Unchained - Can a DAO Go to Court? According to Two DAO Legal Experts… Probably - Ep.254

Episode Date: July 13, 2021

Aaron Wright, co-founder of OpenLaw and Professor at Cardozo Law, and Ross Campbell, SushiSwap core developer and LexDAO contributor, discuss the latest breakthroughs and legal implications in the burgeoning world of DAOs. Show highlights: how Aaron and Ross fell down the crypto rabbit hole whether a DAO, like Curve, could sue to protect its IP when a governance token might be considered a security who owns the copyright to a DAO how SushiSwap handles its open-source licenses why Ross views Uniswap’s business license as a good thing what an DAO is and how the idea stems from Bitcoin how Wyoming’s DAO law works what makes a Wyoming DAO different from a DAO registered as a Delaware LLC how an algorithmically managed DAO might work in the future why Aaron thinks a DAO should not be allowed to be manager-managed why wrapping a DAO into an LLC could be advantageous the difference between private and public ordering Thank you to our sponsors! Crypto.com: https://crypto.onelink.me/J9Lg/unchainedcardearnfeb2 Tezos: https://tezos.com/discover?utm_source=laura-shin&utm_medium=podcast-sponsorship-unconfirmed&utm_campaign=tezos-campaign&utm_content=hero Conjure: https://conjure.finance    Episode Links   People Ross Campbell Social Twitter: https://twitter.com/r_ross_campbell Medium: https://medium.com/@rosscampbell9  Career OpenLaw: https://www.openlaw.io/ LexDAO: https://lexdao.substack.com/people/867851-ross-campbell SushiSwap: https://app.sushi.com/swap    Aaron Wright Social Twitter: https://twitter.com/awrigh01 Career OpenLaw: https://www.openlaw.io/ Cardozo Law: https://cardozo.yu.edu/directory/aaron-wright Content The Rise of DAOs: https://stanford-jblp.pubpub.org/pub/rise-of-daos/release/1   DAO Information Basics: https://ethereum.org/en/dao/  https://1729.com/daos  Kain Warwick: DAO First Capital Formation https://blog.synthetix.io/dao-first-capital-formation/  https://twitter.com/kaiynne/status/1287961077041393664 DAO Stats https://deepdao.io/  Wyoming: https://www.wyoleg.gov/2021/Engross/SF0038.pdf https://lexnode.substack.com/p/wyomings-legal-dao-saster https://twitter.com/prestonjbyrne/status/1370002015644962816?s=20 https://www.coindesk.com/wyoming-dao-llc-law-passed  https://twitter.com/lex_node/status/1407668599205027843?s=20 https://decrypt.co/75222/americas-first-dao-approved-in-wyoming  Delaware: https://ricardian.gitbook.io/ricardian-llc/is-ricardian-legal  Curve IP:  https://gov.curve.fi/t/cip-xx-enforce-curves-ip-rights/1890 https://www.theblockcrypto.com/post/108561/the-first-dao-lawsuit-proposal-asks-if-curve-should-protect-its-ip https://www.coindesk.com/curve-dao-contemplates-its-intellectual-property  https://twitter.com/SamMiorelli/status/1405141398479847426 https://twitter.com/lex_node/status/1405251782574497799  Uniswap V3 https://www.coindesk.com/uniswap-v3-introduces-new-license-to-spoil-future-sushis  https://twitter.com/jchervinsky/status/1374738548239314951 https://defiprime.com/uniswap-v3-explained Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi, everyone. Welcome to Unchained, your no-hype resource for all things crypto. I'm your host, Laura Shin, a journalist with over two decades of experience. I started covering crypto six years ago, and as a senior editor at Forbes was the first mainstream media reporter to cover cryptocurrency full-time. This is the July 13th, 2021 episode of Unchained. My book, The Cryptopians, Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency craze is available for pre-order on Amazon, Barnes Noble, or any of your favorite bookstores, go to Bitley-S-C-T-L-Y-S-C-R-Y-T-O-P-I-N-S, and pre-order today. Conjure brings any asset you want onto Ethereum by allowing for users to create synthetic assets which track other markets. With zero-interest loans and unlimited assets, it's helping defy to consume tradfi. That's C-O-N-J-U-R-E. Finance. Check it out. The crypto.com app lets you buy, earn, and spend crypto all in one place. Earn up to 8.5% interest on your Bitcoin and 14% interest on your stable coins.

Paid weekly. Download the crypto.com app and get $25 with the code Laura. The link is in the description. Tasos is smart money. That's redefining what it means to hold an exchange value in a digitally connected world. Discover how people are reimagining the world around you on Tezos. Today's topic is legal issues with DAO's. Here to discuss are Aaron Wright, co-founder of Open Law and professor at Cardozo Law, and Ross Campbell, core developer at Sushi Swap and contributor at Lex Dow and Open Law. Welcome, Aaron and Ross.

Happy to be here. Yeah, thanks so much for having us, Laura. Excited to dig in. Before we dive into this very intellectually meaty episode, that has actually kind of been a flashpoint for the crypto community over the last year, so let's start by having you each describe your experience in crypto and with crypto legal issues. Erin, why don't we start with you? Sure. So thanks again, Laura. I'm a professor of Cardozo Law. I fell down the Bitcoin rabbit hole

very early about 2011. Have a background in law and technology. Before joining Cardozo's faculty, I started a company and sold it to a for-profit sister project to Wikipedia called Wikia. So fell in love with open source technology, fell in love with Bitcoin, was fortunate enough to play a small role helping to launch Ethereum. I co-authored a book on blockchain law and policy that Harvard published about a year or so ago. And then I've been building out some tech along with Ross and others called Open Law, which is trying to kind of bridge the gap between digital assets and traditional legal contracts, and that's called Open Law.

So that's a bit of my background. And Ross, what about you? Sure. So I started in crypto coming from, I guess, a corporate legal background. My first real job out of school was as an associate attorney with a law firm called Andrews Kerth, now on Andrews Kirk after two mergers. That's a whole other story. But in terms of the canonical crypto rabbit hole, I think it started with me studying risk around ransomware attacks. And then I learned about Ethereum smart contracts. And then from that point, I actually kind of fell into open. law, worked for consensus for, I think, about two years. On that project, I had the opportunity

to also work with Aaron on the launch of the LOW, which I hope we cover on this, you know, call. And generally, you know, just thinking about how smart contracts can be used for company formation to improve deal flow and transactional efficiency. And then more recently, kind of working with defy contracts with Sushi Swap as a solidity developer. So that's kind of my journey. It's been kind of let alone the nose through curiosity and probably overwhelming professional FOMO. It's very interesting work, I'd say. Great. So, yeah, why don't we start with maybe one of the more recent what I would call kerfuffles in crypto. And this one involved Curve, last month in the governance forum for Curve, which is an automated market maker. There was a governance member

who asked whether the Defi project should try to enforce its intellectual property in court. And it specifically mentioned that Saddle Finance had been accused of copying Curves code wholesale. Although, by the way, some people did point out to me that I think Saddle's code is in a different language, so it's not like directly copy pasted. And in the Curve forum, 67% of the 64 poll respondent said that they thought Curves should assert its IP rights against infringers. So what do you guys think of this proposal? Erin, I know you have a IP background. Do you want to lead on this? Yeah, sure. I mean, I think all these issues as lawyers or other folks that have been in and around the crypto space

have kind of prophesized for a while, they eventually come to Roost, right? So issues related to intellectual property, issues related to securities laws, issues related to liability, issues related to enforcing rights, it's not surprising that as we see crypto continue to mature and continue to push into the mainstream, that these are beginning to come to fruition. Related to the claim at hand, this is a vexing problem even outside of the crypto ecosystem for all open source, right? If you have open source code and other people use it, they have the ability to create forks, to create modifications, and depending on the underlying license, that will really dictate whether or not they had the right inability to do that.

What I think makes this story the most interesting, though, is that it kind of goes to this route about DAOs and what curve is as an organization, right? And it's a bit inchoate right now as to what curve is, like legally. So they call themselves a DAO, depending on which jurisdiction looks at it, let's say the U.S. or possibly another jurisdiction, it's probably going to be considered a partnership of some sort. And partnerships can enforce. their rights. So if Curve wanted to do this, not advocating that they, that they should or not, you know, it opens up these interesting questions about how these online groups that likely will be considered partnerships in some sort of way can enforce their rights. And there's

the second question of whether they should enforce their rights, given that it's an open source project, right? Maybe what Saddle is doing is fair game or many folks that really believe in open source technology would consider that to be fair game. You know, those are questions that are above kind of my ability to comment on, but I do think that they raise some really interesting challenges. And it's not limited to curve, right? We've seen this also open source licensing issues, begin to emerge in uniswap ecosystem.

We've also seen kind of Dow related legal questions emerge in the maker ecosystem. So some of these questions are really coming to fruition as the ecosystem continues to mature. Yeah, I guess if I could append to that, I agree with Aaron that using, you know, legal tools like IP enforcement rights will force these DAOs or these right now sort of loosely coordinating groups to actually choose a legal identity. I assume that there is some sort of centralized agrib developers. They might even have,

you know, a legal name, you know, maybe curve labs. It might become more apparent how things are centralized in their system if they choose to use legal tools like enforcement rights. So it feels premature for a lot of these organizations, in my opinion, to, make those hard choices, but they will be forced to. And the least we can do as sort of crypto lawyers and people in the spaces to provide templates to make that a bit easier, more predictable. You know, I don't know if this is a good segue into Wyoming Dow and sort of statutory frameworks for having, you know, code-based organizations and rights enforcements that are kind of typical to, you know, traditional companies. But I think we are trying to make it a bit easier. Once

Dow's face these questions, they want to avail themselves of legal rights and opt-chain. enforcement. What is the least intrusive way to do that? That's still, you know, cypherpunk. So definitely something we're watching. But I think things are a bit better now in that I do think that they can achieve a legal identity and not lose their sense of an open organization. But yeah, culturally, I think it's also very problematic in that DAO's attract talent by being, you know, open source champions. They're very permeable, you know, merit-based. You can rise in the ranks at Dow, by the work you do. And I think a lot of people that want to contribute to Dow's and kind of grow this economy on Ethereum,

they are wary about people being protective about code because that can constrain kind of the growth of this system. So it's very political as well. So I think I can see how Curve might want to kick this to the community and see how they want to proceed on legal rights. We see that with Uniswap as well. And that seems like a way to have it both ways, that you can still monetize code and support talented coders, but you can also allow people to make it easier to use if there's like

community spirit there. So that's something I'm watching as well. Do we want to talk about, you know, Wyoming, the context here and maybe, you know, not just, not just yet because there's so much more I want to ask about curve. Yeah, sure. But I first of all, wanted to ask so, you know, So it's not clear exactly what entity would sue, but let's say that curve really was a true Dow, then is it possible for a Dow to sue? Like, can a Dow own IP? Yeah, I mean, I think, you know, if a group of folks, and just to caveat it, I think a lot of this discussion will be very U.S.-centric,

and there may be different jurisdictions that view it differently. it gets too complex, so just for simplicity's sake and Rase. I know your roots, at least legally, are in the U.S., but maybe we can constrain it to hear. But from a U.S. vantage point, Curve and possibly many other DAOs, presumably would be considered a partnership of some sort if they're viewed as a group of people

that are working together to make some sort of profit. So I guess there's a question as to whether or not, you know, all the KERP token holders are trying to make a profit, let's just assume that they are. At that point, they'd be considered an implied partnership. And partnerships are a recognized entity, and partnerships can avail themselves of courts. So it's conceivable,

assuming somebody had the ability and agency to bring a cause of action, that curve could walk into a U.S. court and assert that. They probably wouldn't, I don't know a ton about the saddle team. I don't know if they're in the U.S., right? There's lots of, like, nitty-gritty questions that lawyers are that to sort through about where to bring a cause of action, whether to bring a cause of action, whether they could enforce.

But assuming that those issues were sorted out, I don't see conceptually why they wouldn't be able to enforce their rights if they so chose. Well, if Curve then went that route, then would that make CRV or the CRV, its governance token, a security? So that's an open question. You know, this is one of the vexing questions around Dow's and some of the legal issues is what is an interest in, a DAO itself. And folks that have been around the crypto ecosystem for quite some time, this will bring back memories of questions about what a utility token was, are they securities, or they're not securities, which are really fun conversations. I think we've gotten some clarity, not as much clarity as many folks would hope. And when it comes to DAOs, I think the answer is going to be, again, not surprisingly, very loyally, it's going to depend, right?

there's some interest in DAOs that likely would not be considered securities. They'd be considered either commodities or not really even representing potentially, you know, some sort of right in an entity. And then I think depending on the structure of what the folks want to do together, and to the extent that there's fees that are being distributed or some profits that are being distributed or other forms of distributions, those interests are likely going to be considered securities. And there's a whole line of cases in the U.S. that courts will lean back on involving partnerships and limited liability companies.

And interest in partnership and limited liability companies can be considered either as securities or not securities, depending on whether or not there's folks that are in charge. If there's a group of managers that are in charge, LLC and partnership interests are more likely to be considered securities. If there is not a manager in charge, then they're less likely to be considered securities. but frankly, it's a little bit of a gray area. It's something that courts have sporadically addressed in narrow contexts. And these are the types of questions that I think we'll start to see navigate through U.S. regulatory bodies, foreign regulatory bodies, and ultimately courts, just like we did with some of the token-related questions from, you know,

the Housian days of token sales in 2016 to 18. Okay. But actually, from what you said earlier where you said, you know, when I asked you if it's possible for a Dow to sue, you said, well, if they're a partnership and they, I can't remember how you phrased it, but essentially, you know, if they, like the goal of that is to make a profit, then that it's, then it does sound like then the tokens associated with curve would be a security, right? It again, depends, right?

It's going to depend on, the partnerships can make a profit, right? So if you have a partnership interest that, where there's no manager, there's folks that are actively participating, the information is freely available, then there's arguments that can be made that those interests are not securities. That would be drawing on some of this case law and other folks that have looked at characterizing and classifying partnership interests. If there's a manager, if there's a board, if there's more hierarchy, then it's more likely to be considered a security. The reason for that is the kind of core fundamental purpose of securities laws. It's about narrowing information asymmetries. Orr, if you were a manager of a company,

you're going to have all this information that you may not be sharing with other folks that are stakeholders or investors or participants in that company. And that's what securities laws fundamentally are trying to target, you know, how to get information that's being held closely that could be important to other folks more widely available. So flatter structures, I think, have a better shot. But these are very, unfortunately, like, nuanced questions. And that's going to drive developers mad. But that's in many ways kind of how the U.S. approach.

to these questions has historically been applied, and I imagine will continue to be applied for the foreseeable future. And Ross, you were going to add something. Oh, yeah. I was going to kind of go to this issue of management and, you know, what is actually providing value to token holders? If in the curve context, we see licensing and the defense of the license by a sort of core team, you know, or centralized entity, you know, that value creation by defending the license could be suggestive of, you know, securities. And I obviously don't want to give a legal opinion on a podcast, but these are the trends we see in that if you hold an instrument and it's expected to increase in value because of the efforts of others, that's the fact pattern that applies to tokens like

any other instrument or, you know, a ticket to an Orange Grove or something. So these legal tools, like I said, can pose these sort of like related legal problems in that you are identifying value streams that almost necessarily have to be centralized. We are seeing, like I said, cool examples where the permissibility of a license and, you know, grants of a license are put to a community vote. And in that sense, you know, management of that sort of value source, the IP is distributed in a more flat way. And I think that is helpful for teams to consider, you know, not trying to retain the crown jewels and a core team, because that can be suggestive of management. Another kind of interesting aspect of the law is that,

you know, it gives and it takes, right? You know, there's always extra considerations. And this is why the law is becoming a robust profession, probably. There's unanswerable questions that are context-driven, right? I know. When I was researching this, I was like, wow, this is quite the rabbit hole within the rabbit hole. Well, you know, one other thing I wanted to ask about was at the top of the contract source code for Curve, it says license, copyright, curve.fI, 2021, all rights reserved. So who is it that has that copyright? Is that the Dow or is it like maybe some kind of LLC that represents the company behind curve or is it individual devs or what does that say to you?

And is that a typical thing for a defy project to do? I mean, you're in finance. The name of their token, I think, is yearn. It's a hyperlink. I think that is a way to kick the can on responsibility in a way, you know, from the contracted employer to, you know, maybe people. that are running a website and a product. But I think, you know, good practices, if there are legal entities associated with these things,

is to put them, you know, in the privacy disclosures on the website itself. You know, those are the rabbit holes that they're kind of forcing us to follow. They determine, you know, if they say this is licensed and has restrictions, you know, who's going to enforce that? It seems like they didn't quite have a name. They wanted to associate at that point. But yeah, yeah, I do think that's typical in defy that they don't want to think too much, you know, beforehand about the legal structure they want to apply.

They just know that they want to sort of plant that flag. So, yeah, there is a bit of, you know, digging involved in Defi, I think we're seeing. But the copyright, yeah, more on the copyright owner question. So in the U.S. again, person or groups of persons, right, you can have more than one person that creates IP. The folks that create it, and once it's fixed in a tangible form, which would mean like saved on a computer. and there's copyrightable work, which generally means something that has a modicum of creativity and is not functional nature,

that group of folks would be the copyright holders. With the license that you put together, assuming that all those initial creators are kind of captured by curve.5, that would kind of vary those initial copyrights. So, you know, these are, you know, copyright is a very complex part of the law as well. So there's lots of questions that kind of need to be answered, but that's a general framework.

So I'm assuming there was some group of software developers, either one or more, that wrote the initial smart contracts and related software that helps power a curve. And those folks would own the copyright. They may have varied it with an open source license of some sort, which give people the rights to use it. And they would have to assess based on their ownership rights and that license whether or not they have a cause of action. that may be with the Dow itself. To the extent that the Tao has some rights in it, it could be with those individual developers to the extent that they retain some rights.

Those are complex questions that would have to get sorted through by competent counsel. And yeah, I mean, one other thing about this, just to go back to the copy rate and the IP issues here, I saw somebody tweeting that if Curve were to try to go to court

to enforce these, that curve should then also be, subject to money transmission laws. And those are, you know, that requires projects or companies to go to every state to get a license. What's your sense of whether or not that's correct? I mean, that's a whole other body of law, right? But to the extent that they want to be recognized or avail themselves to certain courts, you know, then it can open up a whole other can of worms. So even though they may have the right to do that, they may choose not to for other reasons, possibly reasons related to what we were discussing before. You know, what are the

interest in curve and what should they be classified as, you know, questions related to AML, know your customer. That's a very big issue when it comes to defy. It's a very big issue when it comes to Crypto more generally. We're seeing, you know, Fadov get more involved in our beginning to kind of meander towards clarifying rules related to that. It's a, it's just a huge can of worms. So legal issues with DOWS is, you know, a rabbit hole. of a rabbit hole like you described before, but there's plenty of other rabbit holes that get opened up when you begin to dig into some of these projects and issues that they face. And Ross, did you want anything?

Oh, sure. Yeah, I think kind of what the legal system is still trying to get acquainted with is this idea of, you know, money robots and, you know, that developers can create an almost fully functioning exchange or market and then kind of leave it and not have any overhead and just walk away. You know, who is transmitting value in that case, you know, code or is it the LP providers who are, you know, facilitating those markets? It's so complicated that it feels really, you know, like in need-rick reaction, just say like the people who have docks themselves, usually developers, like we should just make them get all these licenses. I know this might, this is more an aspirational notion, you know, versus legal reality, which, you know, has precedent.

is very structured and requires research based on state by state. But kind of more of the point is, is that I think that the legal system is, you know, maybe trying to, you know, move too quickly in assumptions about responsibility and control. And that kind of goes to this issue of not understanding how this technology really functions for markets. So, yeah, I would be reluctant to make any sort of firm opinion about money transmitter license requirements. But that seems like a misplaced regime. team, especially for what we see happening in the space with curve and AMMs. And Ross, actually, I just wanted to ask for Sushi, how do they do a copyright, if any,

or any licensing at all for the project? That's an interesting issue, of course. For Sushi Swap, at least what we consider core contracts, you know, the Sushi Swap organization on GitHub, that's all MIT and more recently we're using GPL licenses. So it's open source, you know, free to modify. But we do have outside teams that we've funded with grants that have used licenses on their code. And that has been interesting in terms of unifying this idea of Sushi swap as a completely open source exchange. You know, you know, Bentobox is a product that we're using, you know, for our lending contracts.

And there is some licensing involved with that. So that's more the Sushi swap perspective of like you can have a plan, you know, among a developer group to open source the code. and see where that goes. But sometimes, you know, you can't take, you can't put the toothpaste back in the tube if something's already licensed in some ways or you don't necessarily hold the rights there. So yeah, it can be difficult in expanding rapidly to coordinate the legal regime, which I'm sure anyone appreciates in a high growth startup, regardless of it being blockchain related. But we have good outside counsel. Okay. Yeah. Let's now also talk about uniswap because, and it's, this directly relates to what happened with Sushi Swap. Back in March, when Uniswap launched its V3, it launched it under what's called a business source license. Can you explain what that means and why this caused a little bit of a stir in the crypto community? Yeah. So, I mean, Uniswap released V3 under the business licensing.

The immediate reaction is, you know, what are you worried about in terms of releasing? Well, just, Ross, can you just explain different? define what that is for people who maybe don't know. Yeah, totally. So it's like commercial with a plan to open source. So in their system, I believe it's, you know, a two-year time period before it automatically converts to GPL and then anyone can use and modify it. But right now, if I want to use any of the license code from Uniswap v3, I would have to get a express permission from them or, you know, we'd have to have a commercial license. So, um, Yeah, it's a blend of open source and commercial, I guess.

That's helpful. And Aaron, you're actually a professor for these things. So you probably have a better, more scholarly way to describe this. But for me, it's open source, but with an immediate sort of pause. Yeah, I think it's super fascinating. And I think it really kind of hits at this core that many developers are trying to balance when it comes to, you know, crypto, defy or blockchain projects, right? They want at some point for the code to be managed by a whole bunch of stakeholders.

I personally believe that's a very healthy exercise to have a whole bunch of different folks that are maintaining it, managing it. And I do strongly believe in the open source ethos. But there's windows where that's difficult to do, right? You need to have a dedicated team that's focused on it to push it forward to make sure the quality is high enough and to make sure that you have the opportunity to test out the market. And so I think Uniswap was trying to blend those two competing ideas together and did a pretty good job doing that. Obviously, with the looming fear of a roving band of sushi fanatics that may decide to take some of that innovation and apply it into their ecosystem too.

So, you know, I think it's great that, and I don't know who on the Uniswap team, if there's their outside council or their internal counsel. but I do think from my vantage point, it's wonderful to see that form of innovation. I know that made bristle with some folks that are true open source believers and a little bit more religious in their approach. But I think it's a fair tradeoff overall. We want to incentivize teams to develop new things, to work on it, to feel incentivized to do that. Well, at the same time, knowing that as it's mature, once people feel secure about it, that stakeholders or other folks that are part of it, that can begin to support.

and make sure that it's operating and developing in a productive way. Yeah, and just to be totally clear for people who missed it, this is probably a direct response to what happened last kind of, what was it, summer slash late summer slash early fall, when Sushi Swap basically forked the code and then launched a liquidity mining scheme that involved Uniswap to get users from Uniswap over to Sushi Swap. And so to my mind, this is pretty much their way of being like, let's make sure that doesn't happen again.

But Ross, since you are part of the sushi team, I just wondered, you know, what's your reaction to this move? So, yeah, to clarify, you know, my earlier comments were meant as criticism, but more to maybe help explain the reactions of the crypto industry at whole. I know there was a lot of criticism to licensing for any B3. But personally, like, I'm agnostic to what is going to make Ethereum development sustainable and secure over the next decade. It's a very, very young industry. And there's clearly different stakes at play with, like, open source code that also controls like financial assets.

So, you know, if UNISWOP wants to try and innovate and have it both ways, I don't necessarily want to discourage that. I want to have more examples in the wild. You know, more boats in the water to test things out and see what developers really congregate around. And it's an open market. You know, some people, you know, see that as moat and that's respectable for their tokenized community. Others might see that as a sort of challenge to growing Ethereum as a whole. But like I said, it's not clear to me, you know, what approach Wednesday day or provides the most value to, like, you know, Dex users.

So yeah, I definitely, maybe that's a lawyerly answer in about itself. I don't know, having it both ways. But I respect that they're trying to protect their uniswap community and product using what some might call lawfare, but I just see it as like kind of normal for any startup to do. And they are very open about being a startup. You know, they have Universal Navigation Inc. I believe it's a Delaware corporation. You know, they're based in York.

They have a clear physical presence. offices, they have a founder who has an identity, reputation at stake, as well as most their developers are also, you know, doxed as they say in the industry. Sushi is trying to do maybe something different there by, you know, being a bit more impermeable for developers, allowing people to have their anonymity, if I can pronounce the word right? Yeah, so I think there's definitely some competitive advantages to being fully. sort of crypto anarchist. But, you know, I don't know if that's necessarily what we need to have over the course of the

decade. So, yeah, I think we definitely appreciate that the licensing was in response to sushi swap, the vampire attack. It also was, you know, quite clear that there was migration tools provided to go from sushi swap to uniswap to uniswap, very similar to how sushi swap was launched to migrate from Uniswop to sushi. So in my mind, you know, people see that as like negative competition. But for me, it's like, yeah, let the best exchange win, you know,

and let the best legal regime win. You know, it's all kind of code that we're trying to improve, right? So people are like creating modes and they're open about it, and it's obvious how we could change that mode, you know, through governance, which uniswap has done. That seems interesting, too. You know, so, yeah. All right.

So in a moment, we're going to discuss a little bit more about the uniswap license issue, but first a quick word from the sponsors who make this show possible. TASOS lets you easily exchange smart money throughout our digital world. As self-upgradable blockchain with a proven track record, TASOS seamlessly adopts tomorrow's innovations without network disruptions today. Because of this adaptability, engineers, conservationists, entrepreneurs, collectors, game developers, and artists from around the world are building, creating, and using TASOS every day. Discover how people are reimagining the world around you on TASOS.

With over 10 million users, crypto.com is the easiest place to buy and sell over 90 cryptocurrencies. Download the crypto.com app now and get $25 with the code Laura. If you're a hodler, crypto.com earn pays industry-leading interest rates on over 30 coins, including Bitcoin, at up to 8.5% interest and up to 14% interest on your stable coins. When it's time to spend your crypto, nothing beats the crypto.com visa com. which pays you up to 8% back instantly and gives you 100% rebate for your Netflix, Spotify, and Amazon Prime subscriptions. There is no annual or monthly fees to worry about.

Download the critpaw.com app and get $25 when using the code Laura, L-A-U-R-A. The link is in the description. Do you want to trade gold, currencies, or even bananas on Ethereum? Ponter opens access to the global financial market for Ethereum by allowing for permissionless user-created synthetic assets. Contra allows you to create, borrow, and trade synthetic assets which track the value for any conceivable asset, real or abstract, using any price feed you want. Asset creators are able to earn fees on every mint and scale revenue with direct use for their assets. Synths are minted by providing Ether to collateralize the asset

as 0% interest loans. Contra is helping to bring TradFi to defy and turn Ethereum into the real global financial settlement layer. Trade synths for USD, gold, BTC, or make your own. So why not check out C-O-N-J-U-R-E dot finance and see what's possible. Back to my conversation with Aaron Wright and Ross Campbell. So just out of curiosity for this license that Uniswap has its V3 code under, since it lasts for two years, I just wondered, is that kind of like effectively the time period in which

anyone might actually want to use the code for business purposes, you know, because like with the pace at which this technology is advancing, I just thought, is this going to like kind of cover all, you know, potential competition? Yeah. I mean, that's like a hundred years in my mind of like crypto. That's like several growth phases or something. So I think effectively you're right, that they see this as covering the concentrated liquidity idea as they've been. implemented it, which is fine. You know, I think, you know, it's, it's all arbitrary, but, you know, anything past maybe a couple months is probably like far in the future in a lot of crypto people's minds. So, yeah. And, and I wonder just for this particular license, you know, it's, it's not

something I'm super familiar with. But is this something that has ever come up in court before? Like, if someone were to fork the code and test this license, do we kind of have a sense of how the courts would decide? I don't know if this is the singular use case of that license. That's hard to know if that came up from the UNISWAT team or maybe they leaned on another example that may have emerged somewhere else, some other former precedent. When it comes to questions around open source licenses, courts move very slow. So even widely used licenses, like Ross mentioned a couple before, like an MIT license or a GPL license, not many courts have addressed issues related to the validity of those licenses

and the scope and questions related to it. So at least in this instance, it's not like this is a license that's been well litigated, number one, at most if it went to a court. I imagine courts would have to look at the kind of sporadic cases involving open source licenses to A, affirm that it's enforceable and be kind of define the scope and boundaries related to it. I think, you know, more practically, I imagine why the UNISWOP team did this was not to walk into court at some point. I know that that's in many ways, like how non-wears view it, but it's just a little impediment, right?

So whatever folks are thinking about possibly using that code, they may pause. And that pause may just give them enough time to, you know, to see if this idea works, which they obviously built and, you know, obviously put a lot of thought and time into it. and hopefully that gives them a little bit of space to grow the ecosystem or support the ecosystem in a way that they think is appropriate. Competition is always good. I mean, I think in many ways, like what we're seeing, this dynamic between sushi and Uniswap, outside of being very dramatic and entertaining in different ways, is also kind of, you know, one of the advantages and really one of the reasons why governance tokens are important.

I think the fact that Uniswap did have a vampire attack by sushi, which introduced a token, I imagine that that fact probably weighed in the minds of initial developers when thinking about that. I think it also points to value why tokens are important to kind of rally people around a project and have them feel like they have a say and can actively participate in governance to improve the ecosystem. I think that's healthy. And I think even here, you know, when we're dealing with new, updates or improvements and enhancements, I think it's, my view, it's reasonable for teams that come up with that to have like a little bit of breathing room to test it out before it gets immediately

copied. I think that creates kind of perverse incentives for innovation if you want to optimize on that front to say that a team that develops something shouldn't be able to at least like try it out, see if it works, at least get some recognition, if not more for that. I think that that's healthy and I'm pretty reasonable. All right. So now let's talk about the Wyoming Dow Law. What does this law do? Yeah, it's a great question. So DAOs are really interesting as a concept. There's different types of DAOs, and DAOs have kind of animated the Bitcoin and, in

particular, the Ethereum ecosystems for quite some time. Just to give like a quick history lesson there, Dan Larimer of EOS fame, I think is credited with the first reference or kind of article talking about DAOs. He fashioned them as a decentralized autonomous corporation. And the notion was, how can we use Bitcoin and an emerging project on that? Bitcoin called color coins at the time to represent a Bitcoin as, let's say, share of stock in a company. And he posited, and I think he's right, that by doing that using blockchain technology to represent interests and organizations, we get a whole bunch of different efficiencies.

The Ethereum ecosystem in particular kind of took Dan's concepts and Vitalik and others, and others kind of ran with it, and it played a prominent role in the concept around the Ethereum white paper. There was lots of use cases, but one prominent one was Dow's. And so the Ethereum ecosystem is kind of been geeked out about DAOs for quite some time. And because of that, there's been lots of conversations about how can DAOs operate in the real world. So these conversations started way back even before Ethereum launched at events that MIT put together, where we began to think about legal issues related to Bitcoin and blockchain technology more broadly. This notion emerged that one possible path forward would be to wrap a DAO in a limited liability company, to use a

Limitive Viability Company, which is a structure in the U.S. that many businesses use to account for certain risks that emerge when you mush people together and they try to do something productive. What the Wyoming Dow bill does is it extends Wyoming's LLC Act and enables you to create a Dow and it attempts and aspires to do that in a way that will work with what some developers want to do with DAO's. So it's not, it never was intended to be kind of like a universal solution. its intent is to, A, provide legal recognition to this new emerging structure where we're seeing a lot of excitement around and a lot of folks that want to innovate around.

And two, it was to align existing laws a little bit closer to how people are actually operating within these DAOs. So one way that I like to think about a DAO, it's like an online group with a bank account and lots of rules that are related to it. And under the existing law, as an example, if you form that and that group of people wanted to do something productive, like make a profit or build something or engage in some sort of commercial activity, it'd be considered a partnership. And you'd have to owe what lawyers call fiduciary duties to all the other members of the doubt. fiduciary duties is a fancy legal word that basically means like a heightened responsibility. Like you owe more than you would other folks when you're engaging with them. But in my mind, that's insane. Imagine if you're part of an online community and some synonymous person that you don't know that you're communicating with, you owe some heightened obligation to. That makes absolutely no sense. But that's the way the laws are currently written. Under the Wyoming bill, we soften that. And you're permitted to do that in the U.S. So we waived these fiduciary duties to the extent permitted by law. We addressed issues related to conflicts because it's presumed, as Ross mentioned before, that downs would be more porous in nature that people will go in and out. And we also streamline.

the process. So you only have to really have one document instead of a handful of documents that are necessary today if you want to kind of explore this structure. So the idea is to legal recognition to kind of align it with what we're seeing right now with DAOs and a little bit forward meaning there too. And then also to kind of hopefully over time lower the cost. And that's exciting, right. I think we've seen tremendous amounts of growth with DAWS, whether that's DFI related protocol DAOs, some of the investment DAWs that folks are are forming or more service-based DAOs, which are really interesting as well. And that's exploded over the past year. It's gone from about $10 million in assets in these DAOs in February

2020, to today, you know, depending on who's counting. It's either roughly a billion dollars or even more than that. And it's gone from having thousands of people participating these structures to up to 200,000 people participating these structures rough, right? It's hard to get clear metrics on blockchain. And so I think it's admirable that Wyoming is taking the first step forward and trying to really tackle and recognize these entities. But there is still a lot of work that needs to be done. There's like valid criticisms that came up even beforehand related to the bill and structure. Some of those issues were known beforehand, but were products of the political system. You know, others kind of emerged from comments. But I think you'll see this as

the first step, and then over time, either additional legislation or additional amendments to kind of clarify and make sure that it's in a really good spot. But I do think it is really a notable moment. And hats off to the folks in Wyoming for helping to push this forward. And before this Wyoming LLC or Dow LLC law, there were other DAO LLCs that were organized as Delaware LLCs. So what can a Wyoming LLC Dow do? that a DAO organized as a Delaware LLC cannot do? So they're very similar, right? The concept was if you wanted to put together a WRAPDAO,

so you wanted to root a DAO and a legal entity, let's say like a Delaware LLC, to do that today, you would have to, in all likelihood, pay a lawyer tens of thousands, if not more dollars, to put together a structure that would work for the project. It's incredibly expensive. And that's not something most developed. can afford. That's not something that most developers, since they're focused on software,

actually are equipped to kind of manage the nuance related to it. Now, there's some folks that can, and now that's awesome, but most folks can't do that. The idea was to set the default rules in a way that was a little bit closer to how people are actually operating, such that the costs over time can go down. So you don't have to pay lawyers tens of thousands of dollars to do something that is more and more routine. And so not surprisingly, when lawyers saw that that occurred, they got grumpy. Lawyers like to take their cut out of lots of these projects and are not happy about that. But in reality, it shouldn't cost, you know, tens of thousands of dollars to set up an entity. It shouldn't cost tens of thousands of dollars to set up a Dow. And so this is a framework that

enables that incentive structure and the cost related to it to eventually go down. But in many ways, it kind of preserves that same spirit, which is using a limited liability company, is kind of like a shell to defer to software-based systems for governance and for member-managed structures to the extent that that applies for various different use cases. The other thing that is contemplated, although I do think the language will change, you can start to clarify which portions of your organization are going to be run by an algorithm, like which smart contracts are going to be used, which I think is important for the public to know, if you're going to be building and intend to aspire to build something that's really meaningful.

I think it's nice to have a public identifier that people can refer to, like the smart contract address or some other public identifier, the code that you're using. I think that's a nice thing to have an additional reasonable requirement that we kind of put in place. And the other thing that you can do with the Wyoming law that you can do with Delaware is call yourself ADAP. And I know some folks may not want to do that. And I know it's very subtle, but it's a big deal. You know, lots of folks want to call themselves, you know, ABC Dow. They don't want to call themselves ABC, Dow, LLC. It just kind of has a different field to it. So that's another important difference as well. Yeah, well, I actually wanted to ask about the algorithms. So as you mentioned, the Wyoming bill does mention these algorithmically managed Dow's quite a lot. But I don't quite know what that means because if a Dow is managed by an algorithm, rather, than the members of the Dow, then how is that a Dow?

Sure. So it contemplates two different things. By default, all the DAOs are member managed. What that means is by default, unless it's varied by the agreements, there's not going to be imputed a manager of some sort. I think that aligns with what we're seeing with lots of DFI projects. There's not some central group or central persons that are in charge of it around the edges. There may be a software development team.

There may be folks that serve more ministerial functions, but there's not like a centralized leader in some sort of way. You can, though, under the existing law, decide to elect to be an algorithmically run Dow. And I don't think we've actually seen these forms of DAOs yet, but it's something that's been contemplated and theorized by legal scholars for quite some time. What does that look like? I mean, since we don't have one, like I was kind of like, why? Well, we have a couple prototypical DAOs of that, which would be something like Bitcoin.

So many folks have analogized that Bitcoin itself is a Dow or Dow like structure. And they've gone through the mental exercise. How could Bitcoin or Bitcoin like project get launched? And how could it get launched in a way that would align with U.S. law? There's a scholar from the University of Southern Florida named Sean Bynum, who's theorized and put this together and thought about this exact question. And the way that he thought it could all get lined up would be, first you form an entity that has members.

So those members form it. They begin to develop it. And then they assign over into that entity all the intellectual property related to the algorithm. And then they quit. They leave. And then at that point, you have a legal entity that only has an algorithm sitting at its core.

And that fact was something that the legislators and other folks that provide a commentary wanted to account for. Whether that has manifested yet or whether or not that's a perfect analogy, it's too soon to tell, but I wouldn't be surprised if we see more and more structures over time that begin to resemble that. And because of that,

that's why it was put into the law. So in... Is there any group trying to create an algorithmically managed out? I think that there probably will be groups that try to create this. We saw groups try to create an algorithmically managed out

or something that is pretty close. that in Bitcoin. And that is something that folks wanted to account for. I mean, Bitcoin in many way is an algorithmically managed out. It has a core software protocol that's run. It's operating, and you can participate in it. But the core governance is in the algorithm itself. So it's a way to kind of position that type of a project. And one way to do that, and you possibly could do that, you know, today in Wyoming, using this legislation. Like if Satoshi didn't want to be anonymous, If you wanted to set up something where you really are putting at the center of the organization a set of software, you would have the ability to do that under the Wyoming Dow legislation

today. And we, so in Bitcoin, what is the algorithm that manages Bitcoin? Is it the Shaw-256? What algorithm manages Bitcoin? Proof-of-work, right? Yeah, sorry. It's the core software. Yeah.

Yeah, it's the entire package that you need to run. Just proof of work. Well, it's more than proof of work. It's the entire node and the software that's dealing with validation. It's a software that's dealing with everything that manages Bitcoin. It's a core group of software. So you can imagine that being owned by an entity and that entity having no members. And while that may seem kind of like an odd construct, it's something that's accounted for in the law

and something that we wanted to account for since A, we're starting to see prototypical examples of it in things like Bitcoin. And B, it was something that legal scholars in the U.S. have contemplated. And since it takes some time to put together laws, it takes time to pass them. We wanted to make sure and do our best to try to future-proof it in some sort of way. So if there's some folks that don't think that that future is going to come to pass, it doesn't really matter. You are by default a member-managed entity. so you can decide who is going to be in charge of this operation. If that idea of an algorithmic doubt doesn't fit for your project, no worries.

It's really no harm off your back. If, however, you want to explore something that's a little bit more future-leaning, you have the ability to do that. And I think that that's an important thing to kind of contemplate. So even beyond that, just to give a full picture, some of the language related to that piece is something that folks have flagged. And even before the law was passed, there was a handful of amendments that were hopefully going to get put into the original bill, but due to different reasons, including some issues

related to Wyoming parliamentarian issues, those amendments look like they're going to come in a second bill that hopefully will go through the appropriate committees and get presented to the Wyoming House and Senate. And what are those? It's just a cleanup bill. Yeah, so it will clarify some of the language related to designating yourself as either a member managed entity or an algorithmic remanaged entity. Go clean up a couple definitional issues that folks flagged and then also clean up some other, you know, minor points that people have identified or have provided feedback on, you know, since the bill was presented and proposed.

It's a process, right? Legislative process is not, it's not, you know, a one-time thing. And then the bill is done, particularly at the state level, there's usually opportunities. these to clean things up and tighten them and amend them. But it's notable that we were able to get something there to A, recognize DOWS, to B, give people the ability, hopefully to form these at much less cost than they would if they wanted to set something up in Delaware. And C, we've begun the conversation around this to start to have some of the productive, you know, the productive conversations that I think are necessary to make sure that, at least in the U.S., we have kind of the right

approach here. Right. And so for the manager managed DAOs, which, you know, under the, with this new law that, you know, you can't have a manager managed now. Some people were interpreting that to mean that a DAO could not be managed a foundation, which is by a foundation, which is how some of the DAO started out. So why is that? Why can't they be managed by a manager? Yeah. Well, I think because, I mean, they could conceivably just, decide to be an LLC at that point. I don't think it's contemplated that DAOs will have managers. So I was trying to account for kind of that reality. But I mean, but, but people are saying that a lot of DAWS do start out with a foundation managing. And so they're saying this sort of like doesn't account for that.

They could form as an LLC and when they feel like their structures in place or they could form as a software company, they could convert into this DAO or they could designate themselves a DAO at that point in time. I was going to say that I also don't think that manager managed really speaks to the use case of DAOs and that they are almost entirely about being flat and real time with membership management. So I can't appreciate, you know, maybe, you know, Dow's that have, you know, managers might not be the best use case to design around or to promote. But there are a lot of protocols that are bootstrapped by foundations, which are, you know, really core teams of developers. I don't think a lot of these developers really thought carefully about, you know, making a Dow or the implications of like token governance. So maybe, you know, things like Wyoming Dow Bill, you know,

code deference approaches, like that can make this bit simpler. But there is an advantage, though, to conversion. And like Aaron said, that if you're situated in a jurisdiction and they have an escape hatch into a more, you know, Dow-Fi version, that seems like an immediate advantage. And kind of my idea with the Dow Bill is, you know, kind of it's a celebration of like LLCs, which is like a celebration of maybe libertarian notions of how we should like own businesses together. If Dow's existed way back when, I assume we would have something like the Dow bill before we would try to do an LLC

bill. Because I think anyone who's exposed to this technology or has been in Dow's, they see like these are actual like real systems versus a traditional company, which is whatever the government and your bank and all these other third parties can agree upon. So it's very much, I think, in the train of the experiment that Wyoming had originally with LLCs and promoting something that's more flexible. I am also aligned in just automating lawyers out of a job. And I think there's probably too much histrionics about code deference and how difficult that is. So I think it's worthwhile to have experiments at the legislative level. As long as we can also promote private organizations that try to use operating agreements, you know, there are templates for that.

But I think my biggest pain points in terms of like, you know, Dow's and LLCs and these sort of statutes is how do we really celebrate smart contracts and digital currencies? How do we remove the need to pay fiat, you know, to the state? How do we avoid the need to a higher registered agent that merely just receives mail? That's very alien to a Dow, like noticing a Dow because like somebody sends some mail to it, like feels very archaic. So there's aspects of company formation.

as a whole that, you know, I think we're leaning in here. And I think it's going to be an iterative process and a lot of sausage is involved, you know, with getting something passed. So I think that's probably why there's, you know, there's controversy. And, you know, I definitely think that, you know, lawyers as our job were meant to criticize. Like, that's almost like how we get our supper. But I think this criticism has been productive for Ethereum. And that we're, you know, as a culture, as a community, were very experimental and we are able to upgrade and fork and do things that are, you know, necessary, you know, so I'm optimistic though, you know, on the normalizing impact of doubt bills or at least.

Yeah, I think that's right. No, but I think it's a good one, Ross. I think it is that experimentation. One, it's the validation, which is notable, right? It's nice to be able to actually have an entity that's recognizable. So going back to even what we were talking about before, if Curve was organized, as a rap Dow in some capacity. And there's lots of reasons why they may not choose to be that,

but there's good reasons for them to do that. If they wanted to walk into court, that would be a lot easier for them to do that. If they wanted to get tax ID numbers and start paying taxes, they can normalize and actually grow to something that's not kind of on the backwaters of the internet, but really front and center and prominent and mainstream, they have an avenue and a path to do that.

And beyond that, you know, I think for existing structures, this may not work, right? Maybe you formed a private foundation before. Converting into this may not work, but you can always start as a member-managed entity, which could be a group of software developers that are managing some open-source project or something else like that. And then you can convert that. You can amend your documents and decide to have that entirely run by an algorithm if you want. Or once these amendments pass, you can have some sort of hybrid of the two and just articulate that. And I think that's great. And then to Ross's point about automation, what I'm hoping we do see is, you know, lawyers or other folks increasingly come up with standard off-the-shelf documents that teams can use so that they don't need to pay a handful of crypto lawyers, you know, $60,000 or more than that to put together a Dow. I think that that's just wrong. And I don't think that that's the direction that we should be pushing towards. It should be just as easy to set up a Dow if you want to as it is to set up a company for venture capital financing or as it is to, you know, to set up a small business,

which it shouldn't cost tens of thousands of dollars to do that. And hopefully this lowers the requirements to do that. And we can continue to see experimentation to make sure that the different forms and shapes and structures of DAOs that I imagine we'll see over the next couple of years increasingly are accounted for in different ways. Kane Warwick of synthetics wrote a great blog post on how Dow should finance themselves, and in it he wrote this description of a Dow. Dow's also forego reliance on external courts of law. The Dow controls itself from the inputs of Dow members alone.

It is by definition self-contained and need not rely on any external arbiter to determine control. Of course, there will always be the necessity of meta-governance, but the Dow handles this through stakeholder inputs controlled by its own internal rules. What did you think of his description here? I think there's a point to it in many ways he's just describing private ordering, which at least in the U.S. and in parts of Europe, there's strong historical messages and support for that notion. The idea is that different parties can agree to order their affairs.

If they're deciding to order their affairs using code as opposed to legal agreements, I think that there's a strong argument for that to happen. Unfortunately, law doesn't disappear. Governments don't disappear. The coercive impact that governments have doesn't disappear just because you self-proclaimed yourself a Dow and just because you decided that stakeholders have decisions. If the activity of what you're doing is unlawful, if the activity hurts other people, you will be held accountable for it. We saw, you know, glimmers of this with the original, the Dow, and its implosion. You know, fortunately, because of the Ethereum hardfork and because of the fact that Ethereum ramped up in value after that fact, people were not wiped. But if they were wiped, I am sure that we would see one or more of those members enforce the rights in courts.

So even though there, the folks that put that together said, hey, this is entirely run by code. You know, it's code as law and it's purest sense. And, you know, many folks are cheering that on. In reality, something goes wrong. People get hurt. They get grumpy. They go to court. They hire lawyers.

and people that are involved will be held accountable for it. In structures that don't have a legal backing in some sort of way, they will likely be viewed as partnerships. And the way partnership law tends to work is that partners have to account to one another if there's some sort of damage in some sort of way. And your liability for any damage that's been caused is not limited. So that means the deepest pocket is going to be responsible for it.

So if some of the venture capital funds that have backed these projects want to participate in governance, if, you know, folks that do have deep pockets because they've acquired a number of digital assets over the years want to participate in DAOs. They can definitely do it. And I'm sure that many of them will not run into issues. But there will be some that get knotted up in some nasty situation involving a Dow that isn't organized. It doesn't have any limited liability protection. And they'll be on the hook for it. And that's going to that's going to probably push more and more folks as they matured to begin to explore these types of structures. Yeah, let's kind of flesh that picture out a little bit more. So let's say that there is a Dow kind of more the way that Kane described it here where they're not an LLC and maybe let's say there's venture backing or it doesn't have to be. It could be whatever. But I imagine that for the foreseeable future we are going to see this range of Dow. Some will become LLCs and others will not. So let's say that we have two, they're doing the exact same thing. the same blowup happens. It's parallel universes like sliding doors or whatever. And, you know, after the blow up, then what happens to the Dow that's not an LLC and what happens to the Dow that is an LLC? Yeah. So let's say that there's some damage that somebody can quantify.

Let's just put numbers on it, $100 million in damage, which is not unheard of. The individual members, if it's an implied partnership, would be responsible for making that party whole. And if, you know, one party was brought and ordered to make the damage party whole, they could turn around and then seek an accounting from the other folks to get their money back. So it creates an incentive when you have a pure partnership to find the deepest pocket to bring a cause of action against the partnership and that deep pocket to pay for it. And then to turn the partners internally so that they can deal with the internal accounting on who should fully pay for this. So it creates a huge mess. if it was a legally wrapped entity, then only any amounts that were contributed to that entity in general,

with certain exceptions, would be at issue. So the entity itself would only be responsible for the damage. You as an individual member or owner or participant likely would only be responsible for your individual contributions to it. So all your other assets are not put at risk. And that's a big difference, right? If you have a lot of assets, if you're a mature player, if you're a traditional player,

you're not going to likely want to participate with some of these Dow structures until you have the certainty of limitation of liability, until you have the certainty of legal recognition. So right now, as we see Defi kind of scaling up, it's awesome, right? Like we can stay as an insular community. But if you believe in this vision that blockchain technology, Ethereum, Bitcoin, at some point is the norm. It is mainstream. You cannot avoid the fact that traditional actors and players are going to need to participate and play around with these structures. So at some point, it's going to have to get sorted out, right?

You're going to need some of these protections, these legal recognition in order to move forward. And that's why it's important because it's not just going to be an insular bubble forever. At some point, the weight and gravitas of what's happening in this ecosystem will become large enough that it's going to have to pull in the rest of the world. And it's going to need some of these legal protections to do that. So I applaud Cain and for pushing and kind of taking what I call the more Wild West approach. But at the same time, unless you lay down the foundation with what's happening in Wyoming and other places, if Eiff and the crypto ecosystem is just going to hit a wall,

it's not going to be able to get the adoption that I think many folks are aspiring for it to achieve. Yeah. And if I could add there, I would say that there could be an intermediate step, you know, for Cain's version of a Dow and maybe, you know, what corporate body should be. You know, adding a simple membership or a constitution to the mix that at least makes it predictable how Dow members will treat each other in the case of disagreements, I think is always, you know, a very positive step. And we're seeing open sourcing of templates for that.

But yeah, there is this issue with private ordering through smart contracts, which, you know, smart contracts are like almost, you know, the end goal of private ordering, which is like true enforceability by agreements, you know, code is law. But then, you know, private ordering still has externalities, of course. You know, the agreement I make with Aaron, I can't say, you know, Aaron, you and I agree that nobody else can sue us based on what we're doing together. That's not exactly how the law works. The law is a remedy system for the things people do that affect each other. However, you know, smart contracts, whether good for private ordering, you know, you know, down member to Dow member, the state provides these, you know, public ordering things like LLCs where we can then coordinate with other people that aren't in the Dow and try to reach some agreement about who holds the bag if there's a lot.

an issue. These are kind of tools and fictions made up things the state provides us so we can like actually coordinate and like make productive businesses without like losing our house every time, right? So there's kind of this reality that, you know, I think is a very important addendum to Keynes. I would say pure and, you know, very idealistic fission of DAO's and that Dow members are humans and what they decide to do on the blockchain will affect people off the blockchain. And we have to grapple with that reality if we want mainstream adoption. People are grappling with it by going full crypto anarchic and going private, you know, using tornado systems to hide value flows. But I can't see that being the immediate adoption point. That feels like

it will always be an area for people to do maybe more censored businesses, you know. But there's more ordinary use cases for Ethereum like fundraising for startups that we want to make sure that it's predictable. Who can get sued if we decide to do these things? Mostly just rephrasing what we just talked about. But I think it's important to also understand that we shouldn't rely entirely on smart contracts. We should try to define our relationships amongst each other as DAWS. And then if we want to have a relationship with the public, we want to own businesses or put up billboards and do cool stuff off chain, it's very helpful to have a coordination mechanism. with the public, like an LLC.

So that's kind of where I see Cota's law and laws code, like converging is like, it's a coordination technology ultimately and trying to get people to not go full vigilante if they have a bad business deal. We want people to be civil, right? That's ideally the goal of all this is that people cooperate, right? Right, and part of cooperation is taking risks. And that's why limitation of liability is so important, right? So that's one of the core innovations of a corporation, right, which folks like Sam Altman and others, you know, have commented that that may be the greatest innovation of all time, right?

This legal innovation of creating a way for people to limit their liability just to the actions of what's going on inside of an organization that's, you know, enabled so much human output, human creativity to kind of meet its most efficient endpoint. And that's what's missing with, you know, DAOs right now when they're partnerships. You have unlimited liability when you participate in them. So that means you put your personal assets at stake for anything that's going wrong in those groups, arguably. And being able to have DAOs that have a limitation of liability means that more folks can participate. Having DAOs that are legally recognized and you can call yourself that gives them, you know, an actual degree of validation, which means that they can interact, they can acquire land, right? They can start to move into areas that are outside of crypto, which is in the long run going to be important. Being able to articulate that you're going to have part of your organization not managed by contracts, but by software, it's subtle but important.

There's nothing precluding that, but having that clearly stated, I think is helpful and hopefully can resolve disputes. And then beyond that, you can start to get things like tax numbers. You can begin to interact with the real world. And that's going to make regulators and other folks that are worried about crypto understand this technology a thousand times better. So if Uniswap wants to be as large, if not the largest exchange ever, you know, how is it going to do that if it can't interact in any way or talk in any way to the traditional world? They're just going to be skeptical. They're going to have their backs up. And it's not going to fulfill that vision.

But maybe through these structures or some innovation on these structures, we can get to that point where we can really see crypto emerge and become the global. force that many developers and advocates and other supporters really believe it can be. So we're taking steps in that direction. Yeah, so we'll have to see how all this pans out. I feel like we could have gone another hour to discuss the many, many other issues that pertain to the subject. But I'll have to do that in another episode. So where can people learn more about each of you and your work? I'm at R underscore Ross underscore Campbell. Apologies for how confusing that is, but people can find me on Twitter and see what I'm working on. Aaron? Yeah, sure. Twitter. A Twitter is a great place. And if you're interested in this intersection between legal agreements and smart contracts,

check out open law.com. Perfect. All right. Well, thank you both so much for coming on Unchained. Thanks so much for having us, Laura. Thanks so much for joining us today. To learn more about Aaron and Ross, check out the show notes for this episode. Unchained is produced by me, Laura Shin, with help from Anthony Yoon at Daniel Nuss and Mark Murdoch. Thanks for listening.