Date of the Proposal: 23 December 2021
The aim of the present project is to bring value to Aragon in reshaping the Aragon Court dispute resolution mechanism. The legal team will (1) provide research on new use-cases, (2) adapt the Aragon Court proceeding to make it more efficient and simpler to use, (3) implement Aragon Court in one or more DAOs, (4) evaluate the state of the product with external stakeholders, and (5) present proposals for external funding in order to deploy on other chains.
The future of modern justice systems seems inherently connected to the mass development and adoption of refined online dispute resolution (“ODR”) mechanisms. Regulatory interventions in the field of consumer law and the times of pandemic have demonstrated how technology can provide efficiency to the judicial systems and make it easier for people to have access to justice. What is happening seems to indicate that Richard Susskind’s prediction on “Online Courts” as the future of justice is correct. Online courts offer to users easy and cheap access to legal services. Moreover, such courts are capable of overcoming jurisdictional differences and practical obstacles.
Aragon Court stands in line with these developments. Aragon Court is far ahead in pioneering a system where everyone is free to gain access to justice by taking advantage of web3 technology and its disruptive features in order to bring more equality, inclusiveness, and fairness to decentralized communities. In Aragon Court justice is granted through decentralization, incentives, reputation and smart contract technology. Thanks to the work of Aragon’s developers, the technicalities concerning Aragon Court have reached an impressive level of definition.
Initial Concerns Around Aragon Court
In its present form, the Aragon Court has not heard any actual disputes—only generic disputes developed to train its jurors and refine its product. We believe that more research on new use cases and target market needs could increase Aragon Court’s organic usage and cement its place as a marquee product for Aragon. Based on discussions with the Aragon Court development team and our own research, we’ve pinpointed the following problems with the status quo Court that we aim to address through a well-researched revamp:
- Fee Avoidance: In order to face the problem of the high fees, which has caused in part the limited usage of Court, developers are deploying Aragon Court on Arbitrum. This is a very important milestone, as access-to-justice and rapid go-to-market strategy calls for financial accessibility, so cost efficiency and transparency must be a top priority.
- Chicken-and-Egg Problem: Aragon Court can only refine its product to produce optimistic governance if sufficient organic cases are handled and jurors remain engaged rather than passive. However, according to the original Aragon Court development team, the existence of the Aragon Court in the first place often quiets disputes before they reach an apex where they require an ODR service. This, along with the fact that the Aragon Court V1 predecessor was limited to the Aragon Network means that the Court has not had a chance to battle-test its ODR strategy and train its jurors by hearing cases directly. For the Court to be secure and usable, jurors cannot be passive.
- Technical Knowledge Expectations: The Aragon Tool is, in its current state, highly technical to use. The initial trigger to create the Aragon Court was to avoid 51% attacks in DAOs—in other words, it developed in an engineer-driven rather than a community-driven way. For Aragon Court to broaden its market and hear more cases, it will have to redefine its product vision from the ground-up. We envision a system where DAO members can ping the Aragon Court about a broad variety of disputes that occur both internally and between DAOs.
Aragon Court is one player in a very small market of early-stage crypto-ODR competitors. From a theoretical point of view, once improved, the Aragon product may have an enormous impact on the conceptualization of justice systems and legal services. Not surprisingly, many scholars have likewise begun to devote attention to what can be defined as “blockchain dispute resolution systems.”
We firmly believe that times are mature in order to promote a revamp of the Aragon Court through a research and development project aimed at softening the procedure and bringing to Aragon Court several new use cases. The project is a year-long endeavor aimed at completely transforming the current status of the Aragon Court. The current proposal made here is focused on implementing the first two phases and as such, the requested funds are only relevant to these phases.
1. Phase 1: Research For New Use-Cases & Workshop (3 Months)
We are of the opinion that research concerning Aragon Court should at the beginning focus on three use cases. Many of these cases can come from DAOs internally, as well as DAO relationships (for instance, between DAOs and DAOs as service providers, or DAOs and sub-DAOs). By expanding the Court mandate to these use cases and reducing the technical baseline knowledge needed to deploy the Aragon Court, we envision the Court being able to hear more actual cases, actively train its jurors, and improve the security, efficiency and functionality of its product. While the court is a scalable product that can be deployed for a variety of developer-focused use cases, we believe that by shifting its focus to DAOs, the product can yield maximum use initially, providing the best chance for adequate sandboxing and refining of the product. This vision is also in line with the ethos and product lineup of Aragon, and could be built to integrate seamlessly and support DAO tools such as Aragon Govern and Voice.
1.1. Use Case I: Internal DAO Disputes
DAOs are growing and encompass members of different origins and levels of education. Moments of tension, if not full-blown internal disputes, are beginning to arise. Almost every DAO presents a set of rules or principles that should regulate the behavior of its members. Nevertheless, they don’t have a decentralized dispute resolution system or an enforcement mechanism to ensure rules are effectively abided by.
There are several well-functioning analogies we believe we can learn from to improve the existing dispute resolution strategies utilized by Aragon Court. For instance, over the past several months, members of our team contributed to BanklessDAO, where a Committee of Ombudspersons (5 members chosen by the community) was set-up in order to tackle internal disputes. During Q4 2021, the Ombudspersons discussed 8 cases. The Ombudspersons became a point of reference for the community, and the subject matter of the cases concerned mainly distribution of funding and member misbehavior. We think that a system like Aragon Court could work very well for DAO internal disputes, and that it would be easily accepted due to its decentralized nature and independence from other DAOs. One issue that we will have to further research in order to increase deployment within DAOs is how to encourage usage of a third-party ODR service such as Aragon Court rather than resorting to in-house guilds or sub-DAOs dedicated to disputes or legal concerns.
According to Art. 4 (j) of the COALA DAO model law, prepared by a group of renown scholars, ODR is integral to the effective functioning of any DAO: “The DAO must refer to or provide a Dispute Resolution Mechanism that the DAO, Members and Participants will be bound by.” Here, Dispute Resolution Mechanism entails an “On-Chain alternative dispute resolution system, such as arbitration, expert determination, or an On-Chain alternative court system, which enables anyone to resolve their disputes, controversies or claims with, arising out of, or in connection with, a DAO.” (Art. 3 (9) COALA DAO model law)
We recently received a strong endorsement by crypto-lawyers and by Polygon leaders to develop ODR tooling for this described use case. Polygon has also publicly declared potential for developer funding and other resource support to incentivize the deployment of the Aragon Court on their chain.
Moreover, we are going to assess the possibility of adopting native tokens of other protocols for the staking at Aragon Court. The adoption of other tokens could foster the birth of sub-Aragon Courts, which would become a tailor-made solution for many protocols and DAOs. The main Aragon Court (with ANT staking) could become the judge of last instance.
Survey: To further assess the viability of the first use case, our team will also conduct a short qualitative and quantitative survey with the stakeholders which will be attached to our final analysis and used to generate further thought leadership on blockchain ODR market needs.
1.2. Use Case II: DAO-to-DAO Relationships
The growing number of DAOs has contributed to the rise of agreements and alliances between DAOs. Such relationships are often not regulated, but disputes and misunderstandings may happen. If DAOs are acquainted with the functioning of Aragon Court (1.1.), they could easily decide to adopt the same dispute resolution mechanism in DAO-to-DAO relationships. DAOs are digital entities that operate with smart contracts and tokens. A blockchain dispute resolution mechanism would be the perfect tool in a DAO vs. DAO case. This use case seems also to fit well with the idea of creating a network of DAOs.
1.3. Use Case III: Recognition of Aragon Court Awards IRL
If Aragon wants to become the bridge between the on-chain and the off-chain world, its decision should be recognized and be enforceable in the on-chain world. Legal scholars doubt that in its present form an Aragon proceeding could lead to an enforceable judgment in the off-chain world. This does not mean that Aragon Court is unlawful. In fact, according to their contractual freedom, parties are entitled to refer to Aragon for their disputes.
We believe that use-cases 1.1. and 1.2. are indeed very strong, but in order to become mainstream and shape the future of justice, Aragon Court should implement remedies as regular arbitration awards and be enforceable in the main jurisdictions of the world. If Aragon Court declares a duty to provide a payment, the winning party needs to be sure that such a judgment will be executed in the off-chain world. Simply put, off-chain recognition is a necessary function of any ODR mechanism as the lines between on-chain and off-chain continue to blur. Competitors such as Kleros have figured this out but have only sandboxed off-chain validity in one jurisdiction, so we aim to incorporate this feature in pre-production to provide as close to universal recognition as possible.
2. Phase 2: Beta Testing & “Adaptation” Of The Protocol (3-6 Months)
2.1 Product Development & Refinement
After the preliminary research phase (in Phase 1), the legal team will work with the Aragon developers to adapt the existing proceeding to the aforementioned use-cases. The idea is to significantly simplify the different steps of the proceeding (for instance, in reducing the number of appeals) and to make the overall structure cost-efficient without losing the incentive model.
The legal team will also draft new documents to present the steps of an Aragon Court proceeding in a clear manner. Using the survey results from Phase 1, the Aragon Court Genesis Team will aim to publish a note in the Stanford Journal for Blockchain Law & Policy (where crypto-ODR has already been discussed by Kleros) to garner feedback from other crypto-legal practitioners and cement our team as thought-leaders in the crypto-ODR space. The legal team will use the recommendations and the results of the brief survey, as well as feedback from our publication, to make necessary changes to the product so that it can be deployed in an effective yet cost-efficient manner.
As indicated above, Polygon may incentivize via a grant the deployment of Aragon Court on its chain, providing an initial relationship for us to beta test the revised product.
2.2. Evaluation of the Product
Phase 2 will end with a workshop/webinar organized with external stakeholders (targeting arbitrators, professors, judges, and DAO participants) who will share learnings about Aragon Court and discuss its inherent features. The workshop will offer an open context for web3-natives and legal experts to evaluate the product and understand how to implement use case 1.3 after the initial product development for use cases 1.1 and 1.2 have been completed.
2.3. Implementing Aragon Court in a DAO
The aim of the work is to revise, redeploy, and grow Aragon Court within a DAO and to begin the implementation of a more simple and efficient justice system for large decentralized communities (for instance, BanklessDAO, UMA, and Perpetual Protocol, among others). We will form agreements with one or more DAOs to launch the revised version of Aragon Court as a pilot regime. We’ve developed four strategies to drive adoption of the Aragon Court shortly upon redevelopment to ensure proper real-case training opportunities—a serious post-deployment problem discussed by the former Aragon Court product development team (See Initial Concern #2 in “Background”).
- Deep Court Team Involvement: Like any product deployment strategy, our Aragon Court team will be available to first users to provide (1) easy-to-understand FAQs and written user documentation, (2) procedural walkthroughs, and (3) customized support for initial sandboxers. This aims to tackle the technical knowledge hurdle present within blockchain-enabled ODR mechanisms.
- User Testing Incentives: We plan to grant incentives to one or more DAO communities willing to implement the new Aragon Court while in beta, to sandbox and revise the product using real-life use cases. While the extent of such incentives required will be refined by our survey, discounts or ANT rewards to parties involved, along with initial partnerships with strategics aligned with Aragon Court’s mission, will aid in growing the Court at an early stage. First partnerships, for instance, with a Polygon ecosystem DAO (since support has been explicitly communicated from Polygon) or with LeXpunK (where this project has garnered interest via a call without the existence of a competing LeXpunK-native product team) offer a chance to test the court in communities that are mission-driven to advance and benefit from effective ODR. Our team has seen competitors such as Kleros deploy juror incentive programs, however incentive programs from the user and community side are novel in the ODR space and merit further investigation due to the chicken-and-egg issue that hinders early adoption rates.
- Dispute Referral Rewards: To further drive usage within the DAO(s) with which we do the beta test, we will utilize this phase’s funds to encourage DAO members to refer other members experiencing disputes to the Aragon Court—these could comprise of “social” rewards (e.g. NFTs, POAPs, or supporter-specific emoji sets signaling that this user was a first supporter, akin to Signal’s sustainer badges for donators) or token rewards/discounts to both referral and referee. The thresholds and metrics for provision of these rewards would be vetted to ensure sufficient case complexity and to avoid clogging of the Aragon Court system with spam or low-value cases.
- First Client Grants: As the most cost-heavy path (intended for use with only 1-2 initial partners that prove to be integral to user testing), initial partner DAO(s) could share Aragon Court implementation and case costs with Aragon itself. These partnership conversations would take place based off of community involvement with the workshop in Phase 2.2.
This collaboration with other DAO(s) could bring many benefits to the Aragon community: true-to-life testing of Aragon Court, strong communication with potential Aragon clients and stakeholders, and more thought leadership surrounding the Aragon Court and the ANT token form the tip of the iceberg. We aim to begin the trial with one DAO by the end of Phase 2 and collect feedback so that strategy for the next two phases can be developed.
3. Phase 3: Scaling the Product & Marketing (3-6 Months)
Our aim is to take the fully developed product to the market and commit to a full launch after the beta phase. This phase will be dependent on the scale of the identified market and the product success during the Beta phase. Budget and Specifics of this phase will be discussed after completion of the first two phases so that the most efficient method can be chosen to scale the product.
BUDGET REQUEST & DELIVERABLES
The expected timeline of the project spans 6 months (January to June, 2022) and it will be mainly covered by the proponents of this proposal. This budget includes research and product strategy costs, excluding assistance from technical developers needed to deploy this project fully. External costs (for third parties’ involvement, for instance) and additional opportunities for funding support*** will be determined during our research.
The initial request of funding will only concern phase 1.
|PHASE 1 (JANUARY- MARCH 2022)|
|Workshop with Stakeholders||Survey Results||$10,000|
|Research on Use Cases||Research Report & Analysis||$15,000|
|Preparation of Report||Research Report & Analysis||$20,000|
|PHASE 2 (APRIL- JUNE 2022)|
|Adaptation of Protocol|
|Drafting of Explanatory Documents|
|Implementation of Aragon Court in a DAO|
|Total Fund Requirements for phase 1||$45,000|
*The budget does not include marketing campaigns and other promotional activities which should surround the implementation of the proposal. This budget does not include implementation of Phase 3.
**Implementation of product in a DAO and product development will require assistance from developers and technical experts, some of which may be already salaried by Aragon for Aragon Court. As such, the budget does not include their estimate and proposals for funding will be drafted closer to deployment when the extent of new development and technical support required is further understood.
***Polygon has strongly endorsed a dispute resolution system internal to DAOs. Concerning the potential deployment on Polygon, there would be the possibility of obtaining a grant for the dev work in the range of $50-70K USD as an incentive. Polygon would possibly further request the implementation of the new Aragon Court product within the myriad of DAOs that are currently deploying in their ecosystem.
The payment (50% in USDC and 50% in ANT) will follow this structure:
- End of Month 1: Survey Result, Preliminary Research and preparation of the workshop - 15 k USD
- End of Month 2: Template of Report, Use case Research - 15 k USD
- End of Month 3: Final Report: Analysis and Exact suggestions for phase 2 - 15 k USD
An escrow account is not required as the team will be paid through installments after reaching certain milesontes. In addition, all members are Aragon core contributors or Ambassadors.
The Gnosis Safe Address of the team is: 0x7B621B6038981163234a10F4A06220C074f31E59
@eaglelex Law Professor and Lawyer in matters related to Blockchain technology, Cryptocurrencies and DAO regulations. He is a judge of the official ADR system of the Italian Banking Authority. He has written academic articles on Blockchain technology and is particularly interested in DAO governance and in legal set-ups for DAOs that aim to be active in the off-chain world. He has also focused on blockchain dispute resolution systems and follows every legal news concerning cryptocurrencies regulations worldwide. He is the Coordinator of the BanklessDAO legal guild and an active contributor in Legal DAOs as LexDAO and Lex Punk.
@sabinachain Sabina is a legal-tech researcher with US and EU experience. In web3, she’s worked with partners such as BanklessDAO and Algorand to enable treasury diversification via investing. In legal, she is the Managing Editor on the Stanford Journal for Blockchain Law & Policy, where she has edited articles on crypto-enabled ODR. Related research includes work on computable-contract ODR for insurance disputes and the development of legal frameworks for large-scale national AI data clouds.
@lion917 1. I am a legal consultant specialising in Asian jurisdictions from a leading Law University in Asia. I specialise in Blockchain, Data Protection and information technology. I am the project manager for legal guild at Bankless DAO. I have been an early adopter of decentralised finance and I also work with DAOs to streamline their legal-tech products. Though I have always been enthusiastic about law, technology is my true passion and I am glad that Aragon provides me with the chance to contribute. I am a level 2 contributor at Bankless. My research on crypto assets has also been published by the American Bar Association. In the past, I have worked with some of Asia’s top law firms as a researcher. Given my experience in the field of DeFi, law and research, it can be a unique opportunity to apply these skills to an impactful workplace where I can use symmetric global parameters to provide targeted expertise. Regulatory innovation is required for the sustainable growth of DeFi.
@Tayy is community lead at Aragon DAO. He is a legal expert with US background with 2 years experience in web 3.0. He is an active member in the BanklessDAO legal guild, in Lex Punk and in LexDAO.