This is Part 3 of the âVenturing Deeper into the Crypto Idea Mazeâ series. Read Part 1: Sound Money and Open Finance and Part 2: Web3.
In Jon Choiâs âEnter the Crypto Mazeâ, he identified three primary narratives for crypto: Sound Money, Web3, and Open Money. After exploring Sound Money and Open Finance in Part 1, and Web3 in Part 2, I want to introduce what I believe is a fourth narrative emerging for crypto: Open Law.
I see this as a new fourth narrative emerging for crypto. Some might consider it a sub-maze within Open Finance, but personally I think it is actually distinct enough that it deserves its own category.
Essentially, what this means is that there will be a shift from legal contracts to smart contracts. Itâs within this category that the âDAO Renaissanceâ would fall. Instead of going through all the legal paperwork to set up a company or foundation, creating a DAO is much faster and cheaper! If Sound Money is âmoney is softwareâ and DeFi is âfinancial services are softwareâ, then Open Law is âlaw is softwareâ.
I think this will serve a really big need to be honest. So for example, I incorporated Sikka using RocketLawyer. But once I do that, where can I visualize the entity that is Sikka? Why donât I have a place that I can easily see the cap table of the company and transfer some shares to a partner? Why canât it be as simple as the Aragon dashboard??
Check out my friend, Chris Goesâs post Comparative Advantages of Distributed Ledgers where he discusses some of the potential of innovation in governance mechanisms that will come through blockchains. I especially love the section on Threshold Commitments. In my opinion, a lot of this falls under the category of Open Law.
One place though, I imagine that I might differ with Chris is that much like my beliefs on DeFi, I think that eventually blockchain-native systems will have to eventually become more tied into the legacy systems. For example, I did an Epicenter episode recently with Nexus Mutual and learned that they are actually a legal company in the UK, but are set up in such a way where the ERC20 token on Ethereum is a bearer instrument representing ownership in the company. Thatâs so cool! I believe the eponymous company OpenLaw, from whom this narrative borrows its name, is working on creating a framework for creating these types of âDAOsâ called âLAOs â Limited Liability Autonomous Organizationâ.
In a way, I think smart contracts will become a sort of âfrontendâ to the legal system, where at the end of the day things will be settled in the legal system in case of issues, but executes on chain programatically in the optimistic case. I think there were a bunch of companies such as Accord, Agreements Network, and OpenLaw who were building platforms that allow you to generate both smart contracts alongside equivalent legal contracts to serve as a backstop. Iâm pretty excited to see where these types of projects go.
As we venture deeper into the crypto idea maze, Open Law represents a fascinating path that could fundamentally change how we interact with legal systems. By making law programmable and accessible, we can create more efficient, transparent, and fair systems of governance and coordination.
The intersection of smart contracts and legal contracts isnât just about replacing lawyers with codeâitâs about creating new possibilities for human coordination that were previously impossible or prohibitively expensive. As this narrative develops, I expect weâll see innovations that bridge the gap between code and law in ways we havenât yet imagined.
This is Part 3 of a 3-part series exploring the crypto idea maze: