Protecting and enforcing intellectual property ( IP ) rights, particularly copyrights, is a discussion which is beginning in the DeFi industry. Some members of the community support the exercise of copyrights to protect the economic incentives for projects to continue innovating; while other members find that logic antithetical to the open-source culture of DeFi, and the broader blockchain industry.
Tracer DAO is committed to the growth of DeFi. It is also committed to supporting the industry as a whole by keeping its innovations open-sourced. Tracer DAO currently uses the The GNU General Public License v3.0 ( GPLv3 ) license for its already-deployed code.
Historically, DeFi projects have opted to open-source the IP in their works via the use of open-source copyright licenses, such as The MIT License, GPLv3 or similar. Generally speaking, these licenses allow third parties to copy, paste and commercialise code developed by software developers for a certain DAO, provided that the third party complies with some peripheral obligations; for example, inclusion of the original license, attribution, keeping the code open-sourced, waiver of patent protections, etc (depending on the license).
Arguments for open-source licensing
Open-source licensing in DeFi allows third party teams to fork and re-use code, leading to:
- heightened industry competition;
- expedited development processes;
- more accessible (ie, less expensive) start-up phases;
- teams focussing on complex and unsolved problems, rather than solved ones; and
- regular and iterative innovation.
Considering these outcomes, it is clear that open-source licensing has played a key role in the rapid growth of DeFi seen in recent years.
Uniswap Labs launched its Uniswap v3 contracts alongside a Business Source License ( BSL ). The BSL prohibits reproduction and commercialisation of associated code for a set timeframe. Uniswap Labs chose a timeframe of approximately 2 years for Uniswap v3. The rationale for this time-delay is to enable entities investing in software development to avoid their code being immediately forked and deployed by competitors.
Arguably, Uniswap Labs upholds the values of an open-source community by making its code freely readable. However, some open-source maxis did not appreciate Uniswap Labs using copyright law to periodically prevent other teams from competing against and building upon Uniswap v3.
The copyright license used by Curve DAO prevents the reproduction and commercialisation of its code. Unlike the BSL used by Uniswap Labs, Curve DAO’s license does not limit the timeframe of this prohibition.
Despite that, numerous third party projects have forked Curve DAO’s code for their own competitive projects. As a result, the legal enforcement of Curve DAO’s IP rights is currently being considered in this Curve Improvement Proposal. Interestingly, at the time of writing, 68% of Curve DAO members are in favour of the IP rights being enforced.
Arguments against open-source licensing
Open-source licensing reduces the economic incentives for software development entities to invest in creating innovative code. In DeFi, many entities are spending years and millions of dollars to create code that is immediately freely usable by free-riders who might then allocate resources to business development, marketing or further development.
Non-open-source licenses in DeFi (like Curve DAO’s) permit third parties to learn from and audit associated code, while preventing third parties from reproducing identical or similar material in competition. Arguably, time-delayed open-source licenses (like Uniswap Labs’) provide a middle ground: allowing for code to be freely used only after its creator has had a chance to commercialise it.
What do you think?
We want to hear the Tracer community’s thoughts on the copyright licensing approach for future Tracer DAO contracts, particularly Perpetual Pools and Perpetual Swaps. What other licenses have you seen used? What form of license do you believe is most appropriate?