Welcome to the NZRT Wiki Podcast. Today we’re looking at DAO Governance.
So, what is a DAO? The acronym stands for Decentralised Autonomous Organisation. At its core, a DAO is an organisation where the rules are encoded in smart contracts on a blockchain, and decisions are made by token holders through proposals and votes rather than by a traditional board of directors or management team. Your membership and voting power are represented by governance tokens held in your wallet.
To understand how different that is from a traditional company, think about five key properties. Governance in a company sits with a board and shareholders. In a DAO, it sits with token holders through on-chain voting. Execution in a company means a management team carrying out decisions. In a DAO, smart contracts handle that automatically, or a multisig wallet does. Transparency is selective in a company, but in a DAO every proposal and every vote is public on-chain. Membership in a company means appearing in a share registry. In a DAO, it means holding a governance token in your wallet. And finally, jurisdiction. A company operates under registered company law, while a DAO exists in a much more variable legal space, sometimes unregistered, sometimes structured as a Wyoming DAO LLC.
Now, DAOs come in several types. Protocol DAOs govern a DeFi protocol, where token holders vote on things like interest rates, collateral ratios, and fee distribution. Well-known examples include Uniswap, Aave, and Compound. For NZRT, this is relevant because ITSL, the Iteasel token, could potentially adopt protocol DAO governance after mainnet launch. Investment DAOs pool capital from members and collectively vote on where to invest it. For ITSL, investment DAO patterns could apply to collective governance of revenue distribution. Social and membership DAOs gate access by token or NFT holding and govern treasury spending or community direction. Service DAOs are freelancer collectives that pool reputation and distribute income. And then there are AI DAOs, an emerging category where token holders govern which AI models are used, what system prompts are applied, and how outputs are validated.
Moving on to tooling. For proposals and voting, there are four main tools you should know about. Snapshot uses off-chain, gasless voting. It is the most widely used, but votes do not execute automatically. A multisig wallet has to implement the result, which adds a trust layer. Tally uses on-chain voting through Governor contracts, so votes execute automatically, but voters need to pay gas fees. Aragon is a full DAO framework covering voting, treasury, and membership in one platform. And OpenZeppelin Governor, also called Governor Bravo, is the industry-standard on-chain governance contract used by Compound and Uniswap.
The key tradeoff between Snapshot and on-chain voting is cost versus trust. Snapshot is cheaper and more accessible but advisory only. On-chain Governor executes automatically but can reduce participation because of gas costs. For ITSL governance, the NZRT recommendation is to start with Snapshot combined with Gnosis Safe, where the multisig implements approved proposals, then migrate to on-chain Governor when participation and treasury size justify the overhead.
For treasury management, Gnosis Safe is the most common DAO treasury tool, a multisig where appointed signers implement DAO decisions. Llama handles analytics and spending authorisation. Hedgey manages token vesting and distribution for contributors.
On token distribution, there are four common patterns. A fair launch means no pre-mine, tokens distributed via liquidity mining or airdrop from day one. A retroactive airdrop distributes tokens to past users based on a snapshot of on-chain activity. A vesting schedule locks team and investor tokens over two to four years to prevent immediate selling. And contributor grants allocate tokens from the DAO treasury for completed work.
On the legal side, DAOs exist in a grey zone in most jurisdictions. Wyoming was the first US state to legally recognise DAOs, providing members limited liability through a Wyoming DAO LLC. The Marshall Islands DAO LLC is a low-cost offshore option used by many DeFi projects. A foundation plus DAO structure, common in the Cayman Islands or Switzerland, has a foundation holding the IP and contracts while the DAO governs protocol parameters. An unregistered association carries the highest legal risk since members may have unlimited personal liability. And a New Zealand company with a DAO governance layer on top lets the company retain legal personhood while the DAO handles governance.
Now, the most critical NZRT-specific point. ITSL tokens are currently structured as revenue-sharing interests under the New Zealand Financial Markets Conduct Act 2013, using the wholesale investor exemption. If you add on-chain governance voting rights to ITSL, the token could be reclassified as an interest in a managed investment scheme, which requires full registration, a licensed manager, and a supervisor. That is a significantly higher compliance burden. The clear rule here is do not add governance functionality to the ITSL contract without a New Zealand securities lawyer confirming the exemption still applies.
If legal advice does confirm a DAO layer is permissible, the most conservative structure would work like this. At the top, NZRT Network Ltd remains the legal entity holding contracts and intellectual property. Underneath that sits a DAO governance layer built on Snapshot and Gnosis Safe. That layer uses a separate governance token, not ITSL, and its scope is limited to advisory votes on product direction only. Execution flows through Gnosis Safe with existing leadership retained as a required signer, meaning the DAO cannot override the company’s obligations under the Companies Act 1993.
The immediate next step for NZRT is obtaining a New Zealand securities lawyer opinion on whether adding governance rights to ITSL would trigger managed investment scheme requirements under the FMCA. That legal opinion is the prerequisite before any DAO planning moves forward.
That’s it for this episode of the NZRT Wiki Podcast. Thanks for listening.