---
title: "The LAO"
url: "https://caper.network/wiki/daos/investment/the-lao"
updated: 2026-08-30
license: CC-BY-4.0
license_url: "https://creativecommons.org/licenses/by/4.0/"
---

# The LAO

| Organization | **The LAO** — a for-profit, member-directed venture DAO investing in early-stage crypto projects |
| --- | --- |
| Category | Investment / venture DAO (non-DeFi) with a legal wrapper |
| Legal structure | **Delaware LLC** — a real limited-liability company whose members are its DAO participants |
| Membership | Capped at **~100 members**, limited to [accredited investors](https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/updated-3) |
| Announced / launched | [September 2019](https://www.artificiallawyer.com/2019/09/09/smart-contract-co-openlaw-launches-the-dao-mark-ii-the-lao/) · live [April 2020](https://www.coindesk.com/tech/2020/04/28/openlaw-launches-first-legal-dao-for-distributed-vc-investments) |
| Governance | A fork of [MolochDAO](/wiki/daos/public-goods/molochdao) (v2), later generalized into the [Tribute DAO Framework](/wiki/dao-governance/tooling/frameworks/tribute) |
| Built by | OpenLaw (Aaron Wright, Cardozo Law), now [Tribute Labs](https://tributelabs.xyz/) |
| Sister DAOs | Flamingo (NFTs), Neptune (DeFi), Neon (metaverse), Noise (music) |

**The LAO** is a member-directed venture fund that runs like a DAO but sits inside a real [legal wrapper](/wiki/dao-governance/concepts/membership/dao-legal-structures). Members pool capital on-chain, vote on which startups and tokens to back, and split the returns — while a Delaware limited-liability company gives them the liability protection, tax treatment, and enforceable agreements that a bare smart contract cannot. When it went live in [April 2020](https://www.coindesk.com/tech/2020/04/28/openlaw-launches-first-legal-dao-for-distributed-vc-investments) it was widely described as the first "legal DAO," and it remains the canonical example of the archetype: a for-profit investment club that is simultaneously a piece of software and a company the courts recognize.

It matters because it answers a question [MolochDAO](/wiki/daos/public-goods/molochdao) and [ConstitutionDAO](/wiki/daos/social/constitutiondao) left open — _how does a pooled, on-chain treasury actually hold equity in a startup, sign a SAFE, or return profits to members without every participant becoming personally liable as a general partner?_ The LAO's answer was to marry Moloch-style on-chain mechanics to auto-generated legal documents, so an on-chain vote and an off-chain contract point at the same decision.

## The legal-wrapper model: a DAO the law can see

The LAO was built by **OpenLaw** — a smart-contract-and-legal-agreement toolkit from [Aaron Wright](https://www.artificiallawyer.com/2019/09/09/smart-contract-co-openlaw-launches-the-dao-mark-ii-the-lao/), a Cardozo Law professor, and his co-founders (OpenLaw later became [Tribute Labs](https://tributelabs.xyz/)). Its core move is to organize the DAO as a **Delaware LLC** and then use software to generate "all relevant legal documents from entity formation documents to member subscription agreements," as the [launch write-up](https://medium.com/openlawofficial/the-lao-a-for-profit-limited-liability-autonomous-organization-9eae89c9669c) put it — giving members "the backing of the U.S. legal system."

That wrapper does real work. It caps each member's liability at what they put in (no general-partnership exposure), it clarifies that members are LLC members rather than a securities-issuing partnership, and it lets the entity itself hold the assets the DAO buys — equity, tokens, SAFEs — under agreements a counterparty and a court will honor. The on-chain contract handles voting, funding, and allocation; the legal layer makes the outcome enforceable off-chain. This is the pattern later codified across the industry as the [DAO legal-structures](/wiki/dao-governance/concepts/membership/dao-legal-structures) toolbox (Wyoming DAO LLCs, the Marshall Islands wrapper, foundation companies), and The LAO is its proof of concept.

## How members invest: shares, weighted votes, and rage-quit

Governance is a fork of [MolochDAO](/wiki/daos/public-goods/molochdao) (v2), the minimalist "guild bank" contract — and it inherits Moloch's three defining mechanics:

- **Capital buys shares.** Members contribute ETH and receive voting shares in proportion to their economic contribution, so influence tracks the money at stake.
- **A member nominates, the majority allocates.** To back a project, a member submits a proposal; funding proceeds only when a majority of members, weighted by their shares, [approve the allocation](https://medium.com/openlawofficial/the-lao-a-for-profit-limited-liability-autonomous-organization-9eae89c9669c). Deal flow is member-sourced, not run by a GP.
- **Rage-quit.** A member who dislikes a decision can exit immediately and reclaim their _fair share of unallocated funds based on their economic contribution, regardless of voting weight_ — the [exit right](/wiki/dao-governance/concepts/membership/rage-quit-and-exit-rights) that stops a majority from spending a dissenter's capital against their will.

Because share weight and exit share both key off capital, The LAO is an honest instance of pure [capital-weighted](/wiki/dao-governance/concepts/treasury/dao-tokenomics) governance: the largest cheque is the largest [vote](/wiki/dao-governance/concepts/voting/voting-and-delegation), bounded only by the rage-quit backstop and the membership cap.

## Accredited membership, the cap, and the DAO family

To stay inside U.S. securities law, The LAO keeps membership **capped at roughly 100** and limits it to [accredited investors](https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/updated-3) — a deliberate trade of open, permissionless entry for legal defensibility. That constraint (a private placement to a small pool of qualified investors) is exactly what lets the fund invest in equity and tokens without registering as a public offering.

The LAO has since become the template for a whole [Tribute Labs](https://tributelabs.xyz/) family of member DAOs, each pointing the same wrapper at a different asset class: **Flamingo** for NFTs (which [grew an early ~$10M pool into a collection valued near $1B](https://www.coindesk.com/markets/2022/02/10/flamingodaos-nft-portfolio-is-now-worth-1b) at the 2022 peak), **Neptune** for DeFi, **Neon** for the metaverse, and **Noise** for music. The underlying tooling was generalized and open-sourced as the [Tribute DAO Framework](https://github.com/openlawteam/tribute-contracts). The LAO itself has kept deploying capital across dozens of early-stage rounds — [trackers count roughly four dozen investments](https://www.cbinsights.com/investor/the-lao) across its life — making it one of the longest-running productive investment DAOs.

## How Caper approaches this

The LAO shows what a well-built _capital-weighted_ investment DAO looks like: shares scale with the ETH you put in, your vote scales with your shares, and your [exit share](/wiki/dao-governance/concepts/membership/rage-quit-and-exit-rights) scales — as the [docs](https://medium.com/openlawofficial/the-lao-a-for-profit-limited-liability-autonomous-organization-9eae89c9669c) say — with your "economic contribution, regardless of voting weight." That is the right design for an accredited-investor fund where capital _is_ the contribution. It also means control is, straightforwardly, for sale: the biggest cheque is the biggest voice.

[Caper](/wiki/foundations/what-is-a-caper) keeps the same open exit right but changes what a vote is made of. In the contract, a member's weight is `w = (t · v) / (V · T)` — held tokens _t_ multiplied by an _earned_ vote factor _v_, over total vote supply _V_ and circulating tokens _T_ (`compute_vote_weight`, verified in `contracts/common/src/lib.rs`). Those vote tokens are **soulbound** — minted one per ballot cast and 0.01 per XRD of gross trade value on each leg of a trade, non-transferable and fractional (`DIVISIBILITY_MAXIMUM`), so _v_ is a record of participation nobody can sell you, though capital can mint it directly by trading.

The sharpest contrast is at the exit. The LAO returns a dissenter's stake purely by capital. Caper's `exit()` pays a treasury share equal to _the same_ `w = (t · v) / (V · T)` that determines voting power — so your slice on the way out reflects both your holdings and your earned participation, not capital alone. A big bag still counts (_t_ is a multiplier), but a bag with no earned _v_ can neither capture the vote nor claim a participant's exit share. Same legal-wrapper problem The LAO solved; a different answer to _who_ the treasury ultimately belongs to.