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Legal Structure

Arrow DAO is more than a community and a token — it also exists in the legal world. This page explains how, in plain language.

note

This page is informational, not legal or tax advice. The governing documents control if anything here is out of date.

The short version​

Since February 2024, Arrow DAO has operated through Arrow Air, a Wyoming Unincorporated Nonprofit Association (UNA). The UNA is the DAO's legal wrapper: it lets the DAO sign contracts, hold accounts, pay contributors, and file taxes as a real legal entity — while governance stays exactly where it has always been, with $ARROW token holders.

A DAO without a legal entity has two problems:

  1. It can't act in the traditional world. No entity means no contracts, no bank or exchange accounts, no ability to buy insurance or file a tax return.
  2. Members can be personally exposed. Without a recognized entity, some courts may treat a DAO as a general partnership — where any member could, in theory, be personally liable for the organization's obligations.

Wyoming's UNA statute (Wyo. Stat. § 17-22-101 et seq.) solves both. The UNA is a separate legal entity: it holds its own assets and obligations, and members and directors are not personally liable for the association's contracts or torts merely because they participate. That liability shield is the core reason the wrapper exists.

Arrow chose the UNA form over alternatives (like a Wyoming DAO LLC or an offshore foundation) because it is nonprofit by construction, lightweight to maintain, and designed for member-governed organizations.

Nonprofit by design​

Arrow Air's Articles of Association prohibit distributing profits or assets to members. Nothing about holding $ARROW entitles anyone to a share of revenue or treasury — the token is a governance and membership instrument, not an equity claim. Revenue the DAO earns is reinvested in its mission: building open-source aircraft.

This "non-inurement" principle is not just philosophy; it is a structural legal commitment that shapes how the DAO handles its treasury, compensation, and token.

Nonprofit does not mean tax-exempt. Arrow Air is a taxable nonprofit: it files regular US federal income tax returns and pays tax on any net income, like any other business entity. It has not sought 501(c)(3) charitable status, and contributions to Arrow are not tax-deductible donations. The nonprofit commitment is about where money can never go — into members' pockets as profit — not about receiving special tax treatment.

Nonprofit also does not mean the token can't be valuable. $ARROW can appreciate the way membership in any growing network does: more aircraft flying, more manufacturers and builders participating, and more activity governed by the DAO all increase demand for a voice in it. What the nonprofit structure rules out is one specific thing — the DAO paying holders (dividends, revenue share, redemptions). Value comes from what the network does, not from a claim on its treasury.

Token holders are the top of the org chart. All meaningful decisions are made through AIPs voted on Snapshot.

The board of directors is the execution layer, not the decision layer. The Bylaws describe directors as stewards who "shall at all times be required to carry out the will of the Tokenholders." In practice, directors:

  • Sign contracts and resolutions implementing decisions the DAO has already voted on
  • Serve as signers on the DAO treasury multisig (3-of-5 threshold for any transaction)
  • Handle routine legal upkeep: filings, records, tax returns

Directors are elected by token holders every 12–18 months through an open nomination process — any DAO member may stand. Individual directors have no unilateral power, and the role is uncompensated.

Current status​

  • Entity: Arrow Air, Wyoming Unincorporated Nonprofit Association
  • Governing documents: Amended & Restated Articles of Association and Bylaws, adopted February 21, 2024
  • Registered agent: maintained in Wyoming, as required by state law
  • Taxes: the association files US federal tax returns and maintains its own EIN
  • Board: five directors, elected by token holders; election announcements are posted on the DAO forum

Key documents​

  • Articles of Association — establishes the entity, the nonprofit commitment, and member liability protections
  • Bylaws — defines the board, elections, token-holder supremacy, and governance procedures

Both are available on request through the DAO forum or Discord.