Discussion: Should ANT be the native token of Aragon Court?

This video of the proposal from Delphi is sooo goood. https://www.loom.com/share/0bc36ec9ac604599be6faf454f23988b

And thanks Jorge for considering alternative options/opinions!

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UPDATE: The town hall been postponed 30 minutes. New time: 7:00-8:00pm CEST

Hey everyone, I’m Jack from Aragon One.

As @jorge said, the outpouring of feedback from the juror community in recent days has prompted us to reconsider how we engage with the juror community going forward.

To kick things off, Aragon One will be hosting a town hall tomorrow, Oct 8, at 6:30-7:30pm 7:00-8:00pm CEST in the The Eagle’s Nest voice channel in the Aragon Discord server.

Link to town hall: https://discord.gg/tedsZWD

To submit specific questions or discussion topics please reply to this post or leave messages in the #ANJ channel on Discord (please include [Town hall] in your message, this will help us keep track of your questions!)

Of course, feel free to ask questions during the town hall itself, too.

See you there!

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Why not collaborate with Kleros to enhance security?

Is there a calculation how much it would cost to attack the aragon court ?

Would it be possible that in the last case where max jurors are selected also ANT holders can stake their ANT in the court to become jurors if the case goes to the last instance ? In this case the attacker not only has to acquire 51% of ANJ but also 51% of ANT

I have the feeling that this vote is much too quick and not thought out. In my opinion you should first ask in the forum for feedback and then create a vote not vice versa.

Aragon One is withdrawing the proposal.

We plan on re-proposing an updated version of it soon, along with other potential thorough proposals that come up in the next week in the ballot.

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I’m happy to see the discussion over the last few days, and happy to see the vote to move forward with Aragon One’s proposal to unify ANT and ANJ into a single token withdrawn so that the community can discuss and debate the merits of that proposal as well as alternative paths which have been brought forward.

I’d like to make the case for why I think token unification is the best path forward for both ANT and ANJ holders. For some context, I was a major supporter of creating the separation in the first place for two reasons:

  1. Separation of powers and isolated incentives - In order to establish rights for minority and or otherwise unrepresented stakeholders (like users) or encode core values (like setting aside a portion of revenue for charity) its essential to be able to raise objections when these rights or values are discarded by those that hold a majority of governance power.
  2. Work token aggregation - As I’ve written before (1)(2), a well designed crypto-economic system is unlikely to capture significant rent because capturing excessive rent is actually inefficient, and decentralized protocols can be forked at minimal cost (relative to the upfront investment in design, implementation, and market validation).

The current design accomplishes both by using a bonding curve to connect ANT to ANJ, ensuring that some fraction of the success of the connected token is realized as demand for ANT, while enabling the token to float on the market such that market incentives would drive participants in the court to value the long term reputation of the court as a reliable arbiter, while creating a check and balance between the two groups where on-chain votes can be blocked by the court, but the court cannot execute on-chain actions.

While this model results in only a fraction of the increase in demand for ANJ as a result of the court reflecting in demand to lock up ANT in the bonding curve, it also serves as a template for realizing value from investing in the creation of tokenized protocols without depending on extracting rent. By using the bonding curve model, we exchange extractive fees, for a baseline level of liquidity between connected tokens. While both can be potentially forked out, additional liquidity is (imo) less extractive and benefits and aligns communities more effectively than fees.

So what’s changed…

1. Optimistic Snapshot

With optimistic snapshot voting, we can move voting off-chain and support a much more flexible way to design voting mechanisms, while only needing to submit two transactions to execute the results of an off-chain vote. This works by using the Court as an arbitrator for an optimistic game, where anyone can submit the results of a vote on-chain, and the result will be accepted unless it is challenged and the challenge is resolved in the favor of the challenger.

This is by far the best way to do voting if you need to have execution happen on Ethereum and have a large number of stakeholders that need to participate. We want to adopt this process for the Aragon Network, but if we do we break the separation of powers assumption that is so important in governance. As a result we have been reconsidering some aspects of the Aragon Network and Aragon Court’s design in order to make the most compelling system and create the most value for all of Aragon’s stakeholders.

2. Focus

I believe strongly in the value of Aragon Court, it has been the foundational pillar of the Aragon Network and is essential for DAOs and I believe it should be the Aragon Community’s singular focus for the foreseeable future. Rather than have the Aragon Network function as an investment fund, which is probably not a good fit for a large, open, and highly transparent community governance process… while also fracturing the communities attention and considerable resources between many disparate initiatives. It seems more practical to focus all of the communities energy into a single direction.

By creating this clarity, and reflecting it in our economic model, we can reduce confusion by simplifying what people need to understand about Aragon, while also making it easier to integrate and collaborate with other communities and networks by ensuring the role and incentives around ANT are simple and well understood.

3. Better solution

As mentioned above, the potential transition to off-chain voting using snapshot has been top of mind for us at Aragon One and has driven us to reconsider some of our past design choices and explore alternative constructions of the Court to establish separation and isolation of incentives while also addressing other important challenges we have encountered while working on the Court so far.

Rather than create this necessary separation by creating a separate token, we can deploy multiple instances of the court tied to single token (ANT) and use a reputation and/or credential component to modulate how much stake individuals can have in a specific court instance. A court instance may be focused on different languages (english, spanish, chinese, etc), or dispute specialization (snapshot, legal certification, solidity etc). While snapshot is likely the highest priority use case in the short term, allowing for people to opt-in to specific categories of disputes in this way is something that many Jurors have asked for, and this provides a way to do it while making it easier for economic stakeholders to activate in controversial cases as they get escalated to a final appeal round. Eventually using a futarchy decision market so that final appeal round does not require participants to have credentials or reputation in the specific court instance.

Hopefully these points help make the case for why token unification is the right path forward for Aragon as a whole. However, I think it’s also important to address the concerns that have been raised by ANJ holders since the proposal was shared on Monday.

I think there are two primary points of concern I have observed:

  1. This proposal violates the rights of ANJ holders by not explicitly including them in a decision which clearly impacts them.
  2. This proposal doesn’t offer adequate compensation for ANJ holders.

To the first point, the relationship between ANT (which has governance authority over the court and by extension of ANJ), has always been both explicit and clear. That said, the goal of ANT holders as governors of the Aragon Network is to navigate a complex decision surface to serve the Aragon Community as a whole and represent the interests of all of its stakeholders, including participants and stakeholders in Aragon Court specifically. So while I don’t think the proposal should be seen as a violation of the rights or expectations of ANJ holders, I am happy to see that the vote has been withdrawn so that as a community we can discuss and address the concerns that have been raised by community members before moving forward.

As for the second point, the strike price for the merger and fact that the proposal was announced without prior discussion was done in an effort to ensure that both ANJ and ANT could be merged as equal stakeholders in the network, while minimizing the possibility of trading as a result of the proposal inferring advantage to any specific parties.

Some have suggested that it would be appropriate for ANJ holders to be offered a takeover premium, and while I have less overall conviction on the specifics of something like that, I think the analogy of a hostile takeover is not particularly apt, here’s why:

ANT and ANJ are deeply linked, because the Aragon Network as a whole is responsible for governance as well as development, support, and promotion of Aragon Court. As a result ANJ is not currently a self-sufficient standalone asset, but a component of the Aragon Network, if ANJ were to be valued independently of the Aragon Network and ANT I expect that its fair value would be much lower than it is today, especially if ANJ was left alone while the Aragon Network proceeded to focus on the vision described above using ANT as the staking and fee token. I would hate to see that happen, and think it makes much more sense to fold ANJ back into ANT as the proposal suggests, but it’s important to think about in the context of any sort of call for a buyout or redemption premium. Taking all that into consideration, if we assume markets are a reasonable estimator of value, using the relative market valuation feels like a fair and objective way to resolve the merger.

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Luke, I don’t think anyone is asking for the assets to be valued independently. I am fairly confident that people bought into ANJ because it is an extension of Aragon, in the first place. Also, ANJ and ANT are obviously bound together by a bonding curve, so I don’t understand where the concept of independent valuation is coming from. Whether or not you were initially a proponent of having an independent token and have subsequently changed your main is relatively irrelevant at this point. At the end of the day, Aragon created an opportunity for people who missed out on low market cap ANT to be able to still have a chance at a low market cap Aragon Network embedded asset. This opportunity is now sitting in a place where it may be revoked (by Aragon Network itself, no less) and I believe that is the main reason for the contention here. I feel like your writeup sidesteps this aspect of this situation. I feel like your writeup also sidesteps the fact that ANJ being folded into ANT would mean that the effective market cap would be increasing ~20x, while many holders of ANJ are holders of ANJ due to its low market cap and amazing upside potential. So from the perspective of an ANJ holder, the market cap is increasing 20x but the price is staying about the same. I feel like your writeup is made solely from the perspective of an ANT holder and marginalises the perspective of ANJ holders, who may be newer to the party and wanted to get in on a low market cap Aragon token before it inevitably appreciates in value. I feel as if your writeup also sidesteps the recognition of the precedents that folding ANJ into ANT would set. I think that it is good to keep in mind that the value of ANT doesn’t actually change all that much if ANJ is folded into ANT, since ANT was already the only means by which to mint new ANJ. Having a bonding curve pair of ANT <-> ANJ already increases the utility of ANT, and it in a way inherits the value of ANJ (due to the supply of ANJ being controlled by ANT by virtue of the bonding curve).

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Valid points. I agree with Mostly everything.

The only thing I disagree with is your belief is that there should be no premium. Here are four simple reason why there should be.

  1. Most current ANJ holders are not speculators and are longtime crypto investor, and this situation should be looked at as potential for growing a stronger foundation for ANT. Not giving a decent premium for our loyalty & belief in Aragon’s projects will be seen as disrespectful.

  2. the dilution of ANJ holder’s % of ownership of a protocol goes down significantly once ANJ is converted. Therefore our potential upside goes down as well.

  3. Simple 15-30% premium on ANJ conversion would not dilute ANT’s price but increase use case of ANT’s and increase valuation by 50 mil. per Delphi Digital NPV valuation.

  4. ANT price will not be diluted once ANJ is Converted. TimeLine: Aragon announces ANJ conversion premium, ANJ price adjust, ANJ is converted to ANT, # of ANT token goes up mcap also goes up price stays the same.

Only thing that adjusts is Aragon gained many loyal followers.

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I don’t think anyone has proposed this, I’m surprised you are even mentioning it.

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I try to understand this for me complicated explanations

  1. Separation of powers and isolated incentives – Do you mean you like separate tokens for different ecosystems because then the interests are clear and only people who hold the token vote on the decisions of the specific ecosystem. In contrast if you would have a big token for all ecosystems then interests are not so clear separated?
  2. Work token aggregation – Do you mean you like separate tokens for different ecosystems because then each token capture the value of the specific ecosystem. This makes it easier to analyze ?

I really would love to see a pro contra list with arguments for and against a separation of ANJ / ANT

Do you mean because ANT is a governance token for the Aragon Network and through Optimistic Snapshot ANT would rely on the security of the Aragon Court (ANJ marketcap) and this is too unsecure for ANT governance? Thats why you need a higher security court (ANT court)?

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ICYMI, the recording is up for the town hall discussion on the recently withdrawn ANJ <> ANT merger proposal :microphone2:

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For me, as one of the authors of the Aragon Network Agreement, my primary concern is that we have a way to enforce the Agreement when the Phoenix phase launches. If there’s a guarantee that we will have a mechanism for enforcing the Agreement in the new single-token court model when the Phoenix phase launches then I think this change makes sense.

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the vote passed YES+
what anj holders need to do now

I love what Jorge proposed / brainstormed during the town hall discussion that ANJ will be like ATOM in the cosmos hub a coordination token / system where everyone can spin up a court and connect it via the ANJ court hub with all other courts. Is there a written proposal for that? I think this is very exiting.

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The proposal was withdrawn and will not be enacted based on the result of the first vote (the vote that ends today).

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Thanks for the kind words @mouyou!

No. Ideas evolving so fast that putting them on paper right now feels like a bit of a waste of time compared to continuing the thinking

ok. would love to hear or read your continues thinking on your brainstorm.

I like those live brainstorms. collective brainstorm. forum brainstorm. brainstorm in the morning. brainstorm in the evening. Could also be a nice movie “The Brainstorm” now on Netflix and perhaps also Amazon prime. It’s a story about a big storm which disrupts the whole earth. It’s like the day after tomorrow haha

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uniswap rewarded its users generously
i guess aragon will do the same , - they wont use the optimistic snapshot there is better options
and like revolution0x said - with a reset after

I am a newbie in Aragon. From my perspective - it is always good to have a single token for one network / community regardless of its various initiatives. Tokens are a means of Coordination of its participants & community members. Price of a token is just a speculative side effect of the overall value addition to the network that is created by growing adoption and participation. In order to grow adoption it is always good idea to keep things simple, uniform and less ambiguous for newbies. I am in favour of having a single token regardless of economic interest. Economics will work anyway if adoption grows. I hodl both ANT & ANJ but still not sure which one to use where most effectively so I am in favour of merging the tokens into one. Sorry, I am still a noob.