Think of a patent troll company. Then think of the crypto version.
A company that exists to profit from suing DAOs. The company uses its funds to buy ownership tokens in many defi daos or protocols.
The company waits for a governance dispute, a bug, or a disagreement with the way the DAO is being managed. The Company researches vulnerable DAOs, where members are exposed to liability, and wealthy protocols that have so called large treasuries, which can mean the governance token itself, like uniswap.
Many people call patent companies that sue other companies for violating a patent that they buy trolls because their purpose is just to sue other companies. But there is some value in that, and if it is legal to have patents then it is the patent holder’s right to extract rents from others who use it.
If you dislike patent trolls then fix the source- let’s pass a law getting rid of patents, then we won’t have patent lawsuits anymore. But, that is not going to happen.
Patent trolls help clarify what the patent really is and what it isn’t by bringing these cases to court. One might argue that it is wasteful to spend money on this, but wasteful to who? The courts are a public service of sorts- they are made available to everyone. It is certainly not wasteful to patent troll companies. It is harmful for companies that get sued over a patent, but they can be sued for practically anything in this country, so focusing on patents doesn’t seem warranted.
What is the value of a patent? How does someone actually know until they see what they can get for it? Meaning they try to press their rights or rents they are owed by anyone found to be using their patent. Perhaps you argue you can’t know the value of a patent until bringing court cases. A patent by itself doesn’t produce income until you take an entity to court and have a judgment made in it’s favor. Can crypto by itself extract rents like this? Well not exactly like this. But you can extract rents just from owning an ownership token by suing it’s members. But how? Ownership token’s give certain rights by nature of having ownership. It is in the name. Or by giving voting rights, etc. You make money by pressing these rights in a court of law. By arguing that your rights were violated by other managing members that have more liability than you.
Crypto companies have less of a moral defense than the targets of patent trolls. Crypto people tend to think hackers should be able to keep their loot. And I tend to agree for the very fact that the idea that blockchain is ‘immutable’ and you just have to accept any transaction to the ledger since there are no ‘gatekeepers.’ You live by that game, you die by that game, meaning that code is law. Also law is law, and anything that can be done with law will be done and anything if fair game.
This might already be happening, and companies are getting private settlements. This may not be happening yet, because there is more money to be made not attacking the industry.
This kind of company is inevitable.
It is inevitable because the law isn’t clear on DAOs and many DAOs are honeypots that have massive legal vulnerabilities.
