Create SCoDA template for DAOs

[Ro5s]

It would seem helpful to create a standard deference agreement that binds DAO members to smart contract results and/or votes. For example, on Aragon, I can create a DAO where members can sign transactions to signal approval of transfers of ether from the DAO treasury--members are effectively bound to voting results by virtue of automatic execution of treasury smart contract. However, for more mundane proposals that don't involve smart contracts, such as a DAO vote on where to incorporate a an affiliated legal entity (and which will necessarily involve 'meat space' actors), having a supplementary SCoDA-type document that binds members to act on these results might be interesting to try out/optimal.

[izqui]

The idea here is to have legally binding actions depending on the consensus of a DAO, right? Seems really interesting, though @mariapao and @lkngtn will have a way better opinions and feedback than myself.

[lkngtn]

I'm definitely curious what @mariapao thoughts are on this approach, if I'm understanding correctly this would be a legal agreement between members of an organization to not pursue traditional legal remedies and rely solely on protections encoded in the on-chain organization. I have a few clarifying questions:

1. What would be the impact on participants at the time they join an organization (e.g. when someone first acquires tokens)?

2. Would or could such an agreement also provide some protection for interactions with external parties? E.g. someone pays the organization a fee for some service, could this similarly apply as sort of a Terms of Service where smart-contracts or a specific dispute resolution oracle is required to be used in lieu of traditional legal remedies?

[Ro5s]

@izqui yes, essentially (thanks for commenting!) @lex-node can explain goals of SCoDA better, but my aim here would be to consider templates to (i) foreclose litigation by DAO members to dispute smart contract operations (e.g., transfer of XXX tokens to charity ethaddress after vote), (ii) give legal commitment by agents to act on results of DAO consensus (e.g., votes ✔️ Y: Joe shall return Company Car by Monday)

[Ro5s]

Thanks for adding comments @lkngtn. So, generally, my basic idea is that there are two major ways that DAO members might interfere with its automated ops: (1) state action via lawsuit to prevent members from voting and/or dispute result (e.g., getting liens on DAO real estate holdings due to lawsuit over smart contract's transfer of ether to charity due to 'faulty vote'), (2) DAO agent inaction - - i.e., DAO agent refusing to implement valid (& legal) DAO proposal - - it would seem helpful to have an agreement in place that they will abide with punishments from DAO for failing to perform (e.g., smart contract automatically strips them of DAO privileges, halts salary, etc.). I also like your formulaton there (e.g., "rely solely on protections encoded in the on-chain organization"). So, my thoughts on your Qs, heavily gists:

(1) Impact could be DAO 'clubhouse rules' that extend off chain to ward off members' litigation against each other for DAO actions. Thinking through scenarios (fast & loose): When Bob joins DAO as member (ethaddress assigned token), he might then have to sign a clickwrap 'code deference' or ToU agreement in order to (i) 'open' and view the DAO, or further along, (ii) vote his token(s) on DAO proposals.

(2) IN addition to SCoDA for internal disputes, a separate agreement should likely be needed to protect the DAO / membership for its outsider interactions (but would probably contain similar SCoDA terms for dispute resolution). In other words, I imagine when ACME Co. hires CoderzzDAO for a one-off Solidity engagement, the relevant agreement might contain arbitration language that references smart contracts and/or dispute resolution oracle. The bigger question, and something I would like to research, is whether most courts would indeed respect an arbitration award derived solely from smart contracts (feel more optimistic towards decisions issued by trad. arbitrators assisted by smart contract - - @lex-node also likely has more fully-formed thoughts there)

[lkngtn]

The bigger question, and something I would like to research, is whether most courts would indeed respect an arbitration award derived solely from smart contracts (feel more optimistic towards decisions issued by trad. arbitrators assisted by smart contract - - @lex-node also likely has more fully-formed thoughts there)

This has been top of mind for me as well, as I see the value proposition for on-chain organization as minimizing reliance on the often expensive (especially if in an international context) and difficult to navigate legal system as much as possible.

(1) state action via lawsuit to prevent members from voting and/or dispute result (e.g., getting liens on DAO real estate holdings due to lawsuit over smart contract's transfer of ether to charity due to 'faulty vote')

This feels like a bit of a can of worms, but do you have any thoughts on how a "DAO" or organization whose root-authority is a set of smart contracts, to be linked/control real world assets?

(2) DAO agent inaction - - i.e., DAO agent refusing to implement valid (& legal) DAO proposal - - it would seem helpful to have an agreement in place that they will abide with punishments from DAO for failing to perform (e.g., smart contract automatically strips them of DAO privileges, halts salary, etc.)

This is interesting and something I haven't really thought about. It would allow some legal entity to act as an agent on behalf of the on-chain organization (which may not have its own legal personality).

So in a scenario where the organization has an agreement with Agent A to custody some assets (eg a bank account) on behalf of the organization and Agent A breaks the agreements terms, the organization can request another Agent B to seek remedy against agent A?

[Ro5s]

This feels like a bit of a can of worms, but do you have any thoughts on how a "DAO" or organization whose root-authority is a set of smart contracts, to be linked/control real world assets?

I enjoy a good can of worms. The simplest route would seem to revolve around tokenizing real world assets & DAO smart contracts then governing the custody of these tokens. Can also think of ways to link assets to a token through private agreement (parties agreeing to perform certain way based around, for example, how a DAO disposes of tokens). For a rough & whimsical example: a pumpkin farmer enters into an agreement with a pumpkin merchant guild governed by a DAO to supply prized October pumpkins and this exclusive supply right is represented by Pumpkin-ERC721, held in trust and disposed by vote of Pumpkin DAO. Things can get more complicated with more regulated instruments, e.g., tokenized securities. There are also different possible setups for DAO control here and things to explore for corporate participation (I am skimming the worms on the top of the ole' can, I suppose). But I am happy to dive further here (very interesting topic, indeed)!

So in a scenario where the organization has an agreement with Agent A to custody some assets (eg a bank account) on behalf of the organization and Agent A breaks the agreements terms, the organization can request another Agent B to seek remedy against agent A?

That's actually a separate angle (though certainly interesting to think of how agents might keep each other abiding by DAO consensus); I was mostly thinking of how to cover DAO and participating members from any potential liability when its/their actions arguably cause economic (but justified) harm to members that refuse to abide by DAO consensus (e.g., halting daily DAI transfers to their ethaddress).

Edit: I am also thinking of how DAO setup could potentially serve as decision-making/dispute-resolution app: e.g., group of stakeholders sign deference agreement over deposit of shared digital asset ($1 million ERC721 representing fine art; sum of 5,000 ether) into DAO vault and disposition via DAO consensus; DAO is spun up and asset is transferred into vault; ultimate disposition decision (assignment among charity choices) might be more easily reached through anonymous vote via ethaddress. Basically, just imaging how to add layer of legal security to what is automatically achieved in many cases through smart contracts (i.e., how to not get sued over how DAO cookie crumbles). Fun to think about 🤔