Legal Budget Allocation: DMCA and Abuse Handling

Posting this in accordance with the format specified in Disinguishing Proposal Types.

Budget Amount: Max 10%/2,000,000 SC per month, from legal budget block subsidy (further details below)
Timeline: Indefinitely, as long as the service is utilized and provides value
Other terms same as legal budget

The Budget Category: Legal, as of this writing, proposes a 120M SC kickoff amount and 20M SC/month ongoing to stockpile up to 1.82B SC for future potential legal challenges to the Sia and Skynet networks. The logic is that this amount will hopefully and largely go untouched, and act as more of a “war chest” type deterrent to any legal actions against Sia or hosts for events like illegal or copyrighted content being uploaded to the network.

Right now the legality behind host liability for what hosts store isn’t 100% clear, and it seems it is anticipated that someday this may become an issue in the courts. Overall, I agree that a proactive strategy here is good, and the fact that defense of hosts is being considered is also forward-looking.

However, I believe that with Skynet, the potential liability of hosts has increased significantly due to both the ability to make data on Sia public via Skynet, and the fact that hosts now hold full unencrypted files for Skynet. Outside of stockpiling funds to fight issues when they inevitably arrive, I believe another step can be taken which I have previously proposed to develop as a private service, but which I think could be better covered by the legal budget instead as a community and Foundation endeavor.

I have previously announced plans to build a DMCA service for Skynet which would handle DMCA and other legal takedown requests for content on Sia and Skynet. This service would offload the burden which each portal operator currently faces in needing to respond to DMCA and other legal requests, which is essentially having to police the entire Sia and Skynet network because each portal is an equal and independent gateway to all of Sia and Skynet.

This service would centralize abuse reporting for all portals, and create a central blacklist which each portal could pull into their local blacklist. Each portal would also be able to customize their blacklist within this service through a central dashboard, adding or removing items to the list and suggesting that other portals add items as well. A number of sub-lists would exist, such as verified DMCA complaints, complaints from known government agencies, and community lists, similar to spam filter lists which can be used in spam blocking service for email. Only skylink hashes would be published on the blacklists so as to avoid exposing the skylink content and potentially spreading objectionable or illegal material through viewing of the blacklist. Each entry on the blacklist would be categorized with a general reason why the content was objectionable, and who reported it or added it to the blacklist (i.e. Material supporting terrorism - blacklisted by United States NSA).

This service would serve to protect the Sia and Skynet ecosystem by providing a standard and central means to handle the most common legal challenges and comply with regulations around abuse and DMCA reporting. While we’d like to think that Sia and Skynet are very decentralized and content should never be able to be taken down, the fact of the matter is that most public portals will need to respond to takedown requests in order to continue to operate legally. Essentially, this DMCA service would resolve 99% of potential issues before they became an actual legal threat to any portal or host, and would protect all portal operators simultaneously and equally. This service could eventually extend into protecting hosts if they were ever individually targeted with complaints.

With a legal budget allocated to defending hosts and handling legality issues, it would make sense for this service to be subsidized by the Foundation, as it would not be run for profit and will require considerable development hours and ongoing maintenance in responding to takedown notices, interacting with reporters, and managing blacklists. I would intend to develop and operate the platform as a full-time endeavor, under a LLC in order to help protect myself considering the nature of what the service will deal with. The platform would be centralized similar to current community sites, but the source could be made available to the Foundation or open-sourced if it was deemed to be of the most benefit. My reputation in developing and running a major Sia community site for the last several years, my computer science/software development background, and my familiarity with Sia, DMCA and legal challenges surrounding copyrighted and other content make me qualified to undertake such a project.

The response to my initial announcement of my intention to build such a service was overwhelmingly positive, and the majority of public portals operating now agreed that they would sign on to it. For this reason, I’m putting it forward as a proposal to fall under Foundation funding.

A max 2M SC/month budget would cover a development and management position for the service, which is currently at below-market rates for full-time development and managerial work (approximately $5,000/month at a SC average price of about $0.025 over the past year). While this currently consists of 10% of the proposed legal budget, it is funding which will be directly and immediately put to use in order to protect the Sia and Skynet ecosystem from legal challenges and host liability.

A cap of $10k USD/month would be placed on this budget, as it is in line with current average software engineer salaries, and the intent of the service is not to profit unreasonably from the subsidy - rather, to provide reasonable compensation for the work done to create and maintain the service. It is also expected that once the platform is launched, development work will decrease and support work around handling complaints will be the primary function of the service. Any excess SC over the USD cap would be returned to the treasury and/or legal fund stockpile.

Again, this is not simply a platform which can be built and then left alone - it will require ongoing staffing in order to verify and respond to complaints, and support several entities (portal operators, DMCA lawyers/agents, government entities, copyright owners, etc) in order to ensure that Sia and Skynet are operating legally.

This could also fall under Budget Category: Community Service Provider Subsidy, but I think legal is a better area for it because it is more relevant, better funded, and will have less of an impact on community services by not taking funding away from that category. Server costs for the service may fall under community services, however. That aside, I’m interested to hear thoughts on it.


I’m 100% down to give funding to our friendly neighborhood beacon of knowledge(though I guess after this he’d be more of a beacon of legality? That’s besides the point).

The funding makes sense, and the service seems necessary to keep Skynet alive and healthy, so count my vote as aye!

I’m not sure it’s a good idea for the Foundation to fund a large portion of any service. Singling out and endorsing a single service would not be an ideal situation in my opinion.

The Foundation is funding all Skynet portals, which moves to serve Skynet Labs in a profitable endeavor. In that case, it seems like we should probably remove funding for Portals too then under this logic, and re-examine any budget expenditures which support Skynet Labs in any way if the goal is to avoid funding anything which could be profitable. I would say that funding anything which may benefit Skynet Labs is even worse, as they obviously intend to be profitable. Even so, the goal of the DMCA/abuse service is not to be profitable, but to cover a full-time position which would be required to build it now and operate it at scale indefinitely if Sia and Skynet become as large as everyone anticipates that they will. This is also the reason for the USD cap towards the operation of the service - 2,000,000 SC would be an obscene amount of monthly funding if SC price increased even to $0.01.

I was on the fence as to whether or not this should be proposed as an official position or function within the Foundation or Skynet Labs, but separation seemed prudent because there is a separation between the Foundation and Skynet Labs, and the entity running the DMCA and abuse service would be interacting with both. The service would also be a form of defense against legal issues for both the Foundation and Skynet, as well as individual portal operators and hosts. Maintaining such a service as a separate entity makes sense in that it removes a lot of responsibility (both in terms of work, and legally) from all of the others involved in the Sia/Skynet infrastructure.

Users in other proposal comments have valued development time at $100-200+/hour, so an initial funding of $5,000/month would cover 25-50 hours of development work a month towards the service, and 50-100 hours a month at the $10k USD cap. I would expect to put much more time into it than these numbers for as long as the service existed, and especially in the initial six months or so to build out and spin up the service, so I feel that what is essentially a salary for a full-time position handling DMCA and abuse for all of Skynet is a reasonable figure, if not a low one in actuality.

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I have never stated that things that could be profitable should not be able to be funded. My statement was that funding a large portion of the development cost or a direct endorsement of any single third party service is something the foundation should be relatively wary of.

My understanding of the Skynet portals is that the Foundation would be funding infrastructure costs only while the portals remained unprofitable. That seems pretty reasonable.

Everything related to third-party service funding I would like to see under the Community Provider Subsidy and reviewed on a needs basis. Personally, and I believe exceptions may need to be made: if your need is 10k/mo for full-time positions I think you should explore other funding avenues.

To use my own service as an example: Host Manager is ubiquitous for desktop hosts these days, v2 expands that back to server hosts. My goal is 70% of hosts using Sia Central’s infrastructure by mid 2021. Should the Foundation be sponsoring me as a full time engineer to build Host Manager? I personally don’t believe that’s a reasonable expectation.

We could check with lawyers, but I think there could be significant issues relating to prosecution if it is determined that the foundation is not acting sufficiently as an entity with power to enforce censorship on the network. I would not want the foundation of being in a position of potentially being able to censor things via a centralized, public block list, because that may motive regulators to assert that the foundation could be doing more than it is actually capable of doing.

Subsidizing a service in the low 4 figures per month would fit under the other budget category.

I do think it makes sense for the foundation to pick up legal questions related to running such a service, and publish memos that are available to everyone. Questions like “what are my legal obligations as a portal” and “what are my legal obligations as a block list publisher” and “what are the risks associated with running a DMCA service that actively communicates with portals?”

I feel like the OP is making two separate proposals (one for legal clarification around certain topics, and one for either subsidizing or operating a DMCA service), and that they should be split apart.


Probably not - but there’s a large difference between what I’m proposing and what Host Manager is. Host Manager does not respond to a legally mandated process for web hosts and similar providers to investigate and handle takedown requests over copyrighted content. Individual Skynet portal operators, and possibly someday hosts themselves will instead be responsible for performing this task individually. This is likely to deter both portal operators and hosts in the long-term if a process isn’t in place to handle DMCA and abuse issues across the entire Sia and Skynet network. Your product is great, but it is a nonessential service for hosts, does not address a significant legal threat to the network, and it does not require a staff member to man the phones daily, so to speak.

No, the proposal is only to subsidize the service - I expect the legal team would already work to do the other things mentioned. I was only explaining the concerns over host and portal liability to give a bit of background as to why I think such a service is necessary in the Sia and Skynet infrastructure if growth is expected. It seems we agree that keeping such a service separate from the Foundation and Skynet Labs is probably the better idea in terms of limiting liability.

To both of you, I’m happy to discuss an alternate funding structure for the service, such as being a cost to portal operators which may then be subsidized by the Foundation, but it seems to me that such a service is important enough that it would be best managed as a fixture of the Foundation so that there is no uncertainty over the ability to cover costs and keep it operating, the same as the concept for the Foundation and the maintenance of the core Sia protocol in the first place.

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