ANT Derivative Tokens 🦅

The Aragon Network Token (ANT) is the heart of Aragon. It allows Aragon’s decentralized community to express opinions and come to consensus on decisions. Without this, Aragon cannot become an unstoppable force in the world.

ANT also trades on open markets. This means that the price of ANT reflects the value of Aragon governance as well as general market sentiment. Considering that ANT has a price, it can be bought and sold. This makes ANT not only a utility token, but a unity of exchange. As something that holds monetary value, but can also be used to express opinions related to Aragon, it’s a great tool to reward Aragon community contributions.

The value of Aragon governance is related to the value of Aragon. If no one cares about Aragon, no one will want to govern it. If Aragon is awesome and highly valuable, people will want to engage in governance because they will care about the outcome of decisions. Aragon is currently bootstrapping the development of the Aragon network and applications built on top of it via Aragon treasury funds. These funds were obtained via an ICO. While there is some speculative potential in the AA’s ETH holdings, for the most part, Aragon treasury funds go one direction: down. Once treasury funds run out Aragon will need to find alternative methods to fund growth.

Aragon’s post-treasury growth could come from a few sources. These might look like ANT price appreciation, a completely free and open source base layer supported by a commercial entity (think RedHat or Ubuntu), or another ANT token sale (diluting current ANT holders and/or the AA). Let’s explore the least controversial and most exciting of these, ANT price appreciation.

ANT price appreciation might arise due to demand for Aragon related services such as Aragon Network Votes, Aragon Court, or fees on the Aragon blockchain. This is a rather straight forward supply and demand equation. The more useful ANT is the more people will want ANT. The more people want to buy ANT and the less people want to sell NT the more buyers will have to pay for ANT. This equilibrium creates the market price for ANT.

Recently there have been many conversations on the creation of ANT derivative tokens. These look like:

All of these tokens are dependent on ANT. These tokens are effectively derivatives on ANT. This provides a considerable amount of freedom regarding token designs in the Aragon ecosystem. Derivative designers can then modify token dynamics to precisely incentivize the type participation desired. Like with any derivative, this can be done in a way that is decoupled from the performance of the underlying asset almost arbitrarily. These tokens will have increased utility in the small game context of their own token model.

In the larger game of Aragon, however, these token models will decrease the utility of ANT. This is because as value flows to derivative tokens it will flow away from the base layer token. As AVT captures value for voters it will take value away from ANJ court services. This creates a tug-of-war between ANT derivative tokens. If an Aragon community member holds ANT, they have to choose between participating in the court or participating in network governance. This does not compound the value of ANT, but dilutes it. ANT then becomes a gateway token on the way to the tokens that have real value. Like with derivatives, the value of the derivative can be decoupled from the underlying asset almost arbitrarily. At this point you might as well just replace ANT with ETH.

Ideally every Aragon service would synergistically add value to ANT in a way that is greater than the sum of it’s parts. ANT holders would be first class citizens able to participate in all Aragon related activities and services. This makes sense because the people who are using Aragon services would want to have a say in the governance of those services. Likewise, voters are going to make better decisions on network governance if they are also users of that network.

So with this in mind, I ask you: why so many ANT derivative tokens? I get that bonding curves are cool and we’re all really excited about Aragon fundraising, but let’s not act like men with hammers. Not everything needs it’s own token. In fact, the more utility a single token has the more likely it is to serve as a base layer for a system. Considering that Aragon has the potential to act as the substrate for human coordination on a global scale, this seems important.

Let’s support ANT and make it the base layer of Aragon. Let’s integrate ANT into the ecosystem and get it into the hands of our community. Let’s make ANT useful, and valuable, and desirable. This rewards community contributors not only with ANT price appreciation, but with ANT utility. If ANT is useful and valuable people will want to hold it. This will create an economic base layer for the Aragon digital jurisdiction.

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There is a lot of text here, but it feels like the crux of your position is that you don’t think that bonding curve based derivative tokens add value to ANT:

This doesn’t seem to be accurate as far as I can tell. Unlike other types of financial derivatives, there is a direct link between the collateral asset and the derivative token. If the market cap of the derivative token increases the value of ANT held in collateral will also increase. This relationship is enforced by the bonding curve and the incentive for people to arbitrage between the two tokens.

That is always the case regardless of what other type of trading activities occur outside the bonding curve. So I think the notion that derivative tokens dilute the value of ANT (as opposed to add to it) is not really correct. But would be interested in you providing further explanation there.

I think a separate issue is where a bonding curve should be used versus just using ANT or a pegged token, and what an appropriate connector weight is–but I think that is something that should be discussed within the specific context of the economy/protocol being designed. It may be a different set of considerations for the court versus aragon chain for example.

Its hard to disagree with this, but it also doesn’t seem to follow from the rest of your argument in this post.

The ability to leverage ANT by depositing it into a bonding curve is additional utility that enables value from all of these otherwise independent services/protocols to aggregate value to ANT. Its not strictly necessarily for users to want to hold ANT directly, if they choose to hold a derivative token they are locking up ANT and removing it from the circulating supply. As you say the goal is for ANT to become the economic base layer for all of these services, and that relationship is exactly what the bonding curve mechanism enforces.

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Having lots of different bonding curve based derivative tokens creates a tug-of-war between various ANT use cases. This fractures the utility of ANT. If we think of the Aragon ecosystem as a pool, there’s only so much value to go around. If ANT holders can easily engage with all ANT related services the TAM of each service provider is the entire Aragon network. If each service provider or use case in the Aragon ecosystem has it’s token, however, then there is then an opportunity cost to engaging with one part of the ANT ecosystem vs another. ANT then becomes a “gateway token” to other tokens that have real utility. This is not right. The utility and value proposition of ANT should be greater than the sum of it’s parts, not just equal to 1 part at a time. The TAM of the Aragon ecosystem should be all ANT holders, not just whoever happens to be locked up in your curve at the opportunity cost of locking up in other curves to access other services.

If we think about Aragon as the substrate for human cooperation at scale, ANT needs to be the fuel for that substrate. For example, let’s look at ETH. The value of ETH is greater than the sum of it’s parts. (presentation on that here). This is accomplished by being a utility token for Ethereum applications, a store of value for DeFi, and a method of exchange for payments between users. ANT can accomplish similar things via Arachain tx fees, being a method of payment for Aragon services such as court, and a way to engage in Aragon governance. If demand for Aragon and ANT scales, then eventually it too will be a store of value.

When you break up the utility of ANT into derivative tokens you fracture the combined utility of ANT. In addition to breaking down the combined value/utility of ANT, it also makes ANT derivative token holders, the very users who are actually engaging with ANT services and thus driving value to Aragon and ANT, second class citizens on the network. They have to choose between representation in Aragon governance, or taxation via Aragon network fees and whatever else voters decide. This is not right. Aragon community members, service providers, and ANT holders should all have representation in Aragon governance. By making all ANT users, service providers, and holders first class citizens on the network the value of ANT compounds, everyone can engage with the Aragon ecosystem, and there are more total users for all Aragon related services.

I’m having a really hard time following this and what specifically you are advocating for…

Are you saying that you think that there should not be derivative tokens used for service/staking purposes and instead they should just use ANT?

Are you saying that ANT should be used as a payment token for all of the services rather than a stable coin like DAI?

Are you suggesting that participating as a service provider should not have an opportunity cost? That you should be able to stake as a juror and stake as a validator on Aragon Chain and be able to vote in AGPs all at the same time with the same asset?

You don’t need to hold the derivative token to use the service… In other words you dont need ANJ to subscribe or create disputes in the court, you only need it to stake as a juror. You don’t need ARA to pay transaction fees on Aragon Chain, you just need it to stake as a validator.

In practice we could choose to accept fees in ANT or we could accept fees in DAI or we could even create a stable coin based on locking up ANT as collateral to generate an Aragon Network Stable Coin… The choice of a payment token is relatively orthogonal the work token model.

The TAM is based on the potential market for a service, it really isn’t based on who holds ANT or who participates as a service provider using an ANT derivative token.

This seems to suggest that you are advocating for having ANT target the “commodity money” use case, which is possibly the largest TAM of any crypto use case… Is that the underlying goal? If so what do you see as being the necessary steps to achieve that?

I would make the argument that the current path of aggregating service protocols that are relevant to the Aragon Ecosystem and using ANT as reserve collateral is the first step in giving ANT SoV properties which is likely the first step in achieving “commodity money” status.

By second class citizens, do you just mean that they are not able to Vote with the ANT that they have deposited in the bonding curve?

How important do you think this feature is? It might be possible to accomplish in some way, but it would add a tremendous degree of technical complexity that may or may not be feasible to overcome… If it delayed the creation of service protocols by a year or more would it be worth it?

If people opt in to be service providers isn’t that a strong signal that they are comfortable with that tradeoff?

Ultimately, the governance process should aim to represent the interests of all its stakeholders well even if they are not actively participating, or they are minority participants, or for one reason or another are unable to participate… This is one of the primary goals of introducing the Court and dispute resolution into the governance process in the first place.

Yeah.

Yeah.

Not exactly.

You should be able to stake on Arachain and also participate in Aragon Network Governance. You should be able to stake to become a juror and also participate in Aragon Network Governance. To be clear, staking is not the same as using an ANT derivative token. If you’re staked in the court then you can’t use the same ANT to stake as an Arachain validator, but you’re still using ANT.

If we roll out our own blockchain we should be able to introduce optimizations that make it possible for ANT holders to stake and vote. Tezos figured it out. They have a very staked community that is also very engaged in governance. A similar mechanism on Arachain would allow ANT holders to engage in providing Aragon related services while also voting in Aragon Network Governance. If Aragon is serious about changing the way humans do governance at scale, then this is essential for the fight for freedom.

  • From the Aragon Manifesto: “We are committed to decentralizing power in order to dismantle unjustified power — which usually springs from centralization. Power has a natural tendency to reinforce itself and become corrupt. If power becomes centralized, it doesn’t have to answer to anyone but itself. Decentralizing power is essential to minimizing corruption over time. We must strive to create systems in which a large number of diverse stakeholders have a say, in order for common goods to be responsibly governed by their communities.”

That’s a good point. In this case you’re right that the if service providers are staked that would not affect the users, however, it can be expected that there will be a strong overlap between users and service providers (esp during the bootstrapping phase!). Making ANT the token to access all the applications, good, and services within the Aragon universe allows any Aragon service provider to interact with any ANT holder directly. It also greatly simplifies everything from a UX standpoint: just buy ANT.

  • From the Aragon Manifesto: “We seek to use technology to lift people from oppression. To be successful, we must keep our products open, understandable, and easy to use for everyone.”

ANT should be the token for the Aragon universe. If you want to participate in Aragon in any way, just buy ANT.

Yes.

No taxation without representation.

  • From the Aragon Manifesto: “Decentralized organizations change our relationship with governance : from something that is imposed upon us by others, into something we choose to opt into. Where we are equally serving and served, rather than just serving.”

Critical. Every ANT holder should be able to fight for freedom via Aragon Network Governance.

  • From the Aragon Manifesto: “Sovereign individuals will be able to freely express themselves and transact with each other without any kind of intermediary exercising their unjustified power and oppressing them.”

No. Decentralized governance matters.

  • From the Aragon Manifesto: “We must strive to create systems in which a large number of diverse stakeholders have a say, in order for common goods to be responsibly governed by their communities.”

Agreed! But this is easier said than done. Historically it has almost never happened. Why would this time be different?

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I like the conversation but I don’t get it.

Why is it necessary to have ARA instead of using ANT?
How does ARA gets created? only through staking ANT?
If yes then what happens if there is a high demand for ARA? Then I have to stake more ANT to mint more ARA and by doing this the value of ANT increase because it gets locked up (ANT gets out of circulation =higher demand and lower supply)? But how do block producers of the Aragon Chain get paid?
For which services do i need ANT and for which ARA?

Why is it necessary to have ANJ instead of using ANT?
How does ANJ gets created? only through staking ANT?
For which services do i need ANT and for which ANJ?

Why is it necessary to have AVT instead using ANT?
How does AVT gets created? only through staking ANT?

I would be nice to have a pro contra argument list somehow
It would be so nice to have the option to create a pro contra list somewhere where people can up and downvote arguments. is there a tool for that?

Also it would be very helpful for me if there would be a table where i see all the upcoming Aragon tokens their functionality (usecases) minting process supply etc.

It would be also so nice if each forum post has a Q&A tap where I can see all Q&A related to this topic because often i start reading but i don’t get it so I think this tool would be very helpful to educate and engage as many people as possible.

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Cool, so to avoid conflating many distinct issues is it fair to say that there are 3 independent issues you are concerned with here?

  1. Should ANT be used as a payment token for services like the Aragon Court and Aragon Chain?
  2. Should work/staking economics be associated all with the same token (ANT) or based on bonding curved based derivative tokens?
  3. How are service providers (Jurors/Validators/etc) represented in the governance process?

The more ANT derivative tokens we add to the Aragon ecosystem, the more complex we are making Aragon. 99% of the world don’t understand financial derivatives so it would be naive to expect them to understand derivatives on Aragon - it’s already hard enough for many people to grasp Aragon as it is, without any ANT derivative tokens. If people don’t understand Aragon, they are unlikely to be effective contributors to the Aragon governance. And as @burrrata referenced in the Aragon manifesto " we must keep our products open, understandable, and easy to use for everyone". I find it very concerning if we not actively taking steps to make Aragon more understandable instead of adding complexity.

I would love it if we can build Aragon in such a way that it doesn’t require users to read a rocket ship manual to go with it :slight_smile: Effective onboarding is already an issue as it stands.

Also, +1 on @Mouyou’s request to see a for and against analysis of ANT derivative tokens.

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Some of these details are still being figured out, but at a high level the current intention is for ARA to be connected to ANT via a bonding curve (using Aragon Fundraising on Ethereum Mainnet), there will be a genesis event where these balances are migrated to the Aragon Chain, but then can be moved back and forth between Ethereum Mainnet and Aragon Chain using a bridge.

The bonding curve creates an exchange rate between ANT and ARA, and maintains this exchange rate by minting ARA as ANT is deposited, and releasing ANT and when user burns ARA using the bonding curve contract. Based on a parameter called a Connector Weight, a ratio between the market cap (price * supply) of ARA and the value of ANT held as collateral is maintained. So we know that at any given time, the value of ARA will directly influence the value of ANT. (Though the inverse is not true, an increase in price of ANT won’t necessarily increase the price of ARA).

This mechanism allows ARA to have its own market cap separate from ANT which can be important consideration when designing and bootstrapping a proof-of-stake or work-token economy.

An alternative approach which @burrrata is advocating for is to simply use ANT for staking (and everything else). For simplicity, this might look like we have a peg between ANT and ARA. ARA and ANT would be economically equivalent but ARA would exist on Aragon Chain and would be used for staking and ANT would exist on ethereum mainnet. Since it is a 1-1 peg, the two assets would essentially act as one single asset without a separate market cap.

From an ANT holder perspective this may seem more desirable, as the increase in demand for staking would have a 1-1 impact on the price of ANT, rather than some fractional ratio.

However, this decision has trade-offs that are relevant to protocol design/engineering, for example most Cosmos proof of stake chains rely on a participation rate targeting mechanism where inflation is dynamically adjusted to ensure some percentage of the supply of is actively being staked, eg 67%. Having a high percentage of the supply staked is considered a security/safety advantage because it impacts how quickly the active validator set can change. When there are less than 67% percent of the supply staked, the inflation rate increases eventually getting as high as 20%, when over 67% is staked inflation rate adjusts down.

If we don’t create a derivative asset, but we want to adopt a similar policy for Aragon Chain validators we would be inflating ANT directly and subjecting all ANT holders (many of whom have no interest in staking) to that mechanism. Adopting aggressive incentivization mechanism may result in more effective and efficient protocols, but without a derivative token it impacts all ANT holders, not just those who have opted in to provide that service. Each additional protocol that is based on the token directly may have a similar impact, and now just to hold ANT you have to be aware of the dynamics of all of these systems or risk being negatively impacted by their incentivization mechanisms.

Additionally, some service protocols (like Aragon Chain and the Court) also have security assumptions which are partially based on the value loss to stakers (not slashing) based on the market losing confidence in the service. Without a derivative token, these incentives are not tunable parameters.

I agree, and that is why I advocate for isolating the incentives of protocols using derivative tokens rather than try and lump them all together.

Users shouldn’t need to understand every service protocol in order to safely hold/speculate on ANT and participate in Aragon Network Governance. They also shouldn’t even need to hold ANT in order to be a user of these services or Aragon in general.

Someone who wants to be a validator shouldn’t need to understand the economics of the court in order to participate as a validator–but if we lump everything together into a single token they would!

Tokens and Token Economics are important for investors and participants in each service protocol to understand, but users and even your average ANT holder shouldn’t need to understand them much at all.

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can you please expand on this one? Specifically the “security assumptions” of Aragon Court?

There are two ways that a juror loses value, if they make an “incoherent” ruling they can be slashed, or if the outcome of the ruling is unexpected or not preferred by the market, users will be less likely to use the court in the future. They may unsubscribe and opt to use an alternative form of dispute resolution… they may even stop using Aragon all together.

A loss in confidence in the court will result in less fees generated in the future, and a corresponding decrease in value of ANJ (because ANJ is valued based on future value of fees generated by the court).

In the case where ANJ is just ANT directly, and ANT is valued not just on the value of future court fees, but also the value of validating on the Aragon Chain and any number of other future utilities… the magnitude of that impact is diluted.

I don’t get this. if you have on the one side ARA marketcap and on the other side ANT value and the ANT value rises then ARA gets automatically created and if ANT falls in value ARA gets automatically burned? ARA tokens get inflated to pay validators? and you need ARA for staking and the 100 validators with the most ARA staked will be validating the Aragon chain? so if the ARA supply gets inflated then each ARA tokens is worth less and less. To prevent this more ANT has to be staked? For what do you need ARA tokens? Would it be possible to buy ARA for ETH outside of the bonding curve? if this is possible then there would be two prices one bonding curve price and one free floating exchange rate and then you need market makers. so if the price of ARA goes up on the exchange then it would be profitabel to buy ANT to stake and get ARA to exchange for ETH.

What is a participation rate targeting mechanism? So there would be an Inflation of ARA tokens? Why is there an inflation? What does actively staked mean?

Why can you change validators set more quickliy if 67% of ARA is staked? How does the active stake and the speed of changing the validator set correlate?

Good! Then this thread is relevant. One of the biggest problems is that Aragon is too complex for people to understand. Even people who work on Aragon every day don’t get it. As @joeycharlesworth said, we shouldn’t need a rocket manual to figure it out. Aragon only works if people engage, but to engage in a productive manner people need to first understand what’s going on.

Also definitely agree that figuring out the token mechanics of ANT and the Arachain are non-trivial. I’m not saying it’s easy. I’m saying that first we need to ensure that all parties on the network can engage in governance. Then we need to make sure that using ANT is easy, both for Aragon services and governance. How to do that, as we can see, is an open design challenge.

If you can replace a token with another token and it doesn’t change the dynamics of a system you don’t need a special token. If ANT is just a gateway token to other utility tokens, then what’s the value of ANT? At this point it seems like it would just inflate the bags of early adopters. People will just fork the protocols and replace ANT with ETH or whatever else. Considering that Aragon is pro-fork, this seems sub-optimal from a community engagement perspective. If we want people to stick around we should make sure that the tokens they use have direct value.

From an end-user standpoint you won’t need to understand the entire Aragon network to use ANT for whatever it is you want to use it for. In fact, the easier it is to use ANT for everything Aragon related the more people in the Aragon universe are going to explore other goods and services within that universe. It’s a platform with network effects.

From an investor standpoint, investors analyze deals. It’s what they do. Investors are going to be equipped to understand how ANT works. Even retail investors don’t need to understand all of Aragon. For exampe: Ethereum. Does everyone who buys Ethereum understand everything about everything that uses ETH? No! Do people still buy ETH? Yes!

Overall, however, these are just details compared to the larger mission of Aragon: governance. ANT is used in Aragon Network Votes. People need to be able to vote. Users. Service providers. Investors. Everyone. All ANT holders need to be able to vote in Aragon Network Votes. This is outlined in the Aragon Manifesto. It’s why we’re all here. If users and service providers on the network don’t have voting rights that breaks the promise of AGP-0.

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as i understand each Aragon will have lots of services in the future similar to Amazon with AWS. you can buy AWS shares or buy Amazon shares. Therefore each token represents the Maketcap of each service in Aragon and ANT is like Amazon share. I think you can build such a nice UI that you just see USD and nothing else. you can build UIs so people think they pay with USD. The only interesting thing is perhaps for active Investors (validators, stakers, jurors etc.) but those people have to understand the system to participate and they know this complicated stuff or they have the time to figure it out.

This feels like an entirely different topic then whether or not it makes sense to use ANT or a derivative token for something like the Aragon Chain.

I think both are interesting conversations to have, but its really difficult if the two issues are being conflated together.

What I’m suggesting here is that service protocols (staking tokens, work tokens) do need their own tokens, but it is perfectly reasonable for the Aragon Network to fund the development, maintenance, and improvement of these protocols and connect these novel tokens to ANT.

For things that don’t need their own tokens, by all means just use ANT directly… Though it seems much more likely given the environment that those efforts will be forked away and replaced with something like ETH or DAI, because at the moment those tokens are more widely distributed, more liquid, etc.

You can’t use ANT locked in a bonding curves for Aragon Network Votes.

As mentioned before, decentralized governance matters. I’m not alone in saying this. The Aragon Manifesto states:

  • “We must strive to create systems in which a large number of diverse stakeholders have a say, in order for common goods to be responsibly governed by their communities.”
  • “Decentralized organizations change our relationship with governance : from something that is imposed upon us by others, into something we choose to opt into. Where we are equally serving and served, rather than just serving.”

This implies that users, service providers, and investors - those that serve and are served - are not separate, but overlapping groups that all share in Aragon network governance. This is not possible if some participant’s tokens are locked in a bonding curve, and as a result, they don’t have voting rights. Using ANT derivative tokens forces ANT holders to choose between engaging in Aragon governance or providing services to the Aragon network. This effectively makes some service providers second class citizens without voting rights.

Historically, when a single group controls a network they will extract value from the users and service providers on that network. This can be seen on every major technology platform today.

Yes, but only if interests are aligned. If Aragon funded protocols don’t give participants voting rights, they are kind of like a colony within the kingdom of Aragon. They will eventually revolt.

They can revolt because Aragon is pro-fork. Aragon funded protocols/services using ANT derivative tokens effectively function as independent protocols decoupled from ANT (as is the case with derivatives). These protocols would function on their own with their own dynamics, so why would they need ANT? Aragon services would just remove the intermediary like the United States removed England. The Aragon Manifesto supports this: "Sovereign individuals will be able to freely express themselves and transact with each other without any kind of intermediary exercising their unjustified power and oppressing them.”

Creating ANT derivative tokens makes ANT an intermediary, and in the process of doing so, takes away the governance rights of those being intermediated. To be more precise, those being intermediated would be the very service providers who are actually driving value to ANT. This is not right. This is also in opposition to the vision outlined in AGP-0. @luis since you’re listed as the author of AGP-0, how do you feel about this?

If the underlying issue is “how do we ensure that service providers are adequately represented in Aragon Network governance” that issue can be looked at in many different ways–some of which may be compatible with the bonding curve design.

Off the top of my head, It might be reasonable to have decisions which impact a specific service protocol require approval from service providers and ANT holders. It might also be reasonable to have service providers vote with ANT held in the bonding curve as a block, rather than individually. There may be other viable alternatives as well, perhaps the voting app could be modified to enable an addresses voting weight to be split, such that the votes of derivative tokens holders could be proportionally passed through.

By conflating the issue of service provider representation with the issue of using a derivative token, there are a number of possible solutions to representation that are completely overlooked.

This is a very interesting conversation! I have been thinking about some of these issues for a while now, specifically what appears to be @burrrata’s main point.



I am of the strong opinion that all ANT holders and by extension, ANT derivative holders should retain governance rights in the network as a whole

ANT holders deploy their resources (funds and developers) to build and maintain these protocols. Furthermore, the main utility of ANT from the beginning has been governance. For sure, that utility doesn’t appear to be valuable to a large number of token holders at the moment. However, ANV voting is the raison d’etre of ANT. if holders have to choose between staking and voting in the case of Arachain, or adjudicating and voting in the case of the court, this main utility will be further weakened. Another point to be cognizant about is what is “Valuable” to the user is only important to the system in so far as it is a leaver mechinism designers use to strenthen the protocol and network effects.


Clearly, but that is not the correct question we should be asking out selves when designing the system. A better question would be

“dose making holders choose between being a service provider and ANV voter align incentives or weaken them?”

Unless you work for a Flock team or are a massive ANT whale, you currently have very little incentive to participate in governance. IMO this is unhealthy for the network and a separate topic in its self but it relates to this because separating the token into derivatives in this way further weakens ANT utility when it should be strengthening it.



This is something we should be especially mindful of before rushing down any path. We in the cryptospace take for granted how complicated even the most basic interactions are for the average user. All that being said, I do think it makes total sense to separate the tokens wile having a strong link through bonding curves.

Staking and adjudicating are expert fields in themselves. individuals should not be staking without understanding what proof of stake is. They should understand things like slashing conditions and other technical issues. Understanding you have to use ANT to buy ARA is not massive friction conceptually.

Similarly with ANJ. Jurors already need to understand the protocol. In both cases we are talking about service providers, not users, we most defiantly need to consistently lower the cognitive cost of becoming a service provider, but they will always be specialist fields in any case



For me, this is a very strong argument. understanding the incentive mechanisms and finer details of individual protocols are non-trivial in themselves. Combining them exponentially increases this complexity in non-intuitive ways.



This is a little naive IMO, very few investors will be equipped with frameworks to analyse these dynamics. That’s not to say they will not invest, they are equipped to take risks, but clearly it makes the entire system more difficult to reason about.



I think it is of utmost importance. For me it goes to the heart of the project, when making technical or strategic decisions, we should be thinking about how this affects the decision-making capabilities of the network as a whole. “Will this make decision making more decentralised?”

But while I think it is of the super important, I don’t think it is urgent. to answer Luke’s question directly, no it would not be worth it. The effect on the number of unique voters will be marginal at first whereas the service protocols should have a massive impact.

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Agreed! This is 80% of the reason why I feel like ANT derivative tokens, in their current design, are a net negative for Aragon.

The value of governance is linked to the value of what is being governed. Initially this seems to imply that the community and market does not value Aragon. Looking more closely, however, we see there are some problems with Aragon governance and ANT.

  • First, Aragon governance is signaled by ANT, but the AA board has many opportunities to enforce their will throughout the governance process. This is good as we are still in the early days, but it also diminishes the value of ANT governance.
  • Second, while ANT is widely distributed, a few key members of the Aragon community are known to A) have large ANT holdings and B) vote regularly. This, again, diminishes the appeal of ANT as a governance token because at the end of the day we all know that a few people can pick the outcomes they want.

These are temporary blockers. As Aragon further decentralizes these problems will fade and ANT utility and value will rise.

Agreed. The goal of Aragon is to further decentralize governance to give all stakeholders representation in decisions that affect the platform. This minimizes platform risk and allows teams to confidently invest in building and contributing to the platform.

Thank you for summarizing this core component of the conversation so clearly :slight_smile:

Agreed. The friction is when you then want to vote or use other Aragon services and you have to choose between unlocking your ARA or doing other things.

Governance, aka decision making, is the heart of Aragon. It’s the core feature of ANT. The principles outlined in AGP-0 express this very clearly. If these principles don’t guide decision making then they’re not principles, they’re just cheap marketing. Aragon is trying to change the world. Often bold ambitious projects start strong, but then compromise, bit by bit, inch by inch, saying along the way that the ends justify the means. Let’s not be one of those projects. While ANT derivative tokens would have a minimal effect on voters today, this is mainly because there are no service providers, AGP UX is confusing, and everyone knows that a few people can sway the votes anyways. If we just accept things as they are and give up, then I guess that’s that. If we’re serious about fighting for freedom and creating systems that fairly represent the interests of all parties involved, then we need to make Aragon governance reflect that. All Aragon token holders need to have voting rights.

I don’t feel particularly bad if there are strong cryptoeconomic arguments in favor of derivative tokens not having voting power. But if there are not, I’d definitely push for derivative tokens to have some proportional voting power over the Network. I think sub-communities like ARA validators shouldn’t rule Aragon, but at the same time they should have some governance power. Similar to a federated state.

So maybe if ARA represents X% of the Aragon economy, if you hold ARA you have the same voting power ANT*X% would give you. How does that sound?

I’d also love for @jorge to chime in as well.