CS 352B/LAW 1078: Blockchain Governance
Spring 2024
Note: These are required for those that have not completed CS 251, LAW 1043, or have equivalent background in the blockchain space
The first class introduces some of the topics in the course by examining a particular DAO: MakerDAO, which operates through the MKR governance token. Maker DAO had been very successful DeFi application, and its history illustrates many key issues of DAO governance, a major topic in the class. In addition, it is at an important transition point both with respect to operation and governance. As a mature project, it is facing many dilemmas that are or will be prominent for other DAOs.
The class includes an overview of the different DAO forms, common governance and institutional frameworks as well as current challenges. We will look at:
1. Protocol DAOs
2. Investment DAOs
3. Social DAOs
4. Public Funding DAOs / Impact DAOs
6. Industrial DAOs (DePIN)
7. Network State DAOs / Sovereign DAOs
This class introduces the technical underpinnings of DAOs, including smart contracts and blockchain voting on the Ethereum Virtual Machine (EVM) tech stack. We will discuss the role of the ERC-20 token standard in representing blockchain votes, popular on-chain voting frameworks such as Compound's Governor Bravo, and compare on-chain voting and off-chain voting solutions for DAO governance.
During the fourth class, we will begin our consideration of DAO governance with a focus on delegation. Examining delegation requires consideration of participation and "the wisdom of crowds," both of which have a prominent place in the discussion and design of DAO governance.
During the fifth class, we will consider quadratic voting, quadratic funding, participation-based governance, and composite systems. Some of the assigned material on quadratic voting and quadratic funding has a degree of technical economics in it. A primary goal is to understand the core idea of both quadratic voting and quadratic funding. The technical presentation may require some effort, but it is the best way to gain a clear and rigorous understanding of the ideas.
During the sixth class, we will look at mechanism design and its connection with DAO governance. First, we will consider examine voting methods from a mechanism design perspective. Then we will look at a more market-focused mechanism that operates through sequential auctions for temporary control.
The seventh class session is an overview of the securities and commodity regulations that apply to DAOs. The material is voluminous, and we will proceed by going through an explanatory slide deck in class rather than relying on a heavy reading assignment. Proceeding in this way is especially appropriate with respect to U.S. regulation. Widely divergent approaches are possible, and it is not clear what the U.S. regulatory framework will look like a year from now.
This class considers the legal challenges and risks of DAOs, particularly those that operate without deliberate legal structures. We will consider recent US case law with respect to DAOs and how regulatory authorities and courts have legally characterized DAOs. We will consider how DAOs, including unwrapped DAOs, may reduce legal risks.
This class considers how DAOs get captured by legacy legal systems through disputes and how to minimize those risks through dispute prevention and resolution mechanisms, including on-chain adjudication systems. We will look at oracles with a focus on decentralized oracles and their economic security bound, as well as proposed solutions, including forking mechanisms. This class will include a 30-minute presentation by Yann Aouidef, VSR at Stanford CodeX, and long-time researcher at Kleros.io.
This class introduces the most common legal structures chosen to support or wrap DAOs, their advantages and drawbacks, including new legislative initiatives to better cater to DAOs in various jurisdictions. The last 30 minutes of the class will include a presentation by David Kerr, co-author of the Wyoming Decentralized Unincorporated Nonprofit Association Act of 2024.
This class will feature two guest speakers: Prof. Florence Guillaume, the Chair of Civil Law, Private International Law and Digital Law at the University of Neuchatel in Switzerland, who will discuss the relevance of private international law/conflicts of law to DAOs, and Prof. Florence G'sell from the University of Lorraine and currently visiting professor at the Stanford Cyber Policy Center, who will explore software developer liability in the blockchain industry.
In this lecture, we will go over the technical basics of zero-knowledge proofs and their applications in DAOs. We will also present an overview of private voting, and real world examples such as their deployment in NounsDAO.
We will invite three guest lecturers from the world of Venture Capital and Institutional Investors to discuss their role in DAO governance and regulatory considerations of venture investment:
1. Dr. Matt Stephenson, Pantera Capital: Matt is a Research Partner at Pantera, previously a Senior Mechanism Designer at BlockScience, and a lecturer at Columbia University. He holds a PhD in Behavioral Economics & Strategy, where he focused on DAO governance and price discovery in NFT markets.
2. Josh Ephraim, Paradigm: Josh Ephraim is Associate General Counsel at Paradigm. Prior to joining Paradigm, he served as corporate outside counsel to venture capital funds and technology companies at Gunderson Dettmer.
3. Amy Jung, Safe: Amy is currently the Governance Lead at Safe. Her work focuses on DAOs, progressive decentralization, and multi-party ownership for communities building around distributed technology. Her previous roles include an investor at Komorebi Collective (first investment DAO focused on funding female and nonbinary crypto founders), Head of Community Development at MakerDAO, and Design Operations at ConsenSys. Follow her journey on twitter: @itsamyjung
Reuben Youngblom will focus on governance attacks and other issues faced by DAOs, including the ENS Brantley.eth vote as well as technical "attacks" that target DAOs' governance mechanisms, e.g. Beanstalk. Reuben is a Fellow with the Stanford CodeX Center for Legal Informatics, and a Lecturer in Law. He teaches Law 1076 - Blockchain Engineering: Techniques and Legal Implications. His work focuses on the intersection between blockchain and the law, blockchain ethics, and technical education.
This class is focused on blockchain convergence and will feature two guest speakers: 0xKydo, core contributor of Eigenlayer and Stanford university alumnus, who will discuss restaking, as well as Jake Hartnell, co-founder of DAODAO, Juno network, StarGaze, who will be covering interchain DAO tooling and governance.
Uniswap is one of the most mature Decentralized Finance (DeFi) protocols that uses its UNI token for governance. In this class, we will examine the governance mechanisms of Uniswap, as well as the role that Stanford Blockchain Club plays in the governance process as a voting delegate. We will discuss the role of the UNI token, the governance tech stack, the role of the Uniswap Foundation in this process. We present case studies of several key and controversial proposals, including the Wormhole Bridge controversy of Feb 2023 (Proposal 31) and the ongoing proposals for the Uniswap Fee Switch.
The Decentralization Research Center (DRC), a non-profit organization founded in 2021, focuses on non-partisan decentralization research and collaboration among scholars, technologists, policymakers, entrepreneurs, and regulators. The DRC's mission is to promote equitable ownership, governance, and regulation of emerging technologies like Blockchain and AI to combat power concentration and ensure broad participation and fair reward distribution.
In this lecture, the DRC shares key insights from its workshops and research reports (collaborations with its diverse stakeholder group), discusses open problems in blockchain governance, and highlights promising research in the blockchain industry. The lecture aims to inspire students to explore and contribute to advancing the field of blockchain governance through their own interests and expertise by highlighting the contributions of current experts from various fields who were in their shoes not long ago.
The final class will be structured as an AMA (Ask me anything), with students encouraged to ask questions and engage in discussion with all instructors. We will have an open discussion on the future of DAOs, including the role of DAOs in the broader Web3 ecosystem, the potential for DAOs to disrupt traditional governance structures, and the challenges and opportunities that lie ahead. We will also discuss the implications of DAOs for the future of work, the future of finance, and the future of society more broadly.