MetaLeX: next-gen of cybernetic orgs

DAOs today lack accountability and control mechanisms over their resources, entities, and contributors. This limits real-world businesses from accessing the best of blockchain networks - e.g. censorship-resistant, autonomous code - and also limits the scope and efficacy of today’s working DAOs.

We are excited to announce our investment in MetaLeX, a company which opens the opportunity of DAOs to the world by giving DAOs new, granular control over themselves. 

MetaLeX heightens DAO efficiency and accountability with BORGs - next-gen cybernetic organizations which scale socially, are agile, legally sound and, above all, accountable. With BORGs, traditional businesses can effectively leverage blockchain networks and existing DAOs gain alignment with contributors, foundations, and backers via bespoke legal structures and next-gen code (escrows, liens, etc). A few exciting new powers for DAOs include:

1. Automatic, auditable, recoverable vesting for backers and DAO contributors alike

2. Composable escrow, identity, reputation, and liens contracts 

3. Board-like structures for core contributor alignment and token holder assurances 

4. Recoverable resources for subcomponent DAOs plus limited liability for contributors 

With this blend, contributors gain protections and clarity, unlocking innovation, while DAOs themselves gain data and more traditional control over their agents and resources. In our view, this transition from the current “don’t be evil” design to a stable “can’t be evil” structure unlocks enormous innovation, serving as bedrock infrastructure for digital replacements of today’s analog banking, legal, and identity systems. 

The Edges of DAOs Today

Decades ago - before Ethereum or even Bitcoin  - computer scientist and legal scholar Nick Szabo proposed the idea of smart contracts. Described as the “basic building block for a … digital market economy”, smart contracts would be defined by mathematics and cryptography instead of human law. 

Contracts - whether defined by social norms, nation-states, or something else - help markets form and function. Historically, contracts are locally bound due to challenges in amplifying state coercion or social and economic feedback loops globally. Critically, both forms remain reliant on capturable intermediaries. 

Blockchains empower contracts to form outside the scope of either norms or nation-based law. These market-based systems can facilitate open, immutable digital commerce without intermediaries. 

The first well-known form of digital commerce occurred with The DAO in 2016. This vehicle (in)famously raised capital by selling “shares” before suffering the canonical failure model of all DAOs - bankruptcy via hack (e.g., code functioned as written, but not as intended). Social law - meaning Ethereum’s community - intervened by rolling back state to ensure stakeholders remained whole. 

Importantly, this sort of rollback isn’t feasible today and only worked in 2016 as a last-ditch failure to protect Ethereum. Since then, DAOs have evolved substantially, taking roles as distinct as curating sports groups, matching risk, or governing public goods.

DAOs today are bound by their protocols and exposed to immeasurable surface area of risk with little recourse from failure modes. Naturally, DAOs need a precise focus to execute, be secure, scale, and limit insider conflicts. Of course, their global by default nature makes mixing code with real-world law hard to nearly impossible. Most law remains ill-suited for DAOs and serves to mostly impede the goals of autonomous systems. With the right design physical laws strike a balance with coded ones, yielding more functional systems. Ostensibly, these systems can form subsystems based on digitally curated identity and reputation, digitally specified agreements and credentials, and digitally ruled hierarchies and courts, creating a new cybernetic form of law. Ostensibly, this should push the edges of DAOs today substantially forward.

Enter MetaLeX OS

As the scope of various DAOs grow and blockchains become embedded into more of the internet and traditional technology, welding autonomous systems to exogenous human ones well is critical. Into this growing space, MetaLeX OS - a composable, coded law system designed with correctly leveraging traditional law in mind - offers a solution capable of both scaling current DAOs and powering new ones. 

MetaLeX bridges the gap between the legal and the technical with the creation of smart autonomous entities - BORGs - wholly or partially (enjoying check and balances) controlled by DAOs. BORGs granularly define contracts, relationships, agents, and more, enabling today’s DAOs to leverage traditional law from specific jurisdictions efficiently. The mix of deterministic code and human discretion and flexibility helps eliminate the many inefficiencies, open questions, and issues still plaguing today’s DAOs.

MetaLeX’s BORGs begin with a few fundamental problems:

1. DAO-adjacent BORGs: address disconnects between legal agreements and on-chain execution, providing a way to enforce real-world agreements through code. This will minimize principal-agent problems by defining and limiting stakeholder action. First-use cases include wrapping a multisig in an LLC (limiting risk while ensuring signers act in accordance with a code of conduct) or limiting liability for DAO contributors with bespoke legal structures

2. DAO Tech: besides offering better incentive structures for DAOs to thrive, advanced DAO tech creates more granular control for any action a DAO would conceivably want to undertake. This includes embedding investor protections or compliance on-chain and granular controls on issuers of tokenized securities.

3. Autonomous Business Logic Tech: MetaLeX creates composable deal tech, similar to how DeFi enables composable financial bricks. Codified logic embeds typically expensive business logistics on-chain, streamlining commerce with contracts, liens, escrows, and more. Needless to say, heightened efficiency should help increase the number of DAOs substantially.

4. Credibly Neutral Law: MetaLeX aims to reduce intermediation and trust in traditional legal systems by leveraging the immutability and transparency of blockchain technology and novel adjudication frameworks as an alternative and augmentor to state law.

In short, MetaLeX introduces BORGs as a method of mixing legally recognized entities with smart contracts for governance and operations. This should have unbounded effects by making DAOs better-suited as purveyors of commerce. Long-term, BORGs will seed a separation of law from states and replace today’s biased law with a new digitally defined one built around neutral systems of reputation, identity, adjudication, and money. 

Since this law will be enforced by immutable code on open networks, competition between differing legal frameworks will play out, giving users extreme sovereignty. Importantly, scaling of this law via effective use of specific state law will induce change in local and global regimes in favor of new cybernetic law. 

MetaLeX’s MVP - which consists of a comprehensive BORG, vesting, and escrow smart contract protocol, and a web app initially geared toward DAO-adjacent GrantsBORGs and SecurityBORGs - will be live in July with a few early collaborators. 

The Crew Behind MetaLeX

Much like smart contracts, is the brainchild of layers and coders. Its team includes CEO Gabriel Shapiro, one of the brightest minds in crypto law, international tax expert and crypto lawyer Alex Golubitsky, and lead developer PrePop. The rest of MetaLeX is filled out by an A1 roster of legal scholars and hacker, but we are excited to say they are hiring - if you are interested in collaborating on the frontier of cybernetic law we’d love to introduce you to collaborate. 

Smarter Smart Contracting 

The nexus of contracts which define firms has changed markedly since its origin in the 1600s Netherlands. Previously, law backstopped by states or social norms acted as the main purveyor of contracts. Today, smart contracts, agents, oracles, and networks act to power new, open ones. 

By mixing deterministic contracts with flexible, historic, and normative law, advanced cybernetic law can induce a separation of law from state, mirroring Bitcoin’s separation of money from state.

With MetaLeX powering them, today’s DAOs become a flexible yet immutable entity capable of providing a neutral and scalable alternative to today’s gameable analog systems. We couldn’t be more excited to partner with Gab and the MetaLeX team as they mix human and machine and machine in unique blends and help define the transition to a more efficient and neutral economy.