The IKU & MakerDAO collab — WALKTHROUGH

Over the past few weeks we’ve introduced the IKU DRO model at conferences/meetups/hackathons in NYC, London, Cape Town, and Berlin. The takeaway? Context is very important when explaining. Especially when bio r&d meets blockchain. IKU CEO Greg Rigano, Esq. breaks it down for you below.

There has been an increased interest in debate around #openscience (e.g. sci_hub) v. permissioned access (e.g. Elsevier) along with patent laws failing to incentivize innovation in the digital age but instead promoting litigation and patent trolls (see citations below). We present an optimized open source, permissionless innovation architecture (that can be deployed now). Using MakerDAO’s DAI, a decentralized stable currency pegged to the U.S. dollar, combined with IKU’s decentralized research organization model, we defeat patent system inefficiencies - while incentivizing a high bandwidth environment for censorship resistant open exchange of scientific R&D property rights.

Problem Statement

The U.S.A. patent system was created to incentivize inventors to publicly share their knowledge by rewarding them with a 20 year commercial, government enforced monopoly on their invention. This worked really well in the pre-digital age. But now, the patent incentive has devolved into mass inefficiency through patent trolls, $30 billion per year in litigation and most perverse, incentivized scientific information secrecy. Enterprise is incentivized to prioritize profits for shareholders over scientific advance, causing slow input output frequency and significant asymmetry in R&D information.

R&D intellectual property (“IP”) rights are valued in the trillions of dollars, yet there is currently no liquid market for exchange of IP ownership value due to high overhead requirements (e.g. lawyers, courts, etc. to enforce chain of title). IP ownership is currently indirectly monetized, with significant friction points: (Research → Patent/Publish → Company → sell equity in Company → Money).

Only large, well-capitalized corporations can sustain such inefficiencies, whom then seek rent from the public, and maintain R&D in walled gardens. This is especially harmful for the scientific community as researchers are incentivized to conceal their research in hopes of a large corporation pursuing a license, as opposed to peer collaboration within the scientific community for public benefit. The result is (i) a permissioned market with high friction, (ii) very limited R&D investment per capita with essentially zero liquidity and (iii) stifled innovation.

A new incentive model is needed that can unlock Metcalfe’s law at global scale for human advance scientific intelligence. We propose the Decentralized Research Organization, aka DRO.

What is A DRO?

A cybernetic collective of people and machines plugged in as nodes on a network, collectively feeding it with information to fuel innovation — all nodes are economically aligned through blockchain-enforced property rights (“DRO Tokens”). The DRO Tokens represent ownership of research data property rights to mediate participation in a digital R&D portal (the “Portal”) — building a progressively greater intelligence.

Only users are allowed to participate in a Portal. All communications are considered research data owned by the research token holders, pro-rata. Upon staking, users have direct access to research papers, communications, source code, experimental data, etc. in the Portal digital commons. Users may also have rights to publish, provide commentary, submit pull requests, contribute and mine data, earn royalties, amongst others.

Portal R&D/communications may be stored in the Interplanetary File System (“IPFS”) and linked to research tokens (ipfs.io). Upon the minting of research tokens, the [ethereum] blockchain proves the existence of the property rights, therefore proving its genesis and atomic provenance. The tokens serve as the basis for a distributed, liquid research repository, while providing a participation and anti-abuse mechanism to guard its value. Users are economically incentivized to advance the research — the further the research progresses, the more valuable the tokens should become.

//let exampleDRO = ‘ ‘

Alice, a rocket scientist proposes an R&D prediction market for the most efficient rocket engineered blueprints that enable travel beyond Mars, but traditional VC’s generally reject her vision. Instead, she offers blockchain-enforced, research property rights [tokens] to own, participate in and contribute to the R&D in exchange for the funds required to progress through the R&D. Provenance of rights are on blockchain, enabling provable, pseudo-public data-anchored communication channels.

But before minting the tokens, Alice scans the patent literature and finds there are patent trolls close by — Alice needs a way to advance the research and raise the money in the most censorship resistant manner possible, with minimal friction to facilitate the most high end rocket scientists participation.

We leverage the following tools to make this happen:

1. zkSNARK,
2. attorney-client privilege,
3. DAI, and/or
4. multi-signature smart contract

What is a zkSNARK?

zk-SNARK stands for “Zero-Knowledge Succinct Non-Interactive Argument of Knowledge,” and refers to a proof construction where one can prove possession of certain information, e.g. a secret key, without revealing that information, and without any interaction between the prover and verifier. (https://z.cash/technology/zksnarks/) zkSNARKS enables a cryptographic privacy guarantee of a DROs research and/or its participants.

What is attorney client privilege?

Attorney-client privilege refers to a legal privilege that works to keep confidential communications between an attorney and his or her client secret. (https://www.law.cornell.edu/wex/attorney-client_privilege)

How to deploy censorship resistant, minimal friction, high science DRO?

function DRO (Alice, Bob) {

• A pseudo-private off-chain element is introduced in the form of a registered attorney/barrister. The DRO is the attorney’s “client” and therefore communications are private/confidential under attorney-client privilege.
• Alice contacts her lawyer, Bob (a well respected lawyer in the community), for legal counsel on what to do to bring this to the market. Bob informs Alice that all of their conversations on the matter are privileged aka confidential as per attorney client privilege.
• Alice asks Bob to administer a DRO crowdsale to advance the research and build the most voluminous, searchable, open-source repository for rocket-science engineering ever assembled. Alice wishes to remain anonymous to not deal with patent trolls … they enter the magical land of blockchains …

— —

Bob announces a DRO crowdsale. Anyone who sends funds in exchange for research tokens as described above, will do so under two layers of anonymity, but compliant with KYC:

Using zk-SNARKS, any participant (researcher, scientist, interested party, etc.) will be able to enter their name and prove that they are not on a restricted list (e.g. OFAC) but may belong to a certain research institution (signaling their scientific acumen), while Bob may not know their actual identity.

and/or

(2) Any participant may prove their identity to Bob AND elect to engage Bob as an attorney, thereby making all of their interactions related to the matter confidential under the attorney client privilege. }

function liquid() {

console.log(‘We accept all forms of value that Bob may efficiently convert to a stable currency.’)

}

Liquid()

// Mint research tokens

pragma solidity ^0.4.18; import ‘zeppelin-solidity/contracts/token/ERC20/MintableToken.sol’;

Using zkSNARKS and/or attorney client privilege, Bob collects $4 million for the DRO, in which all DRO participants are anonymous to the outside world.

Here comes the Patent Troll to attack the $4 million honeypot, but P. Troll does not have anyone to sue because there is no legal entity — the DRO lives on a blockchain and no one, but attorney Bob’s identity, is publicly known. You can sue Bob the attorney — but suing the lawyer? C’mon. And what about the $4 million, can the patent troll somehow get to that?

Enter DAI and the multi-signature smart contract

What is DAI?

A stablecoin that is algorithmically pegged to the US dollar, which offers transparency and decentralization, as built on top of the Ethereum network. https://makerdao.com/en/dai/

DAI is designed to create a stable, decentralized and instant transfer of value on the blockchain,” said Rune Christensen CEO and co-founder of MakerDAO

What is a multi-signature smart contract?

The purpose of multi-signature wallets (multisig) is to increase security by requiring multiple parties to agree on transactions before execution. Transactions can be executed only when confirmed by a predefined number of owners.https://github.com/gnosis/MultiSigWallet

— —

As Bob’s escrow account receives the funds, they are being converted to DAI in real time providing transparency and a form of censorship resistance. Bob then sends the DAI to a smart contract that requires X of Y digital signatures to move the funds. Bob and several other sources of trust are the multi- signature executors. Bob serves the DRO participants through the portal (hi 3Box, Aragon, Bitcoin, Gnosis, DAOstack, Discord), executing their wishes as governed by a milestone based roadmap.

When a milestone is reached (e.g. Prediction Market complete, lead blueprint chosen for development; time to formulate the technology to start building the rocket), Bob and the other multi-sig participants unlock the multi-sig, Bob converts the milestone necessary DAI to fiat and sends the fiat to the builders. The only bank account that could potentially be garnished or frozen would be Bob’s escrow account, which a judge would be extremely unlikely to do, especially in the name of research for public benefit.

One last note on DAI by Rune Christensen, CEO and co-founder of MakerDAO.

“Incorporating DAI into DRO Tokens is a fantastic example of how decentralized technology can foster innovation and support mission critical research.”

Conclusion

There is likely no bank account to garnish or freeze and there is no legal entity to go after — likely solving the issue of patent trolls and open-source science, while leveraging digital, decentralized systems for efficiency.

We have introduced a method of economically aligned R&D that uses multiple layers of weapons grade cryptography — allowing for markets to exist where overhead was previously to high, promoting global exchange of scientific knowledge.

Citations:

Adam Back, Bypassing the Digicash Patents, http://cypherpunks.venona.com/date/1997/04/msg00822.html (April 1997)

barryWhiteHat, Solving optimization problems using snarks , ethereum and incentives (Jan 2019)

IPFS, created by Protocol Labs, is a peer to peer distributed file sharing system in which all nodes share the same, tamper proof information, cryptographically linked through a Merkle directed acyclic graph data structure. There are no points of failure. https://ipfs.io/ (Last visited Nov. 25, 2018).

Patrick Mockridge, Makerverse/Enjin, chatroom (2019).

James Bessen, The Evidence is in: Patent trolls do hurt innovation, Harvard Business Review (2014). Gene Quinn, et. al., Are More than 90% of Patents Challenged at the PTAB Defective?, IPWatchdog (2017). Robert Sachs, Fenwick & West LLP, Patent Invalidity Rates: The Summertime Blues Continue, Law 360 (2015).

• patent litigation costs ~ $30 billion per year
• ~80% of the litigation comes from patent trolls
• 50%+ of U.S. patents are being invalidated in post-grant proceedings.

Elon Musk, Joe Rogan Experience #1169 — Elon Musk, (Sept. 6, 2018), https://youtu.be/ycPr5-27vSI?t=893 .

Rigano, et. al, IKU Whitepaper (Feb. 2019)