> For the complete documentation index, see [llms.txt](https://docs.borderless.company/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.borderless.company/english/borderless/learn-about-parallel-entity/what-is-a-parallel-entity.md).

# What is a Parallel Entity?

<figure><img src="/files/pveDE5VOmHGDp1BYRwAk" alt="" width="375"><figcaption><p>Parallel Entity Diagram</p></figcaption></figure>

### Introduction

**A Parallel Entity** is an umbrella term for an entity that exists simultaneously in two distinct realms: \ <mark style="background-color:yellow;">**the real world**</mark> (legal entity) and <mark style="background-color:green;">**the onchain world**</mark> (blockchain-based presence). &#x20;

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.&#x20;

***

### How it works?

<div><figure><img src="/files/tOdWBImMeZQnoN3HZrMz" alt="" width="375"><figcaption><p>1.Set up a digital twin🌏🔀🌐</p></figcaption></figure> <figure><img src="/files/TRt7iBu0lPUwJVlV1MWS" alt="" width="375"><figcaption><p>2.Sync it for parallel execution🔁</p></figcaption></figure> <figure><img src="/files/SAAMsL2ACmi2Ms5Vd9Uu" alt="" width="375"><figcaption><p> Parallel entity is now active☯️</p></figcaption></figure></div>

#### Let’s break it down further: &#x20;

{% stepper %}
{% step %}
**Legal Entity as the Base Layer (L1):**&#x20;

Think of your Legal Entity as <mark style="background-color:yellow;">**the foundational base layer (L1) of your business operations**</mark>, <mark style="background-color:yellow;">**ensuring stability**</mark>, compliance, and clarity within the traditional legal framework. \
This includes traditional components like:

&#x20;  \- Articles of incorporation\
&#x20;  \- Bylaws\
&#x20;  \- Internal regulations
{% endstep %}

{% step %}
**Onchain Entity as Layer 2 (L2):**&#x20;

The Onchain Entity is <mark style="background-color:green;">**your business operations' scaling layer (L2)**</mark>, <mark style="background-color:green;">**unlocking scalability**</mark>, efficiency, and transparency through onchain-native processes. It mirrors the legal structure but operates digitally, governed by smart contracts, and streamline+open:

&#x20;  \- Fundraising\
&#x20;  \- Ownership and rights distribution\
&#x20;  \- Corporate governance  \
&#x20;  \- Decision-making process\
&#x20;  \- Dividends\
&#x20;  \- Asset management
{% endstep %}
{% endstepper %}

#### Example: DAO LLC &#x20;

A DAO LLC is a perfect example of a Parallel Entity. &#x20;

\- The **LLC** represents the legal, real-world layer. &#x20;

\- The **DAO** operates as the onchain layer, where rules and operations are executed transparently using blockchain technology. &#x20;