 Hi everyone and welcome to this very special live episode of let's talk Bitcoin today We're going to be talking about the DAO about the fork and about the fallout We're gonna have a number of guests on the show Pamela Morgan attorney is joining me right now And then we're also going to have a number of other guests joining a bit later in the show for questions and answers, please use Hashtag LTB DAO on Twitter. I'll be watching that talk to me in the DAO Slack or Comment directly on the YouTube channel again for questions Hashtag LTB DAO Use the YouTube comments or the DO Slack I'll be watching all of those and asking the questions from all of our guests First let's say welcome to Pamela Morgan Pamela. Welcome to the show. Thank you so much. I'm really happy to be here today So we're gonna do some quick disclosures I Am a DAO token holder. I hold a whopping $40 worth of DAO tokens Which I purchased in order to be able to participate as a DAO token holder in the process and learn from the DAO I Did that in the early days purchased it directly During the pre-sale of or the funding phase of the DAO also I am the chief technology officer for third-key solutions and Pamela Morgan is the CEO of third-key solutions and we have Submitted a proposal for discussion Not for funding but just for discussion To the DAO forums and this proposal is called the decentralized arbitration and mediation network now That proposal received a lot of comments a lot of discussion and what we were talking about there was the intersection of law and DAO so that's the just a mandatory disclosure just to say that we have a lot of interest in this project We've been interested from the very beginning in how this project would play out We do not have really a financial interest in this project Just a geeky interest in this project Pamela tell us a bit about how you first got involved with the DAO while I set up my Twitter keyword LTB DAO hashtag LTB DAO for questions on Twitter Sounds good. I actually have to do a few disclosures myself as well One I do not hold DAO tokens But I have written articles about the DAO Specifically about how interesting it is and what an incredible experiment it is and no matter what you think about the DAO Whether you're pro or anti or somewhere in the middle I I really think that what's happening right now is absolutely Fascinating and I think we're making history. I also need to do a disclosure the the compulsory I am a lawyer, but this is not legal advice disclosure So we will be talking about the law in broad terms But this should not be construed by anyone watching or listening now or in the future to be legal advice So basically we're going to talk about the law as it applies to the DAO or has it might apply to the DAO Because we'll learn as we as we get into these discussions that really Nothing about the DAO is cut and dry. Nothing is known All right, that's a great introduction. So let's let's dive right in so the DAO the decentralized autonomous organization the first of the decentralized autonomous organizations created by sockets and This DAO raised about a hundred and fifty million dollars during the fundraising process That's an ETH in ether and of course based on the fluctuations in ether that went up as high as Was it about two hundred and thirty million dollars in total so quite a bump there And now it's also had quite a significant drop in value Two days ago. I woke up to find out that there was a an event in progress Now we'll talk about exactly what kind of event this was, you know, some people have jumped into using the term theft Some people have used the word hack Certainly it's hack in the traditional Concept of the word the traditional etymology of the word hacking where you you hack to learn you hack to understand How code works whether it's hacking in the malicious hacking Sense we'll we'll have to figure out next but an event happened and the DAO was basically drained or Very large amount of funds about a third three and a half million ether was leaked into a split proposal to a split down and This precipitated an enormous amount of trauma Someone who comes from the Bitcoin space. I can tell you that drama is something that over the last five years were well used to but for those who are new to the Ethereum space where Where scaling problems don't exist where government problems don't exist and when everything's hunky-dory and everybody's happy This was probably the first instance of some quite serious amounts of drama So when did you find out about this Pamela? this Incidents mm-hmm or the DAO overall well both really yeah, I mean, you know, I've been watching the DAO from the beginning I've I've been is that a beer? Yeah Fantastic, I wish I had one with a topic like this is kind of required, right? Yeah, yeah, or or afterwards anyway You know, I've been interested in DAO or decentralized autonomous organizations or DCO is there sometimes called the distributed or decentralized Collaborative organizations and there's all sorts of acronyms and you know I've been at nerd fest set Harvard and MIT and we've been talking about what the appropriate acronyms are and we've been talking about legal issues surrounding the the function of DAO or what they're known today is as DAO And so I've been interested in this from from very early on But this situation the the the situation with the DAO Very quickly raising this amount of money has has been on the radar not only for me But I think for everyone else as well And I learned about this incident probably at the same time most other people did which was a couple days ago and it's been not a lot of sleep and A lot of thinking and a lot of talking to a lot of people ever since All right, let's let's start and talk about some of the details of what exactly happened in this particular event So first of all The hack itself now in this particular case The issue was literally one line of code Which is just like Legal contracts these are the same exact issues that come up in your traditional legal contracts where one word or a sentence Changes the outcome completely where there are unintended consequences Where someone writes a sentence and it makes perfect sense to them and they think that they're on the same page with the other Party and then all of a sudden the other party either uses that sentence to their advantage or It's just a mistake or a misunderstanding So this isn't a stranger for us in in the legal profession Although I think it's come as quite a shock to to those who are participating in the Dow And it's quite unfortunate how this is playing out for them Yeah, absolutely so What were people really signing up when they signed up to the Dow? I think that's one of the critical questions here What are the terms and conditions of the Dow? I think that was one of the really fascinating revelations when you read the white paper or the Dow hub Forums, you know the terms and conditions said And I'll quote it in a second. I'll pull it up and quote it for you in a second But essentially they said don't pay attention to the white paper. Don't pay attention to the website All of these are just plain English explanations. The contract is the code And the code is the only contract and if there is any conflict what the code does is The authoritative issue. Where does that put us Pamela? You just asked about a thousand questions rolled into one and you did it quite well. Have you ever written law school exams? Because these are the these are the types of nuanced questions that come up. First of all Let's let's get one thing straight Just because we say something in writing just because we say that other laws don't apply Does not mean that other laws don't apply. I wrote an article. I don't know probably a year ago now maybe a year and a half ago called Ariel 11 and default law and there's this concept in the law where if you don't say something Otherwise There will be a default law applied So in this case the quote-unquote parties if we assume that there's a contract and I can't even say that There's definitely a contract that's there's room for interpretation. You know if there was a contract there are something called equitable remedies and for those of you that are that are listening or watching who come from Common law countries if you've heard of the term common law Equitable remedies are part of common law and I know I'm using legalese right now Equitable remedies simply mean somebody got shafted and the court is gonna make it right and they're gonna make it right based upon Equitable principles and there's lots of these in the law But basically just because the code itself says this is a contract and these Contain all of the terms of the contract does not mean that a judge will interpret that as the only terms in the contract Does that make sense right absolutely and the issue really here is that We also have Statements purported to be by the initiator of the split that's drained funds from the Dow and in this I Don't know what to call it open letter. I guess in this open letter I actually signed quotes the attacker because that's what other people were calling this person and this person says that they use the code as a contract and The code allowed them to gain board and therefore That is perfectly fair within the terms of the contract And that in fact trying to remedy or undo that would in itself be a breach of contract But we'll get to that in in just a second. I think first We need to describe exactly what the hack was would you would you agree we should dive into some technical stuff here? absolutely All right, so the issue here is called re-entrant code specifically a race condition Created when a function that is called in the Dow Causes like a loop where it gets called again and again and again before it has a chance to complete creating a nested stack of calls all Open but none closing In this particular case Someone initiated a split proposal This type of split proposal is something that could be done from day one after the funding process completed and the goal of a split proposal was To allow people to refund their their DAO tokens if they wanted to get out of Get out of the Dow someone initiated a split proposal now in the code specifically For Transferring the reward once the split proposal vote has ended There is a call to a contract and Then the amount of reward tokens that have joined the split and belong to each user are Transferred to that contract with a value call, which is basically a transaction that contains a certain amount in ether Now in this particular case though the one error in the code was that first the function was called and then the Internal ledger that the DAO or the child DAO was keeping of the balance of DAO tokens was updated But When you call the value function of another contract It can catch that call as an incoming function. This is the function with no name Just brackets right which basically means if you have any transaction that's incoming and Is not calling a specific function name But just contains value in ether if you have a value call coming into the contract execute this code and so the child DAO from the split proposal would call the value to pay out the contract and that contract would in turn call the release reward or send reward Function again, which would call the which would call the recipient contract with a value call which would Once again call the reward function which would call the value in the child contract Etc etc and it never got to the line where it updated the balance and so as a result every time it entered that call It would transfer ETH To the reward recipient without ever exiting from that call Updating the balance an easier way to explain this is Imagine if you have an ATM machine and the ATM machine is structured so that it gives out the money and then once the little Counting machine that pops out paper bills at the bottom has counted and confirmed the bills and Pop them out to the slot it then updates your bank balance after the fact now imagine if there was a way to Jam the door so that whenever it popped out money from the bottom it would then crash the ATM so that it gave you money Didn't update the balance you run it again gives you money doesn't update the balance gives you money crashes Doesn't update the balance and essentially that's kind of what happened here And what this did was that every time a block would be mined with this transaction to distribute the reward from the split proposal it would Call this function again and again and again and again without ever getting to the next line in the code That actually updated the balance now this can be fixed in a number of ways one you can update the balance first and then give it out Or you can set up what's called a mutex, which is a concurrency mechanism essentially a lock That ensures that the code is not reentrance This type of situation where you have concurrent programs stepping on each other is called a race condition And so this person was able to I don't know if I should use the word exploit perhaps That's a appropriate word exploit code as it was in the contract To repeatedly drain Ether from the Dow into this what proposal and into their own contract address so that's that's a rough summary of what happened and that's the Dow Hack or the Dow exploitation Let me jump in with just a bit of legal context here as well So there are a lot of questions on what the Dow actually is from a legal perspective But many in the industry including myself say that it's most likely to be interpreted as a general partnership What does that mean? Basically, what happens? We're back to that default again So if you start a business being if you join with others for a specific purpose And you are attempting to gain a profit which arguably that's what was happening in the Dow if you don't choose another formal Legal vehicle like a corporation or an LLC or a limited liability partnership you will be considered a general partnership and What that means that that has a lot of legal implications and interestingly in the United States General partnership law is state by state So there isn't one federal rule that applies to all states in the United States There are guidelines and some of the states have adopted similar laws but basically what this means is that is that if One of the members of the Dow wanted to bring a legal action they could argue that they were a general partner of the entire Dow and Essentially do something that's called forum shopping. Have you heard of forum shopping before? That's where you arbitrage jurisdictions in order to find the most suitable one Absolutely, and because the Dow did not choose a formal structure Arguably any jurisdiction any jurisdiction where a general partner is located could be proper jurisdiction for the Dow as a whole now General partners have full liability for one another, but they also have a duty of loyalty to one another and For this duty of loyalty there are three different duties that you have built up as part of this duty of loyalty but the important one for our purposes, I think is As a general partner you have a duty to refrain from dealing with the partnership as a party having an adverse Adverse interest to the partnership Basically that means that you can't take self-action That is inconsistent with what would benefit the general partnership If I understand this correctly, and I think we need to clarify this this hack or Whatever you want to call it Happened by someone executing a split proposal from within the doubt This is not something that any pass or buy Can do just snipe the Dow they have to be a Dow token holder in order to execute this They need to have the ability to vote. They don't need a lot they just need enough to create a split proposal and That's it. So but the important thing is that this can only be done by a Dow token holder Either someone who bought during the funding process or someone who acquired Dow tokens in a secondary market because sometime Elapsed between the funding process and when this was initiated someone could have bought this on a secondary market and therefore By owning Dow tokens what you're saying is as a as a partner in this general partnership They have a duty to the other members to not take actions that are adverse to the overall doubt Exactly, that's part of their fiduciary duty as being one of the general partners on partners Also have a duty of good faith and fair dealing. So they're But again, this is only in relation to general law in the United States This could be whatever. I mean you could pick To Valu and find some obscure law that says it's called the general partner fuck you clause where they can do whatever they want Exactly to Valu and all they have to do is find one Dow token holder there in order to claim jurisdiction in that form Yeah, I mean that's that's the difficult part of of not of not either well a selecting a Corporation LLC something like that, but also You know these sorts of risks could have been mitigated if there had been terms and conditions in the Dow That designated a choice of law and a choice of venue so even if that was not a national jurisdiction but as we have described in this where we show our bias but specifically in the in the concept of a decentralized arbitration system the venue could be a Private arbitration form that is not national law Or it could be a national jurisdiction, but not picking any means that you're not getting arbitration by Private you're not getting resolution by private arbitration. You're not subjecting yourself to that jurisdiction You're not subjecting yourself to any specific jurisdiction, but as a result you're subjecting Everyone to every Jurisdiction that's correct and let's quickly talk about arbitration and why this matters I don't want to stay here too long But it's something that Everyone in this industry should be taking very seriously especially because it's really easy to do The American Association of arbitrators also known as triple a and I think their website is a dr. Org But we can post it later Actually has a clause creator where you can create your own clause and you can say okay I want any disputes to be governed by Delaware law Delaware is often chosen because it is it is corporation friendly, but you can pick anything you want So you can say I want all disputes to be handled by Delaware law or is uniform commercial code or Yeah, I mean I suppose you could do uniform commercial code or you can have your own industry rules Which is really really interesting and hopefully at some point we'll get there But for right now we can apply any laws and rules that we want. This is not about Selecting state enforcement. This is about in many cases simply opting out from state enforcement and in fact setting up Complete rules of private jurisdictions private enforcement and private rules of our own design Yes, and and in this instance that's important because not only do we not know how the DAO is going to be interpreted But we don't know what laws are going to be applied to the claims that are being made in other words If I bring a breach of contract claim here in Chicago We can tell if that Illinois law is going to govern that contract But if you bring a breach of contract claim in California Breach of contract may be different in California if we bring one in South Africa, you know somewhere in in Johannesburg for example The breach of contract law may be very different remedies may be very different And so right now as you as you actually said earlier We are exposed to all jurisdictions where if we use just simple terms and conditions and limit The jurisdiction then we get that certainty and then at least we can better protect ourselves From the inevitable unintended consequences and unintended lawsuits That will arise as we do business internationally Absolutely and our arbitration Is a topic we'll get back to in just a second. I also want to point out we already have Two guests to bring on Into the uh, well, I guess we'll call it a show now So let's uh, let's see uh, taylor. Are you ready to join us here? Let me see if I can pull taylor in and we'll continue this conversation Hey, andrew is can you hear me taylor? Welcome to this To this conversation. Uh, yes, we can hear you. Hi taylor Hey, pamela. Great to see you both of you again So taylor, do you want to do a quick introduction of yourself? Yeah, sure. Uh, my name is taylor garing I have been involved in bitcoin and ethereum for about three or four years now I started working out on the hive with wendell davis and through that kind of met Mihail lisi and through that met as a talak udarin and from there on out kind of got involved in ethereum Working on a variety of projects there I'm also a curator for the dow. Though I don't hold any tokens, which I think puts me in a kind of interesting position Um, I've been watching and discussing with a lot of people lately Trying to gather opinions and thoughts and kind of as you guys were mentioning earlier And it's definitely a hot topic. I think there's a lot we can learn out of it There's definitely a lot to get through still before we have any sort of hindsight And you're a co-founder of the ethereum projects as well. Is that correct? Yeah, that's right I helped uh co-found ethereum foundation in switzerland along with Mihail lisi and the talak udarin And that allowed us to set up the proper legal framework to execute the crowd sale and have the associated business dealings that we need to just do every day sort of business like paying employees and paying for expenses to have an office and have meetings and things like that That are legally required. So, um, yeah, the operation is still going I worked also on the go ethereum client with jeffrey wilkie Implementing the first rpc layer there. So I have a pretty deep technical knowledge of the software Now I were you on when I did my, um Hamphisted attempt at describing code reentry and race conditions. Um Is there anything you want to add to that or did I capture the essence of that at all? No, I think you captured it pretty well One of the things I was thinking about last night was look, this is a problem that could definitely happen in any sort of Programming language like you know thinking about the first version of a java, right? There were probably ways to code that weren't so Probably productive for the programmer and if we look at this problem this way like thinking about the distributed consensus layer separate um And how would we have maybe approached this and how Will we have fixed a problem like this? And I think part of that answer is definitely make the tools better for the users Maybe have warnings from the compiler that you're doing something that could perhaps be Not what you intended. So I think it's just early the networks existed for less than a year So the tools are still a bit raw Definitely room for improvement in that area Now, um Certainly one of the arguments that's the could be made and I I made this argument early on on twitter is that um The dow was a concept um Had a certain amount of complexity which surprised me when it was first launched And and then I think everyone was surprised including the the slocket Team that built this code base at how immense it became in terms of size that created a tremendously large Almost security bounty vulnerability bounty for anyone who could find the vulnerability to exploit in the dow Which is a great way to test ethereum But in this particular case may be over tested ethereum overextended the ability of Of the code at a point where the maturity of solidity code wasn't quite there I know you weren't involved in the creation of the dow. I want to make that clear your curator which is a Which is an oversight role and had nothing to do with the creation of the code But it would you would you maybe have if considered putting a limit in if you were involved in that code and and not raise this much Money so soon so quickly in ethereum Yeah, I think that's a really great point and one of the things that I think we can take a Page from you know the digit digits token sale That happens so fast because they did have a cap on it And here we have a situation where there was no cap and it grew immensely fast I think in both cases we can see that there's like tons of interest from such a fast rate of people putting the money in but Um, yeah, I mean I suppose it does beg the question of was this smart to leave it totally uncapped It was I think far and above and beyond anything anybody imagined in terms of total value Uh, just people wanted to pile into this project. I think they saw the value of having something like this for the whole ecosystem Uh an increased exposure for it in that way I I think there is a risk here um of people gloating and and kind of expressing this uh chosen friday, um this, um Gleeful feeling at other people's misfortune. I think we need to step very carefully to avoid that first of all because Regardless of the outcome This was a fascinating experiment in governance in smart contracts from the very beginning and um I participated knowing full well the risks I think a lot of people perhaps, um underestimated the risks in participating on on a very large scale, um, but At the end of the day, um This is something that will help us learn a lot about governance. Unfortunately. It's also something that is now costing some 55 million dollars. Um, I don't know what the current valuation is, but it seems to have Hurt, um, not just the dow, but also ethereum Um, I remember the night before This event happens ether had just hit 21 dollars, uh, which gave it a valuation of some 2.7 billion. I think Um, and today it's hovering around 12 this clearly hurt um Ethereum or at least not not ethereum, but at least the price of ether Uh, fortunately as we know in cryptocurrencies, if you take the long view Um and hang in there things turn around but, um You know, I I think it's important to not uh take a position here And I certainly don't I'm saying, you know this this this doesn't really show anything about Uh ethereum, but it certainly gives us a lot of good lessons to learn about, uh building complexity in in smart contracts and whether we're ready for that level of funds to be tied up in smart contracts Yeah, it's interesting. I I do agree. It's we have to be very careful and think about what presidents are set for the future And how we might learn from any of the steps we've had Um, you know looking back in the entire history of crypto, uh, there are lots of mistakes been made But we can always learn from them and I think uh governance is certainly one area that needs more attention and improvement Um, you know when we have difficulties in our communities, we have to figure out how to work past them Um for the betterment of everyone and this is an opportunity to kind of do that in a really positive way and try to come out ahead with the whole community and um, hopefully we can we can still do that It's going to take some time I think fortunately some of the delay built into the withdrawal of the funds of the dow is just time to discuss So that was a very intelligent design decision Made by the implementer of the code Um, but hopefully we can come up with a decision soon here and look forward to better governance So I think that's uh a good point to switch topics and talk about the cure that might in fact be worse than the disease Um, the dow was our first topic. The second topic is the fork and here we have to take I think a very uh skeptical and careful look At the proposed remedy to this event the fallout from that and what happens next in um In both the dow and in ethereum, uh, Pamela, what do you think are the implications of the proposed remedy? At least from a legal perspective in the meantime, I'm going to bring in our next guest Standby everyone Pamela. Tell us what you think the implications are Well, let's start out with first it is impossible for anyone to know what the implications are because we don't know what law applies And we have no idea what jurisdiction will be in um, but you know, I I think that When we're looking at uh this fork, um, there are some really really interesting questions that arise I think first of all and and I thought we were going to to Read the quote-unquote attackers um uh Past been article. I don't know what you call a letter. Yes. I think it's been a letter. Yeah um, but it While you're getting that I think it's important to note that this person is uh legally savvy And we could go through the the the letter line by line, but I think it's I think it's interesting the way that they Phrased certain things and and to me when I read it. It seemed very clear that they were trying to assert for example Um, this was not a mutual mistake. So the first line starts out by saying let's let's go in and actually Read that but first I want to briefly introduce our next guest. I'll talk a bit about the proposed remedy Brian welcome to the show. How are you? Great. Welcome. Welcome, Brian. Are you here as well? I can hear everybody. Great. Uh, do you want to do a quick introduction? Sure. My name is Brian Klein. I'm also an attorney like Pamela. Um I represent a lot of people in this space. I do criminal defense and civil litigation I volunteered as the outside general counsel for the bitcoin foundation for a little bit I represented people like eric borehees and roger veer and Um a number of companies and other individuals. So I've been pretty active Since 2013 Right. Um, welcome to the show, Brian. Um, so first let's talk about the proposed remedy and then we'll talk about the, um alleged Response letter and we're gonna have to be very careful about, uh, whether we attribute authorship to the So-called attacker on that. Uh, you know, we don't want to be Craig williams in this particular case Um, you know, there's, uh, um The the idea of, uh, having, um False identity in this space is a is a big issue in how you verify identity. Um, I sorry Did I say Craig william? I'm in Craig righted. We don't want to be Craig righted. So, um, Let's let's first of all talk about the proposed remedy Uh, proposed remedy was posted by a Vitalik pateran. Um, the creator of ethereum who, um, At a very early, uh, time of the day got together with a lot of the other, uh, ethereum developers And the exchanges and tried to put a plan into action to fix this problem. Um Now this in itself has caused a lot of consternation among many people because they, uh, perhaps rightly so see this as an intervention in the operation of a smart contract. Um, and you have this, uh, cognitive dissonance, this seeming contradiction Between the idea that the contract is the law, the contract stands on its own, it floats above jurisdictions It is self executing and Subjects to no human interference and oversight unless of course we fuck it up really bad in which case we call Vitalik And Vitalik fixes everything for us, which is a very dangerous Uh precedent is now we've gone to the other side. Now, of course, even Vitalik can't fix this. Um, Because Vitalik doesn't control ethereum nobody does So all Vitalik can do is beg the exchanges to stop trading for a while to give it some room to breathe And then propose this soft fork Um But of course that again does not get executed unless you get consensus for the miners and that's where the drama starts Now I want to go specifically and look at the proposal. Uh, Vitalik suggested that a soft fork be activated that immediately Um, let's say immobilizes the funds in situ. Um, it's basically like putting a freeze on the funds Um, and the specific, uh proposal for the contract was Which has already been implemented by gavwood in parity Is to put a freeze on contracts with a specific hash code and not allow any transactions that withdraw funds from those contracts That would protect the dow. It would protect the child dow. It has some Rather disturbing side effects on other dows implemented using the exact same bytecode Um, and this is stage one. This is the freeze Uh, and stage two that was proposed and has now been withdrawn. Um From the backlash. We saw that specific sentence in the ethereum blog, uh disappeared overnight tonight Um, there was a one more sentence in the proposal that said to be followed by a hard fork Um to refund the money. Um To the dow holders that's gone now. We don't know if it's going to be followed So let's call it the freeze followed by the seas. Uh, so we're talking about freezing assets Uh, followed by asset forfeiture. I mean, you know, this isn't a bailout And I think people rightly so have said listen, this isn't a bailout. No new ether is being created This is not a ben Bernanke moment Of vitalic putterin bailing out the dow It's the same amount of ether. It's simply undoing a specific theft, that's what it's being called. Um but If whether it's a bailout or not, it's most definitely asset forfeiture. It's asset seizure the moment it's being frozen Followed by asset forfeiture done through a majority vote consensus mechanism So we're basically saying that the majority Can do asset seizure followed by asset forfeiture through the consensus mechanism um Pamela your thoughts on the legal implications Uh of seizure Sorry, I'm having some echo I'll say that I I think it's a dangerous idea And I just want to speak to this from a legal perspective for a second in that these decisions that are being made by Vitalik by Developers by the miners. They're the same sorts of decisions that are being made by judges And the question is what what is the remedy? What is how do we make people whole? And who is going to bear the risk of loss right now? We're in a position where everyone loses and so these are difficult decisions that are that are made by courts as well Um brian, do you have thoughts on this? Well, I I don't fully understand the technology behind Executing either of those or those various proposals that are floating out there But I would say that it does seem like an attempt to try to keep people whole um At least by the people doing them and I think that you know, it's trying to Front run essentially potential lawsuits or regulatory action I'm not you know, I Obviously a lot of people are paying attention to this and it's you know for the people who lost their dow tokens Or if they're not lost half or whatever word you want to use um I expect there's gonna be a lot of legal fallout here Absolutely. Yeah, but I think you know, I think um Maybe maybe we don't want to move here yet, but I think you know the quote-unquote attacker for lack of a better term Um, we'll get to that in just one second come on. I'm going to interrupt you. Um taylor I also wanted to jump to you. You you know, you're a curator in this particular case um, so in a certain way you were involved um In in at least the governance model of the dow Uh for validation of proposal. You never got to exercise that role. I want to make it very clear The curators were never involved in making any um actions or actionable decisions I'll give you some protection there. Um, but but but you were prepared to make some decisions about some proposals How you know as someone who's involved on that level in the doubt What do you think of this proposal to do uh a seizure through a soft fork followed by a forfeiture through a hard fork? Yeah, so it's uh, it's interesting. There are probably about four or five different possible proposals about what to do in this kind of situation Uh, depending on where and the party lines you uh fall and it seems to be um a range of holding lots of tokens to holding no ethereum And um, I think the issue is that we need to find some kind of common middle ground and even though there will be no perfect Kind of results. There are some possibilities Uh, one of the things that gives us some time at least which is something important because Having these discussions is not uh instantaneous. It takes a long time to have thought experiments and explore it So, um, one of the things is the software proposal that's been put out there And that would basically be a change to the mining Part of the the software so that they can opt not to process certain kinds of code Signatures will say so there's there's a bit of code that looks like this They can say I refuse to process that in melody that is part of the would you call that to blacklist? Um, yeah, I mean it is the black list of sorts And I was you know when I was thinking about this, you know It does offer a really interesting way to bridge the idea that Contracts are self-executing but still the humans and the social applications. There's a way to sidestep some sort of problems People can choose to not do business with certain people and this might be an effective manner of neutralizing some threats That's that's one of the really interesting points here Now I want to emphasize that um, this discussion is not predicated on finding the right answer or even Supposing there is a right answer. I think probably the most obvious outcome of this is that Things have gone badly wrong Some people stand to lose a lot of money. This is a very serious question Which will have implications that may be very significant for some people may have repercussions in terms of Loss of funds it may have repercussions in terms of lawsuits But it also will have a bearing on what precedence is set and how the governance of The dow and ethereum continue from here on out And how we see smart contracts in their application But I want to go to the last question you the last topic you you mentioned taylor Which is the idea that we use the social structure of ethereum essentially by Uh allowing the miners to vote if they want this solution to undo the hard math of a smart contract when it's gone wrong And to allow the soft judgment of participants through the consensus mechanism um to create our own Uh resolution that sounds awfully like Adjudication it sounds like We're saying the smart contracts are the smart contracts and if there are disputes Then we're going to use the consensus mechanism as the jurisdiction of enforcement of these smart contracts and also As the jurisdiction of equitable Restitution to those harmed Pamela Yeah, I mean that that's the difficulty the difficulty and this has been brought up a number of times on twitter but the question is Where is the line here and who who is making these decisions? So, you know, yes, if for example, if the the code is distributed and a miner says You know, yes, I'm going to I'm not going to process, you know, this transaction or yes, I am going to adopt the the fork code um arguably if if someone has a loss they could Say to that miner and and join all of the other miners who either adopted or failed to adopt that transaction in a lawsuit and say You you've cost me To say it easily they could say, you know, you've cost me x amounts of dollars You took my property. This is effectively a taking and therefore, you know, you you have to make me whole So again, we come back to that question of how are people made whole and what is whole and who wins And I think we set a very dangerous precedent when we start Blacklisting for a number of reasons including but not limited to I think it opens the entire network up to subpoena power And I think that if we show that we have the power to blacklist certain smart contracts I think that We would be foolish not to think that governments today will not attempt to use their their power in order to make the network do that I've been very vocal against blacklist of any kind In cryptocurrencies in general and we may be seeing the first example of this being applied At a governance level on a major cryptocurrency Brian, what are your thoughts about the potential repercussions? the unintended Consequences of trying to remedy this narrow case, but yet creating a precedent that has far reaching consequences Well, I don't know. I think every case is unique. So I think what happens here and I should give the caveat I heard Pamela say earlier, which is I'm not offering legal advice Either but in any capacity here. I think this is a unique case and I think Yeah, maybe it will set precedent for how people handle things down the road in a sense that they will Do things differently, but I don't know that a court or Lawyers are gonna look at what happened here and say, okay, that's how it has to be done in the future I mean, I think there's a lot of still potential remedies out there and people are considering them And I'm curious to see what happens just as a spectator. I don't own Dow tokens I don't have a personal interest in this But I think that whatever happens here people will look to and I think I know people in the bitcoin world are You know, there's some, you know sense of like, oh, well, look what happened to Ethereum and look how bitcoin's doing so much better, but that's sort of irrelevant for The Dow tokens and the Dow holders and And how people are going to judge it there. I think Ethereum stands on its own and is should be evaluated individually Absolutely agree on that and Certainly, I I think I I've been one of the people to talk about Distinct niches and ecosystems in which one system is better than another and not really a head-to-head Competition, I've never seen Ethereum as a rival to bitcoin and I certainly will turn around now And see bitcoin as a rival to Ethereum just because Ethereum has had this particular issue So let's talk about some of the implications But first I want to read you this letter this open letter now a quick caveat this letter purports to have a digital signature on the bottom There is the digital signature itself is malformed. Um, which means that it's bullshit We don't know Who this person is it's a pay spin. It's a completely anonymous account In fact, given the fact that the recipient of this is a contract And as far as I know Since the contract doesn't have a private key unless there's a function already in the contract to sign arbitrary messages There's no way for a contract to authenticate against the address Taylor, you might know a bit better here, but I'm assuming there is no way for The person who created the split proposal to prove That they are the person who created the split proposal because there is no private key with which to sign a message Which would be the only valid proof Taylor Yeah, I think I think that's right. Uh, I haven't looked into the message actually very much And I was looking forward to hearing it read here But uh, if it is controlled by a contract then indeed there's no private key to sign So that would have to be built in the only thing that could be done is A signal from outside that this person's private key sends to the contract And if the contract could do something but that would be pretty much the only way for for them to authenticate And and as far as I know, um They haven't and in fact they have completely disclaimed the possibility of Identifying themselves, which is rather convenient. So as Vitalik said in the case of kreg right There's an easy way to do this and a hard way to do this And if you don't do it the easy way it's because you can't Um to paraphrase so, um Take this with a giant grain of salt But the reason i'm going to read you this open letter Is because of what my initial reaction was and I I had this discussion with with pamela morgan About how this sounds like someone who is sophisticated in the term of law They're using terms in a very specific way Um to establish a certain pattern of behavior and to set up Um something this is not a naive letter. It is not someone who doesn't understand the jurisdictional Or tort issues that come up in this particular case So i'm going to just read this for you and then we'll take some comments to the dao and the ethereum community I have carefully examined the code of the dao And decided to participate after finding the feature The feature where splitting is rewarded with additional ether all emphasis is going to be mine So I just uh if I make funny voices and add exclamation points with my eyebrows. Just please forgive me I have made use of this feature and have rightfully claimed 3,641,694 ether and would like to thank the dao for this reward It is my understanding that the dao codes contains this feature to promote Decentralization and encourage the creation of child's dowse I'm disappointing I'm disappointed by those who are characterizing the use of this intentional feature as theft I am making use of this explicitly coded feature as per the smart contract terms And my law firm has advised me that my action is fully compliant with united states criminal and tort law For reference, please review the terms of the dow and here he quotes or she quotes or they quote The terms that were included in the dow hub contract Quote the terms of the dao creation are Set forth in the smart contract code existing on the ethereum blockchain at 0x bb 9c Which is the address of the dow nothing in this explanation of terms or in any other document or communication May modify or add any additional obligations or guarantees beyond those set forth in the dow's code Any and all explanatory terms or descriptions are merely offered for educational purposes And do not supersede or modify the express terms of the dow code set forth on the blockchain To the extent you believe there to be any conflict or discrepancy between the description offered here in the functionality of the dow's code at 0x bb 9 bc Blah blah blah the dow's code controls and set for sets forth all terms of the dow creation And the letter continues a soft or hard fork would amount to seizure of my legitimate and rightful ether Claimed legally through the terms of a smart contract Such fork would permanently and irrevocably ruin all competence in not only ethereum But also in the field of smart contracts and blockchain technology many large ethereum holders Will dump their ether and developers researchers and companies will leave ethereum make no mistake Any any fork soft or hard will further damage ethereum and destroy its reputation and appeal I reserve all rights to take any and all legal action against any accomplices Of a legitimate theft freezing or seizure of my legitimate ether and i'm actively working with my law firm Those accomplices will be receiving cease and desist notices in the mail shortly I hope this event becomes a valuable learning experience for the ethereum community and wish you all the best of luck Yours truly the attacker I read that and it strikes me as something that has a fair degree of sophistication and legal understanding has Set up certain parameters in such a way as to strengthen a particular case And is also exhibiting a very large amount of understanding of smart contracts, but also a very large amount of being a smart ass Now we have no idea if this is the attacker But even if it isn't that brings up a really good point If the terms of the contract are controlling and this was done through execution of the smart contract According to the consensus rules of ethereum In full accordance to the code by a dow token holder Um, why is this a theft? How is this a theft? How is this not simply using the contract as explicitly defined? Oh, okay I haven't read the terms of the contract that closely, but The terms of the code, right? Yeah. Well, I and I can't read codes. So there you go I would say that this person obviously it sounds like a troll to me, but maybe it's the real person Um, let's assume it is for the purpose of this They're setting up a defense. So they're like, hey, I'm just following the rules here And I just happen to be the big beneficiary too bad. So sad for the rest of you I mean, yeah, you can raise you can raise that defense and maybe that will work I haven't dealt in the details enough But I'm sure other people and I know other people feel radically differently than that That they've been cheated and swindled. So, you know, that's often what you have civil litigation over is One person feels like they got taken advantage of and files a lawsuit and you know, sometimes Legal authorities or regulatory authorities get involved because they have a third view or they share the point of view Well, yeah, let's look at one sentence in specific I'll just say I'll just say real quick. I can't imagine a reputable law firm Gave a definitive opinion like the one expressed in that letter. I'm not saying this person didn't consult with a law firm But it's very hard to get a law firm to say definitively Yes, you have you can do that You know straight up. There's a lot of caveats lawyers give just like I'm giving on this this talk Well, I would give definitive opinions. I would disagree with you there, brian because I've read uh, john you um Providing very specific legal advice that uh, purported to legalize International war crimes to president george w bush. So you can get a lawyer to say pretty much anything Under the right circumstances. I did have to caveat reputable in front of that John you is is is still walking free. So let's I don't know Let's go to the the first sentence and I'm going to Switch to you pamela because I think this one really shows a clear understanding of contract law I have carefully examined the code of the dow And decided to participate after Finding the feature where splitting is rewarded with additional ether Yeah, so let's talk about this. Okay. So that seems like kind of a strange sentence, right? Like, hmm It's very calculated and let me tell you why I think that is For for contract law You have to have an offer acceptance and consideration and so assuming that we have a contract here This sentence speaks directly to a contract defense called mistake So I think many dow token holders and likely the the people who wrote the code Did not realize that this was part of The contract this was an unintended consequence, right? They didn't think that this that this Irregularity was included in the contract now As far as the defense of mistake goes and and let's talk about this If you are able to assert the defense of mistake Then there's no contract and if there's no contract, then there's an equitable remedy Then you can return the parties to their warm and fuzzy state, right? So this person whoever drafted this my guess is They were trying to say that this was not a mutual mistake meaning they Didn't neither party knew he specifically he or she excuse me is specifically saying I knew that this was part of The code and it induced me To invest in the doubt that is a very calculated sentence And you know arguably This is trying to say That because One party knew and the other party didn't know it makes the argument much more difficult If both parties make a mistake on a material issue in a contract Then there's a a good argument that that Contract can be unenforceable. It seems to me and I'm sure that there are other legal issues Surrounding inducement to invest in the doubt But it seems to me that this sentence speaks directly to the lack of mutual mistake And moving it into a unilateral mistake a single a single person mistake You know I think that we need to go back quickly and talk about This concept of all of the terms and conditions being as the coder said included in code And there's something in the enforcement of contracts. There's a there's a concept called Constructive conditions and constructive simply means the judge makes it up. They put it in there because Otherwise, uh, there would be an unjust outcome So we have something called constructive notice where you should know where you do know or should have known something um in this case A judge could could put into the contract something called constructive conditions Even if both parties say no, no, no, no What's in this paper? What's in this code is the only thing that that we are going These are these are the only terms a judge does have the latitude in a common law country If they want to apply an equitable remedy can say even though the parties said that these are the only conditions that apply No, no, no, no, no, that's unfair. That's unjust. We're going to read into the contract That's the language they use we're going to read into the contract these additional constructive conditions In order to have a just result so that one party doesn't get what's called unjust enrichment But in this particular case one of the many outstanding issues is the issue of jurisdiction, which is that By virtue of the floating above jurisdiction fiction of smart contracts that was created here Um presumably the attacker if they actually choose to sue which is a whole lot of kind of worms and really unlikely for many reasons They could simply pick any jurisdiction in which a DAO token holder who is one of their general partners resigned or One of the miners or any one of the developers who implements any one of the bits of code to do the soft fork And basically jurisdictions shop and say you know what? I didn't like the fact that you call me a thief And so I'm going to sue you for a slander in the uk. I didn't like the fact that you took my money I'm going to sue you for um seizure in panama or wherever right and and pick the jurisdiction that is best for each one of the Cases but of course that's the views. They'd have to identify themselves All right. I'm going to grab another beer and let you talk amongst yourselves for a while Don't forget for our audience questions hashtag LTB DAO on twitter or on the dao slack. Just mentioned my name a a nt O and op and we'll take questions from the audience in the next round Yeah, I mean I think this is the issue brian Do you want to weigh in on the on the jurisdiction questions at all because I spoke about this earlier And what did you say just so I don't oh no But the thing is is you know these things can can all come out in in different ways Legal opinions differ friends I think people will Try to choose the jurisdiction most favorable to them if they're going to bring a lawsuit and Whoever cited this they're on. I mean whether it's You know civil plaintiffs or this person who's Controlling these uh dow tokens through the dow child. Whatever the setup is I think those parties will choose whatever they view is the most favorable or most convenient most cost effective jurisdiction If they want to litigate this So I don't think you know and maybe they'll succeed and maybe not and there'll be a lots of arguments over that But I can't imagine a u.s. Court a federal court even a state court frankly with a victim in it quote victim You know, however you want to phrase it Wouldn't feel comfortable Taking jurisdiction over this case because There's someone living in their jurisdiction who lost the dow token to this other person or however you want to phrase it again You know that court courts are pretty friendly And I'm in california, especially very friendly plaintiffs So and especially when there are voters and you know in the u.s. In many jurisdictions federally There's a very long the federal jurisdiction and the federal courts have a very long reach Absolutely, so to me it's You know now can they actually yes this person known are they ever going to identify themselves? Well, this is the issue right if you if you want the court if you want a local court To help you enforce your rights then you have to come forward because the court is not going to You know you can't you can't come forward with a with a student and I don't think The other question of course is then enforceability and once you get in action How do you how do you actually enforce the judgment? Well, there's you ask the toilet. No, there's mechanisms for that I mean in state courts and federal courts to Enforce judgments so then that I don't think would be a problem Yes, but I mean if the if the judgements is against the dow Well, I think anyone's gonna get I don't think anyone's gonna bother to get a judgment against the dow You need to be able to identify if I was you want to be able to identify a person Or where funds are if you're bringing a lawsuit and if you can't identify a person or where the funds would be I think a lot of lawyers would be tell their client This may not be the best lawsuit to bring because at the end of the day you're not going to have anything to show for Yeah, I also think this letter is interesting where Where this person says that he uses the word he or she excuse me uses the word Accomplices and anyone who are the accomplices who who work together to you know Deprive me of my property will receive cease and desist. I think that's that's a very interesting choice of I don't think that's gonna happen because as soon as someone gets a cease and desist They're probably gonna post it on a reddit. Oh, yeah for sure and everyone's gonna know what this law firm is and who this person is I just I mean, maybe that will happen I mean, we'll find out pretty quickly. I mean, is there a case to be made against Miners who refused to process transactions with specific code No strings in them. I mean, is that is there really a case to be made that that they did not You know validate and do their job But can they refuse to do that and and does it seem like he really has a case to bring against them for Refusing to do business with them Well, I think the u.s. Legal system is very plaintiff friendly and It's very easy to find Uh causes of action to bring against people that have at least on the space of that will survive a challenge Now at the end of the day with they had to go trial what they win. Maybe not but um I think that uh, you know sophisticated creative lawyer here can come up with some causes of action that will stand at least initial scrutiny Against, you know, various parties whether for the person who has these Eat these tokens or the people who you know, those tokens This person has so I don't at least in the u.s. I don't know I can't speak to other jurisdictions But I don't see it as a problem. You know, it's usually not a problem to bring a lawsuit It may be a problem to win. It may be a problem if That it really has merit, but to bring a lawsuit is fairly easy in the united states Well, and let me jump in and say If we have an arbitration clause and I don't mean to harp on this But I really do think it's this important if we had an arbitration clause in the terms and conditions If someone did file a lawsuit in their local court You as a as a respondent to that would say no no no no no we don't have to do this here Judge you have to send this to arbitration and if it's done properly and if it's done legally That local judge cannot hear the case. Yeah, that's that's generally true. You're right I thought there wasn't an arbitration clause in the dow. No, there is not i'm saying we need to this is a best practice Friends that are listening. Please Please Do this just add terms and conditions and include arbitration. It's so easy. It's free. There's a clause builder On their right. Um, it doesn't mean that it's going to save you from everything But we as an industry need to be better at this because if we don't We're going to end up having more and more and more of these discussions And it's it's it's not really fun for the dow token holders Um, you know, it's it's legally interesting to have these discussions But at the end of the day, there are people who have lost millions and they don't really want to be dealing with this So I think to the extent that we can mitigate risk by making these sorts of choices arbitration Venue clauses. Um, it I think it's going to be better all around and with arbitration We can select arbitrators that have Technical knowledge in our space. We don't have to just get whatever potluck judge we get We can actually say these are the qualifications for arbitrators. They must have coding experience Insolidity for example, and you can make that probably going to be like one judge if I Well, I mean right now No, there's a number of other lawyers that can do this, but you know the issue is that We can then choose who we want to decide and what laws they use to decide And I think that um, if that had happened in this case, we would have at least a bit more certainty Well, arguably in this particular case what has happened, uh in the absence of Um, setting a choice of law or having any arbitration clause and requiring The DAO contract code to be the one only Authoritative contract that exists is that we're having arbitration by ethereum chain consensus mechanism Um, and this has a number of other implications. Let me look at let me jump in for just one second there and um If you actually do arbitration arbitrators have contracts that um that I don't want to say reduce. I want to say um prevent them from being held Personally liable The issue is in this case. Yes, we're getting arbitration by developers or minors The problem is they don't have the protection the legal protection for making those decisions, right? If I'm an arbitrator in a case I'm not going to agree to to be your arbitrator unless I say well, you can't sue me personally For a decision that you don't agree with because inevitably Someone is not going to be happy. That's the nature of the beast that is part of You know part of dispute and so um if we have this sort of adjudication by Coders and by minors and by whomever else they don't get that protection And that's one of the things that I think is most dangerous about it Well, this sets up some really interesting incentives because on the one hand you have some 25 000 DAO token holders who are all Jointly and severally unhappy And are um prone to be litigious in the case of this money Really getting drained and and lost by the DAO token holders And on the other hand you have a mysterious attacker or attackers who have really no recourse other than Revealing their identity which would point to the bias or incentives heavily skewed towards Protecting or reversing this in such a way as to make whole the 25 000 DAO token holders Than Considering you know the possibility of the attacker suing But there are a couple of wrinkles that I want to get to next and then we'll go to some questions wrinkle number one The proposed soft fork as created at the moment And this is how it has been implemented in parity how it was suggested by Vitalik and Christoph Jantz and um Including the proposal for the hard port is to prevent any transactions that withdraw from Any code segments that has the fingerprint? A specific fingerprint that is the DAO 1.0 code And what this means is that it prevents any withdrawals from either The parent's DAO the DAO 1.0 or any of the children DAOs because children DAOs Automatically create a clone of the 1.0 DAO code It would prevent any withdrawals um, and then the proposal is for the heart fork to implement a scheme by which um, all the funds that are in any code segments with that hash Are transferred to a refund DAO from which the DAO token holders can claim a refund And here's the one big wrinkle that I've tried to verify earlier and We'll we'll get to tailor and find out if this is correct from a technical perspective This code hash includes any bytecode that is implemented DAO 1.0. I implemented DAO 1.0 I'm running a copy of DAO 1.0 on mainnet In order to test the software in on mainnet Um, and I believe it has a tiny amount of ether in there others may have chosen to run This exact same DAO code now While there is a vulnerability in the DAO code If you know all the DAO token holders and know that none of them can or will exploit this with a and get away with it Um, then it's perfectly fine. Yet as soon as the software Passes my DAO codes that has nothing to do with this Has been seized or frozen and if the hard fork passes my DAO code and its ether gets Asset forfeiture directly into a refund DAO and given to the DAO token holders who have nothing to do with me um, this seems to me to be a very Rushed decision that has some really nasty implications Taylor, did I get the mechanics of this right? Are they really doing it based on the fingerprint of the bytecode and will affect any instance of DAO 1.0 code that has not That has not changed the code Yeah, so you did get that right. Uh, there are two parts to it. It's important to note One of the proposals is called the soft work and this is basically refusing to process Code signatures that look like a specific thing and right now this is kind of a broad approach um, but I've already discussed with some of the developers some of the other possibilities and you know There could be a more targeted approach. I think uh at first one of the big priorities is stopping the you know quote-unquote attack vector and To put a freeze there and have time to make a qualified decisions really good So if we can get a a large kind of Freeze on this problematic behavior and then target the specific addresses perhaps in the specific blocks This might be akin to a blacklist of sorts, but it gives the most balanced Proposals since right now the attacker doesn't actually have access to their funds Nevertheless, this would also block my instance of DAO 1.0 code that i'm running Yeah in the first proposal that's uh been made, uh, that's my understanding is it would affect all instances of it Not specific ones. Well, here's the interesting thing I can't do anything about that Because if I started a split right now in order to get around this impending soft work that's coming It would take 27 days from the moment I started a split So I can't unwind my own DAO in order to get any kind of recourse from my perfectly well functioning DAO with my Own property in it, which means that effectively the miners Through the introduction of this soft fork will unilaterally and without recourse confiscate my money Do you see a problem with that? Well, I don't see it as outright confiscation at the moment that you can't send a transaction that will do that That particular withdrawal function Right, so they will seize my money. They won't confiscate it yet, but they will seize a freezing assets is a seizure At least legally speaking Uh, I couldn't comment on the the legal definition of it. I'll take your word for it Yeah, but uh with that. I mean it seems to me that the soft fork is a bit ill considered as to its side effects It assumes that the only DAO that's running DAO 1.0 code is the DAO, but that's not true Yeah, uh, there's no good decisions here. I mean, uh, there's a lot of possibilities And no one comes out a perfect winner in the end. I think that we have to accept that there will be some Fits and starts to getting past this The worst situation I think is to do nothing and just let the DAO drain completely Um, maybe some people might like that from a code idealist purity's perspective But I think that's the worst for all parties involved at a human level Without a doubt and that will also create 25 000 highly litigious angry people who will turn around And and take this to every jurisdiction you can imagine because of 25 000 people I'm betting you're going to find a couple who are going to see you in every jurisdiction imaginable Um, Taylor, can I just jump in one quick second? Um, Taylor, have you guys Behind the scenes talked about this issue at all? Like is there a way to identify who the DAO token holders are versus Um other people who may be running this instance And is there a way to to kind of refund the money and also you mentioned that it's a two-stage process So i'm interested to know if from a technological standpoint. Um, this is something that that can be done I'm not perfectly sure if it can be done. I think it's theoretically possible to Get almost all the way there if not all the way One of the things that I have seen someone do is import the chain into Google for some sort of data analysis And we're running some sort of spreadsheets on that and one of the things that I personally wanted to know is After andreus had tweeted about it was what other instances of the dao 1.0 coder out there And how much funds are we talking if if they're just play things and there's Relatively low amounts below thousands. I think that it's low risk in terms of affecting other people But if there are larger funds out there, certainly That's kind of pissed off a lot more people so Well, and maybe there's a way but maybe there's also a way I mean it's it's hard for us to say like what matters to people right like maybe Someone's one eith is like everything to them, you know, so it's hard to say I mean this the precedent this sets is is astonishing We're talking about people who have very idealistically participated in a scheme that is about changing the fundamentals of You know the justice system and how we organize society and here we are cavalierly talking about And I don't mean you Taylor I mean the whole space is is really looking at a least worst solution where one of the options is Casually confiscate as long as it's just a small amount From people who had nothing to do with this. I mean just from a I can imagine there's a lot of people who are ideologically opposed and we saw from slough kit And this quite shocked me That they accused people who are Objecting to the soft fork as siding with the thief And I thought that was a rather cavalier attitude to take when what we're talking about here Is property confiscation and when you're talking about property confiscation, whether it's a tenth of an eith or an eith or 55 million dollars We have to take those things very very seriously and I would argue that someone who has a tenth of an eith Taken from them could quite easily Sue someone for this Yeah, absolutely I mean if they were going to pursue that route the value of one of a tenth of an eith is certainly less for them to Sue for perhaps there are other damages Civilly I'm not really sure here because I'm not a lawyer But I think you know it is important, you know as we talked before to learn from earlier precedents And there have been cases where other blockchains and talking about bitcoin here Yeah have had to deal with these kinds of issues and there have been reversions and hard for us So we shouldn't look at those necessarily as a black spot But what was learned from them and what were the outcomes of them and who was affected by them Can help inform us of what kind of decisions can be made now Well, in fact, I I I want to Clarify this point because it's a claim that's been made a number of times. There have been two Two forks that have related to bugs in bitcoin The most recent one was in april of 2013. This involves a fork because of an incompatibility between version seven and version eight or sorry 0.7 and 0.8 of the software No money was changed hands. No transactions were canceled. Everything was replayed in exactly the same order and you're involved Simply changing the software version Now certainly miners who found themselves on the wrong side of that chain lost the reward that they would have gained but no Transactions other than the coin based transactions the reward transactions were affected if you go back to 2010 we had an incident where Due to a bug in the software a coin based transaction created some 92 million bitcoin I can't remember the exact amount, but essentially someone mined an exorbitant amount of bitcoin And this was validated by the network and then the code was changed to correct the consensus rules and that block was invalidated But again, we're talking about a coin based transaction that was mined Never in the history of bitcoin has a hard fork or any kind of fork Resulted in the reversal of specific transactions In such a way this is on precedent both of those situations you had somebody who could have benefited Had the fork not gone through if the status quo maintained there could have been a beneficiary And I think it's interesting we kind of had a yes, but that benefit was a miner who was materially participating in the validation of consensus rules I think that's a very different situation than someone who's simply running a contract And again, I'm not saying that bad things haven't happened in bitcoin Um, and and I'm not saying that this is the wrong choice for ethereum. I'm simply saying we really are facing. I'm impressed at this situation This could happen in in bitcoin too. You could have for example when empty gox happened Um, you know at some point we could have had Uh people arguing for a hard fork to reverse transactions that left the cold wallets of empty gox We traced those through And in the early days you could have done that Nobody did that in bitcoin for very specific reasons and ethereum now we're talking about the very real possibility of doing that Yep, indeed. Uh, it's it's going to be a really interesting time as we get through this There's a lot of options. None of them are perfect Um, I we're just going to rely on talking with people and discussing As I tweeted before Doing nothing is also an option. Uh, we may end up going that route I think it would be probably the worst outcome for the ecosystem as a whole including blockchains Because we do have to get past some of these governance issues and doing nothing would show that we'd still haven't would pass Solving the governance problem Right doing nothing essentially means Destroying at least 54 million Dollars worth of value But arguably those would be returned to the ecosystem in the form of sales For the person who profits. All right. I think we've gone around this topic A few different ways and we can all agree there are no good solutions But certainly there are some least worst solutions. Perhaps the need to be tweaked a bit to make sure they don't Unnecessarily sweep innocent dowel instances in their effect But certainly it seems like the solution that Affects only the attacker and not the 25 000 dollar token holders might be the best from the perspective of everybody involved All right, so let's talk about the next topic, which is great. Let's say that's the solution Can we actually pull it off? well Just today in an interview That happens. I'm just going to pull this up This was an exclusive interview With crypto coins news um Andrew quenson Said that they received contact from again the alleged attacker no way to verify it and Conducted an interview part of this was based on the appearance of the alleged attacker in the Hashtag general Channel on the dowel slack and the attacker gave out 6.37 bitcoin as a demonstration that money speaks and people will take money even if it's paid by An attacker and then suggested that the way out of this would be they would give a million ether As a bounty two miners for simply refusing to implement the fork and this gives miners A complete plausible deniability. They don't have to do anything. They just have to not upgrade to the latest parity or geth code Ignore the soft fork and as a result the the supposedly the attacker is saying They will generate a million ether reward that they will distribute to the miners who mine the next few blocks After the supposed soft fork point As a bounty to not do the soft fork now If you're a miner put yourself in this position. You're now like, okay um saint phatolic is saying I should do this and and certainly You know, we all have enormous respect for the the inventor of ethereum and And his opinion carries tremendous authority But also a lot of the other developers a lot of the participants in this everyone from slocket for obvious reasons A lot of other people saying this is the way we should do it 25 000 doken Dow token holders are saying I give us back our money Um, and you're a miner and you're like, okay, I'll weigh this on one side There's a million ether hanging on the other side Suddenly this becomes a really tough choice and part of being a miner is making game theoretical choices based entirely on self-interest Um, it sounds like the attacker just threw a giant wrench in the work and used the consensus system To gain the upper hand here. I'm really beginning to wonder whether The fix is really in Taylor That's an interesting one Yeah, um, I it does come down to the miners in the end and that's kind of what I've been saying It is the community's choice about what to do Uh, what is the million ether worth today after this action? Uh, I Have no idea Whether the price is going to go up or down based on the reflection of that Sorry 12 million dollars right now. Let's see where it goes. Well right now, but uh Can you clear that through uh an exchange fast enough and what is going to be the market sentiment while you're doing that? Um versus what is the value of the blockchain ecosystem? If we take off and not billions, but we're talking about trillions of dollars invested into a world that does believe in this technology and the transformative power Uh a single contract recursion bug notwithstanding. I mean, let's remember EVM salinity itself. I'm working as intended This was an unattended side effect of a particular implementation Not a reflection on theorem as a possible platform Right and the bottom line is that all of this assumes that the um That the attacker is telling the truth I think they could just as easily lie Miners don't implement the soft fork They don't get the reward that wouldn't last very long. Uh, that would only encourage them to implement the soft fork You've got a really interesting game theoretical model here with different strategies evolving What I find really ironic here, uh, but also heartening Is the fact that this simultaneously demonstrates some of the flaws in the ecosystem But at the same time It clearly demonstrates the fact that the governance model is decentralized Because if it was easy to solve italic could just say, you know, let it be so and and he can't Um, he can propose code and that code may or may not get implemented Then the attacker can come back and say hang i'm going to give you a bounty and don't do this Um, this is still a decentralized system. So We're seeing at the moment in the market a reaction that says this has been fixed The price dropped and then bounced back and then stabilized somehow And it stabilized near the all-time high just before a couple of days before this happened And and people seem to think this has been fixed I'm extremely skeptical as to in fact whether there will be a refund Of of the dow. I think this is still up in the air Absolutely Which at the same time has the ironic aspect of demonstrating the fact that ethereum is decentralized Because otherwise this would have been fixed in a much more assertive Way and and the the consensus mechanism of miners With proof of work is is very effective now We don't know if we're going to have lawsuits come out of this but certainly we're going to watch Uh, this governance model get tested to its absolute limit both in terms of Good intentions and whether they might play out as well As the potential for self-interest to get in the way and the repercussions in the long term of this ecosystem Let me let me ask a quick question You know if if this bounty were actually paid if there were transactions that You know transferred a million eth to miners who did nothing Would then the response be to reverse those transactions and how how does how does this play out What what what ultimate control, you know, where whereas i'm sorry i'm a lawyer We we do the slippery slope It gets better than that. Um, I've got some comments on the dow slack channel Thank you everyone for dropping in your little comments, but here's another one this one came up You know the the attacker could be lying But the attacker could also underwrite their promise with an ethereum smart contract that guarantees Execution of their bribe What a twist, right? I mean They will guarantee a bribe through the execution of a smart contract that the miners themselves control In a way through the consensus mechanism. So this bribe could actually become an enforceable solidity promise Solidity it's a solid promise Let's just what can leaves out the recursion of vulnerability from that contract, right? The levels of of irony here are pretty strong Let's see if we can take some quick questions from the audience. I'm going to open it up for questions next I have a question. Yes, please and and it's going to work the youtube Video is delayed by a few minutes So i'm going to ask people to send me some questions now and i'm going to go back and see if I can find some And let's delay things in the meantime and continue this conversation. Pamela Great, so I have a question and in full disclosure This is something that that you and I had talked about when we were chatting about having this this this hangout so I am not an expert in proof of stake. I'm just going to say that right now, but If nothing were done if this person continued to hold this amount of e How in what way if any would that affect a move to proof of stake? Yeah, well to clarify we're talking about five percent of all ether in existence This person has a five percent stake right now or the contract does assuming they can get it out right In other words if if the question really is like if it's actually possible that we're not that that we as an ecosystem Are not going to reverse this then doesn't that Have an unintended consequence if there's a move to proof of stake where this person who arguably Did not act in the best interest of the community now has a substantial role If you assume that that letter is real This person is someone who actually is hostile towards ethereum Um and wants to see it fail in the interview. They called it Um a shit coin and I I I don't think that I'm I'm I'm not saying that they said that so you're talking about someone who is actively hostile potentially to the concept of ethereum And trying to prove Something holding a five percent stake. I mean casper is is is a ghost that's already dead Yeah, it would not be a good way to start off proof of stake. Uh having an untrusted entity holding a large Uh percentage of supply when supply held is what dictates consensus I think that's probably the the disaster scenario Um and something that a lot of people are very concerned about for sure. Um What we're gonna do to kind of get out of this pickle. I don't know. Um, but it's uh, it's gonna be a tough road there. I think Taylor is there any thought about limiting Like how much a dow use the dow in a general sense can raise? I mean it seemed like obviously part of the problem here is just the Incredible value incredible amount of money at stake Yeah, um, I mean the only way to do it is um have the dow reject transfers after A certain limit's been reached. I believe that is possible with solidity to Throw the transaction have the the refund sent back basically Um, but that's again up to the authors of that code to implement that So there is no limit There's no yep, absolutely But we now know there's a best practice Right We we've now learned the hard way that maybe you know, I think I didn't didn't fatality say and has put in his Paste been we should not be using smart contracts that are greater than 10 million right now. Wasn't that just a recommendation? We should try to limit Yeah, and I think that sense a reasonable level for a security bounty that um, you could lose through a hack and still Not affect the ecosystem. The problem is the dow became huge at You know more than 150 million before that limit was set and as a result now its failure Did affect the ecosystem? All right, let's go to questions from the audience if you have questions Hashtag LTB for let's talk bitcoin DAO for decentralized autonomous organization Hashtag LTB DAO on twitter or on the slack channel. I'll get to as many questions as we have um first question from the audience what kind of beer are you drinking and This is the um apex predator And which I believe is a wisconsin Bear, I'm going to say the wrong thing and then people know it's a chicago beer Which I got from my local um artisanal small batch gluten-free organic vegan brewery or whatever the hell that is But it's delicious. Uh, so I would recommend it um, okay, not vodka Okay, do you think uh question number two do you think this um invalidates Solidity or invalidates ethereum or invalidates the concept of the dao in any way I'll go last What do you think? Uh, I would say absolutely not. Um The ethereum so far is the best attempt at smart contract platform dao platform Whatever it is that we can see that this uh this thing could be um There doesn't seem to be another competitor in terms of overall popularity and functionality at this moment That doesn't mean that there won't be some sort of successor technology But for right now, this is the best tool we have for this job And I think for that reason people will still look to ethereum for building these kinds of uh applications and platforms Well, and I think you know, we we have to acknowledge that this is a this is a brand new world This is something completely new Um, you know, I know that I don't buy new gadgets the very first one because I know it's going to have glitches I know there's going to be something wrong with it And so we are playing in the you know, how old is is this code? To not even two years You know the last network's only been 10 months. Yeah, okay, so 10 months You know, so so the expectation that we're going to do this perfectly I think is ridiculous and I think that um, you know, we know that there are going to be mistakes made We you know being the ecosystem being bitcoin being, you know, the ethereum system or any cryptocurrency sort of systems Um, you know, yeah, there are going to be mistakes made and and unfortunately, you know, usually we try to do it on a small scale Um this time it it it became a really big scale But yeah, I don't think this means the end for any of these things. Um, I think you're not sorry I think it's going to color public perception Broadly, I think you'll see stories and The wall street journal the new york times, you know, the extent people have heard of ethereum They will now it is like the mount gox in that sense My dad texted me this morning about the wall street journal article and he said you were right about the dow I was like, oh, it's like the cutest thing ever And then I talked to him and I was like, but wait till you hear what happened in the last 24 hours Holy moly. So yeah, I totally agree with you, brian So I I think, you know, that's going to be gonna I don't know hold ethereum back, but it's definitely going to weigh on ethereum for a while In particularly, I think depending on how this shakes out. I mean, we're still Whatever 24 48 hours 72 hours into this Incident, I mean, there's a lot that could happen in the next couple weeks months That will influence things. I think people now will You know Look at them a little differently or better or worse Or at least the next couple months See how this gets resolved and then people will come to some sort of consensus no pun intended About how they feel about it I I think the Governance and resolution of this are going to be critical. The world is watching. There's going to be a lot of scrutiny and um Many participants in ethereum have an opportunity to prove that they will do the right thing in the right circumstances in a way That creates the right precedence Um, i'm going to jump in and say i'm bullish on ethereum um You know quite honestly, fuck the reputation They said everything bad about bitcoin and we're still here This is a real life experiment for a hundred How many of those apexes have you had now? I've had two But uh, that's like 12. Yeah, that's not why i'm bullish. Um You know the thing is They've said everything bad about bitcoin and it continues to prove Uh day in and day out that it's survivable. They're going to say bad things about ethereum Who else is doing real life? production utilization of smart contracts right now All right, nobody our three is going to spend 220 million dollars building shit chains As proof of concept for marketing reasons If for 150 million dollars, we set up the world's most awesome security bounty to prove some really critical smart contracts technology Learn some hard lessons get kicked in the and you know you kicked in the butt by this um It hurts for a bit, but I bet you reentrant code is going to be written a hell of a lot more carefully from now on um At the same time generating this enormous momentum for funding projects through dowes which will come back um Again and again and can become successful experiments. You know, this is the essence of capitalism You do experiments these experiments fail. They have a very high failure rate Caveat emptor you signed up for the dow If you didn't know this was risky if you thought you were going to get A six thousand percent return in three months. You're an idiot And part of that was don't put in more money than is worth now I have all the sympathy in the world for people who are Going to potentially lose a lot of money and I hope that we find the right solution But the experiment itself is awesome I compared the dow to particle physics the most interesting scientific results are in the debris of the fiery Explosion that happens right well guess what we will now have years to study the fiery debris the The debris from the fiery explosion of the dow And it will teach us some extremely valuable lessons about governance of the dow about governance of ethereum About whether smart contracts are binding about how you handle jurisdiction Hopefully it's not going to teach us too much about lawsuits flying around You know that affect miners and other developers, but I am bullish about this experiment absolutely not this does not Damage ethereum in the long run. This was worth doing Um, it is the basis on which we proceed. We have to proceed experimentally and experientially And that means putting skin in the game Trying it out failing getting up and doing it again I'm looking forward to dow v2 caviar temperature be warned. It's going to be bumpy. You could lose your money And let's learn how to build a really really robust smart contract system And the best way to learn is by making mistakes. That's my answer. I'm I'm Optimized All right, let's take some more questions The dow slot the slack, uh, really enjoyed that answer All right, but what can we learn from this? Um So, uh, do you think people will resubmit proposals to a new dow? And do you think we can build new dow's? With some same level or comparable levels of fundraising The dow was the most successful crowdfunding project Or as I like to call it mosh funding project because this was definitely a bit of a mob Um, it was the most successful mosh funding projects in history. Do you think we can repeat that? Long term in the future. Absolutely I think in the short term we'll probably see smaller attempts Uh, probably with reduced complexity that seems to be the main issue here is the amount of complexity Um, so it'll probably be much smaller in the near future, but in the long term it will change Our thing and they do continue to grow. We'll see much much larger Values put into these kinds of systems because they are ultimately useful Yeah, I just want to jump in quickly and say, you know, if people aren't familiar with common accord Common accord.org is a project that aims to combine code and Human readable legal language. So the idea is that you can put in a line of code into your smart contract and it will provide this This legal template or legal contract For you and when I say legal, I mean able to be read by a judge or an arbitrator and I think that's a really really interesting Project and I think it's uh, I think it's quite timely Especially for people who aren't really interested in writing big long legal contracts, which is most of us myself included And you know, I think that that's a really interesting project that's providing Some tools and some ways for us to move forward without encumbering us with all of the traditional Legal issues, but also allow us to Move aside and outside of it. So for those people who don't want to write big long contracts, you know, you can include snippets of code that do reference quote-unquote enforceable legal language So here's the uh, another interesting question from the audience. I think this is uh, It sounds flippant, but it's not it's it's a deep question and we need to answer it What is the difference between a government or bank who decides when to override the free market and a blockchain that does the same? Yep No answers on that one I The only thing I will say is that um, you know Typically in in contracts you have a duty to mitigate damages and this means that you have a duty If you can to prevent additional damage So, um, I would say that, you know, it's important that the ecosystem is looking at every possible alternative to this And that's about all I have to say Well, I think that people will ultimately pick blockchains so to speak Based on do they want it where someone can intercede or do they want it where it's more autonomously run. I mean, I think Bitcoin seems to be more hands off, right? And if the theorem gets more hands on that's going to change the perception of it For people who are investing in building in it So I think and maybe there'll be a third blockchain that's or a third shared ledger, whatever you want to call it That rises because it offers a different variable So I think it's just People will pick what they want and what they feel comfortable with for whatever they're trying to do and all these things can Be innovative in their own way I could be way off here, but um, I don't think that that the ethereum community wants to be known as the hands-on blockchain I'm not saying they do, but I know I agree the perception if some of these proposals go forward I wouldn't worry about that. I think decentralization is a spectrum And you can have you know, bitcoin is not entirely decentralized ethereum is not entirely decentralized, but when it comes to the hands-on moniker I can guarantee you that the r3 banking consortiums have the hands-on your shortened Curly's Absolutely stitched up and guaranteed for them. There's no going to be any comparison about who is really really centralized Thankfully we have the banks demonstrating exactly what the centralized Locked up permissions option is and we can all stare clear of that, but you're right. I mean this is going to be a matter of range of decentralization and the question is At this level of maturity of things like solidity code Can we achieve the same level of hands-off? Let the code execute as it does decentralization or do you need kind of this either consider it the benevolent dictator ala linus torvils the tolic patern magic touch or appeal to Majority resolution through consensus mining Which is a perfectly valid answer again as to how you resolve these conflicts what taylor called the social side of the blockchain Yeah, I think that's part of the interest in the space to me is it's so innovative and There's all these different ways you can approach the same problem or different problems even Well, here's another thing that came out of this, which I think is rather interesting um Vitalik just tweeted earlier today I'd like to see at least 10 percent of the network running parity in one week This is a good opportunity to get clients decentralization as any you know in many ways Can you explain what that is okay parity is the alternative client written by the eth core group which is Headed by gav wood and what it provides is an alternative implementation from let's call it the reference client Which is geff the go version of ethereum that is run by the vast majority of the network This is really interesting because from a governor's perspective it seems like Ethereum is taking advantage of some of the lessons learned in bitcoin and saying maybe we need more diversity in the clients Maybe we shouldn't have just one reference code It has these nuances that speak to the core versus classic Diversity issue in in bitcoin Um and here vitalik is saying that he would like to see 10 percent running the alternative one To be clear the the ethereum foundation Um is responsible for managing gaff So vitalik is basically saying i want the other people Uh to get at least 10 percent of the network under these circumstances part of the reason for this is that gav gavwood created um A pull request and merged it for the soft fork fix to the dowl hack First so what vitalik is saying great if you like this fix Run parity and that's one way to get more diversity in the client Taylor, what do you think of this move? I think it's super smart. We should use this an opportunity to have more client diversity It's something that's been talked about for a long time But as you've mentioned vitalik can't just snap his fingers and make the miners do certain things They are using reference clients, but to date there are about eight Complete consensus implementations of the ethereum virtual machine So they're not all feature perfect with networking and so forth But it would definitely be good to have something besides just one client running it So when unforeseen issues pop up we have a couple of options Uh when george washington completed his second term He was asked by the american people to run again and he refused And he said i do not want to become a king upon the americas setting the stage for this idea of limited government and removing the possibility Of personality worship so hats off to vitalik. He's following a great tradition By effectively pointing to the alternative choice and saying you know what we should be running a bit of that too This is a great opportunity to do that and it only increases my respect and in vitalik's general attitude By seeing this All right, let's see what other questions we have um Here's another interesting point Um that someone brought up we talked about um asset seizure Hard fork and a number of people wrote in to say Hey, but hang on a second Under hard fork scenario it doesn't the attacker Essentially keep their ether the only difference is they only keep the modern minority chain that isn't tradable anymore So effectively the hard fork doesn't seize the coins It just moves the entire market away from trading those particular coins by putting them on a minority chain Is that just uh legal sophistry? Is it really material to this conversation? It's a it's a very interesting point Very cute. They call that legal acrobatics um, basically if you are depriving this person Of the benefit of their property, which you would be if you were if you left them on a chain where they couldn't trade Those for any sort of value then the fact that they still technically own the coins Doesn't change the deprivation of of property. It doesn't change the analysis, but good thinking. I like what you're doing there um, I want to jump in and say one more quick thing about um solving this problem in the future and I don't mean to talk again about the dam project, but i'm going to um because part of the concept of the dam project Was to provide software for people to implement in their own smart contracts That allows you to basically push a pause button and say hey wait, there's a dispute and if that happened here You could effectively have a solution that was based solely within that contract And you wouldn't necessarily have to go out to the entire ethereum network for resolution um, you could use things such as uh, maybe a mediation dow to decide or maybe you could use something like a dow token holder Boat that decides whether or not this be the hard fork Internally, you know the change is going to be made within the smart contract So it's it wouldn't be a hard fork necessarily of ethereum itself It would be a change in the state of the contract based upon some sort of um dispute resolution mechanism that you put within the smart contract itself So we're still getting a lot of feedback from the audience This has been a very long marathon level live broadcast, but we still have more than 500 viewers And the numbers are still increasing hashtag ltb dao on twitter to ask a question I think we should continue taking the questions for quite a while Um, kenny asks would informally verifiable code go a long way here So one of the criticisms that's been levied is that the very concept of using imperative codes for smart contracts Imperative means a procedural language like solidity That leaves a lot of room for interpretation and because of the complexity of The execution path through the code can create all kinds of unanticipated behaviors Kenny is asking would informally verifiable code a lot of people have made this similar suggestion. They've talked about using um An abstract state machine or a much more limited but still touring complete language to describe the code I think Probably the horse has already left the stable and the idea of trying to retrofit that kind of feature is moot um, but do you think this was a problem of imperative code and The um uncertainties introduced by concurrency That could have been fixed by a formal language or is that really just uh bike shedding? I think it's bike shedding and guy you have to answer this one Yeah, yeah, definitely. I think a bit of bike shedding. I think it would be nice if we had all these tools But it's just so early You've got to build them out of our time We have a clear direction of what to build But to say we shouldn't have gone back and done this in the past is a bit hard There's lots of efforts for verifiable code and I only look forward to having more tools to apply these situations to make sure the contract does what it we intended to do I would make the argument that if you want a limited and focused language for executing smart contracts that is exactly the niche that bitcoin occupies And it has significant limitations in the types of smart contracts it can run But it can provide a much more robust opportunity for security Or a much more robust model for security if you want to run Things that are much more flexible to explore all of the possibilities for innovation Then you have to exceed those boundaries And this is exactly what I mean when I say that ethereum and bitcoin occupy two different niches And that's okay, you know ethereum is much more innovation focused and bitcoin is much more conservative in its security model I think there's perfectly Enough room for both of those models to coexist and to try to say well We shouldn't do a fully during complete Imperative language in ethereum and use only a formal language Well, that kind of regresses it back to the kind of limitations That bitcoin already has and we already have bitcoin for that Yeah, absolutely agree. It's it's good to have multiple options Not just for different economic perspectives, but also for different ideals of what you can accomplish in those There are lots of experiments of many different alt coins Not all those have lasted but it's really great to have a space that's growing in capacity and for different kinds of ideas and different tests So it's it's just good to see everybody growing together All right, uh, we've got a number of questions still more um Let's see Do you think a hard fork or soft fork could take the value of ether to zero? as to a Panelist poll brandy still here with us I am here Um, I don't know what the hard fork was right? Yeah, I imagine ether could go to zero any day for any other number of reasons so I guess, you know Yes, it's possibly My favorite very few currencies actually go to zero. You can still buy roman sistercy in in Rome Hasn't been in circulation since 800 ad and it still has a value that is greater than zero, but Close to zero possibly Yeah, but at least you can hold that in your hand, right? And this is the argument Um, I I don't think it's I I don't think it's going to go to zero I mean, I think it's possible. Um that it can go very very low, but I don't think so I think there are a lot of people really really, um invested In in this ecosystem and I think that there's a lot of people that are working to make sure that that Uh doesn't happen. So yeah, I'm optimistic Uh, I would say that yes, it could go to zero if we implemented something that broke the system altogether Uh, whenever you're making a change there is a risk that you're going to break things worse And if that were to happen, I could certainly drop the price close to zero I certainly don't hope that happens, but there's always that possibility Um, would you consider participating in a future dow and would you consider owning ETH at this point? Um, I own ETH now and uh, I'm still a little bearish on the dow situation Um, I don't hold any tokens. I don't intend to hold any in the immediate future Uh, but certainly a dow 2.0 would interest me Brian I mean it depends on what the dow was. I mean, right? I mean I wouldn't probably jump into one tomorrow and I didn't buy any tokens in this one. So I think it probably just depends. I mean these are questions that are open-ended in that sense. I mean You know, it's all about what what it's set up to do and what its protections are and you know, what your risk Sort of you know, how much risk you want to take on I agree with both of those. I I have ETH or now and I probably I'm very interested in These alternative governance models. I think it's fascinating. I'm very interested in changing systems And providing alternatives for what we know now is the status quo so I'm I'm very interested in In the dow and also other dows and dco's and all these other things So I would probably participate with the caveat that I would need to understand the risk profile Pretty well All right, I have to say I own ether And I probably would sign up for another dow And my rule of thumb is I would take the amount of ether I have divide by the line number of codes in the new dow The number of lines of codes the less ether I would invest in it Because I think one thing that has been clearly demonstrated here Is that complexity is the enemy of security? Honestly, I think the The original dow codes the whole mechanism of splitting And the way of getting refunds or withdrawing money from the dow through the process of splitting in itself was overly complex And something A lot more focused a lot more simple May have avoided some of the security risks then again It may have not so we'll see Question for the lawyers What is the meaning of the term clean hands doctrine? As used in u.s law and specifically u.s patterns law does this apply here? Is this of relevance here? Uh, well, I'm gonna guess and say that um the clean hands doctrine is is typically what that means is You won't get a remedy and equity if you're also guilty So if you've done bad things and you're saying oh this other person has done bad things a judge may not say Okay, we're gonna make this right. They may just say you know what you don't have clean hands We're not gonna we're not gonna deal with this issue. I don't know how that relates to u.s patent law And you know, I I don't know that it's directly applicable here Because I I don't know How how legally we would get there to to The clean hands doctrine and and not enforcing All right, we've got another question at the moment the dow is um 0.06 eith and um Yet, uh, ether is worth What is it 14 or 12? I haven't looked at the latest price. I'm gonna pull that up right now But this is a significant discrepancy in the price of ether and dow part of that represents the um The risk of running a split proposal under the current circumstances. All right. Yeah Ether is trading for about 11 dollars. The dow is trading for about seven and a half There's a significant discrepancy One way to describe that is as an arbitrage opportunity Um with obviously very significant risks. Do you think there are people out there who are Have enough of a risk appetite to go buy dow tokens right now Hold on to them hope for a bit hope for a fix in terms of a fork and then do a split proposal and get them out in ether and make um 20% return Anyone it's hard for me to imagine anybody buying in the dow right now But and yet brian the price wouldn't be where it is if people weren't buying into the dow because there's lots of people selling So someone's buying Maybe it's the attacker trying to short the position That way they get they get a good result on both sides of the of the soft fork result Yeah, maybe it's just bots trading the market trying to provide liquidity All right, we have a whole bunch of questions about um monero Which i am going to promptly ignore As And once again trying to push monero question for taylor should a soft fork patch affect all Transactions or only balance reducing transactions of contracts without code hash. I mean how would you look at this particular soft fork? Do you think a more refined approach is needed? Uh entirely depends on how many invocations of the dow are out there How many times people have deployed this contract if we're talking about one or two Our risk profile is relatively low, but you're still going to impact some people. I think more surgical which is definitely preferred personally But there are different perspectives on that all right question for um The lawyers again If meet space Contract laws can be applying to the dao. Then what about fincent regulation of tokens? brian Do you think Do you think you can take the question? Yeah, I don't understand the question I I think and this seems to be a common misunderstanding the idea that somehow if you float about the jurisdiction by not picking a Choice of law by not creating a contract or a registered entity somehow This means that rules such as those applied by fincent or the sec don't apply So you can basically exempt yourself from the legal system just by making no claims As the coverage to me that seems to be a fundamental misunderstanding of how the law works As far as i'm concerned if fincent decided to claim jurisdiction over this or the sec The only real issue is who would they sue first or who would they try an enforcement action on First and anyone who's not anonymous anyone who Represents like a Target in such a case Would get targeted regardless of whether you call the dao and llc a general partnership or A floating above the jurisdiction smart contract that doesn't subject itself to the law of mere humans Brian you're the litigation expert. Well, I think In my mind the sec is the one that's most likely to feel like they have jurisdiction over what's happening here in the u.s not fincent But I don't know that for certain and I would think that it you know, it's very likely that there are regulatory and law enforcement agencies looking at what's happened here I mean it just seems In the front page on the front page, but it's making big news. There's a lot of money that's been you know At issue here and it wouldn't surprise me at all that was happening And the way they usually do things is they investigate not you know Bring an enforcement action right away, but usually investigate to try to figure out what happened Who there is to blame if they want to blame somebody and if you know, frankly, sometimes they have to figure out if they have jurisdiction In the sec the first question they ask is is this you know security And try to figure that out and if it's not and it's someone else's another agency's issue not theirs So I think you know Those are questions those agencies would have to grapple with I think Just because you don't call something the security doesn't mean it's not a security obviously Um, I think that was andreus's point Well, and even if you try to limit jurisdiction Um, you you can't limit Uh, regulatory bodies. You can't you can't say The sec doesn't govern this contract if the sec determines that you've issued a security and they and they want to assert jurisdiction And they can rightfully do that then you can't contract around those sorts of yeah You have to go to them in advance with a no action letter and say hey here's what we're planning on doing and if we do this Please confirm that this wouldn't be covered by sec regulations essentially I'm just waiting because uh The the thing that I'm worried about the most honestly is not the sec is not vinson. It's pritt Pritt bara southern districts of new york has Now stuck his fingers in every cryptocurrency related Investigation because apparently he can't find his way to wall street to check out some real crooks So what he's doing is is patting his resume with all of these digital currency Prosecutions, I would not be surprised in the least if we see pritt show up in this space Anytime soon and tried to create A case regarding fraud or some other thing in the particular case of the doubt. I hope that's not I mean the the basis for doing so is You know the basis for launching a grand jury investigation is Very the hurdle is very low Ham sandwich Well, that's for an indictment. That's the phrase right? Yeah an indict a ham sandwich, but Um, this kind of thing prosecutors read the papers too and they say hey, that's interesting. There's 50 million dollars You know Disappeared according to this article. What's going on there? I mean that's and then they And start an investigation. It's really that simple almost Um, so yeah, it wouldn't surprise me in the least if A u.s. Attorney's office or more than one even frankly Have their ears perked up a little bit for what's going on here But I'm sure pre-parar will be uh dissuaded by the Fantastic argument that the dao floats above his jurisdiction Let's see how that works out A lot of people are going to start feeling like ham sandwiches. I'll tell you All right, um, I think we have covered all of the questions from the audience and this has certainly gone on long enough Uh, thank you so much for the analysis and interpretation our first guests Pamela Morgan CEO of third key solutions an attorney and one of the people participating In the proposal of the decentralized arbitration and mediation network um Brian, I'm sorry. I forgot your last name Well, I I remember it. It's Klein Brian Klein, thank you so much Brian. It's your second beer. That's what I'll blame. Yeah, blame it on that That's that's probably a good bet Brian Klein who has represented uh in uh people in many uh bitcoin cases including eric borges roger and others and Was also legal counsel for the bitcoin foundation as a volunteer For a while and has a lot of experience in this space And of course telegearing a co-founder of the ethereum project Involved in both bitcoin and ethereum for many years now and uh one of our Uh favorite technical experts. This has been an episode of let's talk bitcoin a live episode with question and answers from the audience My name is Andreas Antonopoulos. Thank you for joining me today in the dow the fork the fall out That'll be all take care everyone