Commentary-17

A DAO may modify, upgrade or migrate its Smart Contracts to resolve a software bug, augment capabilities, change operating procedure, meet legal requirements or for technical maintenance. Modifications are simple changes to the data in the DAO's smart contract, such as modifications of voting majority thresholds. Upgrades can be made through an existing function (e.g., via a proxy contract). Finally, migrations involve more substantial coordination, as entirely new Smart Contracts may be deployed and migrated to. For example, a new DAO could be constituted with the same membership distribution, and then the old DAO would vote to move all funds and legal personality to the new DAO.

There is an important distinction between upgrades and modifications on the one hand, where the DAO can still be identified through its unique Public Address, and a migration on the other, where its identifying Public Address has changed. This distinction implies that within instances of modification or upgrades, there should not be any ambiguity as to the validity of the upgrade or modification, so long as the DAO continues to conform with the requirements of its legal status. However, if a DAO migrates to a different Public Address, the DAO must provide clear Public Signaling to move legal personality and all assets and liabilities to the new Public Address.

An example of Public Signalling to help interpret Article 17(1)(b): A DAO plans to migrate to a different Smart Contract with a different, unique Public Address, but maintaining an identical distribution of control and ownership rights among the same set of Members. The Members of the DAO then pass a Proposal to such effect. If the Proposal is passed and proper notice is given on the DAO's website and social media accounts, then the legal personality of the DAO will be deemed to have passed from the predecessor DAO to the successor DAO without interruption. The original DAO will be deemed to have passed all rights and obligations to its successor.