‘We Call Them Ownership Coins’: A DAO Governance Innovation

Introduction

From the depths of crypto Twitter, a cult-like community of techno-optimists has been reimagining onchain ownership and governance. This vision challenges the longstanding assumption that members of onchain-native organizations can’t achieve tangible control or accountability from the businesses they invest in. 

Building on the foundational concepts of futarchy, this movement, led by MetaDAO, has developed a novel structure for ownership and capital formation within fully onchain entities. This model grants investors economic rights, entitlements, and protections in the organizations they fund, addressing the core problems that have long made decentralized autonomous organization (DAO) tokens difficult to invest in and often decentralized only in name. The decade-old vision of a truly blockchain-native organization may now finally be realized. We call this new class of assets ownership coins. 

The words of the prophet?

What Do Traditional Onchain Organizations Look Like?

The core issue facing DAOs today is in their segmented structure. Many blockchain-native organizations combine onchain token-based governance layers with detached, offchain legal structures. To interact with the real world (i.e., sign contracts, hire employees, manage intellectual property, or hold funds onchain or offchain,) a traditional legal entity, such as a foundation or LLC, is established. This “legal wrapper” typically raises equity financing from venture capital investors to fund protocol development and operations. It remains only loosely connected to the DAO through governance and is completely separate economically from its tokens and their holders. 

This design creates a structural rift. The offchain entity, which can be governed by directors and shareholders, exists under traditional corporate law and holds the DAO’s equity and assets. Its legal obligation is to act in the best interests of that entity and its shareholders, and not necessarily the tokenholders. The onchain organization, by contrast, is composed of the tokenholders who have limited rights to influence certain aspects of protocol direction and treasury management. However, their tokens do not equate to ownership in or control over the DAO’s legal entity, which can act independently of the tokenholders. The tokens often carry no claim to profits, assets, or anything else owned or controlled by the legal entity in any capacity. This separation leaves tokenholders vulnerable to market risk without granting them legal remedies or economic claim to the underlying business; these assets effectively represent risk without tangible control or ownership. In the event the offchain entity fails, mismanages funds (or runs off with them entirely), or acts against the community’s best interests, tokenholders have little recourse. That is because they possess no enforceable rights to the business or its assets but bear the economic consequences. On the flipside, if the team managing the project builds a successful product that generates notable economic value, there is no guarantee that the success will be reflected in the token’s value (but equity owners have historically done well in these cases). We have seen both scenarios play out an uncountable number of times over the years. 

The result is the bifurcation of value between company equity and DAO-issued tokens running parallel to each other. The offchain entity captures economic value as every company does (e.g., through intellectual property, service contracts, and revenue generated by the underlying application) while the onchain token accrues value primarily through in-app utility, governance influence, or outright speculation. The result is distinct values assigned to a DAO’s token and the equity of its “legal wrapper.” 

This dual model, where an onchain community of tokenholders governs around an offchain corporate core, has become the standard implementation for most DAOs. The model has major pitfalls, most notably in onchain participation, providing little more than visibility and voice, with ultimate authority, ownership, and protections remaining anchored in traditional legal structures separate from the tokens and their holders.  

The next generation of onchain organizations aims to bridge this gap by directly integrating economic, legal, and operational rights into a single, natively enforceable system through onchain issued tokens and governance mechanisms. 

Decision-Making Under the Traditional DAO Model

Most DAOs use a “one token equals one vote” governance mechanism, where the size of an individual’s bag is directly related to their influence over the outcomes of governance decisions. Control over proposal outcomes is thus distributed proportionate to token ownership, meaning that decentralization of the decision-making process can only be as broad as the token’s supply distribution. In practice, voting power in many DAOs is concentrated among large holders, early insiders, or professional delegates, producing governance dynamics that often resemble plutocracy rather than meaningfully distributed decision-making processes.  

Above the token concentration, social influence compounds the centralization of the “one token equals one vote” model. A small circle of recognizable figures, including founders, contributors, or major delegates, often shapes outcomes by framing narratives, influencing sentiment, or dictating which decisions can even be voted on in the first place. Some token holders defer to these figures or delegate outright, allowing reputation networks and social hierarchies to drive decision-making. 

Additionally, because governance tokens are fungible and easily acquirable through several channels (e.g., swapping on the market, borrowing, and leasing), DAOs are also vulnerable to vote buying and short-term governance attacks, as actors can accumulate voting power around key proposals and exit immediately afterward, eroding process legitimacy. This was recently seen in an Arbitrum DAO vote where an adversarial party was able to cheaply acquire votes and materially move the needle on the outcome; history is littered with such instances [1] [2]. 

At a deeper level, these governance flaws stem from a fundamental disconnect between token power and ownership or control over DAO-held resources. Governance tokens typically grant no tangible claim to profits, assets, or fiduciary rights within the associated offchain entity. Because the token's value is separated from the entity's economic performance, governance decisions, whether brilliant or destructive, do not have a direct link to the value of the token. A tokenholder voting to approve a value-creating proposal has no assurance their token will capture that value; likewise, voting for a destructive decision carries no guaranteed downside to their position. This disconnect makes governance participation economically unbound from outcomes. When decisions carry no direct consequence for voters, apathy and short-termism naturally follow. Moreover, because only token holders are enfranchised, there is no structural mechanism to incorporate broader stakeholder interests or to punish decisions that erode long-term value. Without enforceable accountability or economic feedback loops, tokenholders have limited incentive to rigorously evaluate decisions or monitor management. 

What Are Ownership Coins?

Ownership coins represent a fundamental re-architecture of onchain organizational design, aiming to marry economic, legal, and governance rights within a single, enforceable framework. Unlike traditional governance tokens, which convey influence without control or accountability, ownership coins embed enforceable membership, decision-making authority, and economic exposure directly into the organization’s onchain structure. 

The Core Innovation

Ownership coins aim to address an important problem in blockchain-native organizations: some traditional DAOs let tokenholders vote on decisions but don't grant any share in the underlying economics of the organization, control over all types of decisions made by the organization, or protection from rogue organization leaders (e.g., the ability to dissolve the DAO and distribute treasury funds pro rata to tokenholders). The ownership coin model embeds onchain governance into a legal entity that holds all assets (e.g., treasury, IP, contracts, code base, and infrastructure), where the operating agreement legally obligates designated members to implement decisions approved by the onchain voting mechanism, creating enforceable accountability between blockchain governance and real-world execution. When onchain communities control the governance mechanism and that mechanism has exclusive legal authority over the entity, tokenholders have tighter control over everything in the entity’s purview and, by extension, legally grounded protections for their collective rights and interests. Ownership is thus expressed through control and enforcement rather than through passive shareholding; legally, tokens do not constitute equity in the entity, but they determine its behavior and value allocation through enforceable control. 

How It Works

The architecture has three parts and was established in a partnership between MetaDAO and MetaLex. First, an LLC owns all assets and legally recognizes only onchain governance as its decision-making authority. Second, the futarchic mechanism (MetaDAO's onchain governance platform on the Solana blockchain) makes all binding decisions about those assets and all strategic, operational, and capital allocation choices of the organization through market-based pricing. Third, members are legally obligated to implement these onchain decisions in the real world, bridging the gap between code and law.  The entity used is a DAO LLC established through MIDAO, enabling ownership coin businesses to embed governance smart contracts into their operating agreements under a framework that recognizes algorithmic management.

The result: communities control the futarchic mechanism → the futarchic mechanism controls the LLC → the LLC owns all assets and executes all business decisions. Therefore, tokenholders effectively control the balance sheet and the organization's strategic direction. This is enforceable control over a real entity, including its economics, its decisions, and, therefore, its future, backed by law and smart contract-enforced actions (i.e., DAO resources are governed by onchain smart accounts with set spend parameters), not symbolic governance. 

An example of an ownership coin operating agreement can be found here. 

Separation of Legal and Market Authority

In this system, membership interests are not equity, but legal roles bound to onchain governance. Each member holds a single, indivisible, non-transferable membership interest that cannot be sold, assigned, or inherited. Members do not own shares in the organization or hold any automatic economic rights. Instead, they are legally obligated to implement the outcomes of the futarchic mechanism. 

Because every payout or distribution requires explicit futarchic approval and DAO-owned funds sit in onchain smart accounts, no one can extract value unilaterally or offchain. All capital movements and decisions occur transparently through smart contracts. This framework separates legal execution authority (the members who carry out decisions) from economic and decision-making authority (the futarchic markets controlled by tokenholders). The result is a governance system that better resists plutocracy as markets determine direction, law enforces outcomes, and members serve purely as bound implementers of the community’s will. While this legal framework provides enforceable accountability as a critical backstop, the system is designed to operate primarily through transparent smart contracts and aligned economic incentives. This should make legal recourse a last-resort option rather than a routine enforcement mechanism. 

Aligned Compensation

Compensation follows the same rule-based logic as governance. Team incentives and member salaries are determined by futarchic markets and are programmatically paid out via smart contracts, not managerial discretion. Performance-linked tokens unlock only when predefined metrics (e.g., token price or company value) or market conditions signal real value creation, ensuring that rewards track measurable outcomes rather than tenure or insider privilege. Because all payouts and salary proposals must be approved through the same onchain mechanism that governs every other decision, compensation becomes transparent, enforceable, and economically aligned with community performance. 

Economic Integration

Traditional DAOs often attempt to simulate ownership through fee switches (fee sharing with tokenholders) and token buybacks, mechanisms that imitate economic alignment and control without establishing substantive ownership or accountability. These workarounds rely on offchain discretion and consume treasury resources, leaving token value only loosely tied to the organization’s actual economic performance, all while depleting capital that could otherwise be used for more productive purposes (e.g., growth or acquisitions). By contrast, ownership coins ground token value in direct, enforceable control over the organization’s real assets. All company assets are designed to be governed exclusively by the futarchic mechanism. Therefore, communities’ governance decisions directly determine how value is created (or destroyed), allocated, and preserved, and, by extension, how much of that growing or contracting pie of value is associated with the token. In this case, governance control and economics become inseparable. 

In traditional DAOs, token value and DAO equity value ebb and flow independently. Ownership coins close this gap. While legal title to assets remains with the LLC, tokenholders exercise effective ownership because they govern the entity's behavior, direct its capital, and shape its value flows through the futarchic mechanism. This integration realigns value flows, linking company performance and token price in a single enforceable system. DAO value and token value, thus, should converge into one. 

The Takeaway

Ownership coins promise to transform DAOs into legally anchored, economically coherent digital companies where code, capital, and law operate as a single system. Tokenholders achieve effective ownership not through legal title, but through enforced control over a real entity with real assets. What tokenholders decide onchain becomes binding in law. 

Importance of Futarchy

Futarchy is the mechanism that gives ownership coins their decentralized, tamper-resistant intelligence. While traditional DAOs rely on token voting to express collective preference, futarchy separates the process of setting goals from the process of evaluating the means to achieve them. This leaves communities to decide what outcomes they care about, while markets determine which actions are the best way to achieve them.  

It's important to note that futarchy is designed for significant strategic and capital allocation decisions, not day-to-day operational matters. Much like how a board of directors and shareholders govern major company decisions while leaving management to execute daily operations, the futarchic mechanism and tokenholders oversee high-level choices, such as treasury deployments, major partnerships, compensation structures, or strategic pivots, while founders and teams retain autonomy over routine execution. Not every decision merits a conditional market vote; futarchy provides governance over the decisions that materially affect organizational direction and value, ensuring founders can operate effectively without constant community approval for the granular details.  

In a standard token-governance system, each token equals one vote. Voters cast “risk-free” ballots (in the sense that votes carry no direct financial risk in and of themselves) based on their opinions about both what should happen and what they think will work. These systems are susceptible to reward social influence and narrative coherence more than analytical accuracy. The most popular outcome, not necessarily the most effective one, is susceptible to winning. As a result, decision-making is vulnerable to reputation hierarchies and short-term sentiment rather than to predictive rigor and the economic impact of a decision. 

Futarchy Fixes This

Under futarchic governance, participants first define high-level organizational goals, such as revenue growth, user adoption, or stability. Once these objectives are set, the voting infrastructure creates synthetic conditional markets around specific proposals for achieving them. Each proposal generates two conditional markets for the DAO’s token: a pass market and a fail market. These run temporarily alongside normal token trading and are powered by automated market makers (AMMs). 

Participants can buy or sell in either market, expressing a belief in whether adopting or rejecting the proposal will increase the token’s future value. Because trades are conditional (i.e., executing only if the corresponding outcome occurs), each position carries real economic exposure. Over the voting period, the time-weighted average price (TWAP) of each market is tracked; whichever side ends higher signals the market’s collective belief about the most value-accretive outcome.  

In this system, values are voted on through governance objectives, but outcomes are bet on through markets, aligning decision-making with financially backed expectations rather than individual opinion. Importantly, because the process is market-based rather than membership-based, participation is open to anyone willing to take economic risk (not just token holders). This removes the barriers of token holdings or formal DAO membership that typically gate governance access. More on how futarchy markets work can be read in this Galaxy Research report. 

Because each participant’s gain or loss is counterbalanced by another’s opposing position, attempts at manipulation become self-correcting, where one actor’s distortion is another’s arbitrage opportunity. This adversarial symmetry makes the system inherently more tamper-resistant than the alternatives, helping prices better reflect the collective intelligence of the market rather than the influence of any single participant. Through this process, futarchy transforms governance into a price discovery mechanism for truth. This dynamic was shown in MetaDAO’s Proposal 6 where one individual allegedly tried to manipulate prices to pass a proposal the market deemed detrimental to the DAO; the proposal failed despite the quarter of a million dollars spent to influence the outcome. 

Why Ownership Coins Make Futarchy Powerful 

In traditional DAOs, futarchy is often ineffective because the token’s market value is detached from the DAO’s real economic prospects. Even if a governance proposal improves the protocol’s fundamentals, that change often has no clear or direct effect on the token price. This disconnect strips markets of meaningful predictive power because traders have little reason to bet on outcomes that wouldn’t materially affect token value (or at least have a reasonable belief to). 

Ownership coins solve this problem by mingling the legal, economic, and governance layers of an organization into a single system. The token is not just a signal of opinion since it represents enforceable control and direct exposure to the entity’s performance. When ownership coin holders trade through futarchic markets, they are speculating on the future value of the organization they collectively control. Market participants can now price decisions based on their expected economic impact, because the outcome of those decisions directly influences the pool of value controlled by the tokens. 

Where Is the Ownership Coin Trajectory Heading?

While still in its early innings, ownership coins are showing promising signs. We have seen the projects behind them succeed and fail, which highlights the power of the model in both cases. 

mtnCapital: Ownership Coins Work Even When Their Businesses Fail

mtnCapital exemplifies the power of futarchy and ownership coins not because it succeeded, but because it failed. The project was a Solana ecosystem fund created by mtndao and intended to allocate capital across private investments and liquid instruments. All allocation decisions were controlled by a futarchic governance mechanism. 

The fund’s capital raise concluded on April 9, securing approximately $5.2 million in USDC stablecoins, all of which remained in the company treasury under the governance of tokenholders. Over time, the community’s futarchic markets consistently rejected proposed investments, judging them misaligned or not profitable enough. The only successful proposals were to repurchase MTN tokens and restore their value to the fund’s net asset value (NAV). 

Ultimately, the community voted to dissolve the fund and distribute residual treasury assets pro rata to tokenholders. The outcome demonstrated that even when the venture itself failed to find viable opportunities, the governance system and organizational structure did not. Futarchic markets prevented potential capital misallocation, and the ownership-coin structure helped ensure investors retained legal and economic protection over the assets they contributed. Importantly, tokenholders were able to recover funds unilaterally, which is something that would have been virtually impossible to do under the traditional DAO model, where assets are typically controlled by a core team and can only be returned if that team chooses to do so. 

Umbra Raises $155 Million Exclusively Onchain

On Oct. 10, Umbra, a privacy protocol on Solana, raised $155 million by selling ownership coins through MetaDAO’s funding platform. The fundraise, which targeted a minimum raise of $750,000, was 207x oversubscribed, putting it among the largest fully onchain fundraises conducted by a blockchain-native company. Just six months earlier, Umbra had won an honorable mention at the Colosseum Breakout Hackathon. The speed of the project’s ascent is underscored by the nature of ownership coins, where investors are given tangible protections and enforceable rights over the companies they fund. In this environment, confidence compounds quickly, enabling levels of participation and capital formation rarely seen in onchain fundraising. 

Thinking About the Future

The fusion of enforceable governance and onchain legal structure could catalyze an entirely new class of digital organizations that are born legally grounded, investable, and decentralized from inception.  

The space is poised for broad experimentation with the concept, potentially leading to meaningful adoption of the MetaDAO model and subsequent forks (if they are to form). MetaDAO is working to allow the permissionless launching of ownership coins, which could be an inflection point for the creation velocity of this type of organization.  

The demand is likely to come from both sides of the market: 

• Builders, who gain automatic governance enforcement and flexible capitalization through tokenized ownership. 

• Investors, who gain direct, enforceable exposure to organizational performance through the same instruments that govern it. Ownership coins provide investors with mechanistic protection against treasury misuse and legal protection against revenue misappropriation, ensuring that tokenholders have enforceable rights to the revenues and assets their capital supports. 

Among these groups, the investor side will likely dominate early demand. Ownership coins offer a new, legally grounded way to hold exposure to organizational value creation without the opacity of traditional DAO tokens at a time when onchain fundraising and initial coin offerings (ICOs) are in vogue. An interesting question is how these tokens may be viewed by regulators. On the one hand, ownership coins are legally structured as governance instruments tied to non-transferable membership interests rather than equity stakes, with no automatic profit-sharing or traditional shareholder rights. On the other hand, they provide economic exposure and control over organizational assets that, while achieved through governance mechanisms rather than passive ownership, may function similarly to equity interests in practice. In any event, the current U.S. administration seems far less inclined than its predecessor to force novel structures into existing regulatory categories, providing time for clearer frameworks to emerge. 

In contrast, legacy DAOs are unlikely to make a meaningful migration toward this model. Their governance layers are deeply detached from their legal and economic cores, and bridging that divide would require restructuring the entire organization from the ground up. For most, the cost, regulatory complexity, and coordination required to retrofit will not be possible or require significant risk and/or resources. As a result, the next generation of organizations designed around ownership coins are poised to becoming a defining standard that dilutes the primacy of the traditional DAO model. 

Conclusion

Ownership coins represent a meaningful advance in onchain organizational design. By unifying enforceable governance and market-based decision systems within a single legal and technical framework, they offer the first credible model for legally recognized, self-governing onchain entities. 

For new project builders, the choice is increasingly clear: build on a framework that grants investors real rights, protections, and aligned incentives, or continue using the old model where governance and ownership remain disconnected. As the benefits of this new paradigm become evident, founders and investors alike may begin to reject legacy DAO structures in favor of organizations designed around enforceable, value-bearing control.