Law as Code: More Law as a Feature (Not a Bug) of Smart Contracts

welcome everybody to our law as code panel more law as a feature and not a bug of smart contracts so some of you may when you think of legal agreements think of a very long document that's hard to get through the important stuff is buried somewhere in there you don't know where how can we improve this in web 3 and add more legal hooks into smart contracts make the key terms more readable and accessible so I am very thrilled to be here with this panel of expert lawyer Builders and I'll let you guys introduce yourselves check check sorry guys hey there my name is Jordan Teague and I am a lawyer by day coder by night um so my main gig is I'm the general counsel of the Graf Foundation if you're a developer you've probably heard of the graph critical infrastructure in web3 I'm also one of the founders of a crypto native law firm called the anti-firm serving plants all across the web 3 space and a co-founder of Holly Dao a dow deployer platform do I oh it does work uh hi guys my name is Austin I'm co-founder of Keno we are a film and television marketplace where you can go behind the scenes A-list uh Talent films uh some of the biggest Blockbusters that are coming up you can invest collecting experience my background is in economics and law um so I'm very excited to be sitting with these two brilliant lawyers beside me to talk about how smart contracts which are right now pretty dumb uh can be iterated and innovate and we can bring a lot of efficiency and opportunity to the web 3 Space by combining our legal prowess and engineering awesome and I'm Diana Stern The General Counsel of palm nft Studio we're a tech company working with leading Brands and artists to help them deepen fan engagement and expand their audiences using nfts okay so um Austin I'm really curious to know how at Kino you guys think about incorporating legal agreements into smart contracts yeah definitely um so there's two sides to what we do at Kino there's sort of the consumer side which is if you're as a fan really love a particular film you could come to our platform and buy we don't even call them nfts we call them smart contracted assets you could buy an nft that represents your rights or a particular prop right now just the smart contract alone is not legally significant enough in and of itself to constitute that full purchase agreement so right now we have a PDF that's Linked In the metadata that you can go to to verify that that is in fact the prop that you own and then it has baked into it secondary transfer sort of rules uh and agreements and warranties representations but I think what the goal for a lot of our companies especially Aquino is how do we start going from the PDF everything on chain how do we start to pull those material terms and get them on chain but not just in a way that it lives in the metadata and you could just read it later in a way that we're actually taking material Clauses and turning those into logic statements that have certain triggers when certain events happen because that's how we really start to create a more efficient system where a young artist who wants to start a film and doesn't have thousands of dollars to go pay a lawyer can actually put together a production company and get their IP to the big screen that makes a lot of sense we have a hell yeah from the audience yeah that makes a lot of sense like looking both from a process perspective at efficiency and also how you can add more features in terms of what people can do with the agreements they have and adding on and um Jordan I'm curious to hear at Cali Dao how you guys look at integrating rights and and legal agreements into the work that you do in entity Incorporation yeah so collie Dow was really founded on kind of the principle of ricardian contracts I don't know if you're familiar with the term ricardian contract and maybe the audience isn't but the idea of a ricardian contract is it's something that's both human readable and machine readable so it's something that's useful to both people and smart contracts or AI or you know what have you and so at Kali we were trying to think you know how can we create a holistic platform where Dallas can govern themselves they can move money um they can also interact with the legal system they can Define rights and responsibilities between each other and so what we developed is um a dow platform which is not too unlike other ones that you might be familiar with molok Dao or um all the other ones that are out there but one of the things that we've integrated in that is not in other platforms is a link to Legal rappers and so there are actually some legal rappers that you can form in Kali directly on on chain without having to actually even go to the government and file anything so for an example an unincorporated non-profit Association that's a pretty popular one in crypto these days so you might be familiar with that you don't have to go to your state and say hey Secretary of State here's a filing fee here's our incorporation documents all you have to do is agree among yourselves this is how we want to govern ourselves this is what we are and so that's actually something you can do right on chain and so that's one of the features that we have Incorporated in you can just do it through a dow vote interesting and I'm curious in the audience how many people here are Developers okay lawyers Founders or business side folks okay so any artists oh okay awesome we have a great mix here so both of you guys kind of uh brought up the idea of how you can incorporate more rights through from a technological perspective through smart contracts how do you think about how to surface what rights people are getting in a way that's understandable from end users like really looking at the UI perspective like I know at Palm nft Studio it's something we think about and one solution is having simple FAQ you know on a landing page that break things down and there can be debates around the legal risk of that because then you kind of have two different sets of terms arguably but we think it's really important for people to understand what they're getting and understand how the nfts work so I'm curious Austin if if you want to start on that yeah I mean I think this isn't even necessarily a web 3 problem in terms of service who here has actually read terms of service on Facebook or Instagram who goes to the footer and clicks that tiny little link that we all purposely make really gray and really small and then goes to the you know 20 Page nobody does right and I think that's actually a huge problem you know talk about notice like notice was given we could go to Supreme Court cases that are there but it's it's pretty bad ux it's legally allowed but at the end of the day we actually don't know what rules are governing our use of these different platforms and so I think what's exciting is the idealism of web3 bringing those to the Forefront and just being more upfront transparent you know so if you're going to buy a particular behind the scenes pass on the keno platform and there's artwork attached we'll be very clear that you are not now the IP owner of the movie poster for that movie and we're going to make it very clear that you know that's not yours that you can then go license and go you know have an art show and make money off of you just own a card like a baseball card or a Pokemon card right it's a collectible but if you buy an actual spare in one of our films and you have ownership in that that is real and you actually have ownership and you own let's say one percent and you're going to be owed future profits rights you know to the to the film when it gets distributed and so I think at the end of the day what we kind of have is a is an education Gap in web 3 to the tech side but also just what are we actually giving you what are we actually offering you go to opencs you click on an nft you buy it you assume a lot of things about what you're getting and really there weren't any necessary disclosures made or if they were they were buried in a lot of legalese and it was really hard to read and it wasn't approachable and so I think it's marrying both the tech but also like if we're truly going to be transparent if we're truly going to be decentralized we need to actually put our money where our mouth is and just tell people like this is what you're getting take it or leave it and let the consumer decide that yes I want that because I think at the end of the day too you know some people they just want to collect a card and I just want this cool piece of art I don't want to go resell it you know I don't want to go try to have my own art show with it I don't want to license it on clothing or paraphernalia some people might want that and if we're more clear but we're offering to folks it's just I think it makes them more efficient and and more effective Market frankly Jordan what about you what do you guys provide education in the form of documentation or kind of how do you ensure because one of the amazing things about Cali dolls it's super easy to set this up but that can also lead to people just creating entities Without Really knowing kind of what they're doing or how to manage them yeah absolutely so I think you know first and foremost we put legal incorporation documents right there on the Dow dashboard so it's very obvious you know here they are it's right there in the smart contract um or wallet you know depending on how the Dow is set up so that you know this is the legal documentation associated with it um but then you know kind of more broadly and this isn't really a collie issue but it's more of just a ux UI issue in web3 and maybe this is a symptom of having a lot of developers but not a lot of designers and and UI devs and web3 yet but take a meta Mass transaction have you ever signed a metamaster transaction and really been able to read and understand what you were assigning it's just all this binary that's a problem that we have to solve um I think it's crucial we need to be able to understand what we're signing or it completely undermines the value proposition okay so looking into the future how can we get more web 3 with the way we Define this stuff like what if um the terms of an nft that let's say a dow holds the Dow holders could vote on you know or have a more collector collector communities controlling governance around like I think of the Palm Foundation the Palm Network you know we have a group of creators and artists that are taking a role in governing that nft optimized change so how can we kind of be more distributed or Grassroots in terms of coming up with legal rights that people are interacting with in this space I mean I think ux is really the answer at the end of the day I think I think you're exactly right is we have a lot of we have a lot of scaffolding right now and it's great scaffolding and we have brilliant Engineers who are creating really brilliant blockchain protocols and layer twos and layer threes and dapps and all sorts of things but when my mom comes and pulls up metamask she goes what the hell is this this is a lot of numbers right or even numbers that's impressive so you wanted to see what I'm doing with my time it's actually real um and so I think for example uh we did a we did an nft launch uh yesterday as a film company we did a screening of the documentary Ithaca it's about Julian Assange um highly recommend uh go to find it you can go to Kino dot Studio ethica you can go omit a free nft we're doing it on the near protocol the one of our strategic Partners when I went there we actually have some information in our metadata when I went to the near wallet and pulled it up it didn't have any of the information contained there visible at all the ux was very pretty I think the near wallet is a very pretty ux but it didn't actually show in the metadata and we were kind of bummed as a team we were like we did all spent all this time we had the the rights in there we had the PDF for the contract and it wasn't even pulled up in the wallet so so I think it's a lot of great stuff is being built in the back end it's being built under the hood it's just now we need to be able to show people and if you have the rights to vote you should be able to clearly see okay this is here and not only that but then I have a button to take me to that voting protocol or mechanism whatever the DAP is right or if it's I have this percentage ownership here is where that is and also if I need to change the wallet that this goes to I have that ability that gets into a complex system but really at the end of the day it is it's it's bringing up and as we talked about before sort of the recording contract it's fascinating because a lot of what we're doing right now is very machine readable and developer readable but it's not like Average Joe readable and we need to get to a point where Average Joe can not only read it but also he can write it because if you're a young artist or you want to found a company or you want to found a project you should be able to go write a smart contract because if only developers and lawyers can be the ones to write smart contracts have we really changed that much we've just created new middlemen right and so how do we get to that point where the design is good enough that we can all interact with it easily yeah and that also brings me to a point that Jordan I want to get your thoughts on which was taking the idea of a browser that enforces privacy preferences and looking at applying that to example nfts so let's say I only want cc0 nfts I don't have to read the terms of service for every single nft I can select within my wallet I only want nft 0cc0 now there's going to be need well I would love Jordan what would what kind of are the first things we would need to start thinking about to get something like that up yeah well so I think what you're getting at is you know with cc0 you know you have all these terms they're always the same you don't want to read them to confirm that's a cc0 licensed cool I'm I'm good with buying that nft can we not reduce this to something that's more machine readable that we can kind of package everything up and then you as a user could express a preference of these are the kinds of assets that I want to buy right and I mean I think that's definitely something that we can accomplish but unfortunately in the legal profession and the other lawyers in the audience I think would agree with me we're not incentivized as lawyers to make things simple um and so it really depends on all of us lawyers that are in the room here that really believe in the ethos of web 3 and open source to drive that progress and you know to to be able to say you know we're gonna basically trade the ability to build all these hours in favor of making things simpler for people yeah so we've talked about rights legal UI how to bring more clarity there a lot of innovative ideas from both of you guys let's move on to enforcement of those rights so right now traditional legal web to experience the threat of litigation you know don't reach the terms of service because you're going to get a nasty cease and desist letter how can we think more like mechanism designers at lawyers and create maybe an incentive system or otherwise to sort of redefine this paradigm yeah I mean like I think probably some of the ideal is how do we build reputational and social dynamics into the chain system you know so there are worlds in which if you perform bad acts it will reflect on your record now that can also get dystopian very quickly you know if you have a record of every bad thing you've ever done and that sticks with you forever that's a little scary you know um and so sometimes there is a world in which we say okay the legal system is there for a reason we have certain privacy you know we have the ability to expunge records but also maybe if you're just a user across web 3 and you violate certain terms of service that might you know Trace with you to other platforms maybe or maybe that's a terrible idea you know we're not exploring any of that on Kino yet for the record so if you buy the terms of service that will be a traditionally handled matter and probably we will ensue you for that because you know you just won't be able to use the website um but I think that probably starting with more transparency with these are the ways that we expect our users to act within our little silos and then these are the ways that you can take your assets and use them on different places and sometimes there are expectations that follow that right like if you if you're holding a Kino nft and you're going to go now put that in another platform something that's actually become a big issue for artists are you know hate speech what if you're holding a particular nft and you modify it in a certain way that then you're you know just playing hate speech on one of your Social platforms and the original artist is like I don't want to be associated with that right so I think that we need to think more broadly about the way in which users are acting across different platforms and I think that to some degree we're going to still need the systems that are in place you know like at the end of the day litigation is not going to go away we're not all going to live in a beautiful world where we're just all gamifying and we have badges and like Oh no you're at a negative 10 and I'm at a plus 20 today right but to some degree too I think that we can just make it easier and more simple for users to understand what's expected of them in certain places jump in there I think I think that in web and crypto we can get really obsessed with this idea of enforcement on chain and everything should be enforceable on chain but look here's the deal there's really nothing enforceable really other than your seed phrase and your ability to protect it there are all of these off-chain games that make ethereum possible or that make all these other blockchains possible and so we shouldn't discount like Austin said the value of other incentive mechanisms and I think that social norms we really shouldn't discount the power of that I I really predict that social norms and we were talking before this panel something along the lines of fair fair trade buyer status for instance you know you're a good nft buyer that pays royalties to artists that kind of thing I I think that's really where this is going to go yeah because it's something that people can feel good about you know you could get artists may be incentivized to give you special access if you have that fair trade status it's a great example of a social incentive or a social Norm that could help or there's also a project by an artist named Nancy Baker Cahill and a lawyer named Sarah Odenkirk where you got additional benefits from the nft if you agreed to the terms of service so they went with like an opt-in model where they gave you something extra for signing up which I like because it you know ease of entry and exit in self-sovereignty and not not creating lock-in I think is important for the web to ethos okay so I see our timer counting down any farting words or it should be closed out here thanks for listening yes thank you everybody [Applause]