DAOs - Michigan 7 2024 HHIRS

Aff---DAOs---HHIRS
Thanks to Raghav Laxminarasimhan and Nikhil Gupta for their hard work on this file!
This is an aff that grants DAOs (decentralized autonomous organizations) the right to patent, you should probably google the definition or read through some of the cards since they explain better than I would. There is uncertainty over whether they have the right to patent and that causes innovation to be stifled and they can still infringe which drains resources that are key to innovation.
Advantage 1:
This has a couple diverse impact scenarios---
1. Governance---these talks about how DAOs would decentralize governance which would help build resilience and societal response to a bunch of existential threats like climate and pandemics just to name a few.
2. Decentralized IP---says that decentralized IP created by DAOs would foster collaboration and prevent emerging threats and develop sustainable science ecosystems.
3. Open innovation---solves emerging tech---self-explanatory
4. Society 5.0---talks about the next decade of society which works together and solves global problems.
Advantage 2:
This advantage is about how India is also making new DAOs but there’s still uncertainty over IP rights
1. Globalization---it talks about how clarifying uncertainty means more global cooperation and connectivity
2. Development---the plan enables development in India and builds soft power
3. Indo-Pak---talks about how Indian soft power prevents war
4. Relations---talks about how the US and India have empirically cooperated over IP---Strong US-India relations solve extinction.
I cut this aff because there’s a couple of strategic benefits:
1. Impacts---they are very diverse and strong
2. Deficits---the certainty and modeling warrants are pretty strong and how even a slight difference in signal kills solvency
3. AFF key---all the cards are pretty specific about how clarifying uncertainty from IP is specifically key to solving everything.
4. Patents bad---this aff has a pretty unique strategy on patents bad because the monopolies warrants are pretty low risk---the decentralized IP regime card talks about how DAO patent regimes would be open and allow for collaboration which takes out the main neg strategy on patents bad.
NEG stuff:
I think this AFF is fine vs the counterplan and all the counterplan specific deficits still apply as well as the certainty + modeling deficit.
The main threatening argument is probably Judicial Review due to how many neg answers are there compared to aff---I think the modeling deficit is pretty good here logically---if the president vetoes and goes through this many processes it probably seems uncertain and weird for India to model.
Both the DAs are pretty threatening---I’ve found a mainly equal literature base for both aff and neg so I think it comes down to who debates it better.
T-Domestic is not real---the modeling is an effect not a mandate which zeroes the violation.
-Raghav
Email me at raghav.laxminarasimhan@gmail.com if you have any questions or recommendations!
1AC
DAOs---1AC
Advantage ONE---DAOs:
Blockchain development is high now, but patent trolls threaten to stifle innovation.
Buchanan ’15 [Bill; December 1; Professor of Applied Cryptography at Edinburgh Napier University; LinkedIn, “The Rise of The Patent Troll in Crypto,” https://www.linkedin.com/pulse/rise-patent-troll-crypto-william-buchanan/]/raghav
The world of cryptography, and in protecting users and systems, has moved on so fast in the past year. Our weak systems, such as with Logjam and FREAK, have quickly been replaced, and where browsers just won't talk to systems which use weak encryption, such as for 1,024-bit Diffie-Hellman key exchange or with 512-bit RSA key exchange. At present, only Microsoft Internet Explorer allows for weak key exchange for the SSL connection, and where Chrome and Firefox just won't talk to systems which have weak methods. With talk around backdoors and key escrow, the browsers have pushed the industry along faster than anyone would imagine.
So just when we thought we had secured the Internet, and where it had moved on from Diffie-Hellman and 512-bit RSA key exchange methods to Elliptic Curve methods of exchanging session keys for HTTPs, we find our that someone thinks they have a patent around the methods of key creation using elliptic curve encryption. So this time it's not law enforcement looking for a back-door or weak encryption - it is possibly a patent troll.
With this a Texas-based company named CryptoPeak Solutions reckons that it has the patent on "auto-escrowable and auto-certifiable cryptosystems." The patent states [patent]:
The ARC Cryptosystem is based on a key generation mechanism that outputs a public/private key pair, and a certificate of proof that the key was generated according to the algorithm.
This certain defines the basics of ECDHE, but in no way does it actually go into the details of the methods used. They then say:
Each generated public/private key pair can be verified efficiently to be escrowed properly by anyone. The verification procedure does not use the private key. Hence, the general public has an efficient way of making sure that any given individual's private key is escrowed properly, and the trusted authorities will be able to access the private key if needed.
which basically says that you can verify the key pair without actually using the private key. The patent hints towards the method of using RSA encryption to exchange the key, where the session key is sent back, encrypted with the public key of the server. The private key of the server is then used to unencrypt this key to reveal the session. ECDHE overcomes this by not requiring the private key of the server to be used.
With many current HTTPs systems we often use Elliptic Curve Diffie-Hellman Exchange (ECDHE) which uses the Elliptic Curve encryption method [Link], which is wrapped within the Diffie-Hellman method, and which does not require the decryption of the key. There is thus a hint of the notion towards the patent, but the authors of the patent actually mention anything like ECDHE.
CryptoPeak Solutions have now targeted 66 companies for the usage of ECDHE on their Web site, including AT&T, Netflix and Yahoo.
Conclusions
The world of patents is a strange one, and there are a whole lot of patent trolls who go after companies, hoping they can gain some financial gain in suing for patent breaches. Overall this often stifles innovation, and where the deep technical details of the breach can be glossed over. It can also often stop SMEs in their tracks, through the fear of being sued in the future.
Decentralized autonomous organizations are the next frontier in corporate governance---effective blockchain is key.
Bellavitis ’22 [Christano; April; Assistant Professor of Entrepreneurship at the Whitman School of Management, Syracuse University; Research Gate; “The rise of decentralized autonomous organizations (DAOs): a first empirical glimpse,” https://www.researchgate.net/publication/359712137_The_rise_of_decentralized_autonomous_organizations_DAOs_a_first_empirical_glimpse]
1. The emergence of decentralized autonomous organizations (DAOs)
Decentralized autonomous organizations (DAOs) are blockchain-native, decentralized organizations that are collectively owned and managed by their members via smart contracts. DAOs represent a new organizational model that has the potential to fundamentally change how organizations operate. Organizational innovations associated with the rise of DAOs are enabled by a novel technological infrastructure. Blockchain technology serves as the platform on which DAOs are set up. Blockchain technology refers to a distributed and digital ledger that records transactions in a transparent and immutable way (Nakamoto, 2008). The advent of blockchain technology had a major impact on the business world and is one of the major pillars of the movement towards a decentralized economy (e.g., Yermack, 2017; Chawla, 2020; Sydow et al., 2020) and a decentralized financial system (e.g., Chen and Bellavitis, 2020; Cumming et al., 2022), partly driven by new ventures’ tokenizations through initial coin offerings (ICOs) (e.g., Bellavitis et al., 2021; Fisch, 2019).
The blockchain based-nature of DAOs has several implications that distinguish DAOs from traditional organizations. First, the organizational governance is significantly different from current, more traditional forms of governance in organizations. While traditional organizations are driven by top-down, private and centralized decision-making, DAOs operate through public and distributed decision-making, in which any DAO member can typically put forward proposals for any type of corporate decision and vote on them. This framework facilitates collaboration and community engagement among all members of the DAO that share common goals and ideals. These goals are diverse and codified in DAOs’ underlying smart contracts. For example, DAOs can set out to raise and distribute donations or can collect and invest funds in promising venture projects (e.g., Bove, 2022). DAOs typically possess treasuries that can only be accessed with members’ approval. The funding of DAOs is often based on token sales, such as ICOs (e.g., Bellavitis et al., 2021; Fisch, 2019; Momtaz, 2020) or non- fungible token (NFT) auctions (e.g., Chalmers et al., 2022). These token sales enable ventures to raise substantial amounts of funding from a crowd of investors in exchange for tokens that can carry, for example, voting rights (Fisch et al., 2020).
Second, the decentralized nature of DAOs enables new business models that are catalysts for further disintermediation. As of 2022, some of the most successful organizations are inter- mediated platforms, such as Amazon. DAOs have begun to disrupt intermediated business models and industries in which such platforms are dominant through disintermediation. At the core of the movement toward greater disintermediation is the promise of more favorable rent sharing, as entrepreneurs and investors or sellers and buyers get to share the transaction surplus exclusively, without the need to pay for intermediation services thanks to smart contract technology (Momtaz, 2022). In principle, markets, industries, and entire economies could be governed by smart contracts, powered by robotics, and independently regulated by the DAOs’ members. Consider the example of Amazon: Today Jeff Bezos is the main shareholder of Amazon, Amazon’s CEO is the manager, and Amazon sellers are the service providers. Through a DAO, Amazon sellers could cooperate and share decision making and a DAO could allow every Amazon seller to be a shareholder, manager and service provider at the same time.
The number of DAOs and their impact is rapidly increasing. The raising impact is evidenced by headline-grabbing stories, such as a Constitution DAO’s $40 million bid on an original copy of the U.S. constitution in 2021 (Bove, 2022). Similarly, as we outline below, the number and value of DAOs have exploded since 2019. Against this background, this study aims to provide an initial description of DAOs. Specifically, we aim to outline the promises of DAOs as a new organizational form, offer an initial empirical glimpse at the prevalence and functioning of DAOs, and discuss some of their limitations. By this, we seek to provide an early introductory view on DAOs that future research can base on to develop novel research questions to fully explore DAOs and their underlying mechanisms.
2. The promises of DAOs
Because of their decentralized nature, DAOs offer transparent, distributed, and decentralized decision-making that increases disintermediation not only within organizations, but also at the market, industry, and economy levels. The distinction between shareholders, managers, and other stakeholders, such as industry participants, is blurred, giving rise to numerous benefits (and challenges).
2.1 Decentralized governance: agency, transaction costs, and wisdom of the crowd
In traditional corporations, the literature on corporate governance has long emphasized potential agency costs associated with conflicts of interests between managers and shareholders (e.g., Jensen and Meckling, 1976). In DAOs, however, agency costs could be dramatically reduced because the roles of principals and agents overlap.
While conventional organizations are hierarchically governed by executives that take top-down decisions, DAOs follow a decentralized bottom-up approach. That is, members can submit proposals, which are then voted on by all members of the organization. DAO members are typically identified via tokens, which represent digital voting rights that entitle the token holder to participate in decision-making (e.g., one token, one vote), thereby coordinating DAO governance. The possession of more tokens typically increases voting power, and sometimes token ownership thresholds exist for submitting proposals. The decentralized voting-based governance process reduces the need for hierarchy and bureaucracy, decreasing the need for human managers (e.g., Hackl, 2021; Morrison et al., 2020). Also, while decision-making in traditional organizations is private, decisions made in DAOs are transparent and publicly visible on the blockchain. Thus, which decisions were taken, and how the DAO members reached these decisions, is public knowledge.
Further, blockchain technology shapes the governance of DAOs, which is fundamentally different from traditional organizations. These organizations are governed by the blockchain code which is public and easily accessible. The DAOs’ initial smart contracts, which outline the goals and governance framework, are hardly reversible. Any decisions taken in the DAO comply with this smart contract and changes to the smart contract require a voting process. Decisions are distributed and mostly based on codifiable information. Hence, the characteristics of DAOs – the overlap between principals and agents, as well as strong transparency – significantly reduce conflict of interests and moral hazard in this type of organization. This governance process could constitute a paradigm shift when it comes to transparency and agency costs (Lumineau et al., 2021). As such, governance and decision-making in DAOs could dramatically reduce transaction costs because smart contracts define the rules of the game and govern the decision-making process, but executing a smart contract is significantly less costly than the costs associated with corporate board meetings, corporate bottom-up decision-making, the involvement of labor unions, and so forth.
Finally, because decision-making power is distributed across members of the DAO, distributed and decentralized organizations like DAOs can benefit from “wisdom of the crowd”. The importance of crowd-based decision-making is increasingly relevant in various fields, ranging from the development of new products (Afuah and Tucci, 2012, Poetz and Schreier, 2012), the funding of technology-based start-ups (Mollick, 2014), and scientific research (Franzoni and Sauermann, 2014). It has been found that crowds can predict events very efficiently (e.g. U.S. Presidential elections) (Ray, 2006) and operate differently compared to experts (Mol- lick and Nanda, 2015). Thus, DAOs represent the natural evolution of crowd-based decision- making platforms.
2.2 Disintermediation: from centralized to decentralized platforms
DAOs not only disintermediate and decentralize decision-making within organizations, but also within markets, industries, and economies. As discussed above, the distinction between principals, agents, and other stakeholders, such as industry participants, overlaps to some ex- tent in DAOs. Therefore, DAOs are the next evolutionary step toward platform-based markets, industries, and economies.
Not long ago, technological advances such as internet and smartphones have powered a wave of new business models based on centralized platforms. Before the advent of these technologies, many industries were governed by large conglomerates at the center of industries. Nowadays, many industries such as movies (e.g., Netflix), retail (e.g., Amazon), music (e.g., Spotify), mobile applications (e.g., iTunes), have been disrupted by centralized platforms. The rise of platforms has concentrated market and economic power in the hand of a few companies. As soon as these platforms gain network economies, their behavior becomes less supportive toward complementors and suppliers (Rietveld et al., 2020). An example is Etsy, a platform for creatives. The platform started with fees of 3.5% in 2018, raised to 5% in 2018, and in 2022 raised again to 6.5%. These developments pushed regulators to consider breaking up large platforms1, or fine them for unfair market practices.2 Similar dynamics have existed in financial markets for centuries. Financial institutions act as intermediaries between savers and borrowers that would otherwise struggle to transact independently (Cumming et al., 2022; Momtaz, 2022). Therefore, although platforms and intermediaries help reduce transaction costs, allowing transactions to be carried out efficiently, they gain significant (market) power, financial resources, and increase market concentration (Chen and Bellavitis, 2020).
As decentralized platforms, DAOs have the potential to reshape markets, industries, and entire economies and shift power to members of the different ecosystems such as Amazon sellers, Spotify artists, and Etsy creators. By reducing the involvement of centralized platforms, DAOs can reduce transaction costs and create network effects without incurring monopoly costs (Catalini and Gans, 2019). If an industry is dominated by a DAO, no single entity will accumulate monopoly power, allowing all DAO members to benefit from the network effects to enlarge transaction possibilities, cooperation, and community building with the outcome of enhanced innovativeness and efficiency.
Several studies discuss the benefits of cooperation to increase innovation. The entire open innovation literature is centered around the idea that firms should leverage cooperation with external firms to innovate (Chesbrough, 2004). Cooperating, rather than competing with other firms, allows partners to access complementary resources that can contribute to the development of innovation (e.g. De Faria et al., 2010). Extending these concepts to individuals, DAOs allow a multitude of members to contribute toward innovative goals and projects, sharing knowledge, resources, and ideas. By distributing the power and decision-making within an organization, DAOs emphasize and promote community building which is crucial in creating sustainable ecosystems. Distributed organizations based on large communities such as Wikipedia or Anonymous (hackers) have existed for several years. However, the implementation of a DAO facilitates interaction, alignment of interests, trust, and transparency in a way that was not possible before (Momtaz, 2021a; Fisch and Momtaz, 2020). A DAO does not necessarily have a controlling party and, therefore, allows for open access and permissionless innovation—that is, developers can experiment with new products and ideas without fearing repercussions from a central governing entity (Chen and Bellavitis, 2020). By facilitating permissionless innovation and community building, decentralized organizations empower developers, allowing them to contribute to the DAO in original and unexpected ways.
Further, DAOs can increase organizational and industry efficiency. A longstanding literature argues that firms internalize transactions to reduce transaction costs that would otherwise occur in the open market, the so-called “make or buy dilemma” (Williamson, 1978). DAOs take advantage of modern technologies like smart contracts, robotics, and remote tracking to automate the entire transaction process, across multiple unrelated parties, potentially located in differen

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