A previous blog on DAOs (decentralized autonomous organizations) in Japan mentioned that the nation had put forth blockchain-related regulatory reform to provide official recognition to DAOs.
This marked a significant step at a national level to allow limited liability companies (LLCs) to start forming DAOs to raise capital in the form of NFTs.
EMURGO, a blockchain technology company established in Japan in 2015, has been a supporter of Web3 adoption by organizations and businesses in Japan through local workshops. These have raised awareness on a variety of industry topics such as real-world asset tokenization, distributed blockchain governance, and other Web3 products & services.
This blog will further examine DAOs in Japan and EMURGO’s activities to facilitate their adoption.
Japan approved legislative reform that allows limited liability companies or LLCs to raise capital unlimitedly through an NFT (membership token) by deregulating the existing financial laws.
The potential benefits of this new DAO-related law include:
- More flexible fundraising opportunities for ventures and organizations.
- LLCs can make and record decisions fully on-chain.
- DAOs can issue all sorts of digital incentive tokens with less red tape.
- Potential DAO projects can set up an LLC/DAO in Japan.
The Japan DAO Association was formed in Japan to assess legitimate DAO applications/projects and DAO-related tools for the public.
They act as an initial gatekeeper for Japan’s growing DAO ecosystem, providing a necessary filter for other organizations and the public:
- to raise public and business awareness about DAOs
- to verify reputable DAO projects
- to verify available DAO tools and features that can be used by others
Thus far, this group has given preliminary approval to several DAO-related tools in the Cardano ecosystem and has recognized them as legitimate potential tools for DAO creation.
Read more: Japan’s DAO Association lists Yoroi Wallet, NMKR, and Clarity as DAO-related tools.
Due to this preliminary approval in Japan, Cardano is pushing ahead to become an established network in Japan for DAOs. The DAO tools mentioned in this preliminary approval are:
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Yoroi Wallet
Japan’s DAO Association mentions the need for a secure and tech-verified crypto wallet as it is considered a critical tool of DAO infrastructure.
A digital token or crypto wallet provides basic and essential DAO functions such as enabling members to hold DAO membership tokens in the form of NFTs, providing voting power, signing transactions, and allowing various interactions between members.
A DAO-approved crypto wallet also needs to be safe to use, as it is the cornerstone of the entire system. The seed or recovery phrase for the wallet needs to be random enough to be completely safe.
The wallet’s private key must have strong encryption while being user-friendly for those unfamiliar with blockchain and crypto to easily and safely participate in DAO activities.
By being listed as one of the initial tools approved for DAOs, Yoroi Wallet’s various user functions and features are considered to be an important DAO infrastructure piece that can be used by other companies and projects looking to form DAOs in Japan.
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NMKR
The next DAO tool mentioned by the DAO Foundation is a membership token or NFT that enables DAO members to know they are officially a part of a DAO and have access to its rights and obligations.
In most designs, the membership token is an NFT or non-fungible token held in a wallet such as Yoroi.
The NFT metadata contains and secures the relevant information regarding the DAO, individual members, and anything else deemed necessary to the DAO’s function. This NFT token also serves to access a DAO’s governance platform for members.
NMKR is a Cardano NFT and tokenization platform built on the Cardano blockchain. It has all the necessary tools for DAOs to mint NFT membership tokens and tokenize company assets. NMKR’s NFTs are also easily integrated with other popular digital token wallets in the Cardano ecosystem.
Read more: How NMKR adds value to businesses and brands in the form of NFTs
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Clarity
The next tool given preliminary approval is Clarity, a DAO governance and treasury management system. It provides a platform with tools for other DAOs to use to publish proposals, track voting power, transparently show voting results, and provide its users with control over the shared resources.
Clarity is a DAO tools platform that is native to Cardano.
The project provides a way to register the policy ID used for voting for a DAO, a space to publish proposals, set up voting rounds, and manage the treasury.
It’s a complete solution for those wanting to launch a DAO on the Cardano network.
To advance with the final approval, some details still have to be finalized.
First, there needs to be localization as the tools above must provide a Japanese interface and documentation.
The second is to eliminate fraud scenarios through a wallet multi-sig implementation to prevent any one person or member from manipulating DAO funds.
Japan’s newly formed DAO Association held a DAO awareness in-person event last month, in Takamatsu, Japan to discuss how DAOs could accelerate regional development by making it easier for local businesses to raise capital and market their products or services.
It included the participation of over fifty companies and individuals looking to set up a DAO in the country, including Hirai Takuya, the ex-digital minister of Japan.
EMURGO, NMKR, and Clarity participated to present their insights and technology to the gathered audience.
Read more: Coindesk recap of the event (Japanese)
In the long run, the larger objective is to kickstart the effort to attract new DAO initiatives to Japan through increased awareness and collaboration. Ultimately, this can help grow the native DAO ecosystem, particularly by utilizing the readily available tools of the Cardano ecosystem.
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