The Evolution of Code as Law: watching The DAO take its first steps

The DAO, is a beautiful, bold experiment. The experiment is continuing to produce data, daily. The DAO is publicly testing ideas — sometimes unintentionally — about code, about people, about incentives. The DAO represents the first large-scale, public application of code as law. The quirks we see in The DAO are not examples of failings. They are steps in a journey towards maturity.

For the past few days, the community has been voicing concerns about unanticipated problems — specifically misalignments in incentives and governance. People can “game” the system in unanticipated ways — or at least ways unanticipated by those who wrote the computer code governing The DAO. We’ve learned The DAO code isn’t perfect. And it can’t be. Yet.

For lawyer-coders, this isn’t too surprising — traditional law evolves in much the same way as code. Both law and code are written by people. Writers attempt to solve a problem, by drafting a clear, precise solution that will behave as expected when it interacts with the real-world. They almost always fail. Edge cases inevitably arise. And the system evolves.

When people get excited about smart contracts, they usually say something like “Smart contracts are interesting because they are predictable; we know what the code will do.” But really, until the code is unleashed on the world, the only thing we can predict is how the code will work in response to the inputs we’ve tested.

The same primary problem exists with both systems; the problem is us — people. People are messy, we’re unpredictable. We behave in self-interested ways, with multitudes of rationales, reasons, justifications. Sometimes we take action against our own interests, against reason. It’s impossible to predict how all people will interact with systems until it happens — in the real world, with real stakes. Simulations don’t count. The DAO is not a simulation.

During law school I’d often hear the mantra: “The law is alive!” The phrase is meant to illustrate that the law isn’t stagnant. It changes, albeit painfully slowly, in response to interactions with real people in the real world. Code is alive too. While code can evolve more quickly, evolution is still needed, because it can’t be perfect at inception.

The new paradigm of code as law gave birth to The DAO. The DAO’s first steps pave the way for all that come after it. The DAO is learning hard, potentially expensive lessons now. But for those that follow, learning these lessons is easy and cheap. As easy as:

import “HardLessonsLearned.sol”;