DAOFest – Tristan Roberts, How to Legal DAOs

thank you all for joining me I've been diving deep into a topic that seems pretty esoteric if not incomprehensible but I feel like I've made some progress and I'm here to share with you what insights I've found the real struggle I think with hyper identities is being able to create a language that can merge both the legal and the technical and honestly the magical aspects of hybrid entities so short and brief of it is that a hyper identity is something that has both a legal or a physical component such as an LLC as well as an ethereal or a distributed component such as an ER c20 token or a dau there's some advantages is this sort of structure and I think we're just starting to see people take advantage of them the main thing the easiest fruit is limited liability so that way when you're a doubt self-driving car runs over a self-driving stroller you aren't personally liable for your down there's also other ways of tying together the ragequit with the operating agreement so that anyone can exit the LLC using a smart contract instead of having to go through legal means of course most dads have issues interacting with humans there's a certain amount of barrier between the normies and smart contracts and by creating a legal entity you have the possibility of issuing a contract that they sign that they can recognize as being valid and meaningful it's in human language instead of machine language and then lastly being able to work with other corporations what most corporations aren't ready it's a deal with smart contracts so for them to be able to work with an LLC that is sort of a wrapper for a smart contract they might feel a little bit more comfortable doing that but before we dive into the specifics and the pragmatics I'm gonna give a little bit of a background in history we're gonna go back in time to 1651 when thomas hobbes wrote leviathan this book became sort of the foundation for political science because it's sort of put us into this notion that we need the social contract we have to have this monopoly of violence hanging over our heads because if we didn't have that it things would be even worse he says that covenants without the sword are but words and of no strength to secure a man at all and moreover without a monopoly on violence there would be no arts no letters no society and worst of all continual fear and danger of violent death and the life of man solitary poor nasty brutish and short so you can see we're kind of stuck in this catch-22 where we all recognize that having militaristic police and an invading army is kind of a bad thing but at the same time we don't want to be raided by bandits ourselves so there's a lot of we're just kind of feel like we're kind of stuck and I guess one of my arguments is that this is certainly true for the physical domain but smart contracts ethereal whatever whatever that's opened up the possibility for enforcement by other means so historically the monopoly of violence is sort of teeter between autocracy and oligarchy occasionally there might be a wave of anarchism that wipes things out but lately we've seen this very strange consolidation where the king sort of gave up their autocracy by making joint stock corporations this allowed anyone to effectively become part of the nobility and by that I mean being able to take advantage of the Leviathan being able to profit off of having a trade monopoly or some other sort of intellectual property monopoly and having your property rights backed up by the implied violence of the state so I'm tying together this notion of the legal as well as with the physical and this is again from Hobbes the universe the whole mass of things that are is corporeal that is to say body every part of the universe is a body and that which is not body is no part of the universe and because the universe is that which is no part of it as nothing and consequently nowhere what's exciting is now we're at that time where we are in the know where we do have non-physical we do have an ability to take our ideas and put them into something that is just loosely physical but really it seems to be something of its own so start off with we have bits which are an arrangement of physical components but we as humans we're not interested in the specific arrangement we're interested in the abstract layer the abstraction allows us to build virtual networks which is just an organization of bits and these virtual networks when further solidified by human and machine consensus making systems allow us to create a jurisdiction a domain some sort of portal to something I call the ethereal this notion I have is that within all of these types of systems there is some sort of life it's replicating patterns that are trying to sustain themselves they're trying to get energy they're trying to get currency they're trying to get more ether there if you have some amount of instructions they have some amount of replication and I'd argue to some degree there's the delivery this is a lot of overlap to the mystical concept of an egregore a thought form or a collective group mind an autonomous psychic entity made up of and influencing the thoughts of a group group of people and again this is very much parallels Leviathan where Thomas Hobbes says for art is for by art is created that great Leviathan called a Commonwealth or state which is but an artificial man though of Greater stature and strength in the natural in which the sovereignty is an artificial soul as giving life in motion to the whole body I mean she could look at this meme from the Moloch doubt creator he's saying that there's a he gets the meme he gets the idea it's the concept that goes into his head and then they write the code the code must serve the meme what I'm asking all of you is that is the code serving the meme or is the person serving the meme right did he act the did he choose this me more did the meme choose him right so what we're starting to see is hybrid entities that are native to both the physical real world of nation-states as well as the virtual world of aetherium and other distributed networks they're capable of leveraging both legal and smart contracts and they're potentially resilient against the critical failures of one of their components if you have for instance your LLC gets sued and it's tied to a Dow you have the option to not pay the judgment you would collapse the legal component but the decentralized component could still potentially exist and the same is true going the other direction so these are all I've been like working through these different systems I've tried to make a map that like made some sort of sense I originally had this idea of I was applying for a proposal to connect Aragon's jurisdiction with the real-world jurisdictions so I was thinking oh maybe if we have the software we can we can connect these things but I realized really the thing that's connecting them already is the human side all of these systems they're still dependent upon humans some of them are more autonomous than others so in the ethereal world there's a lot of things you can do but there's a lot of things you can't do and what I'm arguing is that each time you go through a phase transition we can go from the non-physical to actual doubt to a decentralized organization where there's humans but there's some decentralization to networks to code to legal agreements to courtrooms to enforcement it's a there's a lot of energy that goes into each of these transitions and what I'm trying to convey to you is that the amount of energy that it takes to shift between these different states is reducing and what that is increasing is the the power of dows and the power of humans who are able to create in one of these formats and to be able to take that idea and bring it into the physical world it used to be a huge pain in the ass it wasn't really scalable but it's starting to become more and more feasible thanks to this collection of tools some of the things that I think are vital to this process open law is making it so that you can create legal contracts and have them signed by humans and then once all the humans have signed off on it then it executes a smart contract the Dow platforms like Eragon and dial stack or of course making us way more accessible theoria and all the other the others will be used to notarize the documents the agreements but then you would want to stash the full text of it someplace else like ipfs so let's get into some real-world examples again I feel like this is so new there's there's only it wasn't until last year the hyper identities were Republic and in 2020 we're starting to see some that may end up gaining as much traction as the original Dow medic cartels ventured out I believe as a Delaware LLC they just recently like a few days ago published their grimoire which is their operating agreement their pact so I've noticed this interesting theme of magic usage beyond just my own proclivities and it seems to be a recurring theme within this space I don't what I can't tell you about this is that they're still requiring investors to be accredited they're not actually doing security cell but there's room within this organization for people who aren't accredited investors to be able to help the operations of the system and then in turn gain some of the the currency some of the value a similarly open law and consensus have been starting bulow they haven't published their operating agreement yet but they're investing investment thesis is what if we did the Dow but it was owned by us and it was legal and that's that's the experiment they're taking they're gonna use it to fund aetherium projects and again it's tied to a Delaware LLC it's using accredited investors and it's still honestly pretty human focus there's still a human manager that's necessary to actually operate the thing that the manager is sort of held responsible to execute the Dow's votes and then act accordingly huh yeah a little bit later this question of can you have one of these things running but there's no human right like that's like one of the more interesting questions that by the end of it we should be able to answer that's just a meme I made about consensus Joseph lutheran is trying to push it up but it seems like he's about to they're about to get merged into JP Morgan perhaps so I get entered into this space because a friend of mine was really into into Wyoming into this like hyper entity space and I I didn't buy it at first I had been up there as a teenager I thought it was boring as heck but I've been up there since then and just being in this environment where there's all of like it's a small government you can actually enact change it seemed like it's actually made a safe haven for crypto projects so let me just very briefly explain why I'm like super excited about Wyoming first thing is is that you can represent your company's equity as a crypto token and the state recognizes it there's not gonna be like a big debate about it if you have to go to court over hey I gave but someone gave me these tokens they said they were worth part of the company they they're trying to screw me over right the most interesting part though is that rather than listing your shareholders or your members using their name and their physical address you can list their network address and their public key so I think that opens the door for is this doubt run by humans or is it run by intelligences artificial intelligences also super valuable the limited liability company series allows a parent LLC to have thousands of children I wanted to experiment with this myself I made why Dow LLC I has a thousand children which I'm trying to give out like AOL CDs so if anyone wants like a test LLC to just mess around with please let me know on it's controlled by two members only some of the stuff you have to use cryptography it's called cryptographic consensus is the term I used and I'll show that in a second so for instance when we're transferring one of the children to you we want to have a vote on that to sort of make it official and then that also makes sort of a timestamp showing at this point in time we agreed on to this and we're now issuing this token which represents ownership of that child of that series so different ways that the ethereal component and the legal component can be bound together this is just ways to think about it loosely means there's just there's an interaction between the the hybrid like the alien component the ethereal component and the humans it's not really formalized having the door in place it's like oh there's like I can they recognize each other formally there's a way of interacting that's that that's explicit and then tightly would mean that there's they're locked together it's not just that they can decouple it will there has to be some sort of process by which they unlock and unbind to each other and again another way of looking at binding it could be that the DAO points to an LLC but the LLC doesn't point to the DAO and one of the things I've come to the conclusion of is that it's important for there to be bi-directional linkages if you want the this hybrid to be legitimate you want to have the ethereal component explicitly say we're recognizing this LLC or we're recognizing that john smith has permission to form an LLC on our behalf because otherwise it could just be someone saying hey i made the adventure cartel LLC but they don't they don't really have the authority of the venture cartel to actually make an LLC on their behalf and then the last like the more complex is for them to be in a position where they're they're able to unlock and decouple and still operate autonomously so that's like if hits the fan is your legal component going to still be able to exist is your dau still going to be able to exist so some concrete ways that we can see a legal component binding to an ethereal component is by declaring the owners with their public network address that can help you say that this decision was made in a way that required this this this key is sign off on it you could have just your management be authorized to perform some smart contracts you could have some decisions require cryptographic consensus or all decisions require cryptographic consensus this is taken from an hybrid operating agreement the New York Dow LLC by Ross Campbell and it's pretty much just saying like hey if we make a decision and using our down it's legally binding and you can look at our dows votes at that address right there if you're trying to bind your Dow to a legal component you want to have the Dow vote on whether or not it recognizes this legal component or someone has permission to do that I think there will be sanitization of this process eventually but what are we really here we want to be able to protect ourselves we want to have minimal governments and we want to be able to to go to a court of law and argue that hey this I have these tokens they're not respecting that even though we had this doubt that's that's the the minimum right you want to be able to present your case so going back to this topic of the Leviathan the internet pioneers didn't foresee the corporate aggregation of power over the Internet so what are we doing in blockchain to prevent our overlords of tomorrow I guess my argument is that these these these dows these hybrids they are just as dangerous if not more dangerous than nation-states that Monsanto then Halliburton because you can't kill them you can't sue that you can't be like stop it you can't just like cut it out right it'll keep going so we need to have this in mind of like do we have emergency kill switches do we have ways of dekum Park mentalizing it do we have ways of chastising it in a way that actually has meaning so yeah please do not name your entities after God's a child sacrifice don't put much trust and entities claiming to be hybrid that are not clearly bi-directionally coupled and do not put full trust an experimental structure that might explode which is true for either the legal or the etheric component if you are gonna try this out document your path post it so other people can benefit ask critical questions if you're on a team that's forming a dowel like really dig into it try to see how this could could break how a bad actor could break it I think I'm almost at time so yeah clusion hybrid entities permit new types of life it's an experimental art that will become increasingly automated I think that people will be creating dows or interacting with Dow's and they won't even know that right it's just it's in the game it's built into the software and they might end up fighting the United States and another big existing leviathans but they might end up becoming even worse that's it thank you for your attention in time