AGP discussion: Aragon Network Budget

I saw on the AGP wishlist that there is demand for an annual budget for the Aragon Network. I have been spending some time thinking about this ever since I took time to evaluate the financial impact of Aragon Black’s first AGP, and with spending ramping up further after the approval of Autark’s second proposal and potentially even further with Aragon Black’s second proposal, the need to put some kind of cap on spending seems more urgent than ever.

I worry that ANT holders are becoming short-sighted about how they are managing the treasury, and I hope a budget will impose some discipline on spending while the Aragon Network is still running at a loss. I should note that I see this discussion as complimentary to, and not in competition with, discussions such as those occurring in the “Birds of a Feather” thread, and look forward to seeing ways that we can keep development decentralized and continue growing a community of contributors while staying on a sustainable spending course.

I propose that we, the Aragon community and ANT holders, make a “Ulysses pact” with ourselves to not spend more than 20% of our treasury’s value, or 1 million DAI, whichever is greater, in any given calendar year. The result is that we will always have five or more years worth of runway, until we get down to a treasury value of 5 million DAI and spending is capped at 1 million DAI per year.

(Edit: The specifics of the budget have been modified, see proposal text below for the most recent proposed budget details.)

Here is the language I am proposing to add to the Finance track description in AGP-1. I welcome your feedback on this thread.


It’s an interesting idea we’ve explored multiple times. My main challenge is in the implementation.

This would clearly push all finance proposals at the beginning of the cycle and reduce innovation during the rest of the year.

At the same time, it would need some pretty good rules for how to go about two different proposals each under the threshold that combined get above it, should they both pass.


Thank you for posting! and its good to see you back on the forum. :slight_smile:

I think that implementing a budget for the project is the single most straightforward and simple way to improve Aragon governance at this stage. I wrote a bit about it in the bird of a feather post, and have since been thinking about how to do it in such a way as to alleviate concerns that have been vocalized by @stefanobernardi and whenever the topic has come up.

I think what you propose is fairly close to what I have had in mind and planned to propose with the following two significant modifications:

  1. Budget should be calculated on a Quarterly basis not Annually, so using the numbers you propose for an annual budget we would be saying no more than 5% of the treasury value (or 250K) in any one Quarter. The advantage quarterly budget periods is that since most spending is happening as a result of ANVs, we can ensure that one ANV in the beginning of the year does not use up the entire budget for the year, leaving no flexibility or funding for the remainder of the period.

  2. We should also formalize a rule for how to handle situations where ANT holders have exceeded the budget in a single ANV. I think this can be fairly simple, just say that for any ANV ballot, approved finance proposals will be processed in descending order based on absolute approval percentage. Each processed proposal will be debited against that quarters remaining budget, and if there is not enough budget available for that proposal it will be skipped entirely and the next approved proposal will be attempted to be processed until there are no more remaining approved proposals to process.

I think there are also other details to figure out like how the change should be worded, whether it should be a budget for finance track proposals or for the association as a whole (I would personally lean towards only finance track proposals and leave the Associations discretionary spending outside of the budget), and whether or not this budget (if passed) would be effective for the current ANV (do we process meta-track proposals before we process finance track proposals?).

But if you are open to incorporating things like this in order to create one “budget” meta-track proposal it would be great to collaborate on this effort.

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  • So according to this, if we’re close to limit and have to choose among two proposals: a low controversy proposal with 1 ANT for and 0 against passes and a highly controversed proposal with 100 ANT for and 99 against is left out?

  • I think its pretty clear that doing this creates a new incentive to downvote the Finance proposals you’re competing agaisnt.

  • Don’t you think the network will tend to FOMO and try to reach the limit every single AGP round?

Based on this rule it would prefer the proposal with more absolute (not relative) support, so it would prefer the 100ANT for over the 1ANT for proposal.

Since its absolute support not relative support I don’t think this is the case. It should encourage voter participation though, because every vote counts from a relative perspective.

EDIT: I may have misunderstood what you meant here, I think that it does indeed create more competition between proposals and as a result may encourage people to vote no on proposals that they don’t think should pass–but I would consider this highly beneficial, we should be more discerning and critical of proposals and only pass those which are the highest leverage.

I’m not sure, but very likely yes… but the issue is that is already happening and there is no budget to constrain it. I don’t think ANT holders are doing a good job with fiscal discipline currently, and likely wont every be able to on a per-proposal basis, but by imposing a budget like would help remedy that.

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I included the Association’s discretionary spending in the proposal because 1. discretionary spending should be a relatively small portion of the overall budget anyways, best case I see it as unlikely that it would be the thing that pushes us over budget and 2. worst case, I worry about it becoming a backdoor to circumvent the Finance track budget in matters that are politically or personally expedient. Do you have a specific reason for excluding the Association’s discretionary spending from the budget?

I intend for this budget to be applied only to future ANVs. My thinking here is that if a plurality of voters support the proposal, then they can “extralegally” impose this policy by voting down or bidding down during the review process proposals that would exceed the proposed budget.

However in the spirit of collaboration:

I am open to suggestions about specific wording changes so we can get the broadest support base possible without watering down the substance of the proposal.

My expectation is that ANT holders are very likely to end up rate limited by the budget on a per ANV basis, I would be happy for that not to necessarily be the case (eg the network spends less then has been allocated by the budget), but in the case where an ANV uses all or nearly all of the budget it might be problematic if this impairs the ability for the Association to operate optimally.

I personally don’t think that the association is abusing the discretionary spending now, and seems unlikely to do so in the future. Whereas, I think that ANT holders are not necessarily being fiscally responsible now so the primary purpose of the budget in my opinion is to provide a mechanism to impose constraints on ANT allocated capital, not necessarily on the discretionary capability of the Association.

But I don’t have super strong feeling on this issue, just sharing my rationale for scoping the budget around AGP process and Finance track proposals specifically.

This seems reasonable to me… though I generally would prefer for it to be effective immediately simply because I think it is addressing a serious problem and the sooner that problem is addressed the better. The biggest issue with trying to make it effective immediately, is that it would require clarity (from the association) in terms of how meta track and finance track proposals get applied after they are approved.

I think one of the reason to create the budget in the first place is that there are coordination challenges associated with the current process that budget would help resolve. As you point out yourself:

So I’m fairly skeptical that it would be possible to impose this process “extralegally” as you suggest.

Though ultimately I think whether the proposal takes effect immediately or at the next ANV is more of a implementation detail than a point of contention. If you are championing the AGP, I’m happy to defer to your judgement here.

How do you feel about the specific suggestions of using a Quarterly rather than Yearly budget period? And about the formalization of the process for dealing with cases where ANT holders approve proposals which in total exceed the budget?

I understand, thank you. Yes the Association has been responsible with its discretionary powers (as far as I know), and we can leverage the trust they have accumulated to give them some wiggle room in cases such as those you describe. We can change the proposal so it only applies to the Finance track.

Yes, that’s going to be difficult to figure out. And it could create uncertainty for Finance track proposal authors if their proposal is approved, and this one is approved, and maybe they don’t get paid anyways. My preference would be to put that uncertainty at ease, let ANT holders decide what they will for this ballot, and we can kick off with an improved system in 2020.

I think this is a good suggestion and addresses the “front-loading” issue. At the cost of a larger number of Finance track proposals to review throughout the year (four from each Flock team, minimum) but seems worth it.

I thought your suggestion was a clever way to deal with it. It introduces an extra layer of uncertainty for proposal authors, but a nice side effect is that it could lead to more collaborative budgeting overall. Collaborative when it can be, competitive when it needs to be. I would be ok with formalizing language for this and adding it to the proposal.

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One way to limit the discretionary spending is to include it into the Aragon Association Budget AGP, and potentially have that one outside of this policy. It would thus place a cap on discretionary spending without impacting the ability to operate (clearly only if the AGP is approved - but we don’t yet have any backup plans in case that AGP isn’t approved).

Also, the juice of this discussion should also probably be around numbers: what are you all thinking?

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Wouldn’t this part of the proposal be “numbers”?

The total amount funded by Finance track AGPs and discretionary spending by the Association shall not exceed 20% of the market value of the Association / Aragon Network treasury or 1 million DAI, whichever is greater, in a given calendar year. The market value of the treasury, and spending relative to that, shall be measured at the time a spending proposal is reviewed for approval.

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I don’t think it was ever the case that AGPs are processed in some specific order and become effective in a current vote. I think if this passes it would become active for future ANVs only. Is it correct @light?

I’m a bit concerned. We are clearly pointing out that ANT holders cannot make reasonable decisions, and instead of focusing on that deeper problem we are already trying to quick fix it top-down. This sounds like implementing parental controls to those who make important decisions in the network :thinking:. Why not! But not exactly my ideal scenario.

Not sure that’s what you were refering to, but I think we could do better at providing data to inform this discussion in depth.

We haven’t worked yet on detailing different treasury scenarios to the rest of the community. I think that in order to have this budget conversation it would be very useful to have a google sheet with treasury forecasts:

  • Using current burn rate and growth rate over quarters
  • Splitting that between different grant programs and entities
  • Detailing scenarios with different ETH values, number of Flock teams… etc…

Kind of saying that to myself here as producing this kind of document could fall into AA’s scope.


I thought that was a placeholder, looking at the 1M DAI figure

My understanding is that the proposals is a “20 percent of treasury value OR 1M, whichever is greater”, or in the case where the budget period is quarterly “5% percent of treasury or 250K, whichever is greater”. Looking at the treasury value is 42M+, so that would work out to 2.1M “this quarter” if the budget policy was evaluated right now.

I think the exact numbers and mechanism should be discussed more, but it seems like a reasonable enough place to start the discussion.

IMO, implementing a budget is a tool that is helpful for prudent people, organizations, and groups to make better financial decisions.

I think presenting ANT holders with a budget, and having ANT holders make the decision to ratify that proposal is a good indicator that ANT holders are capable of making sound fiscal decisions. These are not “parental controls” imposed externally, this would just be the community deciding to adopt a more mature process for capital allocation.

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Correct, that is the intention.

+1 yes this is not a constraint coming from an external “parental” authority, but from the community itself. As I framed it in my opening post this is intended to be a “Ulysses pact”, a self-binding mechanism the community uses to recognize the unsustainable spending rate and do something about it. We cannot continue saying “yes” to every good looking proposal. A budget provides us a common agreement we can point at to justify why certain good proposals can be funded and others can’t.

More data on this is welcome, and will be useful for informing how, if, and when we make any adjustments to the proposed budget.

I would not say that ANT holders cannot make reasonable decisions. I would say that they have been well-intended but short-sighted with our treasury. But it is not too late to take stock, reflect, and change course. I am putting forth this proposal to give ANT holders an opportunity to do just that.

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I have made some adjustments to the proposed language in the first post on this thread. Thank you @lkngtn @stefanobernardi and @LouisGrx for your feedback.

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There’s a really big problem with this conversation. ANT is the lifeblood of the Aragon community, yet we’re talking about everything in terms of DAI and US dollars. We’re talking about misaligned incentives, but we’re not giving ANT to people who contribute to the community. Honestly I’m not sure why we’re surprised that things are the way they are. People who want DAI are not the same people who want ANT.

There’s a really really easy way for us to reduce our burn rate and align incentives for all parties involved. Right now we pay out mostly DAI and a little ANT as a success reward. We have X DAI and Y ANT sitting in our vaults. We could just switch that around and pay out mostly ANT and a little DAI. Funding secured! lol

But seriously though, ANT aligns incentives and gives people a voice in ANVs. Every other project bootstraps with their native token. The only ones who don’t are the ones that aren’t trying to build an actual community. Places like GitCoin have a lot of DAI bounties because the target market is temp contractors. DAOs and cryptoeconomic mechanisms are all about aligning incentives. DAI doesn’t align incentives for contributors to “feel like founders.” If we want want people to “feel like founders” we need to give them ANT.

This would put downward sell pressure on ANT as teams cash out to pay expenses. This pain is amplified by the fact that ANT has very low liquidity. If more people had ANT there would be more liquidity. Avoiding this problem and kicking the can down the road just sets us up for more nad more pain later on. We need to address this as soon as possible. ANT is the lifeblood of the Aragon network, and we need to drive value to ANT, but we also need ANT to be liquid. If we give contributors ANT then we’re both increasing liquidity and aligning incentives. This will allow us to focus on driving value to ANT and to have that value continue to support the community long after the initial USD treasury funds.

We need to be give contributors more ANT and less DAI. The budget needs to be an ANT based budget. If we drive value to ANT the budget will be worth more and allow us to do more. If we do not drive value to ANT, then the budget shrinks. This aligns incentives.


I hear what you are saying, but I think that is a separate discussion. This proposal denominates the budget in DAI because DAI is a relatively stable asset. The decision is for pragmatic measurement purposes only. Respectfully, I consider the specific token that recipients of funding choose to get paid in to be outside the scope of this proposal.

Measuring a budget in DAI/USD implies that ANT is not valuable. This implies that we want people to earn fiat from Aragon’s treasury vs working as a team with incentive aligned “equity type” compensation. The whole point of compensating contributors with ANT is that it is not a stable asset. It’s value fluctuates, and that incentivizes ANT holders to drive value to ANT. A stable asset does not align incentives!

This is the most crucial decision of any project’s budgeting. It’s the foundation everything else is built on top of. We need to denominate our budget in ANT. We need to calculate our burn rate in ANT. Our ANV/annual budget needs to be based on the ANT burn rate. Considering that the title of this thread is “Annual budget for the Aragon Network,” I think this is incredibly on topic.

Measuring the budget in DAI does not imply anything other than that DAI is a stable unit of account by which to measure our budget and spending. By that measure, yes ANT is inferior and probably always will be. ANT is good for aligning long-term interests in the Aragon Network, particularly when coupled with vesting. And it will soon be a useful tool for onboarding jurors into the Aragon Court. But ANT is not useful for measuring spending day-to-day. It is a utility or work token, not a medium-of-exchange token. For this reason, I do not plan to modify this proposal to denominate the budget in ANT. Thank you for your feedback.

Choosing to denominate a budget in a liquid, stable asset as reference value seems practical. Its worth noting that the budget does scale based on asset value held in the treasury so even though it is denominated in DAI, the budget will increase if asset value (DAI or ANT or whatever else is held) increases in value.

I think it would be interesting to see a proposal or simply a shift in norms such that ANT is used and distributed from the AGP process, but definitely think that it should not be bundled with the idea of creating a budget, as there are lots of concerns unrelated to the idea of implementing a budget that would involve.

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