ANT is the native token of Aragon. ANT holders make important governance decisions. As more and more power and responsibility is shifted from AA to ANT holders it seems essential to discuss, understand, and model the incentives for ANT holders. Hopefully this will lead to more ANT holders making decisions that increase the value of their ANT and more community members taking actions that also increase the value of ANT. This is a hard problem.
The problem, as with any early stage project that’s trying to find product/market fit, is that there is no clear way to measure value created. In traditional capital markets, price (either via private valuation or publicly traded valuations) is used as a proxy for the “value” of a company. There are robust valuation models that have evolved to determine the “value,” and thus price, of companies at every stage of their growth.
- Early stage: total addressable market (opportunity) and the people aiming to build a product in that market (team).
- Medium stage: the actual thing the team has built and the daily/weekly/monthly active users of that thing (product/market fit).
- Late stage: revenues and growth minus operating expenses (P&L).
This is a simplified explanation of how capital markets work, but the main takeaway is that we are at the early stage. ANT value is not determined by users or revenue, but by potential.
So with that in mind, let’s explore Aragon. Aragon is an idea, a platform, and a community. The idea seems to be that the community (Flock teams) build things on the platform that furthers the mission/vision of Aragon. Hopefully this will be profitable and sustainable?
At the moment it’s pretty clear that Flock teams are doing an awesome job executing on the mission/vision of Aragon. That’s not up for debate. What is unclear, however, is how to tie that back to the value of ANT. Since ANT voters are funding Flock teams, it makes sense that Flock teams would do well to show how they are driving value to ANT holders. Since price is the proxy capital markets use for “value,” it makes sense that ANT holders would want to support things that increase the price of ANT. This is difficult because:
- A) ANT holders are largely apathetic and do not vote
- B) ANT holders are decentralized so there is no single voice that can speak for them, and even if there was there is no clear way to ask them what they want
- C) the ANT holders who have voted approved proposals that do not directly tie requests for funding to strategic actions that will drive ANT price
The naive impression here is that ANT holders are either unsophisticated or altruistic. There’s another option though. What if ANT holders realize that good things take time and finding product/market fit requires experimentation and freedom?
Angel investors are called “angels” because they pour money into seemingly impossible ideas, with often unproven teams, trying to build something that has never been built, in markets that don’t exist. Done correctly this can lead to incredible returns. Due to the extremely high risk, however, most of these early stage ventures fail. If they all fail, how do angels get incredible returns? They take lots of “shots on goal” by funding lots and lots of ideas. Most will fail. That’s expected. The goal is not to be a product manager and ensure that every idea gets shipped. The goal is to find 1 amazing idea out of 10 or 20 that will overcompensate for the failures of all the others. If we get creative and apply this model to Aragon, the goal of Flock teams seems to be to support community growth and build awesome stuff that makes Aragon awesome. Having a lively and engaged community who can easily build on Aragon will result in more cool stuff being built. Hopefully one or two of these cool things will actually drive users to the platform. If Aragon has something people want, then people will probably use Aragon. Hopefully this “killer app” will drive the price of ANT to the moon
It would be great if people were using Aragon! That’s the goal, but it’s not the only goal. There’s another goal: a high ANT price. It is currently unclear if active users will actually increase the price of ANT. At the moment all of Aragon’s apps and infrastructure are free and open source. In addition, anyone can create and use an Aragon DAO without ever touching ANT. This implies that the value of ANT is tied to ANT related services, not just users of free and open source software. Let’s take a look at those ANT related services:
- Currently ANT allows holders to influence governance of AA funds via Aragon Network Votes
- In the future ANT might be useful for users to stake claims on the Aragon Court. Hopefully we will come up with some other ideas as well…
So currently, the main service that ANT holders provide to the community is capital as a service. When banks and VCs fund early stage endeavors they do so with an expectation (or at least hope) for a return on investment. The lender provides capital and in return gets a piece of a companies equity and sometimes a stake in governance via a seat on the company’s board. This makes sense. If you make an investment you want to then be able to recoup gains if that investment does well, and you want to have a lever to pull in order to affect the outcome of major decisions that would affect that investment. Currently ANT holders have none of this. ANT holders do not get a stake in the future upside of Flock teams. ANT holders do not have any direct influence over a Flock team other than approving or denying AGPs in a binary manner. Yet, in spite of all this, ANT holders are funding Aragon Flock proposals.
To date, the current model of Flock funding has made Aragon one of the most successful Ethereum projects in the world (from a technical standpoint). The Aragon platform is the undisputed global leader for DAO development. The market sees this. Unlike most other ICO projects that are drowning in the gutter, ANT has a healthy price that is moving upwards. ANT has a pulse despite the fact that there are virtually no users beyond Aragon teams dogfooding their own apps. From one perspective, this is great! From another perspective, this was great. What got us here will probably not get us to the next step. We need to evolve.
So what’s next? I don’t know, but hopefully we can figure it out together. Here’s a few ideas.
Any technology platform needs infrastructure in order to function. Rather than hiring a large team, Aragon has chosen to decentralize. This means that there are lots of teams working on core components of the Aragon stack. These endeavors are not and will never be “profitable” in the conventional sense. If you hire an engineer to build better interfaces for user profiles on your app you don’t expect that feature to be “profitable.” You expect it to fit into the overall feature set of the product, and that product will then be profitable. Today many Flock teams are fulfilling this role. They are building out infrastructure for Aragon that is similar to how employees or product teams in a company would be building internal projects. It is unreasonable to expect these teams, who are building free and open source software, to be “profitable” or “sustainable.” It is reasonable to expect ANT holders to fund teams and projects that fit into the overall strategic vision of Aragon.
One of the biggest barriers to adoption of Aragon organizations (in my opinion) is a way to bootstrap funding and liquidity for a DAO. Apiary addresses both of these pain points, and I expect it will be a major catalyst for more serious adoption of DAOs.
We need better ways for teams to iteratively go from having an idea to building a prototype. This will allow us to try out lots of low risk experiments before investing millions of dollars to fund them long term as part of a Flock team. This is essential to keep energy and engagement in the community high. At the moment ANT holders are funding million dollar projects that support teams of 5-10 people, but small community endeavors that cost less than $10,000 each are getting blocked and pushed back on. To get some perspective, we could fund 100 to 150 $10,000 community grants for the same cost as either Aragon Black or Autark’s latest AGP. For reference, that’s two to three $10,000 community grants per week for a year. Considering that experiments like Daolist, Conviction Voting, Scout, and many more have been funded this way, I think we would be stupid not to increase the volume of support for community projects 10X.
Now, I think Autark and Aragon Black are building amazing apps that have the potential to unlock way more value for ANT holders than they are asking for. Also, in order to attract (and retain) top talent Flock teams need to be able to offer competitive salaries. I’m not contesting the ask of recent AGPs, but I am saying that in addition to funding large AGPs we should, without hesitation, fund at least 50-100 small scale projects over the same time period. If we’re giving 3,000,000 DAI to Autark and Aragon Black over the next year to build 5-10 projects, we should at least be able to give a couple hundred thousand DAI to support 50-100 community driven projects.
To support more community projects we need better infrastructure. One does not simply fund 100 early stage projects. First, we don’t have that kind of deal flow. Second, even if we did who would allocate those funds? The CFDAO is a good start, but it’s clunky. Just look at poor @chrishobcroft who did his best to contribute to the community at EthBerlin and can’t even get basic expenses reimbursed. This is ridiculous…
Now I’m not here to complain. I’m here because I want change. I want the community to be vibrant, healthy, and growing. I think the AA and the Aragon community wants that too. We’re starting to move in that direction with the CFDAO, NestDAO, and CRDAO, but we have a long way to go…
ultimately I think the best models will be more bottom up, and provide space for competition among contributors (or service providers).
This might look like app mining (see below).
It might also look like creating DAOs that support and target specific areas within the Aragon community (marketing, ANT price, dev UX, onboarding, education, scalability, etc…). Each DAO would have a board who’s job it was to find deal flow, fund ideas, and give them support along their way to help them ship or get to the next stage of their journey (Nest grant and/or Flock adoption). This would allow the community to fund projects on a individual basis, allow community members with domain expertise (working groups and/or Expert Network) to support those projects, and then we would have feedback and data from each experiment. This will allow us to refine and improve upon our meta models.
As is, none of this is possible with Flock proposals that throw the kitchen sink at ANT voters in a binary fashion. “You’re either with us or against us!”" shouldn’t be default way to raise funds in the Aragon community. Again, this is not the fault of the current Flock teams. They’re just trying to create cool stuff and contribute to the community. It’s the fault of the community for not providing better ways for teams to experiment and build.
To fix this, the first thing we need is talent. @joeycharlesworth had a great idea on how to fill this gap with the Expert Network. This is similar to the Aragon Working Groups idea, but it’s for profit. Anyone can join, and there’s profits. Let me say that again, it’s profitable. This means that the Aragon community could invest in it and receive value back not only in the form of higher access to talent, but potentially also from revenue. That would be awesome.
We need keep dreaming. We need more ideas on how to support the community. Then we need to follow through on making those dreams real. Aragon was born out of a dream that anyone anywhere could come together and collaborate. We’re fighting for that dream, but we need help, and the people fighting for that dream also need help. The magic of decentralized cryptoeconomic networks is that they create positive sum value creation. Designing and creating those systems within the Aragon ecosystem needs to be the #1 priority for the next ANV cycle.
Aragon App Mining
We need to create systems that reward applications that have high utility and real users. Currently Blockstack has an “app mining” program that ranks and rewards applications on a monthly basis based on their user volume. We would like to create something similar for the Aragon community. Eventually we hope this will allow more Aragon community projects move away from one off grants towards a more meritocratic model. This will incentivize developers to make things people want, and to keep them maintained and usable.
Contract Author Fee Rebates
As Vitalik recently suggested, it would be possible to reward authors of contract libraries every time that library is used in a transaction. If Aragon teams did this with their dApps and infra projects they could potentially earn recurring revenue that would enable them to keep building more dApps and keep earning more revenue, etc…
For Profit DAOs
One idea is that if each team had a DAO, and that DAO’s tokens were embedded into that teams products, and those products gave that team a path to sustainability… then a FlockDAO could fund these teams by putting ANT tokens into each team DAO’s Fundraising bonding curve. This way a “FlockDAO” could iteratively fund Flock teams and in doing so would get some governance and upside in that team. This also creates a clear path forward for ANT holders to support their early investments with follow on capital. If this model were pursued, and I think it should, then there are a lot of other problems that would need to be solved.
- Flock teams need to be able to show a path towards future, not necessarily current, profitability
- it would really matter how that Flock teams model their DAO token’s supply schedules
- to address the “founder mindset” problem, teams need to reward their team with that team’s token
- FlockDAO would also need to award funding in ANT so that the team can have skin in the game in regard to the broader ANT ecosystem and can vote in ANVs
Aragon Black is building Pando, a decentralized platform that replicates a lot of the features of GitHub or GitLab via IPFS and Aragon DAOs. GitHub was recently acquired by Microsoft for 7.5 billion dollars. GitHub is just a glorified user interface built on top of the free and open source git protocol. GitLab, similar to GitHub, started with 1.5 million dollars in seed funding (similar ask as Aragon Black’s current AGP) and is now pursuing an direct listing. Both GitHub and GitLab provide user interfaces and services on top of a free and open source platform. Aragon Black could build out Pando and then provide the tooling and infrastructure developers want and expect. These services can drive value to the Pando token, and if the FlockDAO owns Pando tokens then it’s a win/win for everyone. In addition to just providing services for payment Pando can also incorporate decentralized community governance into their token. This could allow users to vote on feature requests, but it could also create an “in game” economy where people who want support or features can purchase the platform’s token and then stake it to open Issues or bounties for that request. There’s many other options, but the point is that there are options. If a protocol or platform is free and open source, but real value is being created and captured by a token, it is possible to profit from the value created in order to create and reinvest in more value creation.
Aragon is a free and open source platform for decentralized autonomous organizations. Anyone anywhere can use, modify, or deploy Aragon DAOs. They can do this without ever touching ANT. In the open source world a business model that seems to be working is where companies will release a product for free, but then charge for services around that product. Canonical does this with Ubuntu, Red Hat does this with Fedora, and there are many more. This seems like a natural direction for ANT.
One could argue that capital is the first service that ANT holders are providing. Currently this model is not sustainable, although it could be in the future. At the moment the Aragon Court is the first ANT service that aims to be profitable. This will, hopefully, drive utility and value to the ANT token. It will do this by providing a robust and decentralized adjudication mechanism. The initial target user of this service is Aragon DAOs, but it could be much more broadly useful. If people need ANT to use the Aragon Court, then that will increase demand for ANT. A higher price for ANT tokens results in more capital to fund more projects to drive more value to ANT, etc… etc…
We need to identify, support, and ship more ANT related services. They are defensible, sustainable, and essential to our long term survival as a community. I think this endeavor is important enough that it should merit it’s own DAO. We have the CFDAO, NestDAO, and many more to fund community related endeavors. An ANTDAO who’s sole focus is to identify and bootstrap services that will drive utility to ANT seems like a no-brainer.
Your idea here!
These are just a few things that I rambled off the top of my head this morning, but I’m sure there are many more! Please contribute your ideas so that we can make the Aragon community as vibrant and healthy as possible