June 17, 2021: You Got Served! 🧑‍⚖️ ⚖️

The Curve DAO considers lawyering up

crv.mktcap.eth

Jun 17, 2021

@DavidSt66427999 @SamMiorelli @CurveFinance @CurveCap @charlie_eth @Cryptoyieldinfo @bantg @ConvexFinance @saddlefinance

Through an unusual chain reaction, a vote on stripping Alchemix of a reward gauge ended up on a completely different tangent.

Curve Market Cap @CurveCap

How it Started vs How it's Going

It all followed quite naturally if you were following along in realtime. In discussing rewards distribution, the perception of retribution towards Saddle got raised, and Spaceman Sam authored CIP-XX:

CIP-XX:
Contrary to popular belief, Curve has valid and enforceable IP rights in its software code. Pursuant to the LICENSE 41, Curve can and should protect its position in the marketplace with enforcement of those IP rights. Profits from such enforcement should benefit veCRV.

The conversation exploded from here, even getting written up in CoinTelegraph, the rare news source that recognizes that writing about the most popular DeFi protocols is a great way to get traffic.

Cointelegraph @Cointelegraph

Before @CurveFinance decides whether or not they CAN enforce their IP claims over @saddlefinance, the community needs to determine of they SHOULD, according to the author of a new proposal. @Blockanalia reports.

cointelegraph.comDAOs in court? Curve Finance ponders enforcing license over rival SaddleThe author of a new governance proposal for Curve says that the courts might be the best way to protect a fundamental right — but is it like trying to fit a square peg in a round hole?

The community straw poll generally favored the move.

Latitude Crypto @LatitudeCrypto

@SamMiorelli @CurveFinance @CurveCap @bneiluj @charlie_eth @Cryptoyieldinfo @bantg @ConvexFinance @saddlefinance I'm a vecrv holder and IP lawyer. Very in favor given this may be world's #1 DAO and unfair copying is already happening.

Nonetheless, a lot of people weighed in negatively on CT. We reviewed the objections and broke them down into a few major categories.

Lack of Opportunity

The most definitive argument came from the big brain Curve team. You can’t squeeze blood from a stone.

🃏FiskanÐes (三, 三) @Fiskantes

@JozoJesko I legit thought that first lawsuit will be @Uniswap suing some anon over v3 license and it may turn out to be @CurveFinance suing a US top tier VC backed startup. What a time to be alive.

Curve Finance @CurveFinance

@Fiskantes @JozoJesko @Uniswap It's also a question whether it makes sense to proceed from business perspective. Suing a top tier VC backed startup sounds extremely exciting in principle, but not when it is a worthless one

Oh… you don’t have any lunch money? Well, uh, go ask your parents for some and then you can give it to us.

Lawyers are Terrible

Most lawyers I know are the biggest fans of lawyer jokes, so hopefully it won’t be controversial to point out that lawyers are awful.

Cryptoyieldinfo @Cryptoyieldinfo

@SamMiorelli @CurveFinance @CurveCap @bneiluj @charlie_eth @bantg @ConvexFinance @saddlefinance In my main line of work I deal with a lot of IP. I can only support it where upfront costs are massive, like drug development. In an area of innovation like defi where there are little capital costs it is net negative. Slow bureaucratic painful. Defi wouldn't exist with IP.

Speaking as somebody who has had many of my startups get rekt the moment lawyers stepped in to help, my first impulse is to keep the lawyers on a different planet, ideally the one with the most noxious atmosphere.

Clown World @DavidSt66427999

@SamMiorelli @CurveFinance @CurveCap @bneiluj @charlie_eth @Cryptoyieldinfo @bantg @ConvexFinance @saddlefinance This market is pure competition. Learn from China and don't involve the fucking lawyers.

The flip side to this is the reality is that Curve is no longer a small startup. It’s a multibillion dollar protocol sitting on a massive war chest. If it does nothing, opposing lawyers may see these billions of dollars as an opportunity. In other words, Curve might get dragged through the legal system one way or another.

Tactically, once a startup hits it big, they can afford to throw their weight around and leverage the legal system to crush opposition. Facebook and Amazon are now the largest lobbyists in the USA. For Curve’s sake, why not get first crack at establishing the legal boundaries of the space, but doing so from a position of offense instead of defense?

JozΞf @JozoJesko

DeFi Summer '20, DeLaw Summer '21 🌞🧑‍⚖️

Steven @Dogetoshi

Are we about to see the first lawsuit filed by a DAO? https://t.co/fzNzz2ymKU

The Spirit of DeFi

The most common objection to the proposal was that maneuvering through the legal system is opposed to the decentralized spirit of this movement.

Crypto-EndGamer {CEG} @cryptoendgamer

@SamMiorelli @CurveFinance @CurveCap @bneiluj @charlie_eth @Cryptoyieldinfo @bantg @ConvexFinance @saddlefinance Madness If this passes ; a small seed is planted ; its only going to get uglier and more convoluted as time passes by. Lawyers paradise no doubt Isint the whole concept of defi to avoid this kind of bs?

NonFungible @_non_fungible_

@SamMiorelli @CurveFinance @CurveCap @bneiluj @charlie_eth @Cryptoyieldinfo @bantg @ConvexFinance @saddlefinance It's ridiculous. Please don't turn this into a "traditional" legal swamp

Rafael Ventura @rafinskipg

@cryptoendgamer @SamMiorelli @CurveFinance @CurveCap @bneiluj @charlie_eth @Cryptoyieldinfo @bantg @ConvexFinance @saddlefinance DeFi step at a step going to become tradfi, nobody wants to lose the power , nobody wants others to have power

Danny Iskandar ⭕️ 🦀 @diskandarcrypto

@SamMiorelli @CurveFinance @CurveCap @bneiluj @charlie_eth @Cryptoyieldinfo @bantg @ConvexFinance @saddlefinance seems like a waste of time, rather just focus on innovation + product + BD/marketing instead of protecting IP. look at UNI vs SUSHI, they are kind a different animal now. which is good for the whole #DeFi ecosystem. Focus on building, who are we trying to 'crush' + enables.

Alexintosh.eth @Alexintosh

@SamMiorelli @CurveFinance @CurveCap @bneiluj @charlie_eth @Cryptoyieldinfo @bantg @ConvexFinance @saddlefinance I hope the community does not move this forward, do the opposite instead, change the license to GPL.

The purist train of thought is to let the code speak for itself. Let the DeFi space exist in a sort of an international waters until it grows so large it subsumes the traditional world.

To some degree, it’s tough to ignore the parallels with Bitcoin’s cypherpunk origins. At the outset Bitcoin was appealing to the most anarchic factions. Today though, the Bitcoin energy has shifted to finding its way onto corporate balance sheets and nation-state legal codes. All of this is a bit removed from its original purpose, but it’s where the opportunity lies.

It’s tough to imagine DeFi not heading in the same direction — how many Billys get locked before the next growth opportunity has to be the traditional sources of wealth, all of whom would need lawyers to get involved?

Procedural

A lot of more procedural questions came up in the dialog, which was largely the point of the proposal — to open discussion on the unknowns.

Many people brought up the idea of how a DAO can establish legal standing, along with the fact the code is already owned by an existing legal entity.

banteg @bantg

@SamMiorelli @CurveFinance @CurveCap @bneiluj @charlie_eth @Cryptoyieldinfo @ConvexFinance @saddlefinance If I understand correctly, the code is owned by Swiss Stake, not by Curve DAO.

A few people brought up the idea of using Wyoming’s new law, although I believe it would have a few incompatibilities (their law requires a DAO’s smart contracts be upgradable I believe, but no serious DeFi site would create such a vulnerability.)

Sarah ShΞgen @shegenerates

@noahseidman @bantg @SamMiorelli @CurveFinance @CurveCap @bneiluj @charlie_eth @Cryptoyieldinfo @ConvexFinance @saddlefinance Not true, you are way behind.

coindesk.comState Lawmaker Explains Wyoming’s Newly Passed DAO LLC Law - CoinDeskWyoming Gov. Mark Gordon signed the bill into law Thursday, allowing DAOs to be legally recognized as LLCs.

The proposal’s author and potential inductee into the Lawyer Hall of Fame (if such a thing exists) has thought this through and believes establishing standing to be easy enough.

Budding Protocol Politician Sam Miorelli @SamMiorelli

@CurveCap @CurveFinance @KeiferKurre @collins_belton @FrankCSouthie @bneiluj @charlie_eth @Cryptoyieldinfo @bantg @ConvexFinance @saddlefinance Personally I'm a fan of using a foundation organized for the benefit of the token holders. But to be honest there are MANY legal structures that would suffice to assert the IP.

Another point that got raised a few times is that it could potentially backfire. In particular it opened debate about if $CRV would pass the Howey Test, and if this could invite too much scrutiny.

Frank Costello @FrankCSouthie

@SamMiorelli @CurveFinance @CurveCap @bneiluj @charlie_eth @Cryptoyieldinfo @bantg @ConvexFinance @saddlefinance One of the responses is very good: The copyright is owned by the Curve entity, not the Curve DAO. If the DAO directs the team to take legal action, doesn't that make a good case that CRV is a security?

DefiMoon @DefiMoon

@FrankCSouthie @SamMiorelli @CurveFinance @CurveCap @bneiluj @charlie_eth @Cryptoyieldinfo @bantg @ConvexFinance @saddlefinance CRV can't really be a security because only veCRV gets claim on fees, and veCRV is not transferable.

Again though, the best defense is a strong offense. Speaking from some experience here, the regulators like to claim the easiest scalps. When organizations demonstrate more muscle, they appear as more imposing targets — not that they aren’t also at risk, but it takes a bit more planning for the G-men build a case because they know they’ll be going up against good lawyers.

The procedural questions are also quite interesting in terms of the evolving technology.

WillR123 @R123Will

@DegenSpartan @bluekirbyfi @CurveFinance @Fiskantes @JozoJesko @Uniswap If it ok for all the parties involved, can we have this trial in twitter spaces?