The cascading release of NFT’s would grant lender growing governance over the SLAO and its assets, until effectively they owned the majority of the DAO and could dispose of the asset via auction or sale. Or theoretically, can just take over the whole DAO.
2. Similarly cash collateral (such as on-chain rent) could also be collected in NFT to waterfall the payments.
3. It is important to note that LLC membership shares can be dual class. For example, could have one class with governance rights (defined as being able to auction property), and the other representing all the economic rights in the LLC (the “SLAO”)

Request for Grant or Help:

Idea is to have a DAO that is capable of owning and managing real property and having the DAO itself (NFT and shares) serve in an on-chain collateralization for use cases such as RWA in MakerDAO. Therefore the DAO will be a

  1. Legal Entity - Ricardian Series LLC or SPV as a standalone LLC (WYO or DEL)

  2. Be able to own and manage (hypothecate) real property assets in a state TBD

  3. Will use NFT’s to make a digital representation of the real property

  4. The actual ownership of the real property will be by the LLC that is represented by Moloch shares in the case of a SLAO.

  5. Moloch Shares under v2 are complicated as they are not bearer instruments in that they actually require an affirmative vote to transfer. This might require a hack as described above or a custom DAO contract.

  6. Grant would be to develop tooling for DAO shares to be wrapped into NFTs and locked in escrow (or trust style contract).

  7. Grant needed for legal documentation for SPV operating agreements and Securitization agreements where the personal property DAO shares can serve as collateral for loan.


LexDAO - Legal Engineering Guild with RealDAO - Focus on Real Property Assets

Builder DAO’s -perhaps fill out a squad with Raid Guild/DAOHaus?

Legal - lawyer to perform legal due diligence and review

Legal Document Package

How would the lender entity collateralize a loan and get an enforceable security interest?

The Traditional Pledge Model

There is a saying that possession is nine tenths of the law. With certificated shares of a corporation, a lender would traditionally obtain physical possession of the physical shares and also obtain a separate pledge agreement of the shares. “So long as the lender retains possession, it has a perfected, first-priority security interest in the pledged stock.” Spencer Fane See also Article 8 & 9 UCC

Tokenized Membership Shares Model

The DAO model above would treat the LLC’s as certificated shares, where perfection under the UCC would be obtained through possession of the digital tokenized share through control in the smart contract language. The membership interests (as tokens) would be locked and meta-physically possessed. Incapable of further transferability or possession by other means through blockchain provenance.

Ethereum based smart contracts allow the awarding of possession of both tokens and the potential to separate the governance (control of the asset) from the rights to income. Control of the certificate “tokenized” shares would be effectuated by the pledge agreement through assent to the placement of the tokenized shares in a decentralized escrow. The agent (in this case a Minion, or other smart contract escrow), would be the agent of control over the membership shares based on the terms of the lending agreement and pledge instructions.

The above article from Spencer Fane also had the following helpful clause to catch both economic and governance rights:

“All rights of debtor embodied in or arising out of debtor’s status as a member of _______________, LLC, a _______________ limited liability company (the “LLC”), consisting of: (a) all economic rights, including without limitation, all rights to share in the profits and losses of the LLC and all rights to receive distributions of the assets of the LLC; and (b) all governance rights, including without limitation, all rights to vote, consent to action and otherwise participate in the management of the LLC.”

Obviously, in traditional structures the lender would have a security agreement and file a UCC in the appropriate jurisdiction. Most likely the state in which the LLC is formed and in the case of real property, the county(ies) in which the real property is located.

Options Buy/Sell Agreement/Conversion

Other possible models might be to have the lender and borrower enter into a buy/sell agreement where the option is exercisable at the strike date or having the debt convertible into the Moloch Membership shares upon the defined event. The defined event could be time (maturity date) or collateralization ratio driven, etc.

Lender and Borrower Considerations

It is unknown, but worth noting that due process concerns and commercially reasonable practices should be considered. There is a difference between a typical foreclosure of a mortgage and the public sale of the asset (often described under state law) and a public sale of LLC membership tokens (which may implement securities considerations).

For traditional commercial “foreclosure” these occur with proper notice, being sold in a viable and public market, with sufficient advertising, etc. Usually the borrower has a right to redeem, take possession back by paying debt, and costs, etc.

For secondary sales of securities (which the above membership interests may be), then it may be required to gate the liquidation sale to accredited investors, an intrastate exception, non-US, etc. This article also describes a potential path that appears possible from a summarization of SEC no actions letters that have been issued for the “foreclosure” sale of membership interests.


Much work still needs to be done, but hopefully this can be a possible model for single asset DAO’s that can serve as collateral for MCD.


I think it’s so exciting that we have at least four or five different concepts that all look promising. It also means there will be flexibility to put the right vehicle on the right asset.

The sun is always shining on MakerDAO. These are exciting times.


I really do think that the combination of SPV and modular and customizable DAOs will be a powerful mix.

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incredible this work. very interesting. :eyes:


I find this very interesting, I have no doubt that this will focus present in the short time for the history of the DAOs.

Good stuff James–I will probably need to reread a few more times to properly digest.

Question–can Ricardian contracts and smart contracts cross-communicate? If so, why is this not being currently used?


Sure these are exciting times, and I probably put too much into one post to be honest. But yes, it is a simple matter to use things like openlaw, or I have seen documate, used to wire front end contracts to back end smart contacts. I think this “experimental” concept says it best if you watch the video.
Mint your own series LLC as a NFT. Ricardian LLC: Limited Liability NFT | by Ross Campbell | LexDAOism | Medium


Thanks, James. Quick question (which I may have overlooked): who would own the master in a Ricardian LLC series for RWA assets? From my personal investing experience, a master-series concept is usually used where an investor or investment company wants to silo individual investments one from the other while providing upstream liability protections for beneficial owners in the master. It’s a great setup if you have disparate owners that want to be under an umbrella LLC (the master) and invest in different companies or properties AND keep those individual investments isolated. For example, say me, El Pro and Prose want to work together in an investment company but pick and choose where to allocate funds. Tosh, El Pro and Prose can own the master, which sits like a holding company. Then just Tosh and El Pro but not Prose buy an apartment building off Lexington and 125th street and place it in an underlying LLC, called Series 1. Significantly, if the building goes belly up and we get sued, the liabilities therefrom sit with Tosh and El Pro and do not flow to the master where Prose sits. That’s basically the structure in a nutshell.

Perhaps the DAO would collectively own the master, then each RWA company would place assets in different series, with those series receiving an NFT to be as collateral? Not sure but this is a good thought experiment.

In the example above LexDAO, LLC has the master god mode over the baby “series”. But really this can probably be done, similar to other series with another remote “Master”. Let’s say, we wanted to do radio towers. Could have RadioMaster, LLC (registered in Delaware, as example) and then have each baby series own a radio tower as part of the series.

But your thought process is correct as far as I know it. The issue with Series LLC, is that they also bring in some issues as they aren’t recognized everywhere, and other legal uncertainty abounds. As an anecdote I spoke briefly with a title company on whether or how they would grant insurable title in Idaho to a series LLC. And it wasn’t certain that it was possible, as Idaho statutes are silent (to my knowledge). And California hates them (like most fun things).

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While there is a lot of talk about leveraging new legal constructs (Wyoming DAO, Cayman Foundation managed by a DAO), it is important that we explore some crypto-natives construct (the Series LLC is not super old neither).

Those idea also enrich each other as for instance a Cayman Foundation (under the guidance of MakerDAO or a RWA DAO) could manage the master. This structure could allow some lightweight ways to tokenize RWA (assuming no securities laws issues).

The future is about having the ability to deal with RWA as ERC20 or NFT on-chain. Only the path to get there is missing. It is important for MakerDAO to lead the way and help the ecosystem to bootstrap.


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