OtoCo is the name we use for our automated Web3 company assembler and DAO tooling site.
Whilst Otonomos offers offchain entities, OtoCo lets users “tinker different” by spawning up an organization onchain, instant and at very low cost.
Companies as code
OtoCo’s end goal is to turn companies into code, from the way they are formed to how they get funding to how they govern themselves.
This involves a wholesale translation of analog business logic into smart contract code:
- Formation is fully onchain with Formation Certificates as NFTs.
- Operating Agreements are no longer signed PDFs but embedded in the code.
- Funding is onchain, automated and continuous.
- Shares are tokenized.
- Accounting is in crypto with real-time P&Ls.
- Governance is linked to participant wallets’ roles and privileges.
Taking stock
In late 2020, we pioneered onchain company formation for Single Member LLCs with our Delaware and Wyoming Series LLC. Since, over 400 users have spun up their LLC onchain using our technology.
Over 2021, we added new functions including an ERC20 token foundry and a way to raise flash funds using our OtoGO smart contract that lets users stake a project by pre-ordering its token.
Late 2021, we also deployed our DAO smart contract for users who decide to stay unincorporated at first and add a legal wrapper for their project later (if at all).
Around the same time, we opened a pre-order campaign for our OTOCO token, reservations for which are set to close on 11 March this year. You will find more information on our OTOCO token and its use on our Gitbook.
1. New functionality (1H2022)
The new functionality we plan to add in 2022 relates to a tighter coupling between the onchain entities we currently offer and fortifying their offchain, “real world” legal validity.
This has three components:
- A first step towards greater legal validity is to attach roles and privileges to wallets that closely map the roles in the Operating Agreement of offchain LLCs. Members, Managers, Treasurers, etc can all be mapped to wallets each with their own powers within an onchain organization. As a subset of this, we will also enable onchain LLCs to be created from multi-sig wallets such as Gnosis Safe, which will make it possible for DAOs to form and control an onchain LLC.
- We will also provide tools for roles to be linked to real-world identities, which will help us in accessing real-world services such as fiat bank accounts for onchain entities. In this respect, we have had encouraging initial conversations with a number of newly-licensed depositary institutions in Wyoming, however most are not yet fully operational. However we recognize adding fiat off-ramps for onchain LLCs would be a game changer for OtoCo users and pursue this aggressively.
- Only when 1 and 2 are completed does it make sense to make a start with turning the Operating Agreement and the Bylaws themselves into self-enforcing smart contracts. This will allow us to move towards fully programmable business logic and entity governance. In a bridging phase, more templates will be added to ensure legal validity of all ensuing cooperate actions such as the issuance of tokens to raise capital, designating a wallet or even physical assets as part of the company’s holdings, multi-signature rights over such holdings, etc. Even when legal validity of corporate actions is grounded in analog legal documentation, signing will be via private keys. Eventually, these offline documents too will be coded as smart contracts and will be offered in our dAppstore, which is what we plan to build in 2023.
2. More product (2-3Q22)
In addition to the new functionality described above, we plan to add 2 new onchain entity structures.
In this context, very few limited liability wrappers can be formed contractually: most need filing. Pre-filing, there is also increasingly the need for client KYC and Due Diligence.
Such filing turns entity formation into a stop-start process which is difficult to compress in time let alone make instantaneous and onchain.
This explains why we started with unregistered Series LLCs since they can be spawned contractually between the First Member of the Series and the Master.
We are now looking to replicate this for Swiss Associations and Trusts.
- The Swiss Association is attractive as it can be formed contractually between two initial members, each of which could be DAOs based on our research (but untested in court!). This would open the door for decentralized project units including DAOs to associate with and control an entity that could function as a shared platform to access services DAOs are barred from. We have blogged about this idea earlier and see significant demand from the Web3 community for such shared services platform.
- A Trust too can be settled privately or with minimal formality. In an initial stage we would let anybody with an Ethereum wallet grant a Trust and form a Private Trust Company that would then act as Trustee to the Trust. This in turn opens the door for further automation of how trusts are governed and distributions are made, a use case that screams for digitization but is unlikely to happen in 2022!
3. Faster technology (4Q22)
Finally, we plan to move or add a Layer 2 solution to OtoCo.
OtoCo lives on Ethereum Layer 1. Whilst our research shows this does not seem to put off users from spinning up an onchain entity (it is still way cheaper than an analog setup, despite the gas fees typically exceeding our DAI 39 activation charge), we do think it discourages users from accessing more functions and generally do more in our Dash.
We are polling with the community what L2 solution they’d like to see and are also doing more work internally on the development side to plan for this transition/addition. Expect more details in this as the year progresses.
Stake OtoCo
As early followers know, OtoCo started as an experiment. More than a year later we have built a strong community around the project and have committed, paying users.
OtoCo’s main wildcard is its funding: so far, it has been funded out of Otonomos until OtoCo completes its first funding, which it raises only from users and fans.
Our soft cap is US$ 1MM and we’re halfway there, despite the weak markets.
> Stake OtoCo now to help us build onchain entities as one of the primitives of the Web3 space.
