We study a scenario where an adjudication task (e.g., the resolution of a binary dispute) is outsourced to a set of agents who are appointed as jurors. This scenario is particularly relevant in a Web3 environment, where no verification of the adjudication outcome is possible, and the appointed agents are, in principle, indifferent to the final verdict. We consider simple adjudication mechanisms that use (1) majority voting to decide the final verdict and (2) a payment function to reward the agents with the majority vote and possibly punish the ones in the minority. Agents interact with such a mechanism strategically: they exert some effort to understand how to properly judge the dispute and cast a yes/no vote that depends on this understanding and on information they have about the rest of the votes. Eventually, they vote so that their utility (i.e., their payment from the mechanism minus the cost due to their effort) is maximized. Under reasonable assumptions about how an agent's effort is related to her understanding of the dispute, we show that appropriate payment functions can be used to recover the correct adjudication outcome with high probability. Our findings follow from a detailed analysis of the induced strategic game and make use of both theoretical arguments and simulation experiments.
Mikkel Milo, Eske Hoy Nielsen, Danil Annenkov, Bas Spitters
We provide three detailed case studies of vulnerabilities in smart contracts, and show how property-based testing would have found them: 1. the Dexter1 token exchange; 2. the iToken; 3. the ICO of Brave's BAT token. The last example is, in fact, new, and was missed in the auditing process. We have implemented this testing in ConCert, a general executable model/specification of smart contract execution in the Coq proof assistant. ConCert contracts can be used to generate verified smart contracts in Tezos' LIGO and Concordium's rust language. We thus show the effectiveness of combining formal verification and property-based testing of smart contracts.
Decentralized Finance (DeFi) is an emerging financial service model based on blockchain technology. DeFi composability denotes the ability for different DeFi services to interact with one another resulting in new forms of financial services. The DeFi ecosystem is largely based on ERC-20 tokens that can represent the value of an asset. Collateralized assets in DeFi composability are locked and additional profit cannot be generated. In this paper, we propose a method to generate profit from locked assets by using ERC-721 Non-Fungible Tokens (NFTs) and perpetual contracts. NFT represents the rights to a certain asset. A perpetual contract is a futures contract that does not have an expiration date. We propose perpetual contract NFT, a new form of NFT that can be used as collateral, which exploits perpetual futures contracts in the cryptocurrency derivatives market. Collateral needs to be provided to back the value of a perpetual contract. If the perpetual contract is minted as NFT, the resulting NFT represents the rights to the perpetual contract and its collateral. Therefore, the perpetual contact NFT itself can be used as collateral for DeFi composability. A proof-of-concept smart contract and a web application for perpetual contract NFT are provided to demonstrate its functionality. To validate the profitability of the perpetual contract NFT using a real-world scenario, we experiment with the position NFT of Uniswap v3 decentralized exchange. The position NFT is a form of perpetual contract NFT. Specifically, we present validation with three types of pools: stablecoins, stablecoin/wrapped tokens pair, and wrapped tokens.
This article provides an overview of the non-fungible tokens (NFTs) as an investment class. The first part focuses on the NFT infrastructure including the NFT primary and secondary markets, different types of NFT exchanges, NFT aggregators, NFT borrowing and landing, NFT staking, and finally NFT fundraising. The second part investigates the leading blue-chip NFT collections and their performance in the short- and long-term, both during the bull and bear markets. Analyzing close to two million NFT transactions, we find that profile picture (PFP) NFTs dominate the NFT market and yield exceptionally high returns both on the raw and market-adjusted basis. For example, NFTs from the collection Bored Ape Yacht Club (BAYC) deliver a buy-and-hold return of close to 2,000%. Furthermore, NFTs from other categories (art, gaming, metaverse) do not perform as well as PFPs, however, they outperform the cryptocurrency market by roughly 100%.
In this paper, we analyze the formal and material requirements of the jurisdictional agreements made in the field of smart contracts and Blockchain technology. Specifically, the study focuses on the formal aspects of this type of agreement, detailing under what circumstances an express submission agreement between subjects that use smart contracts (to self-execute one or more contractual clauses) will be valid. The different formats in which these types of agreements can appear are also explained, considering the new platforms and computer applications that have appeared in recent years. The theoretical constructions are accompanied by examples and graphics that are intended to illustrate, as far as possible, the practical aspect of smart contracts and jurisdictional agreements. Regarding the systematics of this paper, without prejudice to the introductory sections and the conclusion, it is divided into several sections according to the different types of smart contracts according to the form they take (or, rather, according to the form of the underlying contract that usually accompanies the smart contract), which has allowed a more rigorous study of the jurisdiction agreements carried out in this area. Finally, the study focuses especially on Regulation No. 1215/2015 due to its preeminent application in the Spanish Private International Law.
Ángel Alberto Varón Quimbayo, Yenny Marcela Mina Hinestroza
Esta investigación pretende presentar la forma como blockchain asocia el desarrollo de Contrato Inteligentes (Smart Contracts), a través de una nueva plataforma que relaciona aspectos éticos, legales, sociológicos y filosóficos que se consideran latentes. Los contratos inteligentes plantean un nuevo protocolo informático el cual garantiza el cumplimiento de cláusulas de un contrato automáticamente, generando una serie de derechos y obligaciones entre las partes intervinientes, actualmente existen varias plataformas para crear y gestionar este tipo de contratos, sin embargo la más recomendada es Ethereum que fue creada específicamente para Smart Contracts. Su objetivo enfoca en que se pueda utilizar en un gran número de servicios en sectores como servicios judiciales, salud, banca, inmobiliario, bolsa de valores entre otros, con la posibilidad de que surjan investigaciones para mejorar la forma cómo se ejecutan los contratos actualmente. en este artículo se describe qué es un contrato inteligente y como se realiza, Qué hace que un contrato sea inteligente, entre otros conceptos que nos ayudaran a entender a mayor profundidad teniendo encueta que el objetivo principal de los Smart Contracts, es mejorar el proceso y la ejecución de los contratos tradicionales, haciéndolos más seguros y económicos, para entender el funcionamiento de los contratos inteligentes es de suma importancia Identificar y analizar el funcionamiento y uso del blockchain ya que es una parte fundamental se basa en la infraestructura Ethereum para hacer posible la ejecución de contratos inteligentes, y como está a aportado y beneficiado la tecnología actualmente. En esta investigación se realizó una búsqueda de artículos científicos, donde se hizo una lectura crítica y analítica para poder emitir juicios de valor y poder construir el artículo, donde se obtuvo como resultado el análisis y la implementación del Smart Contract y cómo estos contribuyen a la promoción de los contratos en general y por último concluimos que los contratos inteligentes se expresan en códigos y que se ejecutan de forma automática, eliminando la necesidad de que existan intermediarios, ofreciendo seguridad y reducción de costes.
In recent years, the digital economy has experienced a growing number of transactions. Traditional dispute resolution methods such as court and international arbitration are ineffective for handling a large volume of small value claims across national borders. Decentralized justice is a new approach to online dispute resolution that combines blockchain, crowdsourcing and game theory in order to produce resolution systems which are radically more efficient than existing methods. This article offers a review of the decentralized justice industry and of the key players participating in it. It presents a number of key dimensions of the industry and reviews the mechanism design choices made by these different platforms. Finally, it discusses a growth hypothesis for the industry and how it may grow in the future.
O escopo central do presente estudo consiste em investigar algumas perspectivas (e os correlatos riscos e dificuldades) de incorporação da inteligência artificial e dos smart contracts para a regulação convencional do risco contratual. Tal empreitada parte da investigação das perspectivas de a gestão do risco contratual por intermédio da inteligência artificial ocorrer, entre outras manifestações, ora pela sua utilização para a delimitação inicial de elementos das prestações a cargo das partes, ora para a revisão das suas prestações diante de superveniências contratuais. Analisam-se, por fim, algumas repercussões dos smart contracts sobre a execução contratual e, em especial, sobre a atuação dos remédios ao inadimplemento. Para tanto, o presente estudo adota o método lógico-dedutivo, a partir do exame bibliográfico da doutrina nacional e, a título ilustrativo, da doutrina estrangeira.
Are the technologies advanced enough to replace lawyers and the judiciary in the negotiation and enforcement process? Is it possible for a program code to be a contract that binds the parties named in it? What is a smart contract and what challenges does it pose to the law? The present study aims to clarify and show the advantages and disadvantages of using smart contracts in civil law.
Decisions concerning proof of facts in criminal law must be rational because of what is at stake, but the decision-making process must also be cognitively feasible because of cognitive limitations, and it must obey the relevant legal-procedural constraints. In this topic three approaches to rational reasoning about evidence in criminal law are compared in light of these demands: arguments, probabilities, and scenarios. This is done in six case studies in which different authors analyze a manslaughter case from different theoretical perspectives, plus four commentaries on these case studies. The aim of this topic is to obtain more insight into how the different approaches can be applied in a legal context. This will advance the discussion on rational reasoning about evidence in law and will contribute more widely to cognitive science on a number of topics, including the value of probabilistic accounts of cognition and the problem of dealing with cognitive biases in reasoning under uncertainty in practical contexts.
Amy J. Schmitz describes the development of contracts and the challenges in resolving disputes in this arena. She explains the need for sound dispute system design complete with an arbitration provision built into smart contracts. She is the Elwood L. Thomas Missouri Endowed Professor at the University of Missouri School of Law.
El desarrollo de tecnologías blockchain ha permitido la creación de nuevas formas de ejecución automática de obligaciones contractuales mediante los mal denominados “contratos inteligentes” (smart contracts). Las características propias de la blockchain, esto es, su lenguaje de código, la desintermediación, autonomía e inmutabilidad, crean nuevas problemáticas asociadas a la ejecución contractual mediante contratos inteligentes; y al mismo tiempo implican retos para los actores involucrados, así como para los reguladores. El presente artículo tiene como objeto servir de introducción al análisis de las problemáticas asociadas a la tecnología blockchain y a los contratos inteligentes.
ابزارهای مبادلاتی نوین در عصر حاضر نقشی غیرقابل انکار در توسعه تجارت الکترونیکی بر عهده دارند. یکی از این ابزارها قراردادهای هوشمند هستند که در مقایسه با دیگر انواع قراردادهای الکترونیکی دارای خصوصیاتی از جمله سرعت و امنیت بالا هزینه کم در تشکیل قرارداد میباشند. پژوهش حاضر به روش اسنادی به دنبال پاسخگویی به این سؤال است که سیاستگذاری قواعد عمومی تشکیل قراردادها در مرحله انعقاد قراردادهای هوشمند با چه چالشهایی مواجه است؟ بهطور کلی مهمترین چالشهای موجود مطابقت قواعد حاکم بر این قراردادها با هنجارهای موجود در جامعه، تعارض قوانین داخلی کشورها با یکدیگر و مقررات بینالمللی، اعتبارسنجی این قراردادها و ابزارهای انعقاد آنها از جمله ارزهای مجازی، سازوکار عملکرد هوش مصنوعی و ماهیت متمرکز پایگاههای اطلاعاتی و هوش مصنوعی میباشد. رفع چالشهای مذکور نیازمند برخی سیاستگذاریهای تقنینی و اجرایی از جمله تصویب قوانین کارآمد در جهت اعتبارسنجی قراردادهای هوشمند و ارزهای مجازی، اصلاح قوانین متعارض موجود، پیشبینی تشریفات تخصیص مجوز تملک ارزهای مجازی و بهرهمندی از امضائات دیجیتالی، آگاهی بخشی به مردم و تعیین نهادهای ناظر خواهد بود.
Jørgen Svennevik Notland, Jakob Svennevik Notland, Donn Morrison
Corruption is a major global financial problem with billions of dollars rendered lost or unaccountable annually. Corruption through contract fraud is often conducted by withholding and/or altering financial information. When such scandals are investigated by authorities, financial and legal documents are usually altered to conceal the paper trail. Smart contracts have emerged in recent years and appear promising for applications such as legal contracts where transparency is critical and of public interest. Transparency and auditability are inherent because smart contracts execute operations on the blockchain, a distributed public ledger. In this paper, we propose the Minimum Hybrid Contract (MHC), with the aim of introducing 1) auditability, 2) transparency, and 3) immutability to the contract's financial transactions. The MHC comprises an online smart contract and an offline traditional legal contract. where the two are immutably linked. Secure peer-to-peer financial transactions, transparency, and cost accounting are automated by the smart contract, and legal issues or disputes are carried out by civil courts. The reliance on established legal processes facilitates an appropriate adoption of smart contracts in traditional contracts.
The principles of contract law have shown continued resilience in light of constant technological developments, including the mainstream adoption of the Internet. The ability to absorb technological change may be attributable to the broad manner of their formulation. For example, the foundational proposition that ‘legal intention can be expressed in any manner’ has enabled the nearly seamless acceptance of online contracting. If intention can be manifested by a nod or a handshake, it can also take the form of a click or a swipe. Similarly, the requirement of consideration can be met not only by peppercorns or money, but also by one’s permission to share personal information in return for the provision of online content and services. While the Internet hardly creates academic excitement anymore, a number of internet- related technologies may pose a challenge to the principles of contract law and may, finally, test their flexibility. Purportedly, blockchain-based smart contracts, which are often defined as the encoding of legal terms in self-executing computer code, enable not only the automation of performance but also the delegation of enforcement to immutable code. The theory is that if both performance and enforcement are entrusted to impartial machines, breach becomes impossible. Smart contracts are also premised on the ability to translate contractual obligations into algorithms – a process aimed at the elimination of ambiguity and enhancement of legal certainty. Abstracting from technological minutiae, we must inquire whether, or to what extent, such ‘operations’ are desirable or legally permissible. The challenges of automation are further aggravated by advancements in artificial intelligence. The accompanying problems exceed those inherent in the possibility of inadvertent orders, unforeseen transactions or computer errors. We are forced to inquire whether such technological phenomena as algorithmic trading, machine learning or autonomous agents affect the existence of intention and, on a broader level, raise problems concerning the validity and enforceability of any resulting contract – if only due to the unprecedented transactional imbalances introduced by them. An additional set of difficulties concerns ubiquitous computing, loosely defined as the user-facing technologies involving the Internet-of-Things (‘IoT’). Smart objects and self-checkout terminals blur the division between online and offline environments and force a revision of our understanding of ‘online contracting.’ When the Internet spills over our computer screens and when we encounter requests for consent and contractual terms in contexts that have traditionally been non-commercial, it becomes difficult to rely on such basic principles as the objective theory of contract or on the presumption that in commercial contexts the parties intend to be legally bound. The point is not to question the continued applicability of such principles or presumptions but to illustrate the difficulty in their application. In sum, my chapter explores the legal implications of the said technologies and, while abstaining from unnecessary futurism, presents a realistic picture of their legal relevance. Particular attention is devoted to the overreaching question whether the principles of contract law, in their traditional formulation, are capable of accommodating (or withstanding ?) technological change. While it is difficult to predict technological trajectories and future legal developments, it is possible to extrapolate from existing trends and anticipate certain theoretical bottlenecks created by technological change.
One of the major current topics and one of the major innovations in the contract law, as well as in insurance law is the invention of the smart contracts. The author is basing her research on use of smart contract in insurance law and what are the main legal issues arising from the use of smart contract. In her paper, the author points out that the implementation of the smart contract in insurance law will greatly affect all participants in insurance contract and a significant step forward in improving the level of protection of insurance users (consumers), although it takes time and readiness of European and domestic legislators to create a special regulatory framework so that smart contract can reach its potential.