{"id":283978,"date":"2021-06-25T18:14:00","date_gmt":"2021-06-25T15:14:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/daos-prepare-to-face-off-would-vigorous-ip-battles-be-good-for-defi\/"},"modified":"2021-06-25T18:14:00","modified_gmt":"2021-06-25T15:14:00","slug":"daos-prepare-to-face-off-would-vigorous-ip-battles-be-good-for-defi","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/daos-prepare-to-face-off-would-vigorous-ip-battles-be-good-for-defi\/","title":{"rendered":"# DAOs prepare to face off: Would vigorous IP battles be good for DeFi?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3b5971713e0\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3b5971713e0\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/daos-prepare-to-face-off-would-vigorous-ip-battles-be-good-for-defi\/#Preserving_%E2%80%9Cthe_value_of_their_network%E2%80%9D\" >Preserving \u201cthe value of their network\u201d<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/daos-prepare-to-face-off-would-vigorous-ip-battles-be-good-for-defi\/#%E2%80%9CA_unique_problem%E2%80%9D\" >\u201cA unique problem\u201d<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># DAOs prepare to face off: Would vigorous IP battles be good for DeFi? <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDYvOGE4ZWJhZTItZDUwMC00ZTY4LTgzZGQtNTc0YTZlNDdkMzFmLmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-128018ef>Curve Finance, a decentralized exchange for stablecoin trading, is one of the world\u2019s largest decentralized autonomous organizations (DAO), with <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/dappradar.com\/defi\">$6.5 billion<\/a> in deposits, but last week, one of its token holders made an unusual proposal:<\/p>\n<p>The Ethereum-based DAO should \u201cengage competent counsel\u201d \u2014 both in the United States and other relevant jurisdictions \u2014 to prevent other DAOs from the \u201cwholesale copying\u201d of its software code.\u00a0<\/p>\n<p>Why is this unusual? In the open-source decentralized finance (DeFi) world, bringing legal action against another DAO for intellectual property (IP) infringement just isn\u2019t done. In this case, Curve <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/CurveFinance\/status\/1404682025563533312?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1404780554336280576%7Ctwgr%5E%7Ctwcon%5Es3_&amp;ref_url=https%3A%2F%2Fcointelegraph.com%2Fnews%2Fdaos-in-court-curve-finance-ponders-enforcing-license-over-rival-saddle\">said<\/a> it is \u201c99% sure\u201d that Saddle Finance, a newer and smaller DAO, has violated the license on its contracts.<\/p>\n<p>Technically, DAOs aren\u2019t even <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.natlawreview.com\/article\/wyoming-takes-lead-decentralized-autonomous-organizations\">legal entities<\/a>. Moreover, hiring a law firm to protect its intellectual property is a breach of the DeFi ethos, which often shuns anything connected with lawyers, copyrights, courts or business licenses and where open-source software is considered a common good.<\/p>\n<p>But here Sam Miorelli, an attorney, was declaring on Curve\u2019s governance forum that \u201cIP infringement is not only wrong, it\u2019s value-destructive both for the infringer \u2014 who wastes time copying instead of creating \u2014 and the infringed, who loses value of creation.\u201d Moreover, venture capital firms that invest in other DAOs that purloin code need to be put on notice \u201cthat decentralization does not mean that VC\u2019s get to steal from communities.\u201d Saddle is supported by a number of VC firms, some of them prominent in the field.<\/p>\n<p>Miorelli\u2019s post had 3,200 views as of June 24 and unleashed a mini-storm on <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">social media<\/a>. Robert Leshner, CEO of Compound \u2014 an Ethereum-based DeFi lending platform and the third-largest DAO in total value locked with $5.5 billion, just behind Curve \u2014 <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/rleshner\/status\/1405337567139139584\">warned<\/a>: \u201cCrying to meatspace courts deeply undermines the \u2018code is law\u2019 principles that DeFi was founded on. This is a slippery slope that ends with the end of DeFi.\u201d <\/p>\n<p>Meanwhile, Adam Cochran, managing partner at Cinneamhain Ventures, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/adamscochran\/status\/1405338910046273538\">added<\/a>, \u201cit\u2019s all nonsense, greed driven by people who can\u2019t compete on innovation and build the type of horrible walled gardens that this space was built to replace in the first place.\u201d<\/p>\n<p>Another poster on the Curve governance forum, meanwhile, worried that by entering into vigorous license enforcement, Curve would \u201cturn off\u201d the most talented programmers \u201cwho are \u2018in it for the tech.\u2019 Would Satoshi and Hal contribute to Curve if they were around? I think not.\u201d<\/p>\n<p>But others supported Miorelli. A poll on the forum, for instance, was running two-thirds (67%) in favor of the proposal \u201cto assert Curve\u2019s IP rights against infringers.\u201d Elsewhere, Gabriel Shapiro, partner at law firm Belcher, Smolen &amp; Van Loo, stated that the \u201ccode is law\u201d mantra is fallacious in this context, telling Cointelegraph:<\/p>\n<blockquote><p>\u201c\u2018Code is law\u2019 is a byword for users of a particular smart contract or system agreeing to defer to the results of that code rather than resorting to the costly and inefficient legal system. Curve never opted into a smart contract or other code system for determining its intellectual property rights, and in fact, no such code exists.\u201d<\/p><\/blockquote>\n<p>An assertion of IP rights on the part of a DAO could even be good for decentralized finance \u2014 another sign that it was entering the economic mainstream, some asserted. \u201cI think the Curve community\u2019s interest in enforcing IP rights is indeed a sign of the DeFi sector maturing,\u201d said Shapiro.<\/p>\n<p>Miorelli himself seemed pleased with the response, telling Cointelegraph that the sheer fact that such a discussion is now taking place was positive, adding:<\/p>\n<blockquote><p>\u201cNot only does it show that DeFi is maturing, but it also shows that the communities which have formed around these revolutionary projects are truly thinking long term.\u201d <\/p><\/blockquote>\n<h2><span class=\"ez-toc-section\" id=\"Preserving_%E2%80%9Cthe_value_of_their_network%E2%80%9D\"><\/span>Preserving \u201cthe value of their network\u201d<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Shapiro further explained that governance tokens like Curve\u2019s CRV are shares of equity in a network or digital commons, saying, \u201cJust like TSLA stockholders would want Tesla to defend Tesla\u2019s IP rights in batteries or software to prevent value leaking from TSLA stock, so, too, the holders of CRV would want to maximize and preserve the value of their network equity.\u201d He further clarified that he wasn\u2019t commenting on the merits of these particular IP claims \u2014 merely that the \u201cimpulse\u201d to preserve network equity value was both understandable and predictable.<\/p>\n<p>In Miorelli\u2019s post, he outlined some of what was at stake: Curve pays \u201cbug bounties,\u201d recruits employees, and spends substantial capital developing new products. \u201cSince CRV is the currency of this, if something damages the value of CRV, it damages this work.\u201d<\/p>\n<p>Asked if DAOs would eventually have to behave more like traditional companies in protecting their intellectual property, Wulf Kaal, a professor at the University of St. Thomas School of Law, told Cointelegraph: <\/p>\n<blockquote><p>\u201cOnce DAOs are jurisdictionally recognized, they will likely replace significant portions of existing business constructs. With this development, it is possible that intellectual property issues under existing law will resurface in the DAO context.\u201d<\/p><\/blockquote>\n<h2><span class=\"ez-toc-section\" id=\"%E2%80%9CA_unique_problem%E2%80%9D\"><\/span>\u201cA unique problem\u201d<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>One place where DAOs will soon be \u201cjurisdictionally recognized\u201d is Wyoming, which in March passed the first state law addressing governance issues for DAOs, effective as of July 1, 2021. As <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.natlawreview.com\/article\/wyoming-takes-lead-decentralized-autonomous-organizations\">explained<\/a> in a recent National Law Review article, \u201cregulators have been slow to respond because DAOs present a unique problem: Who is responsible when something goes wrong?\u201d <\/p>\n<p>The new law recognizes DAOs \u201cas a distinct form of the limited liability company,\u201d according to the article, with the multiple benefits characteristic to LLCs, \u201cincluding limited liability for its owners, a more flexible management structure than is permitted in other corporate forms, and potentially advantageous default rules.\u201d<\/p>\n<p>The bill also provides that a DAO can be defined in two different ways \u2014 as \u201cmember managed\u201d or algorithmically managed \u2014 adding: \u201cAn algorithmically managed DAO, which would truly be decentralized, may only form if the underlying smart contracts are capable of updates or modifications.\u201d<\/p>\n<p>One presumes that a \u201cmember managed\u201d DAO like Curve might have an easier time asserting IP rights in a venue like Wyoming where DAOs are soon to be joined to a larger legal and regulatory framework \u2014 but one can\u2019t be sure, at least not yet.<\/p>\n<p>In the meantime, the IP debate is still fraught because none of the issues have been tested in the courts, and many background issues remain, according to Shapiro, like the differences between DAO projects funded by traditional venture capitalists versus those that are more public from the start. \u201cWe need new taxonomies to grasp the issues \u2014 for instance, a \u2018vampire attack\u2019 against a VC-funded project is very different from a \u2018zombie attack\u2019 against a non-VC-funded project. Neither is inherently bad or good, but it\u2019s important to understand incentives and social networks and how they are affecting these nascent disputes.\u201d<\/p>\n<p>Miorelli, for his part, sought to put this all in a larger context. \u201cIP has a controversial history in the software development world\u201d \u2014 especially with regard to open-source software, he told Cointelegraph. <\/p>\n<p>Granted, it works differently under different legal systems. But Miorelli clarified that many of the misunderstandings arise \u201cbecause the legal profession has not done a very good job historically at educating the public and participants in the software and crypto space.\u201d He added further, \u201cI don\u2019t think my proposal got a ton of attention because I\u2019m an IP law luminary. It got a lot of attention because I started an important conversation.\u201d Miorelli said that he hoped his proposal would eventually progress to at least one formal DAO vote.<\/p>\n<p>Kaal told Cointelegraph that lawsuits will inevitably become more commonplace as the nascent DeFi industry evolves, and yes, they might have a restrictive impact on innovation. \u201cIt depends on the legal constructs in DAOs as to how far the lawsuits can change the landscape.\u201d A legal construct is something that is conferred by way of law or contract, such as a right.<\/p>\n<p>\u201cI definitely think we will see more legal action and threats of legal action by and on behalf of DAOs,\u201d said Shapiro, adding further, \u201cWhether this specific situation will set a precedent \u2014 only time will tell.\u201d<\/p>\n<p>\u201cIP protection is an important and valid part of any maturing organization, regardless of how it\u2019s organized,\u201d Miorelli told Cointelegraph, adding on a conciliatory note: <\/p>\n<blockquote><p>\u201cMy hope is that my proposal and any future actions related to it shows that lawyers can contribute to the growth of DeFi [&#8230;] sharing their expertise on the same collaborative basis that the devs do.\u201d<\/p><\/blockquote>\n<p><template data-name=\"subscription_form\" data-type=\"defi_newsletter\"><\/template><\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/daos-prepare-to-face-off-would-vigorous-ip-battles-be-good-for-defi\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# DAOs prepare to face off: Would vigorous IP battles be good for DeFi? &#8221; Curve Finance, a decentralized exchange for stablecoin trading, is one of the world\u2019s largest decentralized autonomous organizations (DAO), with $6.5 billion in deposits, but last week, one of its token holders made an unusual proposal: The Ethereum-based DAO should \u201cengage&#8230;<\/p>\n","protected":false},"author":1,"featured_media":283979,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDYvOGE4ZWJhZTItZDUwMC00ZTY4LTgzZGQtNTc0YTZlNDdkMzFmLmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74867,75186,74868,117,4965],"class_list":["post-283978","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-altcoin","tag-dao","tag-defi","tag-business","tag-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/283978","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=283978"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/283978\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/283979"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=283978"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=283978"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=283978"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}