OpenLaw’s LAO Launches to ‘Break Apart Centralized Venture Capital Funds’ on Ethereum
OpenLaw launched a first-of-its-kind Limited Liability Autonomous Organization (LAO) on Tuesday, which would allow venture capitalists to make investments and generate returns on the upcoming line of Ethereum network-based projects.
The LAO is looking to attract at least 100 investors to its platform in the first phase who can make investments in numerous Ethereum products and generate capital from it.
The LAO project was first announced in September during the ETHBerlin conference. The project is open to international investors as well, however at present only accredited investors from the United States can join in.
The LAO is breathing new life into DAOs. After much anticipation, The LAO will launch on April 28, 2020. With a looming financial crisis and ongoing pandemic, DAOs are stepping to raise funds for projects quickly, much like the fervor around ICOs. 👾https://t.co/AFZIJbnB4A
— 👾 (@TheLAOOfficial) April 8, 2020
How Does LAO Work?
The LAO starts with an LLC Wrapper registered in the state of Delaware. Investors are required to put a minimum of 120 ETH in a smart contract and then they can vote on the type of investment that the group would make.
And later make payouts based on those investments in different Ethereum projects. The success of this venture capital investment fund lies in how wisely the investors vote for the project they want to invest in.
LAO would host multiple projects in the form of tokenized shares which can be exchanged for an Ethereum deposit made by accredited investors in the pool.
These shares can be purchased in the form of ‘blocks’ which are equivalent to 1% of the minimum 120 ETH deposit, and up to 9% in shares can be purchased in LAO which would be equivalent to 1080 ETH.
According to their medium post,
“The power of the OLE stack (Ethereum, ChainLink, and OpenLaw) means that all relevant legal documents including subscription agreements will be generated for parties to easily come to agreement on relevant market terms. The sale will remain open until all units have been sold.”
The firm is planning to raise about $2.5 million for each LAO. This investment model was first put forward by the now-infamous bitcoin exchange Mt.Gox.
How LAO Differs From DAO?
LAO and DAO have the same investment principle, with one exception in the form of regulatory clearance from the Security and Exchange Commission (SEC).
The DAO investment project received a lot of flak after the infamous hack back in 2016: where hackers managed to withdraw $3.6 million from the investor pool and later faced the heat from regulators for offering unregulated securities.
The infamous hack also led to the hard-fork of the Etherum network, leading to the creation of Ethereum Classic. However, the major difference from the DAO project of 2016 is the ability to “Rage Quit,” which means an investor can pull out of the project whenever they feel it’s necessary, which gives complete control to investors over their capital.