DAPPCON 2019: Panel - The Legally-Compliant DAO, More Hype than Substance?

Transcript

my name is Phil Kell refi I'm the general counsel of Knossos it's a bit loud right one sec and we've put together a really nice panel of legal experts and long legal experts on Dowers and we're going to talk about the elephant in the room basically legal and ours and do other is are legally compliant ours are they more hype or other substance I'm going to so I'm gonna briefly introduce our panel I'm

starting with you this you this with man she's a professor at Leiden University for company laugh she researches the impact of blockchain technology on corporate structures and company law she's also an expert on Robo directors and artificial intelligence in the boardroom and how these new technologies actually affect corporate structures then we have a best mccarthy best is a legal mechanism designer and also and behavioral analysts she is the co-founder of the dow incubator the dow

incubator is a collective incubating dowse and she's also the co-founder of the starfish network in san francisco a co-working space for blockchain we also joined by aaron right aaron is the CEO of open law and he is he also co-authored one of the most authorities and earliest books on law and blockchain blockchain in the law the rule of code and he is also going to speak a little bit more about the open law framework he is a professor at Cardozo law school we have other concerns on the

side of the panel Constance is the principal of seven advisories and she's also as you might know the co-founder of koala and in that role she has spearheaded this field law for the last four or five years actually last but not least Molly introduced the person has not been damaged by legal education yet I mean some of money from warlock tau he's also on the CEO of an entertainment platform on the theorem he's going to help us steer it's just debate becomes a

little bit too detached it's going to steers more into the technical direction yes so I actually there is a slider also if you actually have questions which you'd like to ask can either shout them here or you can use slider and it is code number let me find this sorry six seven three seven four six seven three seven if you have questions I mean I wanted to start with you what is the legal framework of the malach Tao hello testing it has a very sophisticated legal framework

nobody has signed any paperwork there is no legal standing minority protections are built into the contract and the only legal advice we've gotten to date is that we're better off without a legal structure wonderful so um tennis so actually another now like the the issue in the friend that the reason we face with the D the Dow's is that they are kind of a legal there's so many towers this year actually has been the year of tower creation there have been that's been a Molotov that's been the DX starter is now young down there are Dow platforms so a lot of them are the majority of them do not have a legal

framework so I would like to also ask Beth on actually sorry I want to ask you these over this choice I want to ask you this do you think the mall of towers a general partnership well maybe I mean just to make sure that you don't have to sign anything actually to have a legal framework applying to you if we just decide all of us to work together and to generate some economic benefits probably actually would qualify as a general partnerships and then a variety of rules the sets of rules will actually apply to our collaboration so it really depends

on what we're actually trying to do so if there is an agreement whether it's written or whether it's an oral agreement doesn't really matter and we're all contributing to it whether that will be labor or whether that will be capital or perhaps the use of goods those can all be qualified as contributions then we probably would qualify as a general partnership and the question is under which jurisdiction that's a bit of a technical story which I won't go into today I mean are located aetherium what do you think about that I

mean does it depend on the members themselves or maybe Aaron wants to say something about that yeah I mean that the jurisdictional questions are interesting I mean it could it could also reside in multiple jurisdictions right so multiple jurisdictions laws could apply to on the issue or whatever dispute may emerge but I think you know unfortunately you know to the previous point there is a legal framework you can't avoid it and that's why this is an interesting question you know we have this opportunity to really build really interesting new structures experiment with new forms of governance all incredibly exciting lots of progress that's being made but there are benefits to kind of wrapping this all in illegal entity of some some form I think some

jurisdictions are pretty well equipped for that already other jurisdictions may adopt and there's going to be pushing and what these legal structures look like what the boundaries are which probably will lead to some changes in in the law but that's a good thing and that means that we've got safe spaces where we can begin to play around with this incredible technology yeah something I wanted to add is just in terms of maalik specifically because it's a grant-making organization everybody who is joined has come in with the expectation that they will overwhelmingly likely lose money you will come out with less ether than you started with and ether and not being a security means that the the Dow itself

is not a security and that's part of why it's not to try and generate economic benefit for the members themselves but for the community at large maybe it's you too so some of the jurisdictions use profit as as the thing that they're aiming for but economic benefit can be positive can be negative so if you work together to for instance save costs you could actually qualify as a partnership although maybe you're actually not saving cost in the end so it's a bit broader than just trying to make a profit out of it we close at the polls that the model is

a general partnership even when it's not making any profit well I haven't specifically looked into your governance system and and and what you're doing I only know that's the key thing is that you in vests whatever you can invest it's it's probably open but a contribution is also very broad so whatever that maybe it could qualify as a contribution and they're working together and they are trying to do something which probably either generates something which is negative or positive but I'm not sure I should have a second look at that I mean

most of you probably ask yourself you may be creating your own now and you want to know what should we actually take you know what how we going to do this legally how are you going to structure it do we need it Ramon are we going to do it like I mean so any advice on how to do this so from a legal mechanism design point to a process question so I think the thing that's really useful about using these concepts of legal design and by legal design I mean thinking of you know the law as not only being you know these certain legacy systems that apply you know rules and punishments and you know like create a

regulatory structure based on jurisdiction but also abstracting away from that a little bit to think of it as being you know just a formal system of logic that includes incentive structures that provides functional roles provides you know a grammar and ontological framework for existing and you know collaboration and working together and so from that perspective I think that you know the question of you know is it a partnership is it you know and I'll see is able to be approached in a way where those are also kind of design constraints for saying you know what like what are you hoping to get out of an organizational structure that would be classified as an LLC and you know how can those characteristics be applied

across jurisdictions and you know what parts of that don't work and you know by kind of asking these questions from a design perspective then you're able to say like you know the certain flow of incentives the certain flow of power this assignation of functional roles make sense for our organization and then these other questions of legal personality and jurisdiction can flow from there so I mean obviously even makes sense to join the DAO incubator advice on that but there has been a lot of discussions recently on like having limited liability dowels incorporated in the United States they've been quite

some academic thinkers actually that spoke about like having zero member LLC's and you know basically have an operating agreement Erin I mean you have been working and experimenting with this on at open law could you maybe tell us a little more about how this works or how this is actually an option to structure the DAO legally yes sure I mean the big question and the big problem here is if you don't form a legal entity then you as a member are potentially putting your asset other assets at risk to creditors of that entity and so that's why in the US and in most jurisdictions around the

globe we give folks the freedom to experiment through legal entities they have a limited liability that means if you're participating in some sort of activity something goes wrong the assets of that entity are really the only thing that a creditor can try to recover not your personal assets and it gives people a tremendous amount of freedom it's kind of one of these bedrocks of capitalism and other forms of systems so people can experiment so people can engage in fruitful social or economic conduct in the u.s. there's a very very flexible entities mostly limited liability entities that give folks that security that they're not going to necessarily put their assets at stake but at the same time they can order their affairs so there's a broad concept of just

private ordering which is using contracts so me and you agree that this is how we want to govern our relationship or a group of people can agree together that this is how they want to govern their relationship fortunately in the u.s. it's pretty much like a blank slate so it's think of it if you're like a programmer you pretty much have as much flexibility to engineer anything you want legally with certain constraints but that means that you can pretty much absolve away certain legal requirements so if you want to say I'm not going to be a fiduciary I'm not gonna have extra requirements in order to operate this organization you can put that in a contract and that's basically how it's going to be enforced or this is how we want this organization to be governed we can articulate that in a contract in some sort of way so that you can have

things like like delegated voting or more interesting voting schemes or decision-making processes and that can all be kind of hard-coded into a paper legal document and can be mirrored in smart contract related functionality as well so I do think in the US and probably in other jurisdictions my expertise is more in US law we do have kind of the bare bones to begin to experiment with dhow and dialog structures some of the really exciting incentive and voting mechanisms but certain constraints mostly around the size of them so that's the the one thing but that means that you can actually have for-profit dowse it's completely feasible that you can set these up so building on the great experiments that we saw in the past with the Dow I think you're gonna see over the next year new

structures that try to mimic that activity are for profit are not necessarily just charity or gift based that actually enable a lot of ecosystem development in this space so on the European level I'm not entirely sure is this also possible can we do this like LLC is that how sad our through an operating agreement and areas could maybe streak a bit on this yeah obviously in the u.s. you have many states with their own jurisdictions in Europe we also have a lot of jurisdiction with their own entity firms Europe we do have corporate law on the European level but a lot of that is directives which needs to be implemented

in the different jurisdictions but if you look at corporate law the states the the member states have their own how can I sit is the right to have their own entities so it depends which jurisdiction you look at for instance if you look at the Netherlands we don't have such a thing as an LLC or we don't have partnerships with legal personality but we do have corporations that are very flexible but mostly more flexible than the corporations which are created in the US but we have limited liability partnerships which is an entity form a

legal entity form which gives you a lot of freedom the freedom that you also have with LLC's to organize who is actually the one who decides the rules who is the one that can amend the rules and who are the ones that are actually receiving financial rights giving you also legal personality which means that there is an asset partitioning aspect to it which means that the legal person itself has its own assets which are separated from the assets of the members so it that's quite similar to LLC's the only thing is that you will still be

liable for your own acts so the the benefit of LLP so limited liability partnerships is that you won't be liable as a member for the acts of your fellow members but you will still be liable for the acts that you have performed yourself but it will be under contracts or under tort law so if we want I mean you know most people that working on the Dow I mean what we really want or that's maybe I speaking for myself is I want the code to get the legal personality so that the code is the Dow and I mean in the legal world the Dow is a non-person

unless it is in one of these it's in somehow has a legal rapper its house in Dallas he or maybe another Dodge entity with a similar framework but what I mean - I mean when when for example we were working in so noses we're working on a DX star we're looking at how we could actually have a legal framework and limit the liability without going to the US and being close to the you know SEC or different regulators how can we actually do that and have the personality attached to the to the DAO I mean Constance has been working on with koalas change hoping to change the law I mean how can we do this is this

just me dreaming and fart like having the smart contract being legal the legal person to a doctor can we well unfortunately it takes time it takes time and it's a gray area of law so a lot of things need to be replant figure it out you know I think that a couple of things it's been a really interesting conversation and I would say that one thing I would caution is seeing this as kind of a binary outcome between lets you know instantiate our dowels in some legal form you know option a and an option B let's stay in this a legal

space where our jurisdiction is that of the blockchain so I don't think these are the two only outcomes and I don't think it's going to be likely that these are the the only outcomes monied x' to be one thing that we've been working on in koala actually with the input of a lot of you guys and various experts is figuring out okay what regulations are we talking about here when we're talking about various corporate forms or organizational entities regulations around you know liabilities around decision making you know what are the current rules which are you know across jurisdictions very similar what are the mechanisms that are used to enforce the

rules what why do we have these rules what are we trying to achieve with these rules and then what are the technological equivalents that we can achieve in the blockchain face and is there a new framework that we can create that provides a spectrum of options so that if you want to afford yourself of the kind of legal personhood and write a contract and limited liability of a particular legal entity perhaps you do need to adhere to XYZ rules you know if you want to maybe only partially have this this kind of legal liability maybe you only want a legal avatar to reach out into the world you know for particularly to hire people or to enter into contracts but you want to

operate your dau you know in the in the virtual space maybe there's a there's a there's a in between maybe there's a spectrum of certain technological guarantees that you can meet wild meeting certain other more traditional legacy forms of legal requirements so you know unfortunately this takes a lot of translation and time because the law on one hand is presupposed a particular kind of architecture and infrastructure and the entire architecture of the laws are posited around this kind of structure in a legal space in the DAO space obviously you know we're talking about very different stakeholders so even translating what you know what a last known person might be for a dhow

you know with all of the various contributors and actors it's a very it's an open question it's a difficult one for regulators so that's gonna take time but I would say the other thing that I think is very hopeful for the space is that there's a lot of angst and focus on the X on Exile genus rules so what are the rules that the outside world is going to impose upon us right now and that's that's you know as I just discussed you know a very slow-moving expertise Laden process which involves a lot of translation between different domains on the other flow regulators and regulators and various jurisdictions and incumbents and all sorts of different

political dynamics as well on the other hand we also have the opportunity here because this is such an open space cuz you know regulations and you know how the internet space is going to be governed how data's gonna be governed it still is now being seen as such an open question there's an opportunity for us to create endogenous rules so what can we and I think Mohawk now is a really wonderful example of that of how can we in in our a legal space create rules that allow us to achieve the same kinds of goals that that regulators wouldn't want us to see so how are we managing minority rights how are we managing custody of funds how are we maintaining

safety and soundness wild retaining this permissionless aspect how can we slice and dice this as a community can we and because we're creating an ecosystem and it's not just one person how can we come together to do this I for one hope your dreams come true and that the law recognizes Dow's as legal individuals because then it would recognize Moloch as a legal individual and that would be really cool I mean in the US your dream is already a reality I mean you can have an LLC structure which is a legal identified entity no members no management and the software is just placed in it so it would have the limited liability baked in it if you want governance on top of that that's

where it becomes a trickier question I mean an open-source license even of its sorry didn't mean to pitch off an open-source license in and of itself is an easy way to get limited liability for software for many different activities I think the headline though and one thing that folks in this space haven't recognized and a lot of these challenges it's just the power of contract law contract law is incredibly powerful particularly in the u.s. your ability to order your affairs with other folks is if it's documented in a contract it provides a tremendous amount of freedom and flexibility as long as the activity for the most part is not criminal and that's exciting when you think about all the potential use cases particularly there's socially minded ones Aaron you know there's a lot of research going

into this whether it's actually really possible to do this under US law so there they started to say in 2015 as this wonderful scholar cold called Shan Bayern he started to come up with this idea that you can have this like member less LLC way in the end you get rid of the members and you have just this code sitting there and an operating agreement that kind of has people work for that code but there's also been a lot of discussions on this that is actually not what they let regulator envisaged so that they actually the regulator doesn't really want to have this member less allow CSIS is in New York statute there's this 90-day rule

and somehow you there have been arguments that you can't get around that but in the end I mean if this ended up in front of court I mean it's likely that they regulator says well that's not what we intended that is not I mean for me this is not a long-term solution as to getting you know getting a legal framework for the Dow I mean we did deleted a contraction one for the day when we in gnosis initialized the DX Tahoe it has a contractual framework only so the answer is I think it would it would be fine that the power of private ordering in particular in certain US jurisdictions it Trump's a lot of things it's just one of these baseline precepts that undergirds the entire American legal system at that of

two parties and if they're competent agree to something it's going to be maintained so for example with an LLC you can basically waive all your responsibilities you can say I have no fiduciary obligations over this now there's a question as to whether or not why you'd want to do that but in certain instances that's proven useful those are enforced those have gone through the courts for 30 years and they're forced so parties want to agree to certain activity it's gonna be hard for a judge to say okay you can't do that that's just not how the US system works we allow people to engage agreement in the panel here I'm not sure I'm not a u.s.

lawyer so maybe that's good to say but I think Shawn Byron sort of based his ID on this algorithm agreement equivalence principle which means that he says if you have an LLC which can be member lisandroni see the question is for how long because [Music] probably there will be a dissolution at one point but then the legal person needs to be represented because the legal person itself the LLC's is it's a fiction it's it's it's not something which is tangible so normally what we have if you have a legal person which is

a corporate or an LLC you have people that are actually representatives so they can represent this legal entity so that there can be legal acts with legal effects and this principle of Sean Barron is based on the fact that he says that a computer code can be representing the LLC to have legal effects and I doubt whether that's actually true and he gives three arguments for for this to work he says well classical contract law is on the decline and he says there just needs to be one jurisdiction in which

the court upheld this principle and then he says well common law has yielded to commercial pressures but those are all arguments based on uncertainty so it doesn't actually say that this is valid legally it just says we're going to try this and then you know if litigation starts we just see what the court will do it doesn't mean that it's actually yeah but these these are the same arguments around open source licenses but two constants point if you experiment you're adding value into the ecosystem these types of questions just get although gray there's always gray in the law so you're going to talk to a lawyer they're gonna say it depends over

and over and over again but usually particularly I would say from u.s. perspective pragmatism wins so if there's some value if there's a need for this for folks to deploy code know that they're not going to be liable for it and it can coronate activity that activities socially or economically beneficial I would be shocked if the u.s. or US Court doesn't say that that's okay now that may be different in other jurisdictions but from a u.s. perspective that just works in general and I think that pragmatism when it came to Internet policy has tended to win I think even though despite the bumps with blockchain related policy we're gonna see the same endpoints pragmatism alright I totally agree did you know experiments are good and I think we need to innovate but

there is a difference between something which is certain and which is uncertain so to say that this is something which is really there and can be used is one but whether it's upholds in court is - so if you choose to do this which I think it's a good thing to do so I agree with that there still quite some uncertainty whether it's actually going to be upheld and we're still talking here though about you know global organizations and dowse that need to have more freedom than recognition just by one one jurisdiction and and also you know I would I would you know just in our mapping exercise we're running into some serious issues around principal-agent

problems and using you know algorithmic governance to deal with corporate governance and how how to get to this last natural person I would say you know the other side of this of contract law which there is at least in the United States a you know great power to to deal with lots of things in this private law sphere which we can you know mechanize and automate very efficiently on the blockchain there's a public law sphere that we haven't gotten into which i think is also equally important so these are the kinds of rules that we as individuals in this in this ecosystem cannot contract away so you know what happens if there is an assassination contract you know launched on main that you know

who is responsible you know exactly the members you know if we are in if we are not in a limited liability context it could be potentially everybody who participated in the project so these things highlight the need for us to deal as a as a community and as an ecosystem with with the public law aspects and so I would say that we really need illegal Commons so we need to to you know experiment more with these kinds with we lock Dow with other kinds of mutual eyes cost-sharing insurance other vehicles that we can you know pull together in order for us to have these

common defense when things are you know attacking the ecosystem or things cannot be contracted away and so I think that that the more kind of steps that we can take proactively is community to deal with both the the legal compliance on the public law aspect as well and show show more steps in that direction I think that the better off the development of these legal frameworks will be yeah the assassination down don't start that oh come on let's talk about assassination let's um what about fiduciary duties I mean so for example with Malta are the members or like the person through or the seminar other fighters so I mean if if it's a

partnership then there may be in but I don't know it's all branch logic right so one assumption it may not be a partnership under US law particularly cuz it's it doesn't generate a profit that's a tricky question period so that answer is gonna be sadly it depends let's assume that it is though just for purposes of argument sake in that instance there would be fiduciary obligations unless there's a contract right that waives those and it's housed in some sort of limited like an LLC of some sort if it was housing an LLC you could waive all those fiduciary obligations you wouldn't have these questions about potential liability for partnership and you can kind of move forward with that fiduciary in the context of like try to make everybody's money worth more or like you sure like

you have extra responsibilities as a to your partners and other folks that are participating the organization yeah I mean the reality is like I feel I would feel personally responsible if the contract was to explode and all the money was to be lost I would have absolutely no way of covering for it there's 1.3 million dollars in the contract at this point and I wrote the code the last you know final to launch I wrote all the tests I've reviewed the audits so I did everything I could and like there was several hundred thousand dollars in the contract for several months before it received more money from EF and consensus and Joe and

Vitalik and crossed the million dollar mark am I you know I wouldn't really know how to deal with that kind of liability but I would hope that they wouldn't like press charges you know I have a further question two years how are you going to deal with sort of anonymity so some areas are like parts of the community would very much like to see that and they also some other structures so you have you can also have you know for example a mutual you can use a mutual or in the UK or

cooperative there are other structures but they are in my opinion or my knowledge they fall down on like allowing members to not be to be an ins in that space does anyone have a comment to that I can take that so I think a lot of this is what is the purpose of the day so really if you're trying to create something that is going to generate a profit in some capacity you're running into just a question around securities law so there's an argument at least in the US if you've got in an organization and all the members are participating

equally then the partnership interest or LLC interest or LP interest if it's organized in such a manner will not be considered to security if not then you run into the same questions we dealt with the ICO market etc and if you want to do this about board and if you want to have participants that have complied with securities laws there's ways to do that but it requires actually identifying who the person is at least to one party right so there needs to be some sort of accreditation check there may need to be some other compliance checks and that that creates an issue it's a trade off entity that does my kyc know so that's the question so you know really for purposes of securities thought the entity itself needs to do the verification it doesn't

necessarily need to signal that to all the other members so there there's a conceptual idea that you can have a basically and administer administer make sure that these requirements are taken care of without disclosing the identity to third parties obviously some of these more decentralized ID systems come out some of that some of those requirements could actually be stored and in those types of systems so like you know some future meta mask 3 box related system I think pseudonymity is important for for permissionless innovation but i do think that that there needs to be kind of a corresponding governance function as pseudo anonymity it becomes more prevalent because you get issues around

when when participants are pseudonymous anonymous then you can get into issues of kind of undue influence you know you have whales you have you know hidden actors and whatnot so having a really good governance layer on top of a suit of an anonymity I think is gonna be very important I mean and also just taking into account the reality of how you know dolls operate where there's you know discussions and forums there's a lot of you know off off chain relationships that are built you know at this conference like oh you know that need to be able to be accurately reflected and accounted for I think like you know I think it's a fallacy to assume that

people can operate completely anonymously because you know you're talking about a system literally based on reputation based on decision making like people make those choices you know based on the other people involved and like the choices that they all make and the risk that they take together over time so I think that if we are there's a need to separate anonymity from you know the Security's view of anonymity and also one that you know from in the day to day life of this dau as especially as is used for more of a you know governance mechanism among people then you know how do i how do we account for both and have language that addresses both so so in my mind the math anybody who is doing when they're thinking about launching a for example for profit dow

is what's the cost to the DAO of you know complying with regulations verse what's the cost of doing this completely anonymously and dark and the the the dark way of doing it is like everybody gets burner phones we have secret telegram groups there's no in-person meetings like you always have to use a VPN nobody really knows each other but that seems like a large amount of effort just to like you know buy things and generate profit it's like you're not trying to kill anyway you know this isn't this isn't like a terrorist cell or something it's just like a bunch of well-meaning people trying to generate a profit but like might not be accredited you know they might not have enough money to be able to do that and then

instead like the alternative is you have to kyc everybody and make sure everybody's an accredited investor and that's like really lame but probably the pragmatic approach given where we're at today are you suggesting that you know anyone that must mean is nefarious activity involved no what I mean is that that's an extreme lengths to go to for non nefarious activity it's yeah I think it's like a one idea one way that this entire ecosystem could develop you start with you know known dows word entities or parties were known and then you work

kind of backwards from that or you have a kind of an intermediary that kind of provides that shield of anonymity now you have to trust that intermediary to do the checks but and that party would not disclose that to other other members so that may be a compromise but there's a trade-off here and you know if you do want to do it with burner phones and all anonymous that's great but you're probably not gonna have the reach to fulfill whatever mission or you know either economic or social purpose that this entity or organization is trying to is trying to fulfill yeah just a groundless and practicality in Maalik Dow today in the grants making organization we also have accepted a few anonymous members so some of them are

anonymous to the rest of the Dow and maybe one or two members have vouched for them there's some I vouch for they identify themselves to me and then I fast for them and then one of them actually I have no idea who they are but I was like give me a reason to let you in and they just sent a transaction from a key that had received ether in the Genesis block and I was like all right fine that's good enough you know you're in and then we also have now launched the molecule which is a separate smart contract that allows anybody anonymously to donate to the pool and the pool will automatically do follow-ons and like that's the sort of other question where like you could have the Dow be identifiable and you have identified members but then like a

separate contractor springs up with no coordination with the down members so it just also gives money to the things that Dow gives what's the Dow supposed to do about it fun questions I we had to slide a desk but I wanted to open up the questions to the panel I just asked you guys here we're not that many so how about we just need a microphone probably too too if you have a questions just stand up and come up here then you know I can ask the question hi my name is kisses Kiva demeanor

I'm represent here the Swiss startup from souk the name of the named Furio and I'm super excited about the topic the competent of Dow and one year ago I already deploy in the fear of network the Dow I have zero volume and right now I'm preparing the Dow for our Swiss project and when we become you're speaking a lot about the legal I can say the dike or the ICO over do you know this I see over this dike or already working with the legal inside the Swiss

and you you many times speaking about this just-just-just the question is you are from consensus you are from agnosia you are the super big and the problem of the dow on my idea right now it's not enough volume not enough customers it's not about the legal actually it's about the customers not believe and customers don't read ii don't see the support from the big industry of the dow you say every time about molotov is just one present but we have the maker dow have

the big leagues now we have the abbeys we have another one now and the question is how you can you like a big guys be crypto support one thousand our projects where one hundred just projects good and nine hundred died but can you support many startup not 30k because i have the wallet i know thirty thousand or another one 30k yeah thank you my question can you please like a biggest like like

super big companies support the dow not just mall of doll can we do 100 so the model tower doesn't have a legal framework so we're speaking about that because a lot of the doubts don't have a legal framework right now let me so so me I would say the tooling to in order to create cows it's just the cost and expense is going down it's a lot like what we saw with the you know token standards etc some of the great work that amines done with Moloch and other projects we're starting to see you know some mechanisms and just the

smart contract design piece that we can begin to use and experiment with some of the tools that we've developed on the open mouth side can open up potentially these legal wrappers that they're available for other folks and the great work that other people are doing is is trying to really understand what the model should be right like what is the right way to structure this off the bat but if you have tools that that open that up so that anybody can generate let's assume that there may be some legal documents that are gonna be necessary in some format those could be automatically generated with some of the incredible store contract work that I mean in other doubt projects are there we can start building Dow factories right we can actually start imprinting them and we cannot just have it for large projects but also for small small

projects and that's the vision I think lots of folks are working towards and consensus and gnosis and people only support Moloch because Moloch is useful to them right it does something that they want in a way that they otherwise wouldn't be able to do themselves so like something like mehta cartel totally separate than Moloch awesome application-level experimentation you might like gnosis has just recently submitted 100 ether to bat to join us a member like you could see that playing itself over and becoming a template for future dowse who decide to take on some area of ecosystem development and then show progress and then receive support from EF consensus you know well meaning a theorem community members and in other communities as well but it starts with

one you don't get to a thousand without starting with one and then the next three and then the next ten and so forth I hope those answer your question hello um my name is Denison Bertram I have this question is kind of directed I guess that Aaron has also Amin in terms of like the legal risks of something like Moloch now for example being not incorporated because at the moment you know there's the idea that 'if is not a security so that sort of protects the members of Moloch Dow from securities law but then sort of puts fear anymore into the realm of a currency and one of the projects you had spoken about funding online is something like a and if you're a mixer to add to a non

annum innum e on the theorem blockchain but that at least to me starts to sound something that falls under Rico laws because now you have a group of organizations which are pooling their funds and they're supporting a tool which allows for money laundering which is specifically listed as something covered by Rico clause in the United States so I'm kind of wondering like where do we fall in terms of like the gray area of like not having legal protections at the moment if for example one of these mixers was labeled as an organization that you're funding it sounds like everyone has contributed tomalak da would actually be pooled together in that I'm gonna ask my lawyer

for help here yeah I would that's a great question I think the answer is there's lots of gray areas right when you pull together funds and you allocate it out either for profit or for a loss it's gonna create questions of corporate law it's gonna create other questions which could implicate other other laws potentially and that's why we have legal entities right they're not awful they're not evil they're just trying to limit the liability of members so that they can engage in activity and if something awful happens then you can handle it on kind of a case-by-case basis so you know from taking a step up I think the idea and something that would be great as an ecosystem to push for it's just creating safe spaces so people can experiment

with this they can experiment with these new structures they can experiment with new forms of government governance they can experiment with some of these incredible voting schemes and they can try to make the world a little bit better I mean that's what I think everybody for the most part is in here some people obviously want to make a little bit of a profit nothing wrong with that - and we need to just kind of sort that out but there are risks right there's gonna be risks in the US there's gonna be risks in Europe so we need to start thinking about it and coming up with holistic solutions that can be replicated so that we can begin to see this ecosystem flourish I wish mixer specifically like we branded them as like secret santa machines you know it's just like send money to your friend they

won't know who it came from but that would be really fun you know not like this is for money laundering because it's like more for like transactional privacy and privacy is a fundamental human right I would think and or I would prefer to live in a world where that was true and like everybody tries to bring the money laundering thing into the conversation but it's like I just want to be able to get eath to an address that doesn't have a trail without having to go through an exchange you know it's like I'm not laundry I pay my taxes like I'm doing all the stuff it's like yeah no it's not unless you are no it's just you we've been through this rodeo rodeo before right with with the internet so you know

it also allowed all of this activity that I hadn't been you know allowed before this open question of whether people were being compliant or not you know the dark side of the story of course is that we saw a recent realization of the internet because incumbents and default structures came into play default power dynamics so it's it's a good lesson for us as a community trying to get a second bite at the Apple to be really thoughtful about how we can be proactive and structuring our relationships our community our norms so that you know where that we can actually create something new instead of replicating the old structure on top of a decentralized architecture I mean one thing you also have to make sure is that

when you have an application there's at least one legal use for it so if you do actually build something that has only illegal users that's going to be a problem so I mean with the mixes what you still can argue is there are actually privacy concerns and what just Aaron and I mean just mentioned is there are legal uses for this which you can still argue but if you build something that's just illegal then that's another story and you can be reliable for that as a developer if it's just a legal structure we could talk after if you want yeah that's more time we over running a bit we're just going to take it depends on you guys you want to end

it but I think we should take one or two question yeah hey my name is Jesus that's loud hi my name is David I'm really curious to hear your guys thoughts on a conflicts of interest you know people that may work for different dows in the future their participation might be a legal issue their decision-making might be a legal issue and without having some sort of like check on their identity at some level just wanted to hear your thoughts so it's not a specific question but I'm curious about yeah conflict of interest law and how that might apply apply to dows in the future so conflicts of interest really get implicated by fiduciary obligations so

if your fiduciary you you you can't just think in in a very simplistic way you can't just think of your own best interest you have to think kind of in the interests of the entire group so you're kind of almost like a parent or it's kind of a quasi parental type of relationship very simplified I'm sure people can argue about that but just to conceptualize it yeah and then that may be one reason why you don't want to have anonymity right but I think at a high level and what SOPA was trying to get at well maybe we want to experiment with maybe there is a plateau for anonymous folks to get together and those conflicts of interests which we can think about and understand maybe they're not as profound as we initially thought or maybe there's other mechanisms that we can use to kind of

address them so I think I think these are questions that the laws dealt with a lot not surprisingly people on boards try to pocket something for themselves and there are certain rules and that are put in place to guard against that but at the same time they can be waived at least in the US with certain legal entities so yeah so if you want to waive your fiduciaries you should come to Aaron thank you so my question is now that it becomes easier to join the House as well as to start downs on different platforms so now there's really need like probably in this room many people want to start down or join those but

it's and they want to comply and they want to be compliant they don't want to take risks but they do want to innovate and to be part of innovations so what would be the healthy and proactive a way forward for them to not avoid interacting with this new technology and new collaboration networks but to be able to participate without taking too much of a risk is there some paths that you're familiar with right now or some steps that you recommend that they should take in order to again innovate while being compliant so one thing one thing you could do is definitely

incorporate yourself so you are people do this so you could just cooperate this often and as a participant in a dhow and that would give you some protection because then you know you still would need to pierce that corporate wave there and that's all possible without you having to form an LLC or make sure that the Dow you want to participate in actually is an LLC or has some legal framework or you are happy with you know so without having to really do too much legal analysis this would be one way of course is also expensive and not ideal I mean I think in long term we just need to change the laws and this is going to happen I mean we are working on this so I think it's last night but I do think

the tools are coming so really like I think 2020 not just 2019 but 2020 we're gonna continue to see a lot of innovation the great work and kind of structuring and thinking about how these should be structured I think we can reduce them down both on the agreement side and also on the smart contract side so that the costs are lower and at least I know from the open law side were committed to making this all open source and our automation tools are gonna be all freely available so hopefully that if we can get a model that can really lower the cost so it's as simple as basically you know NPM install Dao right done I think that's what I think we're all kind of working towards we're going to take one more questions and then

unfortunately have to wrap up because we're already over our time flood yes hello my name is Leo great talk we started actually experimenting with the dark concept so we deployed our Dao on Oregon stack and the question is do you think that actually for the Dow's legal framework is necessary meaning that if you use if you use like core is the law narrative meaning that is actually the smart contract obligations between participants are more deterministic than conventional law their word is actually

interpretations different courts which were not agree with each other and if you were implementing smart contract between the participants it's actually more deterministic so in in terms of dowel being kind of enforceable or legally compliant does it mean that there supposed to be some new way of controlling a new way I can chain courts or something like this like what klaris is doing in terms of that thank you so I think that's a great question also describes why you need contracts so in contracts you can the members of the organization can choose what they want

to use to resolve disputes and in most jurisdictions if that's the contract that's validly entered into it will be enforced by the courts and there's a very narrow window to challenge some of those decisions so it's conceivable you can kind of build this closed loop system which is what you're describing where people say hey I want to be governed by these smart contracts if there's a dispute I want to go into some sort of decentralized arbitration system but you need this wrapper around it if you don't have the wrapper you don't have the safe space if you can to start doing that and if there's a problem then the public sphere or where other forms of jurisdiction can start to creep and much more heavy good to add is that if you look at partnership law or LLC law most of the sets of rules is default rules so if you

forget to put something in your contract then this default rule comes to alive and applies to your organization and that's the beauty I think of partnership law and LLC law is that it's very very flexible to make your own choices but if you forget to make a choice there is a rule applying to you which [Music] but the thing is you know the problem is

that they will get to you because you live in this physical space so I mean as long as so as long as you there is someone involved in this I mean even if the court tries to do something against the smart contract they will get to you and you will be in the end at large to confirm conform unless you try to run away so even if you know we by builder like this justice system I mean you could just have an unchanged justice system and easy theorem jurisdiction but in the end I mean if a court wants to go after you it's just going to go after the developers it's going to go after whoever they can find it's like going to be the lowest hanging fruit so if you're not an add-on in your system and

something happens you can they can get to you because in this world it's still the legacy a world it's the law that counts or not what your smart contract says yeah one thing I'd add is just the risk of giving up sovereignty to it saying sorry time is over said okay we'll talk after thank you very much I mean the answer to this was really it was really lawyers it all depends [Applause] you