Connecting DAOs to the Real World


#1

The concept of DACs or DAOs has interested me since I encountered the topic doing research for a previous project working towards giving creatives the necessary tools to conduct their business on their own terms and without having value syphoned by intermediaries. The nature of the firm is changing with Coasean costs becoming less costly due to improving communication technologies. The idea of having an autonomous project operating like a ship at sea with a circulating crew is quite interesting.

Since I have been working with Mattereum, whose goal is to build the necessary bridge between our software systems and the legal systems which govern property rights and commerce, I have been more aware of just how isolated many blockchain platforms or Dapps are from the material world.

So I would like to pose a question: is there any work or research being done on how a Colony DAO could have a legal entity that embodies it for the purposes of conducting commerce or joint ventures involving the material world? For example, an art collective Colony creates 3D designs that are then represented and traded in some sort of NFT framework. They would like to partner with a 3D printing lab to manifest their art in the real world as sculptures or miniatures for sale. How could the two entities create this commercial agreement if the art group DAO only exists via software? Dispute resolution conducted within the Colony ecosystem is one thing but becomes tricky when the contractual parties are operating in fundamentally different worlds.

One way to bridge these two worlds is to have legally enforceable smart contracts. Perhaps Ricardian contracts could be implemented for each Colony. Ricardian constitutions are an extension of this concept into community building. Everyone who enters the community signs the constitution, and a hash of that event is forever associated with that individual. If a particular Colony has certain rules and values outside of the core mechanics of the underlying DAO platform, those could be enforced using hybrid prose/software contracts.

Ultimately, I am interested in these autonomous systems working in the real world where they could do some good for our communities and our commercial and creative endeavors. I am interested in the legal and software engineering that would be needed for this to happen.

Giving DAOs a legal “suit” to where on occasion can enable commerce in novel ways.

Can the DAO become a legal-technical amphibian? Just curious is this has been discussed in the Colony community.


#2

Yes, we have definitely done some talking about this very subject, and I’m glad you’ve noticed this as a key aspect of how to make DAOs effective in the ‘real’ world.

One thing I’ve thought of as a way to do this is through what i call a “Ricardian task” – in Colony one of the fundamental patters is the task, and it seems like that would be the most straightforward place to link in a legal agreement to a legal entity.

Here’s a more detailed explanation that I wrote up a few months ago:

The ricardian task would, in simple terms, embed a legal consulting agreement into a colony task (in a designated domain). The legal agreement would describe the colony structure, set expectations for payments, liability, and any other terms such as non-disclosure.

The legal agreement is signed using an ethereum private key. Signatories use the same private key to digitally sign the task on-chain, linking the contract to their address.

Provided with a vetted template of the natural language contract, this pattern would allow ‘real’ companies to use colony as a legitimate platform for outsourcing work to external contributors, managing work, payments, and performance (reputation) in one place.

Depending on the language of the contract, it could be tied to a specific performance outcome and contain the payout for work done directly, or it could specify that payment for services will be made through the completion of other tasks in other domains.

I suppose in a legal sense the Ricardian task would only help with an entity that already had some sort of legal standing as a limited liability company or general partnership, but it’s a starting step toward getting the DAO to be its own entity, rather than just the mediating logic between two legal entities (person and company).

On a technical level, the pattern described would be relatively easy to implement, because tasks already have a structure that supports multiple signatures (3, so we could even have a witness or notary signature on there) as well as a reference to a hashed document (the task specification hash).

What I’m not sure about is how the natural-language document would read, i.e. the legalese describing a person’s signature as a signed message transaction on Ethereum. Maybe this is something Mattereum could help with!


#3

Mattereum Co-founder Rob Knight elucidates on this a bit on this thread: