Legal & Governance Hub - Legal Compliance & Token Rights

Transcript

Good morning. Good morning champions. We're there early today. This is Husam here speaking. Um the founder of Entity ID. We help humans and AI agent co-ound companies. Today me pri and we will walk you through the evolutions of coordinations what we call it today legal entities what we call it today states what we call it form of form of coordinations we have now from dows and others throughout history from the very very primitive of it once upon a time 70,000 years ago 100 years ago There was

a tribe, >> bunch of apes sitting together and one of them come with a little trick. It was listen up. We going to save the food of today. We going to hunt and the food we have the best out of it. We want to take it and put it aside because the lion of other mountain he will take it at night and we will better we will be all better off tomorrow. Before that was all this trip they know each other when one steal then you know his cousin will hit him on his

head. But then one person he invented that trick that fiction is like something you will exchange in today. You will surrender the payoff of today of your hunt to the prospect of something bigger. And probably that was the very first coordinations we had in a lot of people say that would be religion, the very first religion and the very first fiction. And under that name we we start having a concept inside our head that allow us to coordinate together that has no tangible direct impact in us. We go throughout history then

probably the there are numbers that you're you're aware of that just like we having 150 people around you. You could uh count them. You could know them in your head. But more than that, it's you you need a way to coordinate with this uh like you need to know these people in a in a different way which is will become the tribe, the city, the nation. And so the very like when you're talking about a number bigger than 100 people 150 people that you recognize them they need we needed to identify these peoples that this guy he's a member of us you belong to to us the oldest we know about

ID was like this bead which is like a little shell I will put it in my head and that would allow other people to know that I belong to this clan I belong to this tribe. Right. throughout the the you you zoom in to the like we moving on the history to 20,000 years the clans that one of one of us that has that shell he kill or he injured somebody else and we all responded when one of this clan go and injured somebody from different clan They hold us all accountable to that.

That's probably the very first primitives of accountability. Back then it was we we're all a one entity think about it a DAO think about it um a company a nation but when one injur when when do something wrong to other entities then we respond on his behalf. that the thirst liability part 3,000 years ago we go to the Babylonians 3,00 the Hammurabis where it the merchant will give to his agent um mer the money a merchant and he has a receipt to it

the agent will go show the receipt if there is no receipt that he received this from the merchant then there was no claim for to the picilium at um the Greek age which is pretty much carrying the same concept where I'm I'm the business person I will give to my agent a money then he go make money outside I will be held accountable to the capacity I gave him I gave him $1,000 and then you know pre could hold me accountable to that $1,000 there If we look on this all together you find all this form of coordinations we had a

very similar structure for it. There is constituent like people us together here as constituent. There is constitution which is is like how we're dealing with and there is announcement and this first three you think let's think about United State we the people that's the first line inside the United States constitutions the founders is the constituent the constitution is just like what we meant to do and the anointment the third part which is hey we make it public if If you think about marriage 10,000 years ago, pre is married, but 10,000 years ago, I'll hold

her hand and just like she's my wife. That would be constituent. Constitution, which is like the merid or the explicit or implicit and annoment companies pretty much the same founders, constitution which is like what we meant to do, what we will aggregate value, what we are programmed to do. And then announcement very very recently like 150 years ago we start doing recog recognition which is by registering on the state actually until 2010 in Brazil.

This first three part is enough for your company. You're you're you're actually operating in society in capacity of company just by having a paper me and pre we signed together saying that we are a company Sam pre company and we're operating in society paying taxes doing everything why we are we're on that the the whole value of us being here today is introducing our hub, the legal hub and like what's what we're working about.

We're trying to connect the point from how these coordinations the subject we're breaking our head around throughout these days that throughout today tomorrow after like at our legal hub myself pre we and all the community hub members these big questions are not just today this is uh thousands of years ago and we will try to use that for we try to use the what we learn from the past in seeing today and looking into the future. What we what we know looking back thousands of years throughout all this initiative of formations of entities that us as a society to operate properly. Anything that has a tangible

impact on the world that has perpetual existent which is a company that we formed together now and it has perpetual existent that we could die but the company keep operating right and this as we we um tangible impact which is like we can make somebody rich or poor we can kill someone. These all like has these two criteria if you take it automatic uh to the atomic levels which is has tangible impact perpetual existence they all go to the same like operate on society on the same way for for all of us.

Now zooming into the actually what we're working on on the hub on these days you will notice when we're talking here about like constituent constitution there you have two scales you have the ownership the owner of a company us can be annoyanced we could everybody know here that we are let's say a family institute which is annoyanced or we are a company we annoy the owner Then how we're doing the operation which is the constitutions could be private or public.

If you look into your LLC for example, it is yeah the owner on record are 95% worldwide they are known then their operation are private nobody know how much money we're making how much we paid for this merchant going to NGO for instance their operation are public you know like that your audit their record and their constituent which is like the the people behind are public al although you go to your DAO and then you will notice that well we don't know the constituent they are private but the operation are public

shell company the most hated for us as a society regulator hated because we can't coordinate properly if you don't know the owner and that's on the worst part which is the owner are anonymous operation are private to a point hard to to keep and it's dangerous for society. Imagine our ships that we got now. I got poisoned eating the ships and we don't know how they are.

There's too many things in my hand there. We don't know. I I I I eat the ships. I got poisoned and then we we can't tell like who's behind this company. How we will sue or impose liability on someone if that uh that's the case. This ships has labels and has regulations way more AI agent the most dangerous part we have today to jump through that's that's pretty much where I am today we I will hand the mic to my my colleague Pri here the emerge what we the emerge of a new form we're calling the super entities the

agent entities which is go back and has this constituent constitution annoyanced then after that it would be modular or like modular like it it has the compliance by modularity deployed that go that go back to I will hand the mic now to pre and she will take it from here introducing what's on the dows and the token rights thank you pri Good morning. Uh, welcome everyone. Um, I'm Pri and I am handling the token governance uh, and DAO track at the legal and governance hub. Uh, Sam has

given us a brief history of time in 12 minutes and I want to really get to where we are right now as far as organizations are concerned. where he spoke about entities being at the intersection of an impact and a perpetual existence. Most of these forms are available right now to us offchain. Um we have constitutions like LLPs and LLC's. Um these are pretty much standard format anywhere in the world. um cooperatives which I would say are the the closest uh uh constitutions to Dows. They exist in

a lot of countries and they have made a lot of impact uh especially in poorer countries uh where you have rural cooperatives that pull people's uh efforts together and reap the rewards uh themselves. This unfortunately is not really available on chain and whatever experiments happened with Dows on chain were randomly and ruthlessly gone after by uh you know the regulatory authorities and that has hampered innovation on that front. So the what we know about Dows right now and whatever is the overlap of Dows with

law has always been from the point of view of a prosecutor and a defender and so far has not been from a point of view of hey this seems like a legitimate organization that wants to do some uh activities for which they need to get together. So let's figure out how they could do this lawfully. That is right now hopefully the conversations that are happening in the corridors of power. Um there are already um you know uh entities like DAO LLC's and Duna regulations from in the US that have come up that are allowing these kind of decentralized organizations to

come together. But unfortunately what has been the case with them also is that whereas DAO LLC's allow you to uh share profits together it's basically a decentralized venture fund but the problem there is that you need to have accredited investors. So that's closed off again to the majority of uh people. It's not uh the ownership or access is not completely decentralized or anyone can be part of it. It's not open. It's very closed door. Uh with the Duna, it's the other way around. Uh the Duna regulations allow you to uh they recognize onchain governance and they'll

allow you to have uh the the access open to everyone. But in that case, whatever is the profits that are generated by the protocol have to go back to the treasury. So it is locked. The treasury is locked for the people that are contributing towards it. So you see, we're stuck between a rock and a hard place because none of this is really a solution for anybody that would want to engage uh you know in a DAO setting unless you are doing impact or charity funding. that seems to be the only use case where you know Dows seem to have found a fit. But even there there have

there are issues uh local with local regulations as we have seen with uh you know uh whether it was COVID funding in India which Vitalik you know uh funded with his uh shea uh selloff and there is uh even recently issues with people wanting to donate crypto for the Nepal floods. it was difficult to get things offramped within the country. So the solutions don't really capture what Dows want to do especially they don't capture it in the way that we can

organize ourselves uh offchain. So what basically does an onchain native entity? You could call that a DAO or you could call that anything you want but if it is native to onchain you would want that people users holders contributors are all coming together contributing towards the various aspects of Dows. Uh there are councils which are not of perpetual existence. The DAO could be of a perpetual existence but not the the members of you know the governing councils or the stewards uh that take this forward. Um ownership rights are

you know properly mentioned written down clearly. There is transparency on the terms of what the contract or what the token does. Treasury is visible and open to all. Uh Sam mentioned that the most hated companies are shell companies because they are private and we don't know the owners are anonymous. With that respect, Dows at least fall under a public uh publicly known uh you know enterprise even though the owners would be anonymous or pseudo anonymous. So all of these things are really important for a DAO or for any onchain entity that there is openness there is uh there is a

token that really aligns all of the uh contributors together everyone's uh contribution is measured is a you know you're able to quantify it and qualify it these are all the things that would help Dows to achieve objectives because honestly you cannot achieve decentralized objectives without decentralized organizations. So I'd like to ask to come and take this forward.

>> I have my >> Hello. Hi. So I'm Wayi from Claros. we do decentralized dispute resolution. So I'm going to explain what are the um onchain options when it comes to arbitration where courts without countries stand and also explain a little bit about the future of the agentic commerce. So show us that arbitration came before courts and as of now today the judge could be crowdsourced by a bunch of jurors which um curs is an example of how arbitration could be ruled on chain and it's been

doing it since 2018 where we're basically the mechanism behind it is called shilling point or in economic terms the prisoners dilemma. is basically how a bunch of strangers would arrive at the same honest answer without communicating with each other because they expect the other person to do so with a reasonable sound mind. So jurors are drawn at random the state tokens review the evidence and cast their votes and if you vote with the consensus which is the majority you earn and if you vote against it you lose part of your stake.

So everyone's best move essentially is to vote honestly and to counter cyber resistance there's um appeal mechanisms and also it helps to avoid will manipulations and thousands of disputes have been settled by code using this way and as of right now the real starting to recognize it there's been a few past cases whereas in Mexico in 2020 there was a case where it was being ruled on chain and the parties decided to bring it forward to a court and the Mexican court did upheld their decision and um in UK's case it recently published a digital dispute rules and in India's context there is this niti aong

nationwide policy for online dispute resolution which is currently the largest ODR market on earth and as you can see countries like quotes without countries exist the question is just how enforcement are being ruled and Here are the challenges that's currently facing courts on chain. First, enforcement. I would say um rulings only matters when someone can actually enforce things. And as of right now, under the New York convention, national courts can enforce um arbitration awards provided that there's a legal seat and the parties could be identified. So, but when it comes to onchain, you often have neither because everything is completely

decentralized. And when it comes to incentives, there's always the question of bribery, collusion, and apathy. And Claros provides an answer for this, which is appeal. Because whenever someone appeals, um, a larger bunch of jurors get drawn. So it makes it more expensive and costly and eventually the outcome would cost more than what it's worth to actually manipulate the court. Third one, evidence. So on blockchain everything's verifiable and onchain but um real disputes involve private data and newer system allows jurors to reveal private evidences. Fourth standing as Sam has mentioned when there's no entity there's no defendant and now with the

whole development of AI core with agents doing transactions with each other the big question is how things are being governed when agents provided a wrong transaction or when the deals go bad. So in in this September there has been a project called claw bank which ran an experiment. They allow two agents to sign a contract where each lock a deposit in escrow and when they disputed a pen of AI jurors decided which party should be the correct one. And so essentially it's a machine speed court for machine speed commerce. But the question is if these rulings should be legitimate. It depends on the country. France for example, it requires a human arbitrator and it really depends

what kind of LMS or what kind of AI jurors are being used to judge this case because um if you put 99 disputes to a bunch of different models in different modes, it essentially gives you different decisions. So picking the models essentially means picking a judge. So likely in the future um AI jurers or LMS will be used for speed but when more complex reasoning is required a human would still be in the loop. So the code executes the rules but the law would need to decide who answers for them.

So um if you zoom out AI raised much bigger questions which here are the um open questions for us to ponder. First personhood can an agent be a legal person? Some US states say no, but like other states like Argentina have been really actively pushing it liability. The EU has have um product liability in place that reaches software and identity. when it comes to standards like ERC 80004 um that tracks who authorize what an agent did KYAS the upside who owns what an agent earns the AI judges fast but the question is who should answer for the ruling and also public infrastructure which we could learn from India's case where they built like digital DIPs and payments public

rules for over a billion people so perhaps registries and courts could really learn from that so yeah as of right now we're mainly just touching the surfaces for a lot of topics because we have limited time but much more of the nits and bits will be discussed across the agendas for the legal and governance hub. So thank you