ANV-3 AGP: Panvala Launch Partnership

Panvala is a donor-driven platform that helps fund the work that the whole Ethereum community depends on. You can think of it as a decentralized version of the Ethereum Foundation that runs on its own token. Details of Panvala’s goals and design are available in the Panvala Whitepaper.

In Panvala’s first batch of grants released on February 1, Aragon One earned 300,000 PAN for their work on the Voting Relay Protocol, a layer 2 protocol to scale token voting on Ethereum. Those tokens will be included in the initial token distribution when Panvala launches on the mainnet in August.

10,000,000 PAN have been set aside for Panvala Launch Partners, selected grant recipients who have committed to donate pan they earn or purchase from other grantees over the first two years of Panvala. Launch Partners receive voting power for fulfilling their pledge. This AGP proposes giving the Aragon Association permission to donate up to 2 million USD over two years to Panvala on behalf of Aragon One. The final amount will be chosen by the Aragon Association as they see fit.

Donations can be made by purchasing PAN from grant recipients, or by earning PAN for doing work that benefits the whole Ethereum ecosystem. Since Aragon and its associated teams already do significant work on Ethereum public goods, they can apply for grants for that work and donate the tokens they earn to fulfill the pledge. It is possible to fulfill Aragon’s Launch Partner pledge without spending any money from the Aragon Association’s treasury.

Voting tokens are released as the pledge is fulfilled. Either Aragon or the Aragon Association can decide to stop fulfilling the pledge at any point. The remaining token allocation will be forfeited at that point, but all tokens earned thus far will be retained.

In Panvala, token holders decide which grants are issued. It’s important for Aragon to be able to influence these decisions to ensure that the scaling and security work the Aragon Network depends on for its success can be prioritized. Putting these decisions as close to the teams building on Ethereum is what will set us on a path towards establishing Ethereum as the settlement layer for the world’s open financial system, with Aragon as one of its premier applications.

We look forward to continued cooperation between the Aragon and Panvala communities.

Niran Babalola
Founder of Panvala

While the Panvala mission is important, I don’t think this is something the Association should be spending funds on.

We already have a CFDAO and this AGP process. Teams building commons infrastructure can apply directly and governance remains in the hands of ANT holders.

From the panvala site:

The core problem that we’re facing is that the ecosystem funding is unsustainable. A lot of the common infrastructure that we all rely on is being funded by one team or another that raised funds in a one shot deal. And they’re spending down those funds and eventually they’re going to run out.

We are one of those teams spending down funds. I’d much prefer to see AA and flock teams contribute by helping to build out this commons infrastructure rather than donating funds.

When the Aragon ecosystem matures and starts generating revenue, I would be for spending larger amounts on projects like this.


This is the desired outcome of this proposal. The only addition is that those teams would apply for Panvala grants alongside the grants they receive through the AGP process. Those teams would donate the Panvala tokens they earn to fulfill Aragon’s pledge, which would put more Panvala tokens in the hands of Aragon. Again, no funds from the Aragon treasury need to be spent to fulfill this pledge. This is about Aragon’s work, not its money.

The Aragon Association is involved for three reasons: to decide the final amount of the pledge, to receive the tokens earned by fulfilling the pledge, and to decide whether to donate with funds from the treasury to fulfill the pledge when Flock teams haven’t earned enough tokens to do so. The first two reasons seem uncontroversial to me. The last reason is potentially controversial, but the authority granted to the Association is limited: their authority can always be revoked by a future AGP, and this proposal only grants permission to spend up to $250,000 ($83,333 per month) from the treasury between each ANV if zero Panvala tokens have been earned by Flock teams.

Panvala was designed to coordinate the teams already doing their part to build common infrastructure for the Ethereum ecosystem, and give them the toolkit to incentivize more teams to join them. The goal isn’t to change Aragon, it’s to recognize what Aragon is already doing so more teams will pull their weight as well. If Aragon intends to spend $2 million over the next two years on common infrastructure, this proposal was designed to have no cost. Regardless, Aragon can always decide to stop fulfilling the pledge through an AGP or a decision of the Aragon Association.

Another option we considered was a proposal that allowed the Aragon Association to make a pledge that required further approval if treasury funds were needed to fulfill the pledge. However, the pledge is a monthly pledge, and Aragon can only grant new authority to the Association every three months. Instead, we chose to start with the authority to spend funds and allow the community to revoke that authority every three months.

When teams spend down their funds on common infrastructure, they should receive tokens for it. That’s what Panvala is designed to do, and that’s what this AGP is about.

Ok I think I understand, the flow goes something like this

  1. Aragon pledges to spend up to 2million DAI/$ over 2 years. During this period Aragon retains control over the funds and directly funds teams to build infrastructure but according to a panvala governance method? (Association controlling a tap)

  2. Team Y requests funds to build some infrastructure, these funds count towards Aragon pledge?

  3. The request is accepted but the funds are dispersed via a 3-month tap by the association if it feels the objectives are met?

  4. The panvala tokens earned by team Y are donated to Aragon one?

Please clarify where necessary.

On the whole, this seems reasonable. Some other clarifications would be useful.

Aragon one is just one team building out the Aragon infrastructure, why on behalf of A1? It would be more appropriate to be on behalf of ANT holders as it’s their funds being donated, the association could possibly be a proxy.

Still a bit confused as to what these grants are. Are these funds panvala has collected as part of its own treasury? And or its own panvala tokens?

Admittedly I haven’t read the white paper, most people voting in the upcoming ANV probably won’t. It would be useful to further expand on the benefits of these tokens. Do they have a monetary value or are they just for the internal governance of panvala? And if so why should ANT holders care? As you may understand bandwidth for voting is limited and has its own costs associated

Aragon remains completely independent of Panvala’s governance. To fulfill the pledge, Aragon would encourage Flock teams to apply for Panvala grants before or after requesting funds from Aragon. Aragon might choose to prefer AGP proposals that align with work that Panvala issues grants for so the pledge can be fulfilled, but that is entirely optional because Aragon can always walk away from the pledge.

Panvala issues grants in its own token. The market value of the tokens when they are donated determines the amount of the pledge that has been fulfilled, so the amount Aragon funds teams with will almost always differ from the value of the tokens earned. The tokens can be worth more or less than the amount Aragon spent on the work.

Aragon’s funds are spent as normal, but the tokens earned by Flock teams are collected by the Association and donated back into the system itself. Here’s a diagram of the flow of tokens and money in Panvala. In this scenario, Aragon is the donor at the bottom of the diagram and Flock teams are the workers at the top. Aragon gives teams dollars, ether, or ANT to fund workers, and gets the Panvala tokens earned for the work in return. Aragon donates those Panvala tokens back into the system itself.

This part was just a technicality. The Launch Partner program is only open to teams that have earned grants from Panvala over the last nine months. Since Aragon One has earned a grant, either Aragon One or Aragon as a whole are eligible to become a Launch Partner. Here’s the full list of Panvala grants, which includes all other teams/projects eligible to be Panvala Launch Partners:

Panvala is a new kind of foundation that runs on its own currency. It doesn’t raise any funds—it can’t hold ETH, USD, or any other currency. It issues grants and accepts donations in its own token, PAN. There are 100,000,000 PAN in existence, and the system will launch with 49,906,303 PAN locked in the token capacitor smart contract, which releases tokens at an exponential decay, like the Bitcoin block reward. The goal of Panvala token holders is to maximize the demand for their tokens by maximizing donations to the system. The more effective Panvala is at funding work people care about, the more people will want to donate to Panvala.

With Aragon’s Launch Partner pledge, a portion of the 10,000,000 PAN set aside for Launch Partners will be allocated to Aragon. When Panvala succeeds, the projects that hold more tokens in the system will have the votes they need to prioritize funding for the work they depend on without having to fund it all themselves. Instead, some of that funding will come from businesses that want to earn the attention and gratitude of the Ethereum community by becoming a Panvala sponsor.

While Panvala tokens might have a monetary value, I don’t view Aragon’s treasury as an investment fund. The treasury is for fulfilling Aragon’s mission to give the world the freedom to organize. Since that mission depends on common Ethereum infrastructure, these tokens will aid that mission not by giving Aragon assets to sell, but by giving Aragon voting power in the system that directs our common efforts.

I don’t see why a new, illiquid token is necessary just to facilitate funds donations. Why not accept DAI donations and give DAI grants (or some other liquid token that has actual utility)?

Raising DAI to distribute as grants is a workable approach that we encourage others to take, but we believe that more effective systems can be built with tokens, just like Aragon will produce a more effective arbitration system with ANT.

By using our own token, we have been able to distribute grants over the past nine months to teams working on common Ethereum infrastructure, like Ethereum 2.0 teams (Sigma Prime, Prysmatic, Status/Nimbus, Whiteblock), state channels teams (Connext, Counterfactual, Prototypal), and more. Rather than those teams working independently to raise funds, they now have the tools to raise funds together through Panvala. The more work they do to increase the flow of donations into the system, the more demand there is for the tokens they hold. Tokens are an incredibly useful tool for aligning incentives to produce cooperation where there was once competition.

Here are two more reasons from the whitepaper:

Property Rights

Using property rights to organize cooperation makes it easy for people to do work and be rewarded for it without needing anyone’s approval to do so. As a result, people capable of improving property can identify themselves without needing to be recognized by a central planner. We’re familiar with how this plays out with land or intellectual property, and these same dynamics can be harnessed to organize the provision of public goods.

A normal foundation hires donor development staff to increase the flow of donations into the organization. Instead of having a handful of donor development employees who are rewarded for increasing donations, Panvala can tap thousands or even millions of token holders, who can all be rewarded for increasing donations to the ecosystem. The more donations are made to the system, the more demand there is for the tokens held by the people recruiting more donors. Token holders have an incentive to tap their social networks to recruit more donors to fund the work we all care about.

Principal-Agent Alignment

Many donor-funded organizations are ineffective. The management of these organizations act as an agent for their donors, who expect them to maximize the good that can be done with their donation. However, since their effectiveness is hard to measure and often defined subjectively by a handful of large donors, the management of the organization can be far removed from any increases or decreases in their effectiveness compared to for-profit organizations where there are clearer measures of impact. It is notoriously difficult to solve principal-agent problems and get agents to act in the interests of their principals.

In Panvala, pan holders are the agent for Panvala’s donors. Pan gives its holders a stake in the system’s future. If pan holders vote to issue grants effectively, they will grow the number and size of donations made to Panvala, which increases demand for the pan they hold. If they issue grants poorly, donations will decrease, as will demand for their holdings. As a result, we expect pan holders to be very responsive to the desires of current and potential donors, even though donors themselves don’t have votes in the system.

So PAN is a medium of exchange token, which has been shown to have fatal flaws:

I don’t see why recipients should give this token any value, or why as a donor I would want to buy it. I prefer to give and receive a more stable, liquid token such as DAI.

I think there are better uses of the Aragon Association’s funds, and also better ways to construct a decentralized grants system (e.g. CFDAO, Giveth, Moloch DAO), and will not be supporting this proposal.


It’s not a medium of exchange token. From the article you linked:

The important thing is that for the token to have a stable value, it is highly beneficial for the token supply to have sinks - places where tokens actually disappear and so the total token quantity decreases over time.

Panvala’s sink is the token capacitor, which regulates the release of donated tokens.

Anyway, thanks for your questions! I think they’ve been useful to explain the proposal to the rest of the community.

why a new, illiquid token is necessary just to facilitate funds donations.

The token is used for that purpose, but it is also used for voting in the system. Panvala’s token incentivizes the token holder to vote in favor of the work that should truly be funded. If the token holders vote for work that the community does not like, the token is likely to decline in value as the system loses legitimacy.

The token and its incentives enable crowd-sourced wisdom and markets to allocate the donations, rather than bureaucracies whose ability to allocate donations to the most important work is unclear at best.

I cannot see how using this token facilitates Aragon allocating funds more efficiently, nor can I see how this token captures value so I will also be voting no to this proposal.

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Here’s the pull request for Aragon’s Panvala Launch Partnership.