Clarifications on AGP-41: Acquisition of DOTs

treasury-management
association
agp
#1

AGP-41 seems to have spurred a lot of interest in the community.

It’s extremely thrilling to see so many people share their concerns or voice their thinking around specific opportunities. It really goes to show how much people can take seriously such a vote, and we hope this will become the default pattern for any large capital allocation by organizations with a wide type and vast number of stakeholders.

In this process, oftentimes a lot of incorrect, incomplete or blatantly false information can spread out.
We’d like to imagine that most of the time they come from genuine misunderstanding, and are just amplified by the emotional load that any vote in the Aragon community carries.

At the Aragon Association, we never want to be in control of the narrative around specific issues as we prefer the community to develop its own voice and opinion. This serves as a great test ground to prepare ourselves for when we will have the technology ready to completely distribute the governance power and the funding decision through the Aragon Court system to the Aragon Network.

With this in mind, we do feel that on this occasion the community would benefit from a few clarifying thoughts from our side.

The Aragon Association has been in touch with the Web3 Foundation, as it has with many different other projects all building the future we are fighting to build. During the course of these discussions an opportunity arose for the Aragon Association to participate in a funding round regarding the Polkadot protocol.

While, during the ANV-01 ballot, the Aragon Association received full discretion over the treasury of the project (for which there is now finally a disciplined, deliberate and diversified plan in place, on which we’ll provide more information at another time), we felt that this is a major decision for which we would not be comfortable taking action without having the Aragon community express their opinion.

There are other ways to achieve the diversification and exposure necessary for the financial allocation plan we have in place, but we do think that Polkadot and a few similar projects represent a clear answer to many of the problems currently felt by the developers actually building, and more importantly, deploying and using decentralized applications.
Therefore, we do think that an allocation to DOTs is a reasonable idea to propose to the community.

The AGP-41 vote doesn’t mandate that the Aragon Association purchase any assets.

The wording is very clear:

The Aragon Association is seeking the signaling by the community for the approval of closer engagement in technology collaboration and parachain development, as well as in purchasing DOTs to diversify its crypto assets. After the signaling is evaluated, the Aragon Association will determine the appropriate amount for the DOT purchase, with a maximum amount equivalent to $1.5M.

The Aragon Association has not been “tricked” into accepting any set offers, and a successful vote on this AGP would exclusively give the confidence to the Association that an investment would be echoing the will of the community.

That doesn’t mean that the Association would blindly enter into a forced contract, without being aware of its leverage, and/or make an imprudent financial decision.

It is absolutely understandable that the Aragon community be skeptical and that evaluating something without understanding the pricing is extremely hard. We clearly understand that.

There is currently an offer formulated for the Aragon Association. We are not at liberty of discussing the price, and we do respect confidentiality agreements entered in good faith. What we can share is that we are positive this is the best deal that has been offered to any blockchain project directly by the Web3 Foundation as part of their current fundraising efforts.

To further clarify: there are currently no signed contracts between any entity.

As part of our diligence on the offer, we have asked multiple OTC desks (some of which we are clients of, and some of which we are not) to provide offers on secondaries from earlier rounds participants.

We have heard of mythical lower prices, but we have only found real offers with a price that is extremely close to that offered directly by the foundation.
We have not found any willing to use a third party law firm, broker or other trusted entity to act as an escrow agent for the transaction (we’d also be willing to pay interest on the capital in escrow).

Should the AGP vote be successful, the Aragon Association would clearly use its best judgement to purchase the DOT tokens at the best available price at the time, while also taking into account the risk that each different transaction carries.

The Aragon Association has also received permission to publicly publish the price it would pay for the DOT tokens when the network goes live (currently scheduled before the end of 2019).

On the topic of conflicts of interest that has been raised: no one at the Aragon Association, including the board members who are also part of Aragon One, has any direct, or indirect, financial interest in DOT tokens at this time.

The deal that the Aragon Association has the option of entering into is also available to the Association employees and board members. We have received confirmation in writing from the Web3 Foundation that this personal deal is completely separate from the Association’s purchase and would be available at the same conditions even if the AGP would receive an unfavorable vote, or if the Association would decide to not follow through with the purchase for any other reason.

Board members of the Aragon Association and myself have a strong intent to purchase DOTs in the future. We commit to doing so at a price no lower than what the Association has either been offered or will execute at.

Obviously, both board members as well as myself will not be voting on this proposal with our own personal tokens. As a reminder, the association’s treasury ANT allocation is also never used for votes.

As such, a positive or negative result on this AGP would have absolutely no impact on our financial interests, other than impacts on the prices of ANT and ETH, which we all hold.

We see this as a defining moment for open governance. We are again extremely grateful to all the people that are spending their valuable time providing their feedback on this decision.

This is the main reason we do things this way.

The going consensus is that general elections in both the U.S. and U.K. have had major influences from external forces, disrupting the democratic process - so we are well aware of the risks and perils of open governance for a crypto network, where the attack vectors are not even known at this point.
But we have not yet found a better alternative. Doing deals in secret and doing disclosures after the fact is not what we believe in. It’s surely easier and creates a lot less drama, but it isn’t right.

Open governance is hard, but it’s worth it - and we’re very proud to be showing the world there is a different way of taking decisions.

:eagle:,
Stefano Bernardi
Executive Director, Aragon Association

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Discussion Regarding AGP - Aragon Acquisition of DOTs
Discussion Regarding AGP - Aragon Acquisition of DOTs
Discussion Regarding AGP - Aragon Acquisition of DOTs
Aragon Network Vote #2 Megathread
#2

I am happy this has been disclosed, but it is a conflict. The board should be using Aragon’s leverage as a project with an active community to negotiate the absolute best price for the project, not their personal accounts and the project. Aragon being on polkadot is worth a lot to polkadot (aside: likely >$1.5M, IRL the tokens should be an incentive to build on polkadot, not getting that is a negotiating failure, imo) The more tokens the discount must be spread over, the worse your bargaining position.

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#3

I really appreciate Stefano’s post. His writing style is clear and direct.

I will add that these deals are NOT mythical, and a few have actually been closed in the last few days since I wrote the post.

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Discussion Regarding AGP - Aragon Acquisition of DOTs
#4

Open governance is hard, but it’s worth it - and we’re very proud to be showing the world there is a different way of taking decisions.

This is great. While it’s not perfect, I applaud the effort. You guys have consistently been trying to create more transparency and community engagement and I really appreciate that :slight_smile:

The going consensus is that general elections in both the U.S. and U.K. have had major influences from external forces, disrupting the democratic process - so we are well aware of the risks and perils of open governance for a crypto network, where the attack vectors are not even known at this point.

So… please correct me if I’m wrong, but historically voter turnout in is incredibly low, even within the Aragon community. With a topic such as buying DOTs, there are incentives for well funded interests from outside the Aragon community to fight for outcomes that favor their interests. It seems… from what I can tell… that it would be trivial for larger players (the Web 3 Foundation itself or organizations such as hedge funds that have a direct interest to support it) to throw their weight behind the proposals they want and “buy” the vote. This would result in outcomes that do not represent the Aragon community at large. Am I missing something here and/or how are you guys thinking about this?

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#5

Hey @burrrata,

Thank you for cheering on the efforts made by Aragon teams!

Here is my personal take on your questions:

It is true that the voter turnout during the AGP ballot that took place 3 months ago was low (approx. 7% if I remember well). However, I would be cautious using the word “historically” when actually there has only been one Aragon Network Vote in history. The current vote is Aragon Network Vote #2 :sweat_smile:

Indeed, that’s one risk of the on-chain governance model on which Aragon is currently based. Although I personally hope that with time an experimentation (for example through ANV#2!) the community will be able to build a better and better process, that’s the state of things at the moment. This being said, I’d like to highlight two things:

  • Buying the vote is not free. Accumulating ANT takes time, it is a costly and fairly risky operation. You can check this tweet providing some data on this matter.
  • Voter apathy is another aspect. As stakes and parties interested in the ballot may change from one voting round to another it will be interesting to look retrospectively at voter turnout and try to draw conclusions from the data.
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#6

Thanks for reaching out!

I guess rolled into my “historical voter turnout” comment was that voter turnout across all blockchain projects is historically low, including Aragon. Should’ve specified that lol

Regarding vote buying/influence, thanks for sharing that tweet. Good information to have. Like I mentioned here I don’t watch markets closely enough to have that info, but it would be great if that was available to the Aragon community on an easy to read and verify dashboard.

Also, for anyone coming to this post who’s interested in the topic, @lkngtn had some excellent comments/thoughts on voter turnout and influence here and here.

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