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Comment by ajross | Hacker News Reader

Also instead of a legal entity with the ability to petition the government for redress of grievances, it's just a bunch of data emitted by some smart contract code.

This is going to turn out to be important the first time a DAO gets significantly scammed. Someone's going to take the money and run, or otherwise violate the "contract" that the DAO thought it was "enforcing", and... there won't be anything to do. There won't be any way to fix it. The smart contract doesn't handle the edge case of having to hire a lawyer on its own behalf.

I mean, just to take this particular mostly-harmless situation as an example: that membership in the Blender Development Fund presumably includes some amount of official input into how the money gets spent. What if the DAO has specific desires or expectations, and Blender simply chooses to ignore them?

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> This is going to turn out to be important the first time a DAO gets significantly scammed. Someone's going to take the money and run, or otherwise violate the "contract" that the DAO thought it was "enforcing", and... there won't be anything to do. There won't be any way to fix it. The smart contract doesn't handle the edge case of having to hire a lawyer on its own behalf.

This already happened, and they hard forked the Ethereum blockchain to revert the hack.

https://www.coindesk.com/tech/2016/07/20/ethereum-executes-b...

What you can expect as a corporate (or any) sponsor, or corporate membership, as it's called, is defined here: https://fund.blender.org/corporate-memberships/ The two (short) PDF's go a bit into detail, but in a nutshell they can fund core projects, access meetings, and "more closely monitor" progress they are interested in.

> This is going to turn out to be important the first time a DAO gets significantly scammed

Badger DAO got scammed for 120 million USD last week and I doubt they were the first.

To be clear, that attack (also the The DAO event that caused the ethereum fork) was a hack. It was a bug in the contract that got exploited. And that's a risk too.

But even if a DAO does everything right, technically, they're still subject to the problem of having to trust entities in the real world (e.g. "whoever on the Blender foundation gave them the address to pay") to behave the way they promise (e.g. "actually hand them an address under the control of the Blender Foundation"). It's trivially easy in this world to just cheat.

And in the real world, with real people on both sides of the transaction, that's addressed in the courts. And it works, and fraud as a proportion of our economy is quite small. But that protection doesn't extend to anonymous smart contracts.

Don't get me wrong, I agree with you completely. There's nothing to be done in this case since the hackers are anonymous, but alas, noone seems to care.

This is a misunderstanding. Many DAOs have off-chain legal entities attached.

In American law, corporations are people. American Courts will give a very high leeway to respecting whatever corporate bylaws dictate. Including being governed by code.

It’s very easy to register a Delaware LLC which states that it’s board decisions are whatever output a smart contract spits out.

> It’s very easy to register a Delaware LLC which states that it’s board decisions are whatever output a smart contract spits out

Yes, but you still need people. The point was more than anonymous funders have no standing to sue. You're right you could have a conventional corporation fund itself with a DAO, but you're still trusting that corporation with your anonymous cash and if they take it and run you're SOL.

At the end of the day unless you're willing to put a signature containing your legal name as a human being down on a contract written on paper[1] the law isn't going to protect you. And if you are willing to do that, a "DAO" doesn't bring much to the table that, say, a plain old trust or LLC doesn't.

[1] Not actual signatures, not actual paper, but a real human being.

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