Aaron Wright: The LAO – DAOs From a Legal Perspective #376

Transcript

this is epicenter episode 376 with guest aaron wright hi i'm sebastian quichiro and you're listening to epicenter the podcast where we interview crypto founders builders and thought leaders on this show we dive deep to learn how things work at a technical level and we fly high to understand visionary concepts and long-term trends if you like epicenter the best way to support us is to leave a review on apple podcasts if you're on a mac or ios device the easiest way to do that is to go to epicenter dot rocks slash apple and if you're new to the podcast be sure

to subscribe on apple podcast spotify or wherever you listen today our guest is erin wright he's a professor at the cardozo school of law he's the co-founder of open law and he's an expert on the legal treatment of daos in fact he co-authored a book called blockchain in the law with primavera d felipe i believe it was last year that that book came out last year he participated in the launch of the lao the lao it's a dao that is organized as a legal entity it's an llc in delaware and it's backed about 30 projects in the ethereum ecosystem since it came into existence so we had a really interesting conversation about dows and how they're treated in existing legal frameworks although we mostly

focused on the us we talked at length about the legal status of daos in wyoming there's some really interesting developments going on there as i'm sure you're probably aware prior to this conversation i had only like a limited understanding of what wyoming is doing in this space but it's really cool actually that they're making it possible for a dow to be registered and recognized by law and that they have the frameworks also to kind of simplify this registration process i think it's like a very good sign for the ecosystem we also spent some time uh discussing the different types of daos that exist and different applications that exist in this ecosystem and we speculated about the types of exciting applications that could emerge in the future i mean personally i think dials are just

one of the most interesting things in the space and one of my first encounters with this concept the concept of an autonomous organization was this pretty famous mike hearn talk from 2013 at the turing festival at least it's it's famous in my mind because it really inspired me and it it's it was the thing i think that really made me want to get into uh the crypto space back in in 2014 or wherever it was when i got into it and uh he describes this autonomous organization that runs a fleet of self-driving cars and it's like super far out and futuristic um so if you haven't seen this talk if you're new to crypto and perhaps don't know about this talk or perhaps don't even know who mike kearn is you

should check it out the link is in the show notes of course taos have come a long way since those early concepts and most dows now have governance tokens and well you know where you can easily trade governance tokens on one inch it's my go to dex aggregator and i know that when i use one inch i'm getting the best price for my trade across all dexes and amms to start using one inch go to epicenter dot rocks slash one inch and with that here's our conversation with erin wright welcome to epicenter we're here with aaron wright today erin um you are the co-founder of opendoor and one of the founders of the lao and basically a thought leader in the dao space and the legal

blockchain space in general it's a pleasure to actually have you on can can you tell us a little bit about your background yeah absolutely and thanks so much for having me on as i noted uh before i've been a long time listener so it's great to to be able to to join the podcast my background uh is a bit interesting i have a background in law and technology uh i'm a professor at cardozo law school in new york and before joining cardozo's faculty i started a company and sold it to the for-profit sister project to wikipedia so i spent quite a bit of time in the wikipedia ecosystem and i have

been deeply involved in the blockchain ecosystem since about 2011 when i started falling down the bitcoin rabbit hole i had the pleasure of playing a small role to help launch ethereum and work through some of the issues there i've also had the pleasure of working with lots of other great folks in in the ecosystem i co-authored a book with prima verity philippe on blockchain law and policy um i was able to help out a number of great projects when they were starting or were early on including working with joe lubin at consensus working with some of the folks on the chain link team also working with folks on other other great teams over the years

uh from my research with primavera and thinking about kind of this emerging blockchain ecosystem i've been able to help build and co-found a project called open law which is thinking about what i view is is the third leg of kind of the commercial revolution that we're building uh we have bitcoin um as kind of an uh first e-currency ethereum obviously is an axiomatic smart contracting platform and the last leg and kind of the cypherpunk dream has always been a ricardian contracting system which is this idea of linking together traditional legal agreements digitizing them cryptographically securing them um and hopefully providing a sort of interface for the

traditional world or meet space world that uh that i think we still inhabit so that's been a really great a great opportunity to work with so many great teams and obviously build some hopefully important technology uh and kind of related to that and we've been applying some of the tools we developed on open law uh to start building out a network of dows the first dow that we launched was the the lao which i'm sure we'll get into we've also launched another dial called flamingo dao which is more nft focused and we have about three or four more that i think you'll see over the next couple weeks and months that are there in the hopper super cool so you've been in the ecosystem

a very long time so you you were here when the the dow that the entire the dow thing went down where were you interested in dao's before that or did that kind of kick it off for you yeah i mean i actually was an avid reader of bitcoin magazine uh way back in the day and i remember dan larimer writing about decentralized autonomous corporations which was kind of the precursor to daos i thought that that was a fascinating concept so the thought being that you could use at that time the bitcoin blockchain and an interesting implementation called colored coins to begin to represent the organizational structure of a corporation so using a blockchain to kind of record

interests in the entity using those interests to think about how to transfer assets how to build controls into a corporation using smart contracts i thought it was absolutely fascinating and kind of all clicked together uh so not surprising when when vitalik and and others began to you know venture towards ethereum and taos became an important part of that story right dows appear in the white paper there was lots of conversations around dowse that the ethereum community i began to think about i was equally fascinated and the dao itself was really the first expression of that interest right uh so ethereum uh was just recently launched for the

most part even though it took some time to to get beyond test nets and a whole bunch of other technical hurdles but you know i really thought it was great that christoph and and team um began to really push here uh they wanted to build uh what was in the white paper they wanted to explore what these new digital organizations could look like and the dow was really the first great experiment um in that area i remember even before the dow launched um you know seeing certain demos and other things by the selaca team dealing with you know ethereum slash iot related devices which i thought were incredibly cool and and i think to everybody's surprise though the dow just was much more successful than i than i

think anybody would have imagined right it was supposed to be kind of a a small experiment it became a massive experiment and then it had a kind of a spectacular finish which i think was was great in terms of animating people's minds about the possibilities of ethereum but at the same time highlighting a number of the challenges and pitfalls both technical and then over the subsequent months as you know lawyers and other folks began to dig in some regulatory challenges as well so it you know i think it was a the first great use case for ethereum was daos and i do think people had a bit of pts dao after the dao and they were kind of afraid to

to play around and dive in and start to start to see what this ecosystem could look like there was obviously developer teams like the aragon team and the dow sachs team that were that were pushing forward but i think people put it to to the side uh you know as we saw token sales and other other kind of crypto economic systems begin to be explored in you know 2016 17 and 18. but they're back right dows are coming back into focus uh there's a lot of activity in the dow space that i think as you know folks are beginning to pay attention to and if you are a developer or are somebody that's interested in blockchain technology i imagine that it's probably worth your time to start to dig in here and think about what may be coming over the next couple months

and years yeah it would certainly come a long way i mean when you talk about like colored coins and and these things back in back in the early days it like it really takes me down memory lane right like and and also i think i was also very kind of marveled at the at this idea that you know things uh objects uh and and also you know more ephemeral things like like corporations could be managed by some sort of an autonomous organization and if you remember in the beginning and you you kind of alluded to this a lot of the interest in dowse was coming from this idea of managing devices like physical devices so slock it was one uh example of this but even before that it was mike hearn

who had given this really interesting talk about autonomous agents and you know how you could basically have like a car drive itself and be its own autonomous economic agent a lot of the interest back then seem to be coming from this place of wanting to govern physical objects or having dao govern physical objects but it turns out that what what the primary use case has been to govern software projects govern things like investment funds and things like that where do you think the initial the initial vision for dao is perhaps was wrong or why do you think that this iot vision of a dow didn't quite come to fruition and rather we were governing things like software and

uh and investment vehicles where was the disconnect there in your view yeah i don't know if there was a disconnect right i think where i think it's both right i think we're going to see dows manage human endeavors right uh people getting together and wanting to do something more productive and you know and hopefully beneficial to society and i think at the same time and that my current talk i think that was at a london meet up or something along those lines it's fantastic if you haven't taken a look at it i think you should and it's definitely worth your time i think that that's the end point right and so daz will operate on a spectrum from helping to coordinate human activity

and over time as the technology matures also increasingly coordinate machine related activity as well and then the notion is is that these software-based systems uh are natural fits to create efficiencies when it comes to coordinating human activity and at the same time due to their decentralized and autonomous and automatic nature are also going to be useful for coordinating machines and i don't think we're there yet i don't think the iot ecosystem is necessarily there yet although we obviously see lots of continued growth there i don't think the scalability of ethereum or other blockchain-based systems is there quite yet and trust because once you're managing a device particularly something

like an automobile which can hurt people you're gonna want really strong security guarantees um and i think that the last piece is this you know kind of real world to crypto or real world smart contract divide i don't know if anybody has firmly tackled that yet right like the socket folks we're playing around with some early examples with that and and i don't i haven't seen as much interest in that yet my sense is when we get to blockchain 2.0 or blockchain 3.0 which i think we're kind of meandering towards um folks will begin to pick up those technical challenges again but you know at a high level i think dows are a very very big umbrella intent uh they're gonna you know govern both the coordination of people and the coordination of machines

and and i think we're just really taking the first steps in that direction uh after you know taking some steps getting knocked down and now we're dusting ourselves off as an ecosystem and kind of pushing forward yeah i think for the physical objects i think liability is probably one of the biggest challenges to get past and there are some practical examples of this like if you look at say what are the like those you know the scooters that you see all over like major cities i think have probably some similar you know legal challenges around liability and like even i mean i know that for example uh uh here in france there was a question about uh who's responsible if those they're damaged right like uh

or can you hold someone accountable for damaging one of those scooters if in fact i mean they're owned by a company but um they're sort of in the public space so probably quite a few legal questions are on that yeah a thousand percent right so questions when it comes to machines is who's responsible if some somebody gets hurt and in many ways it's it's not that dissimilar with more autonomous organizations so one way to think about taos is to break them down into sub-categories one would be more of a decentralized organization so one where humans are really in charge the second one which i'd consider to be the pure dao is where the algorithm kind of sits in the the center so if that algorithm is coordinating

activity is that responsible if it's coordinating you know physical objects should the algorithm itself be responsible or should the manufacturer be responsible these are kind of meta questions that i think policy folks that are looking into technology or grappling with and will grapple with it in the blockchain context but also as it comes to you know other forms of autonomous devices right like an autonomous car or self-driving car being the kind of first i think major example there so we'll sort we'll sort through it i think there's some some folks that are thinking about where that liability should attach and humans tend to find somebody responsible for something if people get hurt or something goes wrong one inch is a decentralized exchange

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easy on yourself just use one inch and you can let them know we sent you by go to epicenter dot rocks slash one inch that's one i n ch we'd like to thank one inch for their support of the podcast if you look at taos one of the hallmarks is that your that dows are able to make decisions with um various stakeholders right so basically if you look at blockchains in a way they could be described as super low throughput taos so basically you coordinate on a new version of a consensus algorithm or you can stay on the old one and basically then you and basically the way that a decision is made is

you fork and the the fork that kind of that feels legitimate to most people is legitimate so ideally you'd want to make a lot more decisions than whether to upgrade the consensus protocol so what what are the options here so i imagine i mean if you look at dows they often deal with low participation and there's you know problem around the bandwidth for of the attention of individual people how do you make sure that a dow can effectively create decisions between so many different stakeholders yeah i mean this is a good question and a challenge that i think both developers and other folks that are

interested in dowse are going to have to sort through so on the one hand you have tao or dow like structures that's a debate as to whether or not bitcoin and or ethereum are and should be classified as taos in my mind i i do view them as styles you know where you have this code base and consensus algorithm and other aspects of the of the blockchain that's kind of coordinating human decisions at the edges and and or you have you know other forms of taos what i would call more decentralized organizations where human decision making is kind of more at the forefront and people are beginning to use blockchain technology in order to to coordinate their activity

at the same time and one of the major benefits of taos is that they lower transaction costs right the thought is by using smart contracts by using blockchain technology by using other aspects you can reduce the cost and friction of coordination so the transaction costs go down at the same time there's one transaction cost that you can't limit with blockchain technology and that's attention right so there's there's a cost to accumulating information to assembling it to processing it to taking and making decisions related to a certain organization and that's why i think in part we see low participation rates not everybody is going to be engaged they're not going to invest their time energy to actually get up to speed on certain decisions

so you see in some dials that the participation rates are very very low and in my mind that's not surprising when we spent and when i spent time in the wikipedia ecosystem it was very very hard to get people to edit anything right to even click the edit button to change one word on wikipedia it was about two percent of the users of wikipedia would actually click the edit button and a fraction of a percent would actually make an edit and so it's not surprising particularly in online environments that people are not going to be actively participating many people just like to lurk and read and kind of process um i think though we see something a little bit different in some of the dials that we put together most notably in the lao and also flamingo

where the participation rates are higher they're like 60 to 70 percent i think that's in part because the amount of assets that uh that folks are assembling together is higher so there's more at stake right so uh they're able to um and are more committed to actually taking actions or weighing in on certain things because there's a financial incentive for them to do so and because they've put up they've contributed a fair amount of capital as part of this collective so i think that that's one way that uh that some of these solutions may be addressed it could just be making sure that people put enough at stake in order to guarantee a sufficient amount of participation at the same time i think we're seeing other experiments where they're flipping kind of the the

question and so the folks at connie i know are looking at this and i think it's quite interesting they're basically saying that if you put up something up for proposal it will pass unless people vote against it so they're changing the dynamic which i think is uh clever and smart so if uh people aren't um you know violently opposed to a certain activity or something that's going on within a dow things will move forward right you have an implied consensus around that but the folks that are participating are paying attention at that point in time if they see something that goes wrong they're able to block that i think we're also seeing other forms of governance mechanisms whether that's you know weighing different conviction

related to a certain activity and that people are going to experiment with to kind of solve this attention issue but the big barrier in my mind at least is this the cost of attention right there's cost associated and affiliated with it and that's that's something that we're gonna need to figure out ways to uh to deal with um but the nice thing about dows is that we can actually play around with these mechanics for the first time right we have a sandbox uh or uh an ecosystem where we can take these governance related decisions and not the complex governance related decisions that we have for kind of core blockchains but smaller groups of people and and we can begin to play around with different ways to address that so if we

want to optimize for high participation but we can play around with different approaches and implementations to do that maybe we don't want that right that's what the folks at colony are beginning to think about maybe we don't want we have to assume there's not going to be high participation you know maybe we need to deal with it at that point in time maybe we use markets and and some sort of prediction market to make decisions right lots of folks are interested in that as well um but at least now we have the framework to begin to explore those things and that's very different than the traditional world and that's in part why i find this space so interesting these governance decisions which are very hierarchical hierarchical in the sense of like a corporation or fairly hierarchical when it comes to a traditional fund structure they've been kind of set in stone over

the past 50 to several hundred years and now we have the opportunity to begin to play around and experiment with new forms and my sense is through that experimentation even though we don't know the right answer we'll figure out better ways to begin to govern ourselves and hopefully make better decisions and i think particularly in today's times that's sorely needed across the board no matter where we are so around 10 years ago or so in europe there was this huge wave of euphoria in iit circles for liquid democracy where basically you would delegate your vote depending on the topic to different people do you think something something like this has a future

in the context of the house yeah i mean i think we're starting to see the threats of that so a more traditional lawyer would call that proxy voting so proxy voting has existed in corporate in corporate context for quite some time so you can provide somebody else the authorization to vote on your behalf uh the problem when it comes to more traditional corporations or legal entities there's a lot of expense and cost in in providing a third party with uh the ability to vote on your behalf there's a lot of difficulty and expense and kind of aggregating those votes you have to usually use a third party service to implement like some sort of uh shareholder vote or other other voting scheme so it's quite expensive on a

on a blockchain or an ethereum it's super easy right you pretty much have to put an address sign a transaction pay a little bit of gas and then that person can be your proxy so on the malik v2 smart contracts that we helped put together that undergird the lao and also flamingo we already have delegated voting uh other dow frameworks have it as well and we're starting to see in some of these organizational dows related to open source technology things that are trying to manage defy protocols or other emerging blockchain protocols we're starting to see services built on top of it so boardroom is a good example there where they're beginning to make it easier for you to basically back a protocol politician so that that

person can make and or take a an action on your behalf so i think the it's there the substrate is there right like the basic core functions are there but the tooling isn't yet mature the the ecosystem of dowse is not yet mature but i do think we'll start to see things that are what i think you could call liquid democracy or kind of a more advanced form of proxy voting emerge in part and i think that that could be a good solution to solve this information problem right if you are a protocol politician if you're somebody that's aggregated a lot of votes from other folks that are participating in dao's then you may have an incentive to actually cut through that information cut through the noise of whatever information these dials are

producing and invest your time and resources to making good decisions uh so i think it's i think it's a super fascinating part of kind of emerging dao governance do you think there's an upper limit to how many people can coordinate within a dow yeah this is a good question so um and here you can go back to some famous economist so ronald kos actually wrote um not just about transaction costs but he also wrote about transaction costs and organizations and how they form and how they're structured uh he has uh some pretty prescient um writings on this uh topic where he noted that when the cost of organizing and and when the ability to disseminate information related to an organization

is reduced so you can think of that as the smart contract based dow frameworks that people are putting together and then the internet as a means of propagation it suggests that you should have organizations that are much larger in scale and that's why i think you've seen some folks say that taos at some point should be able to coordinate you know tens hundreds uh hundreds of thousands if not millions of people um i do think that the entropy and the complexity of organizations that are much much larger may provide some sort of upward bound but i do think we can get to dows that are of that size assuming that scalability solutions are implemented there's innovations when it comes to

governance mechanisms and i just think naturally they'll gravitate towards larger organizations that being said um in in the lao and also flamingo it's a it's a much smaller group of people so due to u.s legal regulations it's capped at 99 members and and we found that even though it's not five people uh it's it's kind of like a smaller roving band of uh folks uh that it actually is working pretty well right as noted before we have participation rates that are high much higher than what you see in other dows um and you you also have some form of cohesion but i do think that at some point are going to get quite large and and that's not surprising right we have corporations that are quite large too

so if you look at some of the largest corporations in the world you may not be fans of those corporations you may not like their products but they're coordinating hundreds of thousands of people whether that's like a mcdonald's or like a walmart or even a government right they're they're coordinating the activity of lots and lots and lots of different people so i don't see conceptually why dows wouldn't be able to do the same thing i think the framework component of this is is what's most interesting here it's sort of a governance system to end all governance systems because the governance system itself can evolve to uh cater the needs of uh of of how it scales so setting aside uh

platform scaling solution problems like so like the ability for ethereum for example to process transactions uh at scale um the the governance system itself can uh evolve as the size of the number of participants grows right so we were talking about this earlier um a governance model that implements a genie coefficient for example that is malleable based on the inequality of um of wealth in the system but you could also think of a governance system that evolves based on the number of participants so it could start off for example as a very sort of stake based system but as you start approaching higher bounds of users then it turns into something

more akin to a democracy where you have like a one person one uh type of system i i i personally i think this is just like the most fascinating uh aspect of this is that it it's it's governance technology for governance as well uh from from a meta perspective yeah absolutely and i think the other areas outside of i think those are really great examples i do think dows can also explore multi-token models which i think are underexplored at this point we're starting to see some projects that are digging in a bit more there but i do think multi-token models could be helpful to start to segregate people and taos into maybe different groups or folks that have different rights or

are weighing in on on different decisions which can allow for specialization and maybe cut through some of the some of the noise or some of the challenges of coordination so it's a playground right it's a governance it's a governance framework a governance playground we have the ability to to do the same thing to organizations like we've done to software which has evolved over time and that's important and something that that i do think is going to you know to go back to your question before you coordinate a whole bunch of different people start to seep into lots of different places uh because it's probably more efficient right if you have better governance and you have lower cost abil the ability to operate these organizations at lower cost it should be in the long arc of history the end point

for organizations right there's probably not going to be a reason to have a corporation or an llc or some of the existing organizations we have today if you have something that can get propagated around the globe is entirely digitally native has you know lower costs to operate and also has the ability to actually solve some of the corporate governance or just governance in general issues that that we know that existing organizations have developers can experiment and figure out the kind of right approach there can you illustrate how a mighty token dao might work yeah so this is something we've thought quite a bit about uh so you know there's lots of legal challenges obviously around dao's and i'm sure we'll probably dive into that

at some point um you know one question is if there's a profit that's made who should be entitled to that profit uh in the us and in other jurisdictions we say that only folks that are wealthy accredited investors should be able to hold those tokens trade those tokens et cetera and while those are in my opinion dreadful policies that is just kind of the law of at least my land and many other folks land um with a multi-token model though you could support those requirements whereby folks that may be entitled to distributions are let's say accredited or wealthy and able to satisfy the requirements but maybe you want other folks to weigh in on governance so you could have a multi-token model where you split economic rights from

governance rights and that may be kind of a first step towards the democratization of some of these organizations where you're gaining the benefit and the wisdom of a group of people that may be interested in a project whether it's an open source project or or otherwise that can weigh in uh on decisions but at the same time the the value transfer is kind of held by another party you can almost think about it and i i have a us perspective here as a separation between the house and the senate right you can have uh the house the the folks that have the governance votes saying hey you should be paying attention this this is important to us we believe in this project but anything dealing with assets or transferring assets go through another house right the folks that have another token

and maybe that's a decent way to to a navigate some uh some legal requirements and be uh ensure an appropriate separation of powers we've already segued a little bit into into the legal model of taos now so i mean obviously the legal framework has come i don't want to say a long way but it's it's come some way since the dao so if you speak with legal dao people they typically distinguish between wrapped and unwrapped hours okay can you explain to us um what the distinction here is sure so there's a always been a question when it comes to daos

as to what they would be characterized under the law um and what are some of the uh tricky legal questions that may emerge the the first time i learned these questions there were some great programs that mit put together right before ethereum launched looking at bitcoin and ethereum and other blockchain technology and we began to have a conversation about well let's let's assume that a tao exists what would it be characterized as at least in the u.s and in many other parts of the globe they be characterized as general partnerships which which means that each partner would be responsible for the activities the other partners both from a liability perspective and potentially also from a financial perspective so that's not a great place to start so folks began to think about well how

can we limit that and they looked at different organizations that exist today and looked at organizations like a limited liability company or some co-ops or other other forms of organizations and began to think about well why don't we use this vehicle as a legal wrapper will wrap it in this more traditional entity but the engine of it will actually be administered entirely or primarily through software uh or some sort of software-based system so that's the idea of kind of a wrapped dow where you you have a dow that's embedded within a traditional legal entity uh but it's operating the way that folks that want to participate in dao's and or the developers of the daos are intending i

operating you know via software um and we've seen some uh some early experiments in in that vein uh so from kind of these more academic conversations we've seen over the past couple years folks like ross campbell who's on the open law team who set these up and the dork team began to explore what wrapped daos would look like in the u.s and then obviously with the lao and flamingo and flamingo dao we've been pushing on that some more the way they tend to work is that they're a limited liability company in the u.s and that modifies almost a number of the default rules

under the law which is permitted using a contract a traditional legal contract such that it can set up something that's akin to what people want in a dao so what does that tend to mean well i can't speak to all the projects but i can speak to what we've done on the lao and flamingo side it means that when you join the dao you're not joining as a partner um you're joining without and to the extent limited by law without any other fiduciary duties to you to your other dow members you're agreeing that potential conflicts of interest are waived so that we can kind of preserve this arm's length notion of of how dios operate we're making clear that the underlying smart contracts

are governing the behavior of folks within the organization uh so it's not as extreme as what we saw with the the dow itself where they pretty much had a terms of service that said the code rules or something to to that effect um but it's trying to kind of preserve that same that same feeling and then it's dealing with other issues that that lawyers worry about things like dispute resolution things like representations and warranties these very boring basic things that just help clear out some of the cruft if something goes wrong and so that that's how we've set it up it's set up as a member managed limited liability company with the default rules related to how those limited liability companies operate modified

such that it can accommodate the dow the u.s at least in my understanding is a bit unique here there's no need to have a manager of a legal entity in the u.s they can be entirely member managed and they can enjoy a limitation of liability which means that they're not responsible for for activities uh related to the organization except to the extent that um it relates to their activities within the organization and uh it's it's been growing uh pretty quickly uh in terms of in terms of um in terms of development so i assume that the 99 member limit kind of arises out of that what's the constraint here and is there any way to lift this

so those are not organizational or corporate law constraints instead those are other constraints that are in the u.s related to securities laws and a related statute called the investment advisor act so for dows that want to pool capital and deploy it for investment purposes there's a couple additional concerns one is what are the interests of the dao itself are they securities or are they not securities and i know as a long time listener you guys have spent quite some time looking at some of the legal issues related to tokens so i don't think we need to go into that but it's not that dissimilar from some of those challenges that we saw with uh characterizing tokens from you know the 2016 to 2018

token sale eu euphoria and then related to that you know if um if you pull together capital from a lot of different people the us tends to view it as a as something akin to like a mutual fund and you have to go public at that point in time so there's some limitations the most notable one being if it's under 100 people uh then those requirements don't necessarily apply so those are some other some other kind of parameters that we we kind of had to navigate through and so that's why in the lao you have at its core it's a limited liability company that defers almost entirely to software and it deals with all these ancillary issues like we saw with the

dow in terms of limitation of liability in terms of questions related to fiduciary responsibilities including questions related to dispute resolution and then at the same time to comply with securities and or the investment advisor act it's limited to 99 members in the abundance of caution we've limited it to accredited investors although my my personal belief here is we shouldn't have needed to do that um and that's that's kind of a separate issue but something that we're hoping to fight over the long run um and um it's it's grown pretty well you know so the allow as an example started with about a half a million dollars worth of ether um in april this year at least as of today it's circulating around 15 million dollars

flamingo dao has about five million dollars in it and just to give you a point of comparison you know the dow when it launched had about 50 million dollars so using this approach uh we're about halfway to where the dow was uh just taking a little bit slower of a burn uh in terms of kind of growing up the ecosystem to what extent do you think the the frameworks of the limited liability company can dissolve into the code like i'm thinking about things like dispute resolution for example these are things where we've already observed you know a significant number of examples in the blockchain space where we have dispute resolution like things like like like aragon of course the aragon court when do you think you know we'll be able to have a sort of

like legal dow that exists only as a dao is that even where there's no rapper uh company around it yeah i think that dispute resolution at least for it to be enforced by traditional courts it's gonna need some sort of legal agreement that's attached to it it doesn't necessarily need to be a heavy-handed one but there's a certain provisions that if they're in a binding contract and if they defer to some sort of arbitration system whether it's uh you know digital based on arbitration system or some other more traditional arbitration system it will be deemed enforceable um so i do think they'll be pretty much like a light light wrappers around a lot of dow

structures particularly sophisticated ones and particularly ones where the amount of assets that they want to administer or pool are fairly large i think until there's an actual modification of the core statutes to to permit this and you're going to have to have some some sort of light pending on it you know that being said if you can wrap it or wrap a dowel or at least wrap some sort of relationship with an a contract and that contract does have an arbitration provision in place at least in the u.s um it's pretty hard to impeach that so the way i view this in many ways is these contracts create the space

so that people can experiment in the digital world you can actually begin to kind of quarantine out um the ability for more traditional um entities like courts etc to begin to administer what's going on in the online world and with the caveat being that it doesn't obviously absolve criminal related questions and concerns so right this is something i totally neglected as the enforcement aspect which of course uh for the time being at least and probably for the first evil future uh relies on on the state enforcing yeah exactly yeah yeah i mean you see some early examples and there's some great projects where that's beginning to get challenged right so one i do think

underappreciated thing about smart contracts is that they can in effect enforce right the question is how do you get a claim on those assets uh via a smart contract right so unless people are depositing the amounts in dispute into some sort of smart contract an online dispute resolution provision comes in place and that arbitrator group of folks has the ability to administer those assets you're probably are going to you know want to file that in a traditional court especially if you've lost a tremendous amount of money and enforce against that so i think i think we'll get there but there's not enough enough assets that are able to be easily managed on chain and some of these questions related to um giving an arbitrator

the ability to settle a dispute are still not fully worked out although i imagine folks will figure that out such that we can kind of have a full close loop system but if that falls in place and you wrap it in a legal agreement there's not much that a court can do to un unwrap it if if it's done appropriately and if the decision is is administered in a reasonable way and there's obviously exceptions to that but it makes it really really difficult to do that and that means that we can kind of move into an entirely digital framework which is something i'm interested in and kind of shed some of the more traditional aspects of the legal system et cetera let's dive into unwrapped taos um a little bit later

but there's also i mean so basically in the in the when you talked about the raptors you kind of talked about giving um the dow's illegal personality of like some sort of legacy system there's also novel legislation that actually sees dao's as a legal that kind of imbues them with legal personality in their own right right um can can you talk about the legislation that's kind of come into force there that's going to come into force soon um and how you see that yeah sure so um in the us there's been a couple attempts at kind of legally recognizing dao's the first one it was in a state of

in the state of vermont uh which passed an act called the uh bb blockchain-based llc so the bb-lc it was a really important but pretty narrow act that just said if you have an llc you can designate it a bblc blockchain-based llc and that's going to be fine under vermont law i along with other folks have been working with some state senators in the state of wyoming which has passed a number of bills related to blockchain technology caitlyn long who i imagine many of many of the folks that are listening are aware of she's been historically spearheading that effort although i think other folks are jumping in

increasingly there as well um and the idea is and this is a bill that's been pushed through a committee in wyoming is that you'd be able to set up a doubt in wyoming so you know xyz dao so it can actually be called a dao it'll be recognized by the state of wyoming you'll file one document so instead of extensive paperwork and if you've ever set up a business you get a stack of paperwork that your lawyer lawyers will prepare you have to sign a whole bunch of different things it's very confusing so the thought here is let's strip that all away you can file one document it's called an articles of organization it identifies the underlying smart contracts that are managed in the system

you're designating uh the dao as either a member managed dao or one where humans are involved or an algorithmic dial and where an algorithm is involved you can put in place any legal provisions that you need to either account for things like dispute resolution modify certain provisions to just make sure it fits neatly on onto your organization um and then you can file this document and you will have a dap and what's also interesting about what wyoming is pushing towards they've authorized this although it's not built yet they want to make it feasible so that you can file things in wyoming via an api so i think we're rapidly getting towards a future

where you're going to be able to set up an organization um you know hopefully from command line right you'll be able to load up terminal type in a couple of commands and you know push that to wyoming push some code to ethereum and your organization is set up um and on some of the automation tooling that's in part why we built things like open law you should be able to automatically generate those filing documents as well right that's incredible maybe pay the fees in ether as well like just right there in your in your coat or you know or usdc i don't know or you know but some something that presumably and and will hopefully be settled on on ethereum um and and that's amazing

and not only is that amazing that you you could soon be able to do that it's also amazing that the cost of setting up the organization should go down right so just like we saw with software and if if the agreements themselves this document that you need to file become standardized or there's a couple templates that people can use the smart contract code is standardized something like the malik framework or some future framework and and the cost that wyoming charges to set up an organization are not unreasonable it's several hundred dollars which i know it may be unreasonable for some but in the scheme of things is a lot better than where we are today and that's pretty incredible right um instead of spending tens of thousands of dollars talking to lawyers that are going to run you in circles

and you know putting together agreements that in many ways are unnecessary uh or unnecessarily complex um you'll be able to hopefully uh you know treat it like any other software just another task that you need to do another thing that you can click off your your uh your checklist the the very idea of interacting with any government authority over an api is something that i never thought i would see in my lifetime and living in france i never thought this would be something i would see in my lifetime but this is very very cool yeah so you know the api piece that you know i think they're well-intentioned i don't know how far along that is in development but um i think that that that's where we'll get

at some point um and then on this at the same time i think going back to what we were talking about before then we'll see experimentation on governance and and really have a hopefully a framework to begin to do that can i just loop in there so basically if if you talk about the internal governance of the dao i assume that the state of wyoming won't be able to butt in there right so because you could you can have all kinds of internal dispute resolution that wyoming wouldn't be able to facilitate and that kind of that holds is that so and so basically the legal personality that the dao has is only in external circumstances so basically it can enter into a contract with like a supplier or it can it can contract people to do things for it and can open a bank account

but i assume there's no dispute resolution and you can't you can't sue um a fellow tao member in front of a wyoming court for the breach of contract or whatever i assume i mean you could um the wyoming courts would have the ability to administer any disputes for any bombing entity but in general in the u.s the u.s loves contracts we love them and we think that they're absolutely fantastic what legal academics will call this is private ordering so we enable to a great degree and probably to the great greatest degree in the world the ability of individuals or groups of individuals to organize their fair

using contracts and the state has very limited ability to upend that um and that includes to decide how you want to administer disputes you want to use aragon court and that's in a contract and that's written down clearly all folks have signed it you're going to use aragon court right there's there's not going to be much much choice so if you walked into wyoming and talked to a judge there he's going to say well look in this contract you agreed to use aragon court so what are you doing here right go to aragon court and get that administered and if you're trying to kind of work around that you're not going to have much wiggle room to do that and in general the state doesn't really get in into the affairs of private enterprises right whether that's a

corporation you know and or um a company and what that would mean is also a doubt there's obviously lots of exceptions to that but in general they're they're fairly narrow um and that's exciting um there's certain abilities though in this statute for wyoming to you know basically unregister a dial if it goes completely haywire and that's something that we were concerned about um and there's also if you're going to have a purely algorithmic system there's a requirement now you're getting you know like a charter from the state of wyoming so you have to give something up and what what we propose that folks have to give up to set up an entirely algorithmic system so something to kind of manage this

future autonomous car that i think folks are thinking about it's just that it's upgradable right in some capacity there has to be some ability to upgrade it uh so that's a trade-off that i think the state senators uh at least those on the committee thought was somewhat reasonable and that may change over time as it goes through committee et cetera but one of the dispute resolution things that have come to mind i don't know if you guys have thought about this but what what if one of the members of the dao is another dao and how does that how would one then handle dispute resolution when you have perhaps like a sort of cascading dowse right that uh at some point have ownership and a dow and there's

there's a dispute that needs to happen there right or dispute resolution yeah well that happens all the time right in traditional legal arrangements right like a corporation can be a shareholder another corporation or a corporation could be a shareholder and an llc and the llc will have an agreement that has an arbitration provision so you just have to find kind of the operative agreement to deal with the dispute and then you you look to that so that's why to your previous point i i just think that there's probably going to be some light pinning with some legal uh documents it could be something like what we're building on the open law side where you're able to automatically generate them for more complex things it could be something even like in terms of service or you know some sort of click through like related agreement that that will

that will kind of deal with some of these types of questions can i just ask one last question on the wyoming framework so basically if if your dow goes haywire and it's kind of deregistered by wyoming what then happens because i mean basically it's on the blockchain it doesn't you can't unsummon it it's still there so basically it does it no longer have legal personality or what what exactly it doesn't so it defaults back to a general partnership is that it or is that exactly yeah that's the thought i mean there's not the state can't they can't take it down right um you know that one thing if it is upgradable that could be conceivably part of some sort of court order right um that you know you need to

upgrade it so that it no longer is operating uh you know these are the edge cases i imagine over over time those edge cases will become a little bit more magnified so that that's the concern that folks have but as as you know and as i'm sure many of the folks listening and know once something's deployed in ethereum uh or other you know comparable blockchain based systems it's it's hard to put the genie back in the bottle if people want to use it so that's some of the challenges this is so cool i'm i'm i'm super excited to see how this actually plays out and so it's going to be wild um so wait wait what what about if a dao summons another dao and you know through this this api like creates another legal

entity can we have a dao owning a dao in wyoming yeah i don't i don't i don't see why not i mean it's the same thing traditional corporate structures you'll have a corporation that has a subsidiary right so you know with the lab we're already members of other devs and that's been mediated entirely through just smart contract based calls so it's already possible to do this so you know the the lao is a member of pi doubt and so the members voted that they wanted to join paidow um and then we did right so once the vote happened right smart contracts were triggered once the smart contracts were triggered it interfaced with uh you know the aragon dow that that undergirds by dow and and we joined so you know i

i think it's gonna happen there's nothing technically limiting that ability to happen yeah there's nothing technically limiting it i just wonder what kind of complexities might arise when you have sort of like dows and child dials and child dials being completely automated and autonomous themselves forming like new dows through some sort of an api and then like i don't know it just seems like like a beast nest of complexities to me with some some sentient ai uh administering the the entire thing yeah yeah i mean not even an ai just it could be pretty simple business logic i mean i think like the to come back to the mike hernandez vehicle i think like in his example

there was this this notion that at some point if the vehicle had sufficient capital it could invest in other vehicles and those would be sort of autonomous vehicles and themselves and there would be like a child vehicle the other so this this this kind of thing has always fascinated me since i've heard this story so this kind of like just um awakens all those fascinations again yeah again i don't i don't think that there's there's nothing conceptually that would limit that there's a couple technical requirements in it you need the entities need to have a registered agent which is basically like a point of somebody to contact in the state of wyoming so that would have to be accounted for um but you know you don't need to have a manager like there's nothing necessarily saying that

you need to have a manager uh of an organization you need to have you know some legal person that would probably file it so that's a big question i don't know what's going to happen with this api and whether or not there'll be some sort of like technical issue that may that may muck up what you're just describing but i don't see why you would necessarily not want that to occur i mean we already enable humans to do that why wouldn't some sort of algorithmic system have a the same same general ability to do that i agree yeah it's but it's a good question i don't i haven't fully thought that through but i'm gonna make sure to spend some more time thinking that through over the next couple days maybe your next book so if you look back at the history of organizations

it kind of seems it seems weird now but i mean you didn't always have shareholder based organizations right so basically if you look at if you look at the dutch east india company that was founded i believe in 1602 um and that was the first one of those do you think this is that moment again um do you think daois are going to um have an analogous position in our society and legal system so my belief is yes right for the reasons described before you have an organization that can propagate anywhere around the globe via the internet and i do think

smart contract based organizations will just be cheaper and cheaper to administer and presumably over the next x number of years will develop superior governance mechanisms and that's a big question and you can disagree with that but that's my belief so i think that this is going to be the the default almost like how folks argue that bitcoin is the soundest money and obviously all money um over time at least as the argument goes well we'll gravitate towards the soundest money i personally think that taos will be and are the soundest organization um for the digital age and that means that increasingly i think you're going to see more and more organizations begin to operate via daos and this is not fully surprising so you

mentioned the dutch east india company and but if you even go further back in time people have been setting up organizations of different stripes for millennia you know romans had limited liability entities to deal with trade and shipping obviously we saw the dutch and then english state chartered corporations that really led to the age of exploration and with all the benefits and the downsides related to that in the us though you know we we came up with the state chartered corporation that was 1811 in new york so we said why do i have to ask permission from the state i should just be able to set this up uh anytime i want if i satisfy these requirements very very american way to approach it and then corporations became the dominant

form when there was the railroad boom in the 18 um you know in the 18 mid to late 1800s in the u.s it led to the birth of preferred stock or different forms of stock that a company can have which is what fuels venture capital investing when we saw the increasing internationalization finance we saw the birth of the limited liability company which is what predominates in in in the us now for many businesses so i think for each technical age and each technical innovation we've seen kind of a a subsequent shift in the way we decide to organize our affairs and and i think that dows are that shift for the internet and there's no reason

why you shouldn't have an organization that can stretch across the globe that's lightweight that kind of reflects the behaviors of how people interact right they don't necessarily want to join together as like partners like venturing out to do something they don't want necessarily to be have somebody in charge of them in some sort of you know top-down hierarchical way they want something that's looser more arm's length and that relies on software so they can actually begin to coordinate things because it's a bit more trustworthy than these you know paper-based agreements that are that are hard to administer or expensive to put together and and specific to a particular jurisdiction so uh i just don't see how taos don't win when in the long run and i think

we're starting to see that play out i don't know if if you've looked at the numbers and uh i do like numbers but if you go to platforms like deep dow which is a really great platform if you haven't been there that's uh taking a stock at the dao ecosystem at the beginning of this year there was about a little under 10 million dollars worth of digital assets in taos and it's up to almost 500 million and the last time i saw uh growth like that i think it would be d5 right uh when we saw you know in 20 you know 1718 when we started seeing the first d5 projects kind of emerge there was a couple people um you know a couple projects that we're getting some traction uh but i i think in the dow ecosystem we're gonna we're gonna see

similar levels of growth i think that's particularly true for the taos that you mentioned before those managing open source projects i do think the developers have a significant amount of demand to either have their assets or the entire project kind of managed in a more democratic participatory way so i think we're going to see a lot of growth here and then as the blockchain ecosystem continues to grow it eclipses more than a trillion dollars in assets you know tens if not hundreds of trillions of dollars then it's just gonna be difficult for organizations to compete and they're gonna have to you know they're gonna have to copy it just like just like they always have done so that's uh that's how i see things playing out super cool so just before we dive into

the current dao ecosystem um one last theoretical question on dao so basically we've talked about um wrap dows in both legacy uh rappers and novel wrappers what about unwrapped dao so if you don't actually have a legal wrapper for ya dao is there any way to not automatically default into becoming a general partnership yeah so this is the tricky part it's going to depend on whose members and it's going to depend on all the jurisdictions in which they reside um so at least in the u.s and in europe that tends to be and i'm not a european lawyer but this is my understanding that tends to be a general partnership that that's also why i think it does make sense to have some sort of contract in place amongst the members

uh i call those uh contractarian dows so you can have um a contract even if you're not legally recognized governing the affairs of the different members and potentially limiting or waiving rights that you think are sensible um as a as a group to the extent permitted by by law and that's a complex question you know which law governs you know what rights you're able to waive and you know some things you can wave some things you can't when it comes to partnership but at least i think that gives you um some shot at organizing things and dealing with these these risks it's you know being a lawyer is a little bit like being a security researcher you're not thinking about the happy path you're thinking about the bad path right and we saw some dramatic bad pass with like the dow itself where there was big

questions and and if there wasn't the hard fork and you know people really lost their shirt my sense is the courts would have weighed in at that point in time um but you know dealing with some of those downside risks i think are important uh particularly if you're trying to build something that's you know potentially massive we're even seeing that in the maker down ecosystem right as maker dial is becoming more and more important as dive is becoming a more essential asset to the crypto ecosystem and potentially other ecosystems these types of legal questions about who's responsible is the foundation is it somebody else they're beginning to come into focus and i do think agreements that are put in place can can kind of stave off those forms of what i call like regulatory attacks in the in the future

so that's something folks should consider um and i think there's some great projects that are already considering that and i think we'll start to see some more more uh following that path too because legal recognition is not for everybody right so either philosophically or you know or otherwise um but you know we decided to go down that path and the reason we kind of thought about it is it's a little bit like coinbase i know coinbase is a bit of a a touchstone but they took malcox right they just copied mount cox and just said hey let's do it in the right way in the u.s um in many ways what we're trying to do with the lao and this ecosystem is is explore the same thing like can we do this in the right way just so we can push the ecosystem forward

um you know we know that that's not going to be the right approach for everybody though speaking of ecosystems so we've talked about lots of different datas they at least mentioned a few you know looking at the different dows that exists do you have a way to categorize them like how would you kind of put them in different uh for different use cases or applications yeah so i think um i think one major category is this idea of using a dow to coordinate an open source project right i i think we're seeing that first emerge in the blockchain ecosystem for d5 projects but i don't see any conceptual reason why that should be limited to just blockchain projects and i think we're seeing interesting experiments like dev protocol

and some other interesting projects that are trying to kind of bring and you know bring comparable models to other open source projects so i think that's that's one area i think the the second area would be what we talked about before these like base protocols so that's an argument i tend to think that they are kind of down like in structure things like bitcoin and ethereum and so i call those like protocol level dows and and then i think i think that there's a lot of potential use cases around pooling capital so if you think about a lot of industries at their core what are they doing they're pooling and deploying capital so venture capital is an obvious example there right people pull together capital make investments into projects um but if you

think about media it's not that dissimilar a label that may be funding music or some other form of creative endeavor there they have capital they have folks that decide where it gets deployed this they pull capital and decide where it gets deployed uh very similar so i think you're going to start to see a lot more dows in that ecosystem if you think about insurance it's just pulling capital and deploying it if you think about other forms of fund structures whether that's hedge funds private equity funds et cetera pooling and deploying capital um and really any corporate forum is is not that dissimilar right if you're running a dev shop you're you're pooling instead of intangible capital it's human capital right so and you're pulling human capital and deploying it so i think that the pooling of capital is

the other major category and that's the one that we're just beginning to explore with projects like the lao and flamingo dao and a handful of other examples here too so that's kind of my broad categorization there you also have um some sort of coordination tools right so basically for instance um there's keeper dao which hasn't been around that long so basically for uh for organizing the extraction of mev um is probably how i would characterize it do you have any other towers that are centered around coordination and basically um division of assets yeah so i think that this is an

interesting potential new frontier for dows so viewing it dow is almost like a like a a point four coordination or also a point for signaling so you can view a data as almost like a a bit like a web of trust of some sort so if you're like interested in a particular topic or a particular project you can you can see dao's potentially be useful for curation or dissemination of uh of certain things so an example we did this in were for flamingo down which is an nft focused out we had a dow drop where an artist was able to drop onto all the members and nft that that they created so they used the dao as kind of like a vetted web of trust of folks that were

interested in you know nft or digital art related things so i do think that there's going to be more forms of use cases for taos i just think we're we're just starting to scratch the surface and what we're doing is looking towards previous models and trying to apply them in the digital context a little bit like web one and then we'll start to see some more kind of emergent things that we may not be able to think about things like keeper tao where things like using dabs for curation or um or other other aspects like that that could also be potentially interesting so i don't have all the answers but um i and i definitely don't but i think that there's lots of ingenious things that we'll be able to do with organizations now that we

we're effectively turning them into software so what's the outlook here where do you see this space evolving in the next say decade and what are some of the risks that you might perceive i mean one of the risks and this i feel like i mentioned this in the in in a short rundown but i think given the current context with the social media censorship that we've observed you know is there a space for daos uh to occupy some uh some of that space and you know what are what are potentially some of the risks that that might incur on society sorry i went from a broad question to a super narrow question no well you know from my my vantage point i hope that blockchain technology

can come and and hopefully address some of the issues that i think we're seeing with centralized social media platforms and other services and hopefully by banding together um in these more loose digitally native structures we're able to replicate or if not improve um improve what we're seeing uh on social media otherwise with all the caveats that about scalability and all the other issues with some of these broader kind of uh more consumer-focused applications we'll have i think the outlook for dows is bright you know i think it's one of the core use cases it's something that's animated both the bitcoin and ethereum communities for you know a number of years now i think the tooling is is coming into place so we we have shaken off this pts

tao i think molok dao was wildly innovative i think amin and team who put that together i really deserve a pat on their backs because i think it was tremendous work i think we're going to continue to see some kind of core innovations around the underlying smart contract frameworks so some issues that daos are facing are not just regulatory questions they're actually just nitty gritty technical issues it's very expensive to deploy a dow it's very expensive to run a dow in terms of gas and other other issues uh so i do think we're going to see innovation in in that realm uh you know on the open law side we've been working on this um we've been putting together what we consider to be the third version of the molok dao framework which means that you'll be able to set

up a more modular dow you'll have the ability to vote on governance related decisions at no cost and transfer assets if there's no evidence of fraud effectively and the cost of transferring that asset which is you know a couple bucks of gas at least when when things are not entirely insane um which we think will lower the cost related to operating dows which is a big pain point and a problem that needs to be solved i think what we were talking about earlier in the show related to the appropriate way to get people involved and and participating in these structures is something that needs to be solved but i think we're getting close to to having at least frameworks where people can begin to experiment there and then the last is regulatory

questions so we may have figured out a way to set these things up but i'm not satisfied that we can only set up a dao in the u.s that's under 100 people i want to see those dows that are tens of thousands of people so i do think that there's the long slog of convincing the gray-haired and grey-beard politicians that that have a disproportionate weight on our lives and that it's okay for people online to organize and do something productive together i think that that's a pretty reasonable argument to make but and something that that does need to be does need to be made and hopefully we'll be able to to begin to do that yeah i mean but if i put my regulator hat on for a second it's a great hat it's a it's a green hat uh

for some reason but i i if if i if i put that hat on and and uh and i think okay well uh this is great but i mean a dow can also allow for extremist groups to organize for dows to also serve purposes that are not in the common good what what is your answer to that concern i think that's always a concern right but people can band together to to do bad things all the time right and plenty of people set up legally recognized entities and perpetuate a tremendous amount of harm to begin with so i think it's just like anything else if you're putting together a dow to set up an assassination market or something

crazy like that and it wouldn't be a good conversation if we don't dive into those types of questions you know there's other regulations that that you can you know there's other regular regulations that can apply there and if folks are doing bad activity and can be identified and that may become more challenging over time as you know cryptographic primitives become easier to to implement et cetera then you know i think we're good we're just gonna have to grapple with these types of questions i don't i don't know you can't again put the kind of genie back in the bottle you just have to kind of deal with the hand that's dealt how large do you think the overlap between regulatory um reach and hours will be so basically if you look at

technology where it's now and where it's going you can kind of see that it relies on centralized infrastructure increasingly less and we see the rise of privacy protecting technology on ethereum and other platforms so in principle it would be possible or feasible to actually partake in daoist completely anonymously without being able to be traced do you think taos will evade regulatory capture or i mean basically because laws are only as good as they are if you can enforce them right basically non-enforceable laws don't really i mean they just discredit

you as a state so how do you resolve that that conundrum it's a great it's a great question right we saw early like examples of this i remember there was a project called damen dao i was claiming to be purely anonymous and trying to explore this um you know this this vector i think there's always just meta questions just about um how anonymous can you actually make things so even with more advanced privacy preserving tools like tornado cache we've seen that there's still holes that people can poke through to identify people it's hard to kind of achieve that pure anonymity i guess that raises a question as to whether or not even though it's an interesting theoretical question and practice that

will actually play out you'll have some in completely impervious system with no no way to de-anonymize things but i think it's it's an issue right and i think as more anonymizing technology gets deployed and as the coordination tools get better um it can be used for good or bad uh you hope that people and i tend to believe this that people are generally good and if folks are perpetuating something bad and they're identifiable there's other tools to to do that um you know but this is a risk that's been known for a while we can go back to the crypto anarchist manifesto that timothy may put together where he prophesized that you know strong cryptography uh other forms of uh of systems

including things that in my my mind and my read seem to intimate and kind of uh prophesize blockchains this was written in like the late 1980s early 1990s are going to create a lot of regulatory challenges but in my mind again you can't go backwards right so you just have to deal with the the issues as they as they emerge i will say that we didn't have this pervasive surveillance systems that we've been putting in place globally over the past 20 plus years before the 1990s right so we were able to stop bad actors then i'm assuming that we'd still be able to stop bad actors in the future even if our ability to track and

trace things is not as uh as strong as as it may be today you word in the politicians ears i think this is a great great note to wrap up on techno optimistic uh to the maximum i love it fantastic um aaron thank you so much for coming on yeah thank you so much for having me i really appreciate it thank you for joining us on this week's episode we release new episodes every week you can find and subscribe to the show on itunes spotify youtube soundcloud or wherever you listen to podcasts and if you have a google home or alexa device you can tell it to listen to the latest episode of the episode podcast go to epicenter dot tv subscribe for a full list of places where you can watch

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