Extitutional Theory: No Rules, No Roles, just Dynamics
I spoke to Primavera De Filipi (@yaoeo), one of the earliest scholars on law and crypto, Internet activist, and artist. She is permanent researcher at the CNRS and Faculty Associate at the Berkman Klein Center for Internet & Society at Harvard University. She is author of the book Blockchain and the Law published by Harvard University Press. During the interview we spoke about some of the biggest questions facing crypto in regards to the law, her work on Extitutional Theory, and whether ...
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Hello, everyone. You're listening to the Blockchain Socialist Podcast. And for today's interview, I have Primavera Di Filippi. She is a legal scholar, Internet activist, and artist whose work focuses on the blockchain, pure production, communities, and copyright law. She is one of the earliest and probably one of my favorite thinkers when it comes to the intersection between law and crypto. And so I had her on to talk about, some of the more recent, research that she's been working on that we'll go into more detail in a bit. So, hi, Primavera. How are you doing? Very good. Thank you. So, like, to start off, I was really interested because you've been, in the crypto space for quite a while and quite early compared to a lot of people. And so I just was wondering if you can maybe explain a bit, like, what got you first into to start studying crypto as a research topic?
Yeah. I mean, I was been, I've been studying, as a legal scholar. I've been studying all the questions surrounding, the challenges of, emerging digital technologies on initially on copyright. And then this will help me into, you know, peer to peer file sharing and decentralized architecture. And then I kind of switched my focus on the legal challenges, and opportunities actually raised by decentralized online architectures and, and the governance that emerge out of that. And so in some way, it was quite a natural, shift to also look at blockchain technologies. And And I think it's when Ethereum came out, because I mean, I've been looking at, like, Bitcoin and cryptocurrency, but more as a as an example as one out of many. And, when ATM came out, I think I realized that there are so many, exciting legal challenges and, that, I don't really need to look at anything else that's enough. And so I decided to focus pretty much 100% of my research on these questions.
Yeah. From from what I understand, you were definitely involved in kind of, like, the very early attempts at, creating DAOs with with DAO stack.
At the time, it was called Backfeed. We Okay. So it was it was it was not DAOstack. It was, but it was with Matan, which is, been, like, since, 2015, we were trying to, we are trying to develop decentralized architecture for, distributed reputation and distributed value value repetition. And, yeah, the idea was to do to create this kind of a platform enabling DAOs to, you know, very easily deploy, using those building blocks for reputation and economic, models for the tokens and so forth. This is a extremely fun and exciting times, But I think it was a time in which when you were saying, no one had any idea what we're we're talking about. But, yeah, that was fun.
You were quite early in that, like, I guess the what what ended up becoming DAOs today, but I guess for you at this point, looking back, do you think that the crypto world sort of evolve and change according to your expectations of what you thought in the beginning when you were first exploring the idea of DAOs?
I mean, actually, I think it took maybe longer than I was expecting, but I actually think we are now entering a point in which, yeah, this is like, the point in which we are now, what there is really this, a further sense of, many different doubts emerging and and and I think we're still in the exploratory phase of, how do we design them, how do we govern them, etcetera. So in fact, now more than ever, I keep hearing people, mostly, though, like, though founders, how though contributors, how much something like back feed is needed. So we were just, we were just, like, seven years too early, trying to provide a solution for a problem that didn't exist yet. But now, like, this this distributed reputation system is and and and value value distribution, this is this is actually what most DAOs really are exploring at the moment. So in some ways, like, maybe now we need to start back feed again.
If I understand correctly, back feed was is something that is, kinda like a that provided, like, templates for DAOs or kinda like standards,
for creation of a DAO or is it kinda right? Standards. I think the idea was really, like, kind of like what, Aragon and DAOstack doing. It was like to create, a platform or an infrastructure with modular, items so that I want to create a DAO. I create my DAO, but then I'm not sure, how to design the the reputation system. I'm not sure how to design the the the governance of the token economics. And there is modules, that I can implement, that I can adopt, that I can tweak. But, basically, it's like having, like, a kind of, like, kind of, like, you know, you want to make a website and then you have, like, WordPress and you have a lot of plugins that you put together. Mhmm. So kind of like this, like, kind of plugins for her governance reputation and value distribution.
Right. So not just necessarily, like, deploying a smart contract, but, like, having a visual representation or a dashboard in a way that's, like, readable
Yeah. I mean, they to manage it. Yes. Eventually, that's great too. But they did it's more more than the front end. It was the back end that Yeah. The it was like the actual protocols for distributed reputation and for distributed value repetition.
Right. So, like, kind of be able to, I imagine, like, modulate or edit certain values that you would want specifically created for your DAO. Basically, it's how do you create a CBN resilient system where
when you have people contributing to a DAO, you wanna be able to evaluate what is that contribution, how much value are you bringing. And according to the value that you bring, you're gonna be assigned, and this has to be a collective decision. You're gonna be assigned some economic token rewards and some reputation. And then you have a system by which the more you contribute, the more influence you have in order to evaluate the contribution of others. But only so far as the contribution is aligned with the interest of the DAO. And so the challenge, of course, is how do you make it such that, it is civil resilient? And how do you make it such that it doesn't generate oligopolistic tendency and so forth? So it it's actually a quite quite a challenging, exercise in in in a pseudonymous ecosystem.
Yeah. One of the things that, like, I think is that I I remember when I was, like, first starting out, looking into, I mean, specifically it was Ethereum. Like, I remember looking at things like Eragon and all this stuff with DAOs and kind of, like, thinking how how different it was than sort of the way that crypto was being portrayed at the time as being a type of kind of solely individually, minded or solely libertarian esque type of endeavor, whereas this sort of very interesting niche and avant garde type of space it felt was way more, was way more, minded about the collective I guess, which kind of goes against what a lot of people were saying at the time.
Yeah. I mean I mean, depend depends who you're hanging out with, I think.
Yeah. Yeah. Indeed. So when it comes to law, I was curious to know if, you had any thoughts on what were some of the I guess for you, what are some of the biggest questions that are related to law that you think people haven't yet been talking about too much that you think will become bigger issues?
Yeah. I mean, I think people are really starting to talk about it, but, somehow we don't really have a proper, legal response. And I think it's, given the fact that finally, we are actually experiencing some, I I don't dare to call it a Cambrian explosion because we're not there yet. But some kind of, like, deployment of, a decent number of DAO and also the DAOification of a lot of things that were created as, non DAOs and now wants to become DAOs. And then, of course, that's fantastic. And there is some challenges in, like, okay, how do we how do we exit to community? How do we doify and so forth? But then there is, like, the most fundamental challenge perhaps, which is, how do those new type of entities, which are DAOs, can interface with, the rest of the world, which is a non blockchain system. And so all those questions, first and foremost, because I think this is really a question that needs to be tackled as soon as possible is, the question of, well, what is the given given the standard state, of the law, what is the way in which DAOs are recognized? Are the general partnership? And therefore, what what type of liability can be imposed, on the values DAO members? What happened to the people that are voting versus non voting? Like, all this question about, like, who can be liable for what, if there is something that the DAO has done that is maybe not perfectly in line with what the law is expecting. And yet those things are fairly invisible. So it's it's hard to have an it's hard for the DAO to interface with, existing legal entity. It's hard for the DAO to actually contract or hire people. It's half of the DAO to pay taxes, etcetera. So all those, all those interaction that, are fairly standard for a company, or an organization, but the DAOs are doing pretty much in the same way. But from a legal perspective, they cannot do it. And so all those, all those all those gateways, like, how do we help the DAO actually, provide a real contract to its contractors, provide, like, hire people in a way that they're actually hired. And, and so we start seeing, like, solutions which are partial solution in the sense that we now, you know, we we have, like, those those those those those organization that are incorporated as organization in order to enable the DAO to, in order to provide a gateway for DAO to then interact. But we don't yet have the proper answer concerning the DAO itself. And, and so we've been doing, of course, with Koala and with my research project. We've been doing a lot of work concerning, like, the DAO model loop, for instance, providing suggestion for policy maker, etcetera. How could that look like a world in which, the law does provide some type of legal recognition for certain types of DAO because, obviously, not any DAO might actually be eligible. Can like, and what are the condition for DAO members to benefit for us from some type of partial, limited liability and so forth. So, essentially, like, all the question about how do we help DAOs be actual actors in society and not just being actors into this, membrane that is the blockchain based ecosystem. But how do we create bridges between the the legal entity and people that have some legal requirement when they are doing something, and a DAO.
Right. Yeah. Do you think that I can imagine some people saying, like, taking sort of, like, the other extreme position where, you know, DAOs should be and the crypto world should be sort of an alternative to the current existing world and actually being creating a legal entity is in some way a coopation or being subsumed into a system that crypto was meant to subvert or to, like, replace in some way?
Yeah. So, I mean, it depends how you're talking about it. Like, asking a DAO to incorporate as a legal entity is pretty much creating a legal entity. And then you you have you have a DAO and you have a legal entity. The two are not the same. Right? Mhmm. So in that case, yeah, you're just abiding by what the legal system ask you to do. That's very different from saying that we are trying to create interfaces between the two. Because if if your goal is to create an alternative, there is very little alternative that will be viable if it cannot interface with existing legal structures. Right? Otherwise, you're confined into that small world, which is the blockchain only world. And as good as your alternative it is, it's not gonna be very mainstream. So creating those interfaces and when I'm when I'm talking about interfaces, I'm not talking about just submitting to the legacy system by just incorporating. I'm talking about enabling those to exist within their own alternative framework and having ways to pierce into the, legal world through those bridges, which they can choose to use when they need, but they also don't have to go all the way on the other side.
Right. It it seems to me that it's it's an it's a potentially necessary step if you want to move beyond kind of being a, I don't know, it being kind of like a local, like a local little project that you do with your friends that's kind of breaks apart maybe in like, certain amounts of stress. Or if you want,
in order to become mainstream, you just kinda have to deal with, the realities. I mean, it's just that I personally, I just don't believe into this distinction between the blockchain world and the rest of the world. I think the reality is a hybrid, and the more we manage to create bridges from one side to the other, then the more interesting it gets.
Yeah. Yeah. Alright. You gave me the message. Yeah. Alright. And so, like, I think this would be a great transition into, the thing that we really want to talk about, which is your work and what you've called, Extitutional Theory, which I think maybe perhaps explains kind of some of these interactions that you're talking about. But maybe to start off, could you explain what executional theory is and how does that relate to or differ from like, thinking about institutions?
Yeah. So I think I should be able to pitch it in a few minutes by now. Basically, yeah, it's a theory is like something that very important theory, that emerged a few years ago. And, by a little, crazy group of, executioner scholar, and we've been gathering, nonstop for, like, few months that then became few years. Just, like, trying to, come up with actually a whole new field of scholarship, which is executional theory. And, the motivation is that, today, we we understand very well institutions. We have a lot of, literature, a lot of, insights about how do we create and how do we manage and how do we engage into the process of institutionalization. And that's very useful, but that's also only one phase of, why are people why and how are people interacting with each other and coordinating themselves. And so, at the there are other face faces. There are other ways, that explain and that inform the interaction of people. And, those are not always institutional. And the problem is that while we are all aware that institution is not everything, we also don't have a name for the other thing. And, and so, executional theory is kind of trying to take, an ontological approach into creating a new terminology, a new vocabulary, a new conceptual and theoretical framework in order to organize all those thoughts, around alternative ways of ordering social dynamics. And, the main distinction is that while the institutional framework is looking at and actually only seeing things that relate to holes and rials associated with those holes. And so when you look at a social group, you describe the interaction and you analyze this interaction based on what are the holes of the various people in the group and what are the rules that have been, instituted into that group. And, of course, that's both a descriptive and a performative function because the fact that you have institutionalized will affect the behavior of people as well. On the other hand, what we call institutional dynamics, are all those things that are not based on the holes and the reels, but are based on the actual identities of people. And by identity, I mean, the way in which one person identifies themselves and how this person is identified by others, and the relationship that exists between those different identities. And this is just as fundamental, in fact, as the institutional dynamics. And and actually acquiring the institutional lens in order to observe, analyze, describe, the behavior of people has bought an explanatory function, but also just like the institutional framework, also a performative function because the moment in which you start looking at and describing and analyzing things in an institutional way, it also will inform the behavior, of people that have become aware of those institutional dynamics. And so the idea is that we want to disentangle the institutional dynamics and the executional dynamics within a particular social group. And by doing so, we can also better analyze the interplay between institutions and institutions. And then we can start understanding better how can we design good institutions that are collaborating with the institutions that it is intended to support because we do create institutional scaffoldings. Usually, with the goal of helping a particular social group and the executional dynamics within that social group be more healthy, be more effective. And the problem is that if we don't look at the consequences that, a particular institutional contraption has on the executional dynamics, then we might end up trying to solve a problem. And by doing so, generating a new problem because all of a sudden we're stepping on the toes of the execution. We're, like, suffocating it. We're undermining it. And so we're we're weakening those institutional dynamics, which which were positive, because we were we are trying to to control the execution dynamics that were negative. And, and so by shedding light through this new vocabulary, through this new ontological and conceptual framework, by shedding light light on the execution dynamics, then we can better understand how the institutionalization impact the execution and how the institutionalization impact the institution, and what does it even mean to institutionalize as opposed to institutionalize.
Mhmm. Yeah. So, like, the way I understand it, and, of course, correct me if I'm wrong, is that you can think of the institution or, like, the institutional framework as thinking about what is, like, the official rules or the official, like, you know, what what the legal documents say about the institution and and how your relationships are. So you may have, like, the CEO and then the secretary and then, you know, the sort of hierarchy within a company as one example, or even the hierarchy within a government institution. And that's one way to describe this social group or organization, but that framework doesn't describe everything that is happening within that institution. There are things that sort of reside outside of what is being defined by the institution, that if you only look at it from an institutional point of view, maybe you will miss out on the fact that, I don't know, for some reason it's important that everybody likes to hang around the water cooler at a particular time and place, then maybe that has effects on how, later on the institution sort of portrays itself or that it changes a rule because of one reason or another. And so these different executional dynamics within the social group can create, perhaps changes within the institution in one direction or vice versa. The institution can impose a rule which changes the institutional dynamics that are happening within that social group.
Right. And, usually, we have, like, the we look at, like, the organic ham. Right? Like, you look at the holes and the holes. You have, like, your little structure. But this usually doesn't reflect much, much more than those wheels. But then there is, like, all the individual relationship and the, the the way in which people interact, the reason that they interact, the power that they have on each other is not you cannot just look at the at the institutional framework to to explain that There are so many other forces at play that, that do not that are invisible to the institutional structure and that are part of the institutional fabric. You know, the fact that, I am the best friend with, like, a very powerful person, might actually give me more leeway in the organization than if I had more powerful role. Mhmm. Right? So all those all those executional dynamics cannot be ignored, if you want to actually, from a descriptive perspective, understand where everyone stands. They need to be accounted for when you design, like, if you have an objective as as to this is how I think the the social group should work, then you cannot just create fields and holes. You also need to understand the executional dynamics and try to tackle those as well. Mhmm. Because, like, executional dynamics can be very powerful and very positive, but they can also be very negative, like nepotism or corruption and all these things.
Right. Yeah. It's so you I think every time you get a notification that I hear the the bing sorry. Yes. So like, yeah, I'm just imagining that, I I I I have been thinking of just kind of like a kingdom or something like that, you know? You have those examples of where, like someone becomes a king and maybe they're like too young to be a king or they're actually like a very, inept, like socially inept person who is on the throne institutionally within the monarchy, but then you have like all their advisers who are maybe, like, the ones who are actually controlling the show or, like, kind of using him as a puppet and that maybe those are kind of, like, the institutional dynamics.
I mean, yeah, that's that's an example. Yeah.
So another sort of aspect, a part of institutional versus institutional frameworks is this idea of enclosure versus exclosure, which I think is a pretty interesting idea. So from what I understand, you can think of institutions as being a place where they enclose particular social dynamics, where under executional theory you can sort of think of exclosures or places where, where you're not necessarily enclosing what the social dynamics are but creating a place of maybe particular types of freedoms within the institution. Do you want to can you talk about that a little bit? I think it's pretty interesting.
Yeah. So basically, an institution enclosed in the sense that within the domain of the institution, you are subject to the hills and the holes of the institution. And so it is it is a space in which the behavior of people is constrained by those rails and by those holes. So sometimes and, you know, sometimes it's done for a good reason because you actually want people to follow those rails and those holes. But in in certain cases, this might be to to the Harkonians. Some some execution dynamics which cannot express themselves anymore given those rules and those roles because it's too constraining for them might want to escape from some of those constraints. But the problem is that either you escape by escaping the institution, if you can, because it's not always possible to escape the institution without losing all the benefits of being part of that institution. And so an alternative way, if you if you wanna stay within the institution, but you want to acquire a little bit more freedom of action, Then comes the notion of exclosure. So in, in in, I guess, in English, an enclosure is a fence. Mhmm. And, an exclosure is when you create a fence within the fence. So usually it's used as the example with, like, you know, browsing animals. So you create a fence in order to make sure that, I don't know, the ships do not run away when they graze. But then there is a particular part of that territory where you really don't want the ships to come to graze the the the the to to to eat the grass. And so you're gonna create another fence inside the fence that is protecting the territory against the ship. Mhmm. Right? So that's the notion of an exclosure. Now in executional theory, we took again the world to mean something slightly different, which is so you have the funds, which is the institutional set of holes and rules. And then you want to expose away from some of those rules. And so you're gonna create a fence, and the fence has to be of the same type as the institutional fence. So if if the wheels and the holes have been defined, through legal means, then the disclosure has to speak the language of the law in order to be able to create something that is protecting the inside of that field. And and also that the institution has no way of stepping in because if the institution were to even try to step in, it will have to violate its own rules. And so that's the magic. The magic trick of the exclosure is that because you use exactly the same language, the same codes that the institution has constituted in order to create a fence against those codes, then you become untouchable by the institution. An example which I think is a is a very nice, and clear example is copyright and copyleft. So copyright is an enclosure of, of the public domain, an enclosure of things that usually are not, are not subject to any constraint. Right? Like, you have creation, you have creative, creative content. All of a sudden, the law comes in and enclose some part of the territory of creative ex expression and stipulate that now all all those things that sit within the territory of copyright law are subject to specific rules, which is, well, now you can no longer reproduce without authorization. You cannot remix it, etcetera. And and that's what society has decided is good for creativity. But then you might have some people or some some artistic practices that don't love it and, and that actually feel that they will benefit more from having more ability to have people reproduce, remix the works. And so because copyright is a legal tool, copyright is is is, is designed to enable people to do copyright licenses in order to give some, in order to license some of those restriction to some people. And so all of student, if you use the same tool, which is a contractual copyright license, but instead of using it as intended by copyright in order to constrain and in order to monetize, you use it in order to actually create a like, carve out a space of freedom, in which all of a sudden within that space, now everyone can do again the things that copyright has prevented them from doing, which is reproduction, distribution, remix, and so forth. Then that contractual license is exposing those artistic creation out of the enclosed territory of copyright law. And copyright law cannot do anything but respect that because it's speaking exactly the language of the law. And it's if you don't respect a copyleft license, it means that you you don't respect a copyright license. And it means that the system does not respect its own its own codes. Right? So that's a good example because I think we are all very acquainted with that, and and it explained very clearly why it's so important that the exclosure be made of the exact same fabric as the enclosure. Mhmm.
Yeah. I think it's it's an interesting way of kind of just pitting pitting the system against itself for your own kind of, like, creating at least your own spaces of of freedom. Or in certain respects it could be seen as freedom. Yeah, I was thinking because, I mean, we've been talking about this a little bit before, but, yeah, it's very much kind of like, you can think of it if you're into Deleuze, of course, like deterritorializing a very territorialized space within an institution, as a way to kind of create new spaces for, more or different, at least, ways of interaction and social relationships. And the the Copyleft, stuff is a good example of that. Hi, everyone. If you're enjoying this episode so far, be sure to subscribe, leave a review, share with a friend, and join the crypto leftist communities on Discord or Reddit, which you can find links to in the show notes. If you're enjoying the interview or find the content I make important, you can pitch into my efforts starting at $3 a month on patreon.com/theblockchainsocialist to help me out. It really helps since making this stuff isn't free in terms of money or time. As a patron, you'll get access to bonus content like q and a episodes you can submit and vote on questions you'd like me to answer, and I'll give my thoughts in twenty, thirty minutes. In the last bonus episode, I reviewed one of Vitalik's latest papers he co authored detailing his vision for decentralized society and use cases for soulbound tokens. Of course, I'll still be making free content like this interview to help spread the message that blockchain doesn't need to be used to further entrench capitalist exploitation if you put our efforts into it. So if that message resonates with you, I hope you'll consider helping out. And so with the executional framework, I think for me, what I think is really interesting is that it seems like a very helpful way in recognizing kind of lower level interactions that happen within an institution that could ultimately, in one direction, it could bring change within it. And I feel like this is, perhaps a really interesting framework for understanding, like how or how collective action can be or could be organized. Is that kind of like a a a correct way of of understanding it?
Yeah. I mean, but but, both institutions, institutional framework and execution frameworks are pretty much intended to, guide and, manage and support collective action. It's ways by which people interact and organize. And, and the thing is that because we lack the ontological and conceptual framework of execution, today, when we're thinking about, managing collective action, we oftentimes default into the realm of institutions, because that's what we know, because that's what we've been taught. But but intuitively and naturally, of course, we also do it in an institutional manner. But because we lack the vocabulary, it's even hard to speak about it. It's hard to think about it because of the lack of a common ontological framework. Mhmm. And while many disciplines, of course, have came up with various ways of talking or identifying those executional dynamics, there is no common, unified language to to talk about that. And, and that means that we have a tendency to lean more towards the institutionalization than toward the institutionalization. Simply not because of a preference, but simply because that's what we are thinking of and that's what we can talk of. And so the introduction of a vocabulary, while very simple, and I think that's the power, is the simplicity. Because, actually, once you talk and once you introduce the notion of execution to people, everyone understand what we're talking about because everyone has engaged and everyone has been subject to those executional dynamics. It's just that they never they never explicitly thought about it because of the lack of a word, because of the lack of a vocabulary. So in some way, as while it is very important to have, like, a whole theoretical framework that really try to, to to establish a better understanding of those dynamics. Everyone understands it in some way, intuitively. And so somehow, just adding the world into just throwing this world into the wild, is already in and of itself a fantastic contribution to help people have a better grasp and be able to think and discuss and exchange about those things that they have been doing all the time, but that they could never talk about. Yeah. Not easy way.
Could you explain a bit what you mean by institutionalization?
Yeah, exactly. So this is, this is the big, this is the big field of research that we have, which is when you we all know what institutionalization means. It means creating more yields and creating more holes, and and reinforcing the institutional structure. So what what what is the what is the institutional correspondence of that? Well, it is actually about affecting and, reinforcing or building, are actually weakening if needed some relationships. The nature the nature, the quality, the intensity of specific relationships between specific identities. Right? And so, again, the, as a as a analogy or metaphor, we can think of institutions as boxes, where you throw people into the box, and those are the members of the institution. And, and then the box is structured with various little boxes, which are the holes. And then that, stipulates the relationship between those boxes. Now when you move into an institutional framework, there are no boxes. There is no concept of membership, non membership. So you cannot rely on the same tools. Right? And, the the execution, they operate via via, gravitational forces. Mhmm. Right? So you have you have some people that have, more or less weight within the execution. And the more weight you have and the more connections you have, the more relationships, then the more gravitational force you also have and the more influence you have. Right? And so it's really it's a very different game. You cannot just you cannot just carve out a new box, create a new wheel. You really have to, like it's a much more, emphasized, science where you really have to look into those gravitational force, those weights. You have to look at these high somatic interconnection of people and try to play into that. So the whole of ex the the the process of executionalization is creating this rhizome, creating this high zone and then changing, modifying the weights and the gravitational forces that exist amongst those different actors and, and trying to trying to find the perfect constellation of people and relationships and identities that leads to that particular type, and quality of collective actions that you're trying to achieve. And usually, in the same way as, like, just playing on the institutionalization will never lead to the intended behavior. Just playing with the institutionalization also will never lead to the intended behavior. And what you need is this proper combo, this, this delicate balance, this this equilibrium between some degree of institutional structure and some well crafted institutional fabric, which when in when interacting with one another, will actually lead to that particular type of organization collective action that you're looking for.
Mhmm. Yeah. I think so, like, one of the things that, of course, come to mind for me and that I think maybe for the audience might be interesting is, kind of the creation of labor unions. So like starting off as kind of like this institutional dynamic where you and your coworkers have kind of decided that, you know, you're not being paid very well, you don't have very nice working conditions, and so over time sort of executionally creating the relationships and the dynamics that would later, create the collective action that would be needed into perhaps institutionalizing maybe the labor union into the company, and becoming and creating change in in in that direction. That doesn't mean that, like, institutional dynamics are then gone, but that you sort of institutionalized, perhaps what were some of the already existing institutional dynamics that were happening in the creation of a of a labor union?
Yeah. I wouldn't say that you're institutionalizing those dynamics. I will say more that a particular set of institutional dynamics, which express, dissatisfaction with the current institutional rule set are demanding for an upgrade of those institutional rule sets in order to fulfill their demands. Okay.
And so, in in relationship to getting back to DAOs now, you mentioned in a piece, that network technologies in particular have created dramatic new exclosures giving rise to institutional dynamics which can't be understood through the institutional lens alone. So if we apply this framework to network technologies like blockchains and like DAOs, what do you think makes them special in giving rise to executional dynamics?
Yeah. So, I mean, blockchain based system are actually a fascinating ecosystem and laboratory of exploration for institutional and institutional dynamics because in some way, they are so, like, what what we really like to do, as a a little group of institutional scholars is to try to find those social groups, organizations, which which express a strong degree of institutional dynamics and a strong degree of institutional ones. So, because those are, like, where you can really look at the interplay. And the interesting thing about blockchains is that they are very extreme on both ends, because on the one hand, you have this hyper codification of everything Mhmm. Which is very institutional in the sense that institutional in the sense of, it is is very strongly correlated with setting up rules and holes and codifying those into a protocol. So there's a very high degree of institutionality into that. But at the same time, there is a extreme and radical amount of institutional dynamics because everything that happens in between, the deliberation, the actual the actual decision making, that happens before before the vote is being casted. All the basically, everything that is off chain governance, is extremely traditional, because it doesn't have to have very few rules and rules about that, because all the institution has been has been put into the on chain infrastructure. And so it becomes extremely interesting to look at this interplay between on chain, off chain, and therefore between institutional and executional dynamics. And so the the and the only way you can actually understand the governance of a blockchain system, of a DAO, etcetera, you cannot just look at the protocol and be like, okay. I got it. That's exactly how it works. Not at all. The the protocol is only the institutional aspect of things, but you will never understand how the system work if you don't also look at all the off chain dynamics and the executionality of it. Right. And what is on it, the housing is also looking at how some system tie for the best of the worst and with different success factors in in integrating them to some extent. I'd like in in understanding that interplay, like, how do the executional dynamics affect? So how does off chain governance affect on chain governance? And how does on chain governance can account for or affect in return the off chain executional dynamics. And so in some ways, like, it's one of the best field, which on which to apply executional theory. And that's also one of the fields that perhaps needs it the most. Yeah. Because we cannot just rely on our understanding of traditional institutional frameworks to understand to understand and to design
a proper blockchain governance structure. Yeah. So I think that's that's really interesting because, I mean, what yeah. First off, in in in blockchain world and DAOs, like, it's very easy, I think, to to think of sort of DAOs or things that happen on the blockchain as purely things that are on chain or purely things that are in your smart contract, which I think is a huge mistake that I see in a lot of critics of blockchains or DAOs, is that they will want to say that, you know, all like DAOs are bad because it's just this sort of like, we're just putting, it's the, what do you call it, like algocracy or like it's, you know, everything is becoming deterministic and there's no room, there's no wiggle room for anything, and that everything becomes solidified. And in some instances, that is the case, and in some respects that is true, but also at the same time that sort of ignores what is actually happening within those organizations that don't fit exactly maybe what their, smart contracts imply, if that makes sense. So like that's I think there is this impression that everything is necessarily is just like financialized and everything is sort of based on just kind of like incentives. But from, like, actually being in a DAO, a lot of it relies on kind of off chain, trust and not just, you know, trust in in smart contracts.
Absolutely. And I think, to be fair, I think most people, have figured that out, by now, like, I think that, that, illusion of a completely, automated and trustless system is, is no longer the the mainstream view. But indeed, now that, now that this understanding has came about, it becomes more and more important to also understand. So what what are those tools by which we can, you know, craft and support those executional dynamics, without having to constantly institutionalize them into work on chain, with more, like, traditional types of institutional structures that still rely on the holes and rules. But really, like and also because this is somehow also part of the, this this is part of the, at least, the vision of quite a few DAOs, which the reason that they choose to that the community choose to deploy itself through a DAO is because they actually don't want those traditional holes and rills that are found in existing or traditional institutions. They actually are trying to have a much more, flexible, malleable thing in which it's more about participation. It's more it's not about, like, I'm I don't have a because I'm a I'm a DAO member. I'm just participating to the DAO. And and I can participate in any ways. And and and then it's the DAO that indeed needs to recognize, well, what's the value I've been providing in a in a in a very executional, settings? And so in some way, like, understanding this interplay between institution and execution can enable us to create those DAOs where the on chain governance structure is a very healthy scaffolding. But it is a scaffolding and nothing more. It is not the endpoint. The endpoint is always and inherently the the the vibrancy of the people that are that are contributing, that are interacting via this DAO. And you don't wanna codify everything on chain. Of course not. You you want to use the on chain infrastructure as as this scaffolding that is supporting, that is enabling specific type of interaction, which are inherently of chain interaction. Mhmm. Would that that's where the collective lives. Right? And maybe when we move into, like, hyper financialized, define infrastructure, we can afford having more on chain things because in those cases, the execution is less important. But when you move into those DAOs, which actually have a more, a more social and institutional, vision, then you actually want to maintain as much as possible of this executionality that is off chain. And and just find those anchor points that, that are the on chain governance in order to help this collective action happen. But the collective action is only using a small layer of on chain infrastructure in order to help them, in order to enable to do things that they couldn't do without this infrastructure. But in fact, the most minimal the goal is like, how do we create the minimal amount of on chain governance structure that will enable the maximum amount
of executional dynamics around the DAO. Yeah. Which is this is like I like how this is just like a completely different vision then also as well. The I guess the the first the first, sort of musings about DAOs were, of course, DACs and kind of thinking about using blockchains or smart contracts as a way to create the ultimately automated company. But sort of, I think what it shows is that a lot of these people who sort of thought like this, especially in the beginning, I think, they were maybe they were thinking too institutionally. And basically, I think that the reason why people are interested in DAOs are for kind of, like, different reasons than why the original creators sort of wanted to create them, perhaps.
Yeah. I don't know who is the original creator. I think it's more like that terminology has no, what I mean is that Ixaba? The, the terminology existed before the creation. And, in fact, now I think the vocabulary of DAO has completely changed meaning because Yeah. Now more and more people are referring to DAO as collectives independently of whether they use a blockchain or not. And So this, this this autonomous world has all of a sudden evolved into a very different meaning. I mean, I don't know what's the right way to see it. But to me, my understanding today is that DAOs are actually anything that is completely automated, you call it a smart contract. And, whenever you actually want, whenever it's a desirable feature to have human governance, then you call it a DAO.
Yeah. Yeah. Oh, buddy. You came with the magic. Yeah. Right. Yeah. Do you think that's because I think what also I see a lot of the time is people have been thinking about, smart contracts as purely a tool for creating new institutions, or like it's a new tool for the development of new kinds of institutions, but what I gather here, kind of what the executional theory brings is, maybe thinking about not that smart contracts only bring about creation of new institutions, but also thinking about how those smart contracts could bring about new, executional dynamics.
Yes. And the two are always, the two always comes with one another. Right? You cannot have an institution without the execution that comes with it and this versa. So there's there's no such thing as one institution and one institution. It's always you have a social group and then you can look at this social group via the lens of institutions. And then you see institutional dynamics. Or you look at the exact same social group via the lens of institutions, and then you will see the institutional dynamics. And so indeed, a blockchain enables new types of social organizations
Mhmm.
Which therefore implies, new typologies potentially of both institutional and institutional dynamics.
And so we've gone about the hour, and I wanted to ask just one last question because you are a legal scholar, and I wanted to hear your thoughts on this. But do you think code is law? Yeah. It's a can of worms. It's
yeah. This is contextual. It depends what you mean by law, first of all. I'm saying this because this sentence has been used and abused Yeah. In the context, to say different things. So if I say yes, it might be using a different context where I will say no. I do think the original meaning of Lorenz Classic that that used this this, expression is not that code is law. Is that I mean, inside the world, but the meaning was that code can be used to, fulfill similar functions as law. Mhmm. Right? Which is regulating behavior. Uh-huh. So in that case, of course, code is a very powerful tool to regulate behaviors. It's a really powerful tool to create rules and holes, which is what law is also a very powerful tool for. Although they do have very different dynamics, and that's where the analogy does no longer stand. Code is not like law. It's it has the same function or it can be used as affecting the same the same objectives. But code is not law because the the nature of those two things is completely different. Yeah. Code creates ex ante ex ante constraints on what you can or cannot do. Law just creates institution on rules, which then you have to choose whether you go you're gonna respect or not. And then and then some judicial system will choose whether or not to sanction you. So those are very different things. And saying that code is law without acknowledging the difference in nature of those two types of fuels, I think is also very problematic. Mhmm. Right? You cannot just assimilate them. So code code has the same Code can be used to have similar functionalities as low, but it does not operate according to the same prerogative.
And therefore in that sense, it is not low. No. I think it's it's it's really interesting to see how that word has been kind of used and abused in particular instances and how, I think it's it's definitely shifted since the beginning. I remember the word code is the phrase code is law was used quite a lot in the beginning, especially in regards to like, the DAO hack and things like this. You had the one camp that said code is law and therefore you should respect the fact that this guy used, didn't break any of the law or didn't break any of the code in order to steal or take a bunch of cryptocurrency. But then, despite that fact, still people chose to revert the Ethereum blockchain in order to reverse kind of what, what occurred at that moment. And to me that was kind of like a show of that in some respects code can be has a lot of the same properties, like you said, but ultimately it is humans that kind of like direct these systems and ultimately choose whether or not, or choose how to respond to maybe instances where code is used in a way that is unintended. And I think one of the examples that I've heard you give before was kind of, thinking of, like, MEV as being a type of, I guess you used that as an example of exclosure the other day.
Yeah. Yeah. It's a it's a place in which you're not violating any rules. In fact, you're talking the language of the protocol, in order to achieve something that actually was not envisioned Mhmm. By the protocol. And yet the protocol cannot do anything against you. And so it's a form of exclosure, to actually acquire additional species of freedom in a way that some people consider to be not necessarily legitimate. Mhmm. Some people consider to be completely legitimate, just like, you know, is copy left illegitimate? Of course not. It's just it's just a system that use copyright in order to escape from the constraint of copyright. And so in some way, you can see MEV as a as a system that actually relies on the rules of the protocol in order to actually achieve things that somehow the protocol had not envisioned.
So do you think that then, like, the the moments in which people hackers maybe take, or, like, steal cryptocurrency out of smart contracts through DeFi, through or through the protocol, those are kind of instances of negative exclosure?
I mean, that's why I wouldn't call it an exclosure because this is just like I mean, it's just like you find a you're you're not really creating a fence. You're just Mhmm. You're just finding a hole in the fence.
Mhmm. Right? But in the case of MEV, because it's sort of continuously there.
Because MEV is actually becoming is is becoming its own domain. So it's like, it has it has created its own exposed domain in which people that want to engage in particular practices enter into the MEV domain.
Well, thank you so much for coming on and explaining executional theory to us. I know it's something that's, for me, we've been talking about it a little bit the past couple of days, and I still have to, you know, spend some time to maybe wrap my head around it completely. But, yeah, thanks a lot. And maybe just to finish off, if you want to share with people where they can, keep up with you and your work.
Yeah. So there is, like, the blockchaingov, blockchaingov.eu, which is the where we try to gather all the work we're doing as part of my, European research project. There is a koala.koala.global, which is, more of, like, the the work I'm doing, as part of this kind of, like, international network, of, of researcher and, and lawyers mostly, trying to trying to identify how we can bridge DAOs and more generally blockchain based systems with the with the legal system. And then just more generally, you can just Google my name, and, you might find a lot of, more or less interesting pieces of writing. Yes. Definitely.
People will find it. Alright. Thanks so much.
Good. Thanks a lot.