Previously the different obstacles that impeded the application of the traditional law enforcement environment to DAOs and the necessity for dispute resolution mechanisms were discussed. Below you will find a couple of possible ways that may alleviate this situation but the answer to the problem requires an out of the box approach to disputes and their role in commercial transactions . Possible but fundamentally flawed approaches
One way DAOs could settle disputes is by appointing a legal representative who would act as the only real world link to the company. Why would a DAO establish a legal representative in the first place is quite simple: other DAOs and large businesses won’t transact with shady DAOs who can’t be held responsible for their actions, so from a commercial point of view it makes sense to, while looking to preserve the investors identifications, build a structure that is capable of committing to a deal and be held responsible for its actions.
The key aspect to this approach is that if the legal representative is the only physical person that can be linked to the DAO this person needs to have access to the DAOs funds. Why? because eventually he would need to comply with the sentence. If a DAO is found guilty of breaching a contract and its only link to the real world is a person who doesn’t have the power to execute the court’s sentence then we are back to square one.
This approach, while quite simple at first glance, comes with a few notable obstacles.
First: while proving that the legal representative has access to the funds on day one of the dispute would be pretty straightforward, making sure that the DAO doesn’t remove his access would be a concern.
Second: while this would work for commercial and civil disputes, if the […]
