An exploratory study of DeFi protocols: semi-automated smart legal contract development tools

Abstract

With the current development in blockchain technology, the finance industry has also made use of it through decentralised finance (DeFi), where financial transactions could happen on the blockchain without a third party. Legal contracts are usually formed on paper, along with the signatures of the parties involved. To translate the legal contracts into smart contract code, the lawyer drafting the legal contracts will need to have prior programming knowledge if the lawyer was to do it manually. Also, the ambiguity of the natural language causes an issue when trying to translate legal contracts to smart contract code. Hence, the idea of smart legal contract development tools comes into place, with the objective being to ease and quicken the process of the contract translation. Human intervention however will still be needed as the legal professional will have to check if the generated smart contract code satisfies the original definition of the legal contract. This report analyses the different existing semi-automated smart legal contract development tools and discerns the advantages and disadvantages of each tool. With the results from the analysis, recommendations for further research will be made to develop an improved tool.