Setting Standards for Altering and Undoing Smart Contracts
Often, we wish to let parties alter or undo a contract that has been made. Toward this end, contract law has developed a set of traditional tools for altering and undoing contracts. Unfortunately, these tools often fail when applied to smart contracts. It
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Cornell Tech, New York, USA [email protected] Cornell Tech (Jacobs Institute), New York, USA [email protected]
Abstract. Often, we wish to let parties alter or undo a contract that has been made. Toward this end, contract law has developed a set of traditional tools for altering and undoing contracts. Unfortunately, these tools often fail when applied to smart contracts. It is therefore necessary to define a new set of standards for the altering and undoing of smart contracts. These standards might ensure that the tools we use to alter and undo smart contracts achieve their original (contract law) goals when applied to this new technology. This paper develops such a set of standards and, then, to prove their worth as a framework, applies to them to an existing smart contract platform (Ethereum). Keywords: Smart contracts
Contract law Blockchain Ethereum
1 Introduction If a covenant be made wherein neither of the parties perform presently, but trust one another, in the condition of mere nature … upon any reasonable suspicion, it is void: but if there be a common power set over them both, with right and force sufficient to compel performance, it is not void. — Thomas Hobbes, Leviathan (1651) The purpose of contracts is to solve a game-theoretic problem: it is to our mutual benefit to cooperate in some way. But if we cooperate, then one of us can do even better by defecting. — sirclueless [psued.], comment on What is Ethereum?, Hacker News (2015)
Tyrell Corporation, manufacturer of replicant humans in Philip K. Dick’s Do Androids Dream of Electric Sheep?, famously touted their wares as “more human than human”. Riffing on that motto, we might say that smart contracts are able to beat analog contracts at their own game and are therefore “more contract than contract”. This is because the “fundamental function of contract law (and recognized as such at least since Hobbes’s day) is to deter people from behaving opportunistically toward their contracting parties” [1]. And that is something a smart contract — at least, in its paradigmatic form — does better than any analog contract ever could. In fact, a
© Springer International Publishing Switzerland 2016 J.J. Alferes et al. (Eds.): RuleML 2016, LNCS 9718, pp. 151–166, 2016. DOI: 10.1007/978-3-319-42019-6_10
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B. Marino and A. Juels
well-designed smart contract drives the probability of opportunistic breach toward zero as such behavior becomes impossible or, at least, “expensive (if desired, sometimes prohibitively so) for the breacher” [2]. Mind you, this feat is not possible for a contract that is merely “a set of promises, specified in digital form” [2] — i.e., a digital contract. Breaching a contract recorded in binary is no harder than breaching one recorded in ink. What lets smart contracts rise above their brethren is that they additionally include “protocols within which the parties perform on … promises” [2]. These protocols beget smart contracts’ hallmark ability to “automatically enforce” [2] themselves, a quality that, in turn, eliminates the need
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