What is a Parallel Entity?
Introduction
A Parallel Entity is an umbrella term for an entity that exists simultaneously in two distinct realms: the real world (legal entity) and the onchain world (blockchain-based presence).
In essence, it represents a legal entity with a real-world presence, while also operating as an onchain entity governed by blockchain-based rules and smart contracts to leverage the best of both worlds.
For example: A DAO LLC is a Parallel Entity where the LLC (Limited Liability Company) exists in the legal world, while the DAO (Decentralized Autonomous Organization) operates on the blockchain.
How it works?
Let’s break it down further:
Legal Entity as the Base Layer (L1):
Think of your Legal Entity as the foundational base layer (L1) of your business operations, ensuring stability, compliance, and clarity within the traditional legal framework. This includes traditional components like:
- Articles of incorporation - Bylaws - Internal regulations
Onchain Entity as Layer 2 (L2):
The Onchain Entity is your business operations' scaling layer (L2), unlocking scalability, efficiency, and transparency through onchain-native processes. It mirrors the legal structure but operates digitally, governed by smart contracts, and streamline+open:
- Fundraising - Ownership and rights distribution - Corporate governance - Decision-making process - Dividends - Asset management
Example: DAO LLC
A DAO LLC is a perfect example of a Parallel Entity.
- The LLC represents the legal, real-world layer.
- The DAO operates as the onchain layer, where rules and operations are executed transparently using blockchain technology.
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