On the evening of September 19th, the eighth episode of the fifth season of Guanhuo Langya List was broadcast. Former Chief Engineer of the Internet Laboratory of the Software Institute of the Chinese Academy of Sciences) The interview guest in this issue is Ms. Xiao Sa, a senior partner of Beijing Dacheng Law Firm.
The guest, Lawyer Xiao Sa, is known in the industry as "Sister Sa". The professional and boring legal terminology became less harsh in her mouth, and she gave us a sincere law popularization class with some interesting metaphors and vivid cases.
The topic of the conversation between the two big names was "Legal Supervision of NFT Digital Collections and Possible Paths of Sinicization of DAO".
As the leader in the field of Web3 technology innovation, Mr. Shi Xingguo, and lawyer Xiao Sa, who has long been focusing on the legal business in emerging technology fields, analyzed the legal risks and suggestions in the development of Web3 in China and the world from the perspectives of law formulation, implementation, and enforcement. The objects of discussion include subdivisions such as NFT, digital collections, Gamefi, and DAO.
"Law and technology are not opposed to each other, but should be combined." Lawyer Xiao Sa said in an interview that she recently discussed the combination of law and technology with some technical researchers, using blockchain smart contracts as legal rules to enforce contracts. Users cannot perform operations that violate the law, which is closer to the realm that Confucius said, "do whatever you want without transgressing the rules." "Through technical methods, the operation of the law is getting better and better, and the law also makes technology more and more able to illuminate the way forward for human beings. This is beneficial to both parties."
At the end of the interview, Mr. Shi Xingguo also left an open topic for the audience: "Is it possible for the legal industry to develop into the possibility of conducting business in the form of DAO?" Feedback in the comment area.
Highlights of this issue:
1. What kind of trend does the regulatory change of Web3 reflect?
2. In the development of Web3, what are the similarities and differences of supervision at home and abroad?
3. What are the predictions for the development trend of NFT and digital collections?
4. Any suggestions and thoughts on the legal characterization of NFT and digital collections?
5. Does Gamefi have to rely on Ponzi mode to start? Where is the future of Gamefi?
6. Under my country's existing system, what is the possible path for DAO to be localized in China?
The full version of the interview video of this issue can be viewed on the video account "Huoxun Finance" by clicking "Live Playback".
【Interview record】(with some deletions)
【Shi Xingguo】
Hello, Attorney Xiao, I have learned that Attorney Xiao has been paying attention to emerging technology fields such as Web3 and blockchain very early. When we discuss Web3, its financial attributes are unavoidable. Most of the regulation for Web3-related fields is also aimed at its financial attributes. May I ask Mr. Xiao, what are the regulatory risks of the financial attributes of Web3 in the current environment? During your attention to Web3, what kind of trend does the regulatory change reflect? For practitioners and participants with limited legal knowledge, can you give a few concise and distinct risk characteristics for us to initially identify whether we are at risk?
【Xiao Sa】
Thank you Mr. Shi. First of all, we need to clarify a concept, that is, what is the connotation and extension of Web3. At present, on this issue, whether it is in the academic or practical circles, everyone has not yet reached a good consensus. If the Web3 we mentioned refers to a series of technologies and ecology driven by blockchain, then we can start talking in this direction on this topic.
At present, what is more interesting or called explosive in the Web3 industry under this definition is the digital collection industry. However, because the official and accurate legal characterization has not yet appeared, some problems of one kind or another will be found no matter in the courts of various places or in the process of performing legal contracts by practitioners. The problem is focused on the legal risks of the secondary market sales of digital collections themselves, that is to say, in the process of opening the secondary market on the platform, how to make the participating cultural consumers not regard this matter as a speculative opportunity but as a A collectible transaction is actually a very difficult thing.
Regulators and judicial authorities in Beijing and elsewhere have accumulated corresponding cases. Everyone’s main focus is on the digital collection industry, whether it sells real things in the secondary market, whether these things are worth the price, and whether the price has increased exponentially due to hype. Price increases may cause consumers to blindly follow established trends, resulting in loss of their own property rights.
From the perspective of consumer rights protection, looking at this issue backwards, it is not difficult to find that there are not only financialization issues, but also some issues that are highly related to financialization, such as the issue of organization leadership pyramid schemes, This is what we often call the tertiary structure. Opening the secondary market page of digital collections, we will find that some platforms even write the complete third-level distribution on it, which is very dangerous. As we all know, three-level distribution is actually an important feature of organizational leadership MLM. To avoid these problems, one is not to operate any commodity, item or virtual asset as a financial derivative; the other is to avoid some corresponding market value management operations. In the process of market value management, it is easy to have problems such as fraud and fraud; the third is to focus on avoiding the problem of organization-led pyramid schemes, and the focus is on the relationship between dealers or nodes in the market and the creation nodes.
【Shi Xingguo】
That is to say, for the Web3 industry and ecology, we first need to see whether it has financial attributes, that is, whether the product can generate value through sales, etc.; second, we need to see whether it may constitute a pyramid scheme.
【Xiao Sa】
I would like to add that when I heard this question just now, I thought that maybe the reason you asked this question was because we were going to compare it with the overseas Web3 industry ecology. Tokens in the foreign ecology are divided into Security tokens (Security tokens) and Utility tokens (Utility tokens), but in China, there is no definition of securities for financial means tokens with certain financial attributes , so it does not fall within the scope of the supervision of the securities regulatory authorities. In overseas regions such as the United States, Security tokens are regulated by the SEC (Securities and Exchange Commission). If it is not a security, it may be treated as a general commodity.
But China's definition of securities is a narrow concept of securities. Therefore, we cannot make such a distinction between virtual items generated in Web3. This also leads to the fact that our virtual property is still within the scope of virtual property mentioned in Article 127 of the Civil Code in many cases, that is, Utility token, which is treated as a specific virtual commodity that can be used. It is because of this difference in law that the issue of financialization is handled differently at home and abroad.
【Shi Xingguo】
Yes, and I personally feel that the overseas treatment allows people in non-financial industries like us to understand it more clearly, but the domestic treatment will make practitioners have some uncertainties in the process of learning from it.
【Xiao Sa】
Regarding this issue, I recommend everyone to read an academic article "The Formation Logic of the Financialization of Ordinary Commodities" written by Director Zhang Chengsi of Renmin University, which describes the circumstances under which an ordinary item will be regarded as a financial product. In fact, there are distinctions in China, and it does not mean that we blindly look at Western legal governance. This is because our securities laws are different. Civil law countries define securities in this way. We cannot blindly copy operations around the world, but need to maintain the inertia of the legal system. On the contrary, when our laws are advanced and improved along a system, our efficiency may be a little higher.
【Shi Xingguo】
You can read this article recommended by Lawyer Xiao. In fact, I found that those of us in the non-financial industry want to read a lot of things, but we lack sufficient judgment ability to judge which content is in line with the actual situation and which may be biased. We just need someone like Lawyer Xiao, who often writes some very professional articles for us, so that we can distinguish the difference. I remember that at the beginning of 2021, when NFT was just becoming popular in China as an emerging concept, Lawyer Xiao’s team had already observed and analyzed the financial attributes of NFT, as well as hype and being used as criminal tools such as fraud, illegal business, pyramid schemes, etc. criminal risk.
Since the beginning of this year, the prosperous NFT market has been hit hard. The transaction volume of the NFT market has shrunk by about 90% compared with 2021, and the prices of some of the most popular NFTs have dropped by 50%. In addition, the encrypted asset market, including NFT, has aroused concerns from US regulators about money laundering, illegal financing, insider trading, fraud, etc. The domestic digital collection market has also been sluggish recently. What predictions does Lawyer Xiao have for the future development trend of NFT and digital collection market? What suggestions and thoughts do lawyers have on the legal characterization of NFT and digital collections?
【Xiao Sa】
Regarding the direction of anti-money laundering, in fact, the relevant international organizations have very high requirements for member countries, and our country is also carrying out some corresponding work on anti-money laundering. As far as the industry as a whole is concerned, money laundering through NFT is actually a place that we are more worried or worried about. In the metaverse world and NFT we see now, there are some items with relatively high unit prices. If real-name management is not implemented, the risk of anti-money laundering will be relatively heavy. This is indeed a focus of regulatory attention, and it is also a part related to finance.
In addition, regarding the current downturn in the entire industry, as far as I am concerned, I bought many NFTs last year, and the first NFT collection I photographed was also hung on the office wall at that time, and I was also given by the issuer at that time commemorative certificate. But looking at it now, a major development dilemma of NFT is that there are too few display scenes, and it can only be "show off" by frequently changing the skins displayed to the outside world. So I think that if our industry wants to develop in depth, we still need to implant more scenarios, or let the virtual assets wrapped in the blockchain be able to intervene in more real economic life. This may be the next step we need A point of attention.
What is gratifying is that we have found that some big names, as well as traditional metaverse technology companies and technical teams, are trying to find ways to use NFT and the corresponding Web3 technology in what we call an economy that combines virtual reality, including financial, Live etc. If there are enough usage scenarios and give us more opportunities to "show off", everyone's enthusiasm may be rekindled. This is a personal thought of mine, and it is also my real feeling after using digital collections.
Let me also ask you here, what characteristics and development trends do Mr. Shi think the current overseas NFT market and the development of domestic digital collections have presented? How do you think the sound development of the digital collection market should be promoted?
【Shi Xingguo】
In fact, there is still a big difference between domestic and foreign countries. First of all, the traceability of domestic digital collections can also be traced back to NFT itself, and the general trend of NFT abroad, I divide it into three stages. The first stage is the stage of the birth of NFT technical elements, and then it will soon enter the stage of market element production, and now it is the third stage, that is, the stage of entity equity intervention.
The first stage was from 2017 to 2019, when the technical form supported the emergence of products in the form of NFT. At that time, a relatively well-known project was called "CryptoKitties", which once caused the blockage of Ethereum due to excessive transaction volume. At that time, NFT technology was born, but its business environment was not mature enough in essence.
First of all, its trading methods are relatively lacking. Exchanges are more willing to do digital currency transactions, and few are willing to directly support NFT transactions. Secondly, the NFT at that time lacked a good way to participate in the secondary creation. The CryptoKitties just exemplified was generated by the automatically and randomly generated pictures of the program. The possibility of human participation is not high, which also led to it not forming a large-scale development of.
But soon to the second stage, starting from the end of 2019 or 2018, market elements began to intervene. This mainly refers to the development of DeFi and the emergence of NFT trading platforms. The emergence of these two things has greatly lowered the threshold for NFT issuance and trading, leading to more people participating, more diverse ways of secondary creation, and the use of NFT have enriched the value-added form of NFT itself, so At this stage, users have increased a lot, forming the hot scene of the NFT market that we saw some time ago.
But at present, we have seen that the entire NFT market has declined. I think the main reason is that the rights and interests represented by NFT are still too simple, and there are still too few elements related to the real economy. Whether it is the current user stock or business scenarios, they are relatively thin and not substantial enough. It still maps simple features.
Therefore, the industry ecology of NFT is now entering the third stage, that is, many of the real economies you just mentioned are beginning to cut in, which actually brings in many real rights and interests in our physical world. Many brands use NFT as an aid to integrated marketing. Although the form is relatively simple, it has a particularly significant expansion of the user base. I think this form is equivalent to giving NFT a larger potential market.
But in this case, the ball is thrown back to the technical obstacle. It is that the blockchain itself is not ready for such a scale in terms of capacity and performance.
So recently, the underlying public chain in the direction of Layer0 has become a popular investment track in the industry. I also believe that the entire blockchain industry will definitely switch from a serial architecture to a parallel architecture. For example, the recent merger of Ethereum is actually moving in this direction.
Once this switch is actually completed, the popularity and explosion of NFT business will occur. At that time, it should be regarded as the fourth stage, and the entire encryption industry will switch to the parallel blockchain. The real industry can do faster and low-cost expansion and faster NFT issuance on the parallel blockchain. At that time, we can be regarded as one foot really stepped into the Web3 stage.
Domestic digital collections are relatively special. Its business inspiration comes from NFT, but we should regard domestic digital collections as a digital certificate that strips NFT of its financial attributes. As you just said, it is similar to or can be classified into the category of virtual property, but it is different from virtual goods in that it is more open and traceable, and it has a wider range of equity mapping than traditional virtual goods and play styles.
It's just that the current product forms are still relatively simple, and can only be mapped to the copyright of some items. The market space of this simple mapping is actually limited, and its supply is getting closer and closer to infinity as the number of participants increases, which is why we have recently heard news that some collections have become unsalable.
If digital collections are to develop soundly, I think we must realize that the domestic collection market is still dominated by consumption attributes, and the rights and interests it maps must have sufficient consumption value. In order to be able to provide these values, it needs to be deeply integrated with the business of the entity in order to obtain sufficient value support.
Fortunately, the current consumer group is very concerned about personalized consumption, and is particularly interested in spiritual consumption and consumption in social scenes. Digital collections are particularly good at empowering in this area, so I still think this field has great potential. Such a product development path not only does not need to worry about regulatory issues, but also is the industry digitalization and digital factor market direction that our country strongly supports in the next generation Internet planning.
But in terms of the empowerment and gameplay of digital collections, we must not simply imitate overseas NFTs, which will not work in China. In particular, the characteristics of NFT other than financial attributes are also very attractive. However, relatively speaking, the playing methods of overseas NFT are relatively diverse, such as using NFT as a pledge asset to obtain loans and leases. Some domestic digital collection projects are also imitating these methods. May I ask Lawyer Xiao, what are the main legal risks that may be caused by NFT lending, leasing, etc.? What are the differences in the gameplay of overseas NFT projects and domestic digital collection projects due to national conditions and legal backgrounds?
【Xiao Sa】
This problem cannot be reduced to the difference between domestic and foreign countries or the issue of whether finance is not finance, but what we say about financialization is actually a false concept. Everything can be financialized. Isn’t the once popular shoe speculation also financialized?
This industry is more about applying the underlying technology of Web3 to carry out corresponding identification and traceability operations on things that we find valuable or interesting, so as to improve the efficiency of our economic production activities. As for the pledge or loan method you just mentioned, it does not violate the laws of our country. Pledging the copyright after marking it is also an operation method that has not been denied in the copyright law. In the same way, if NFT technology is used to uniquely identify the copyright one-to-one, and then sell or pledge it, it is also within the scope permitted by law.
The main problem now is that the price of NFT can be as high as several thousand under the hype, that is, the rights packaged by this technology may have certain corresponding flaws, so I very much disagree with some friends who package NFT with some rights and interests. Renamed NFR or something like that. In fact, NFT technology itself can pack many kinds of rights , and all the sources of risks in it depend on what kind of rights we pack up. Now we are in a state where we are not talking about the contents of the box, but about the packaging form of the box, which is actually problematic, and we have not seen the essence of the matter.
In addition, I also want to remind all technical service providers, especially friends in the direction of To B, that technology is never so-called neutral. No country in the world can think about it this way. The laws of our country are deeply rooted Because of our cultural tradition, our preference for value and order comes from our cultural tradition, and every Chinese is in it, so the legal path we have chosen has always been biased towards the civil law system, and we are a statutory law country .
It’s not that there is something wrong with the laws of statute-law countries. On the other hand, the case-by-case laws in the legal system of the sea are not necessarily suitable for us. The laws of each county, city, state, and county are different, and each place is a small kingdom unto itself. Logically speaking, statute law is relatively clearer. We know where the boundaries of behavior are, so don’t say that our legal system has problems. Such laws are also normal.
For so many years since the founding of our country and reform and opening up, the laws we have used are also effective, so we cannot blindly criticize the laws, but practice them and implement them.
Our country has relatively high requirements for technology platforms and technical personnel, such as "crime of refusing to fulfill network security obligations", that is, service providers provide corresponding services for others, and if others violate the law, service providers must bear corresponding responsibilities . I hope that all friends will understand the real situation and know that the law entrusts certain obligations to each subject, instead of saying that we only enjoy rights, and rights and obligations match.
In fact, our domestic laws have a more sense of boundaries. Only after we have really studied in depth can we know where our code of conduct should be defined is more appropriate. We sometimes hear the saying that "you can do what is not prohibited by the law", and the wider boundary is the criminal law. If a company, a team, or an individual has a low tolerance for the law, as long as they don’t commit crimes, they will be banned, fined, and embarrassing.
But what is called a crime is something everyone needs to understand and must not touch. For example, I just mentioned that pyramid schemes are crimes, and organizations cannot have a three-tier distribution system. Fraud is also a crime, so what exactly is NFT selling, the platform and the issuer must make it clear. For example, how long is the license period for the copyright of the NFT casting foundation? This is the problem.
【Shi Xingguo】
In fact, it is precisely these details that we non-legal professionals do not know very well. Therefore, we often see that something has unique value and potential, but if we really put it in the eyes of legal professionals, we may be able to see its flaws. Many popular projects in the industry have similar problems.
The highlight of Web3's financial nature is "X to earn". For example, the Game Fi application StepN, which has been at the forefront of public opinion this year, has users from more than 180 countries within two months of its launch in the way of making money while walking. And the daily retention rate reached 80%. However, this app and most "X to earn" apps are generally recognized as Ponzi schemes by the outside world. The recent crypto bear market has also caused the tokens of projects led by StepN to plummet.
And your evaluation of such applications in your previous article is " It is undeniable that such a form has an incentive effect, which can guide people to increase corresponding behaviors in their lives. However, it still needs to be considered whether the above behaviors have actual Economic value, how to gain more people’s trust. ”
May I ask Lawyer Xiao, how do you define the actual economic value you mentioned? Does Gamefi have to rely on the Ponzi model to start? What do you think is the future of Gamefi?
【Xiao Sa】
When we legal people discuss issues, we habitually judge whether something is suspected of deceit or fraud by the results we expect. For example, if Musk hypes Mars and moon immigrants on Twitter, most people probably don’t think he is a liar, but if I say: "I want to go to the moon", most people may think that Sister Sa has something wrong with her mind.
The essence of business is storytelling, so it is likely that my judgment of whether a project is feasible depends on whether the story of this project is feasible or not.
A certain Yuchen found us when he was a student and told the story he conceived. At that time, he was still a student of Peking University. After hearing this, the people in our law firm had only one feeling: "This buddy is not a genius, but a liar. .” Of course, what they have done is very successful now, and we also feel that it is very powerful and very gratified. The big question now is whether this guy lied when he issued the coin, or did he really think he could succeed. If some business celebrities, such as Buffett, put forward similar ideas, we will take into account his industry experience, status and other factors, and we are more likely to accept that he can have such forward-looking. If it had been said by a doorman in one of his companies, the result would have been quite the opposite.
Therefore, regarding the Gamefi issue, we must look at it from different angles, and there is no certain criterion for judging it.
In a case we handled recently, a judge asked: "How do you prove that the fintech platform created by your client was worth the money?" How much the company’s valuation is used as evidence, but in any case, the initial market value and price-earnings ratio of the companies in such cases are unknown and can only be estimated.
So this problem may be a problem that the legal circles all over the world are very concerned about, but it cannot be solved for a century. How to determine whether it is false or not and whether it has economic value and benefits is more prominent in the field of virtual economy and difficult to solve.
【Shi Xingguo】
Yes. Let’s not talk about letting ordinary people judge the economic value. As far as I know, even many experienced venture capitalists will blush and have thick necks because of the difficulty in judging the economic value before investing in the project. Identification is different. Whether Gamefi itself is a Ponzi model is also difficult to define.
【Xiao Sa】
Sometimes it is actually result egotisticalism. If the project is successful, then it works, not the other way around. Therefore, as legal professionals, we also hope to gain some room for trial and error or tolerance for these controversial projects, as long as these projects do not really violate the law.
"Ponzi scheme" may be a relatively colloquial language. In legal language, this is actually the case of being suspected of "fund-raising fraud" in Article 192 of the "Criminal Law". With the current sentencing standards, there is a high probability that a person will be sentenced to life imprisonment. It is also an unbearable punishment for us humans. Overall, this question is really hard. Here I also throw this question to Mr. Shi. What do you think of Gamefi’s business model? What should its future look like?
【Shi Xingguo】
We do have certain obstacles in value judgments, but from a historical point of view, there are many Internet innovations that everyone recognized at the beginning, but after trial and error, it was discovered that they actually violated economic laws. For example, O2O and some forms of sharing economy, after a period of time at that time, it was proved that it may be more of an asset-heavy leasing economy rather than a sharing economy.
So from this perspective, we usually can't see whether a certain business itself has a real future at the beginning, and we can only make a preliminary judgment based on some conditions. For example, we will consider whether a new business meets the two principles of cost reduction and efficiency increase compared with the existing business. If it does not meet the requirements, then usually the business cannot last.
In my opinion, Game F i can only meet these two principles under certain conditions. So I think Game F i will exist, but it won't become a common business form. Game F i has the effect of reducing costs and increasing efficiency in terms of community base, so related projects have achieved positive results in terms of marketing communication and user retention. This has also been verified on StepN. The community has expanded to a very large size.
But we need to know that Gamefi itself is still a game, and its essence is gameplay, entertainment and consumption attributes. Therefore, if Game F i is mixed with appropriate "Fi", that is, financial, it will promote consumption, but if it is excessive, this "Fi" will backfire on the consumption attribute, resulting in the lack of the entire business model.
But with regard to the appropriate degree of adding financial nature, I think this is difficult to define, and the second is that it is difficult for human nature to maintain an appropriate degree by self-discipline. Game F i, which has been operated in a community mode for a long time , is likely to change from a state where everyone participates and everyone is responsible to a result where no one is responsible. Any successful GameFi must be based on the rules of a community with good self-discipline.
This is also the topic of DAO that we will talk about later. However, it is not realistic to jump to community self-discipline at present. Therefore, the development method of Gamefi should be to increase the participation proportion of the community itself in the form of "Fi", and then gradually develop into a perfect DAO . The industry must not turn Game F i into Fi Game .
When it comes to games, I remember that Lawyer Xiao mentioned in an article, “In terms of games, there is no metaverse game in the true sense in my country. There are very few companies with publishing qualifications, and it is even more difficult to obtain a game version number." When do you think the timing of the development of metaverse games in my country will be, and how will the domestic metaverse industry seize the opportunity to create a real metaverse? game? What is the essential difference between metaverse games and traditional games?
However, we know that the word metaverse has frequently appeared in the key development directions of national and provincial planning. So, if you want to make suggestions to the managers of these provinces and cities, what kind of adjustments do you think should be made in terms of laws and policies? Will it bring greater promotion to the Metaverse? In addition, there is a strong concept of asset ownership in the metaverse. What legal and regulatory obstacles may be involved in this? When do you think the metaverse games will be developed?
【Xiao Sa】
Out of my own interest in games, I once asked some game company friends: "Why don't you come to make things about the Metaverse?" There are no problems with their own games in all aspects, and they don't want to make big changes in the industry.
"There is no need to muddy the water with the metaverse." This is the situation that friends in the game industry I have come into contact with are happy with the status quo. Moreover, since the state tightened the issuance of game version numbers, it has become more difficult to obtain game-related licenses and version numbers. The adverse effects of this have led to the dissatisfaction and reflection of many parents. At that time, many parents were talking about the game harming their children, not only failing to keep up with their studies, but also damaging their eyes, which was more terrifying than puppy love. The influence of such public opinion and the nature of huge profits in the game industry made it more and more difficult to obtain relevant licenses. Can't get it.
But in the future, it is possible to let go, or to find another breakthrough in the game industry to a certain extent, which means that metaverse games are only a matter of time.
When I am playing some games now, I have begun to feel that the current experience can no longer satisfy my leap of imagination and texture. Including when we purchase the corresponding services of the metaverse, we also feel that the current overall technical level is slightly weaker, and it is not as fun as Web2 games.
As you mentioned before, Mr. Shi, the basic infrastructure of the entire industry is not as good as we imagined, so it sometimes fails to meet our ideal Web3 and metaverse-related needs. I think, no matter whether it is domestic or foreign, everyone should first do a good job in the underlying technology, otherwise we can only build castles in the air.
As for the second question you mentioned just now, the future of virtual property is closely related to the development of the industry. The current "Civil Code" includes virtual property within the scope of personal property protection, which is very cutting-edge in laws all over the world. It’s just that we need to cut off illegal transactions related to virtual assets, because some people who are engaged in virtual asset transactions may cause some damage to the financial order during the transaction process, and because of the impact of the epidemic on economic production, everyone is concerned about financial The sense of protection of order is unprecedentedly strong. Therefore, from a policy point of view, if the attitude towards virtual property is too broad, it may lead to problems such as capital flight and financial disorder.
Therefore, in the scope of practice that we can see, there will not be a particularly open or very casual legal environment for assets on the chain. However, judging from the feedback from judicial authorities in various places, it is generally believed that virtual property rewards held or obtained through labor will not be strictly prohibited by law as long as they are taxed according to law. In other words, our legislation on virtual property is still in a gradual development process, and it is not the pessimistic situation that everyone expected.
【Shi Xingguo】
In other words, most economic activities in the virtual economy are allowed, but we must avoid these activities from disrupting the financial order, or making regulators think that you are deliberately doing some gray behavior that is edging the edge, right?
【Xiao Sa】
Yes, in fact, this is a problem that cannot be broken through the bottom line. Ordinary people's awareness of property security is not strong enough, so there are always speculators who want to take money out of other people's pockets by taking advantage of the opportunity, and let ordinary people participate in raising prices, which is naturally against the law. But if you have worked hard to help others build a system, and others deliver it with virtual property as compensation, of course you can collect it.
Why do countries around the world, including the United States, have such strict financial controls? The regulation of finance in the United States and other places is a strong regulatory license access system. We have rich experience in overseas work and understand the local judicial environment, especially in places like Singapore, where Web3 or related practitioners often advocate how good the legal system and environment are in Singapore, but you can actually find out by going to a lawsuit Singapore is not what you think it is. Everyone must have an understanding of the relevant laws, and we must also restrain our negative emotions towards the law, and learn more about the general knowledge of the law. In this way, we can achieve what Confucius said in the process of making technology, "follow the heart and do not exceed the rules".
At noon today, we also discussed the combination of law and technology with some technical researchers, implementing blockchain smart contracts with legal rules, and forcing contract users not to operate in violation of the law, which is closer to the realm mentioned by Confucius.
Law and technology are not opposed to each other. Instead, they should be combined to make the law run better and better through technological methods, and the law also makes technology more and more able to illuminate the way forward for mankind. This is beneficial to both parties.
【Shi Xingguo】
What Xiao Li said is very good. In fact, as ordinary people, we don’t intentionally violate the law, but we are particularly worried about what inadvertent behavior causes us to violate the law. If the scenario you mentioned is really realized, then we will at least I can feel more relaxed and natural in my usual behavior.
【Xiao Sa】
Let me give you an interesting example. When I just graduated from graduate school, I went to the bookstore to buy legal articles, which we call legal articles. At this time, I heard an old man and an aunt chatting next to each other. The two of them looked at the legal article and said, "Why do I know every word, but I can't seem to understand its meaning?" Many non-legal people will I feel that the legal provisions are very obscure, as if I know every word, but I just don't understand it. This may be the professional barrier.
We will compare our legal profession to the medical profession. For a doctor, taking a cecum is a minor operation, and for us, filing a lawsuit is also a minor operation. But if a person who has not received a professional education is going to help others pull the cecum, then he can't even disinfect or anesthetize, and rashly using the knife will kill people. The law is the same, it will also really affect the life and freedom of many people, especially the criminal law.
The so-called interlacing is like a mountain, so we still very much hope that everyone can learn some general legal knowledge.
【Shi Xingguo】
Yes, we also hope that smart contracts in the future can be improved to a certain extent, so that we don't have to think about so many legal aspects in a layman's way.
Another hot word in the Web3 field this year is DAO. As a product of the industrial age, traditional corporate production has shown its limitations in the digital information age. According to the definition of the official website of Ethereum, DAO is an organization established by a group of like-minded people around a certain mission. mission. The consensus of many people is that DAO may replace the company system in the future and become the development direction of future commercial entities.
Lawyer Xiao once wrote that according to China's existing legal system, it is difficult for the DAO model prevailing abroad to legally land in my country. So, can Lawyer Xiao give a possible path for the localization of DAO under the existing system in our country?
【Xiao Sa】
The most likely way may be to operate through a special limited partnership model, including the current large accounting firms and large law firms, etc., which are actually such a mechanism.
This mechanism is a kind of partnership system, and its outstanding feature is the partnership.
The most prominent thing about a general company is the joint venture, that is, everyone contributes money together to form a company, and the board of directors and shareholder meeting constructed in proportion to the capital contribution votes to make corresponding decisions, and the general manager executes them. The general manager can be replaced at any time at the executive level Yes, because the final decision rests with the contributing directors or shareholders.
But the DAO we are talking about actually pays more attention to the cooperation of people, and people are relatively more important. If you change a group of people, the organization may fall apart. Where is that person combined? One of the more prominent ones is professionalism. For example, in our law firm, all members of our law firm are graduates of law schools and have worked in law for more than ten years. A glance between each other can convey corresponding information. The same goes for accountants.
That is to say, DAO actually has relatively high requirements for participants. No matter what the background and assets of the participants are, as long as the thinking and situation do not match, it will be difficult to work together. DAO is more like what we call the concept of small teams and associations. We can see that the business decisions of partnerships are all voted by one person, one vote. We will set up rules ourselves, one person, one vote. This form is very similar to DAO, and it is also in line with the domestic legal environment.
This is just a direction to try, and it is hard to say whether the human-partnership system can be applied everywhere. For example, some organizations we serve, such as rural cooperatives, agriculture, rural areas and farmers, industrial and commercial people, and ordinary people defending rights, it is difficult for us to pack everyone together to form a DAO.
DAO has high requirements for consensus and the ability to take common divisors, and it has high requirements for people. Therefore, the existing special limited partnerships are generally specially approved by industry-specific regulatory agencies. After the partnership is approved, each person uses his or her own invested capital as the upper limit of compensation, and repays external debts when the partnership breaks down. However, if it is a general partnership system, the participants will have to use all their assets to compensate external debts, and the risk will be relatively high.
At present, some institutions with relatively high educational background and experience level like ours will adopt the special partnership method more often. As for the future, with the improvement of our national quality, or in the case of a limited partnership, we can give a relatively large common divisor, so we can also make corresponding attempts.
This only shows the possibility of DAO. It is my own personal opinion, and it is also a beautiful ideal, but it is a bit difficult to realize.
Also, what does Mr. Shi think about the advantages and disadvantages of DAO compared with the current corporate system? Can these deficiencies be resolved through technical means?
【Shi Xingguo】
As you said, DAO may have an implementation method at the legal level, but from my own personal understanding, I think DAO itself is not a new thing. And more strictly speaking, DAO is actually the oldest way of collaboration for human beings, but it is manifested in different forms during the development of human civilization.
In simple terms, like you said, a DAO is legally a partnership. But in fact, it itself is a group of people working in partnership, but with the continuous development of technology, there are more and more ways of partnership, and the scope is getting wider and wider. At the level of DAO, it can be extended to a scale of thousands of people all over the world.
The corporate system itself is a product of the times, and it is more suitable for the scale of cooperation in the industrial age. In my opinion, the corporate system is a little different from DAO. But I think the company is actually a form of cooperation formed by a series of legal framework items. It is a contract-based mechanism that operates under the guarantee of laws.
In contrast, DAO is actually a relatively new form of partnership, and there is no clear law to regulate it yet. However, blockchain technology and smart contracts themselves can replace laws and regulations to a certain extent to provide certain contractual guarantees. So it can realize the partnership model we expect, but also because of this, its advantages and disadvantages are more obvious.
The advantage of DAO is that it is a thing on the Internet, so it can attract people to participate very quickly. The disadvantage of DAO is that it is limited by technology. The basis of DAO is the smart contract, which is too primitive, too simple, and not flexible enough, so it is difficult to organize complex cooperation, and it cannot do more detailed management. It can only carry out extensive management. . At the same time, due to the lack of scalability of the current mainstream serial blockchain itself, the organization cost of DAO remains high, and its development in business scale is also limited to a certain extent .
But the good news is that the current technology is gradually solving it. For example, the problem of performance scalability can be solved through parallel blockchains, and smart contracts are also evolving in a more complex and perfect direction with the development of blockchain technology.
Many of the problems encountered today are actually caused by the technical limitations of the serial blockchain itself. Many problems are not a problem at all in the concurrent blockchain scenario. Our Hyperchain is doing research on parallel blockchain technology, and we will release some technologies related to DAO before the end of the year. At that time, I believe that the entire industry will have a refreshing understanding of DAO.
We also especially hope that DAO can match the domestic development environment in terms of domestic legal form. But in essence, DAO still has a lot to explore whether it is the improvement of the business model or the compatibility at the legal level. So today I also want to leave an open question for everyone in front of the screen to think about. This is also related to the topic of this conversation between me and Lawyer Xiao, which is the legal aspect of Web3.
Dear friends, do you think it is possible for the legal industry to develop into the possibility of doing business in the form of DAO?
Of course, Attorney Xiao is the most qualified person to answer this question. If you want to discuss this issue in depth, friends, please leave a message in the comment area. If you want to know about related issues, we will invite lawyer Xiao to answer our questions again next time in Langya.