I don’t think that comparison is quite the same. If we are measuring economic weight in terms of ANT (or dollars, or whatever) and you inflate the supply of the asset in which you are measuring economic weight and simply give all of the new issuance to yourself, all else being equal the value of each individual unit is going to immediately drop by a proportional level so everyone’s economic weight would not be the same post-issuance. Whereas in this proposal, if ANJ holders currently hold 1000 ANT worth of ANJ according to the current bonding curve rate then they will receive 1013.5 ANT in the redemption offer, compensating for the extra issuance so economic weight as measured in ANT is being maintained.
Light, this proposal is effectively increasing the market cap of the asset in question by 2000%, why are you trying to refer to a 1.35% increase as a “premium” that ANJ holders receive. You are getting caught up on a technicality which makes almost zero difference to ultimate outcome of this proposal passing (2000% vs 1.35%). The fact of the matter is that this proposal negatively impacts ANJ holders who bought into it due to its massive upside potential. Both ANJ and ANT fluctuate much more than 1.35% almost every single day. Trying to make people recognise or be grateful for a 1.35% “premium” along with an effective 2000% market cap increase is asinine. This is beginning to feel like another plutocracy.
I don’t think I’m getting caught up on a technicality. I’m responding to someone else’s question about the use of the term “equal economic weight” to share how I interpret that phrase in this context.
Yes in considering the redemption offer ANJ holders will have to decide whether they want to own a bigger piece of a smaller pie (X% of ANJ $6m mcap) or a smaller piece of a bigger pie (Y<X% of ANT $140m mcap). But because ANJ is backed by ANT, ANJ holders can already think of their current holdings in terms of their proportion of the ANT supply as well. This proposal offers ANJ holders a slightly larger % of the ANT supply than they would otherwise be entitled to if they chose to exit via the curve today, and offers this redemption rate to all ANJ holders not only those who can exit the bonding curve the fastest.
Don’t you think just about every ANJ holder made this decision already (i.e. when they converted ANT into ANJ via the bonding curve, or when they bought ANJ via an exchange in the first place)?
ANJ holders are not being given a decision here at all, ANT holders are making all of these decisions on our behalf (without even first consulting the ANJ community). There is an unfair conflict of interest here, why would ANT holders vote against this proposal if it increases the utility of their token by far more significant amount than the “loss” that the inflation it would cause? On the other hand, from the perspective of an ANJ holder, this proposal pretty much only screws them over, I don’t think your attempts to dress this up as anything more positive than that are going to be successful.
This proposal sidelines and deputises ANJ holders. It’s shocking.
Personally, I hold both ANT and ANJ (pretty much the same value of both), but this proposal is strongly biased towards favouring ANT holders and disregards ANJ holders to a frightening degree. This proposal basically “cancels” a cryptocurrency and offers a 1.35% “premium” to convert it into a cryptocurrency with a 20x higher market cap. It feels weird that I need to be trying to convince you why this is distasteful.
(reposting from discord)
I believe the main point of contention is this. The proposal fails to recognise that, in simple terms, a dollar amount of ANT is not equal to a dollar amount of ANJ. By offering ANJ holders a slight premium, the authors of the proposal have assumed ANJ holder would be happy, maybe even grateful, to be reimbursed in the form of ANT of a higher dollar value. However, baked into every single slice of ANJ has been work/participation, not only in terms of jury duties, but investments of time in research, analysis and keeping up with the project. This is an intangible “elbow grease” investment that cannot be expressed in monetary terms. Most importantly, they have a completely different risk profile of initial investment from a capital perspective. As a fund manager, the dollars I would invest into ANJ are from a different allocation to the dollars I would invest into ANT, a different bucket so to speak, with different risk parameters, and different opportunity costs. This is easily conceptualised via market caps. Taking ANJ from 6m to 12m is much easier than taking ANT from 120m to 240m. I have made an active investment decision to commit capital to the first, and not the second. Would i swap a dollar amount in the first for an equal (+small premium) dollar amount into the first? Would any rational investor? We all know the answer to this question…
As I understand is that ANJ is a working token of Aragon. It is not independent its bound and controlled by Aragon / ANT holders.
Sure, but there is also a bonding curve, which was essentially the contract involved in how ANJ was bound to ANT. Also, your argument could be used to say that ANT is a working token of Ethereum, and the same logic could be used to try to justify a majority of Ethereum validators saying that ANT should be dissolved in favour of using ETH or a wrapped version of it because it has a higher market cap. It seems like a silly precedent to set.
Was ANT created by ETH validators voting to create ANT?
I do agree that ANJ holders should be able to vote with the ANT which is staked in the bonding curve
Thank you so much for this post. Hope this helps people rethink about steps that might have been taken with too rush.
Alienating the existing ANJ juror community, given the purchase price and the fact that ANJ holders are not able to vote on their own destiny, is going to happen very likely, but apparently is not something they seem very concerned about.
Thanks for your proposal. Raises some very important points and it could end up being more positive for the protocol than the one we published. Currently allocating all my time into thinking about this, but as of right now, I think what you propose has legs.
As we have been discussing, I am incredibly looking forward to a full fledged alternative proposal to ours and we can let the community discuss the merits of both.
I think that what makes this scenario the most “challenging” is that ANT holders are incentivised to vote “yes” on “Should ANT be the native token of Aragon Court?”, which gives ANJ holders very little recourse in this situation.
However, ANJ, as it was standing before the bonding curve freeze, offers ANT holders an even larger incentive than merging ANJ into ANT. That bonding curve offers all ANT holders an opportunity to invest in another dimension of Aragon, a dimension which happens to be only the second one and which only has a market cap of ~ $5 million whilst ANT has much larger ~ $113 million. I think it might even be a good idea to launch new tokens such as ANJ for different use cases and novel applications going into the future, because it creates a fresh environment for active users and people following the community to flourish within (shards?), it comes with a sort of economic “reset” in the sense that everyone essentially starts back on the same level.
If this proposal outcome is “yes” then Aragon will be setting a precedent in a sense that the “one token” approach is the way to go, this is sort of unfavourable to newer members because it means that the economic landscape may always favour essentially the same “upper class”. It may also taint confidence of Aragon community members buying any new Aragon token other than ANJ in the future (because what if it just gets voted out of existence again?).
Could we potentially have a proposal on “Should ANJ be the native token of Aragon Court?” on Aragon Court? Or even a snapshot vote using ANJ? This would incentivise ANT holders to use the bonding curve to acquire ANJ (if they want to vote “no”, or “yes”). This could be beneficial because it would ostensibly increase the market cap of ANJ, and may lead to higher staking % of the community, and may actually even lead to people who came to vote “yes”, ending up voting “no”, or vice versa.
Any other tokens that Aragon launches in the future could also be tied to a bonding curve pair with ANT which would increase the utility of ANT (i.e. ANT in a sense both retroactively and efficiently inherits the positive value of the token that it is bound to on the bonding curve). I think it would benefit both ANJ and ANT for ANJ to stay a thing.
Please don’t give up on ANJ yet.
This video of the proposal from Delphi is sooo goood. https://www.loom.com/share/0bc36ec9ac604599be6faf454f23988b
And thanks Jorge for considering alternative options/opinions!
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!
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.
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:
- 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.
- 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.
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:
- This proposal violates the rights of ANJ holders by not explicitly including them in a decision which clearly impacts them.
- 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.
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).
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.
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.
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.
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.
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.
I don’t think anyone has proposed this, I’m surprised you are even mentioning it.