This is such an important discussion!
The primary utility of ANT is governance. I feel very strongly that governance is the foundation for value creation in digital communities like Aragon–but it is important to leverage governance in order to create sustainable network/community value.
The project has a significant treasury and runway, but as you point out this pool is ultimately finite and will eventually run out. I think Aragon can grow into a massive global community supporting and enabling new forms of organization but in order to get there and make the project sustainable we need to either 1) directly generate revenue or 2) generate demand for ANT.
The main challenge is how to go about approaching these goals in a way which is defensible. Since we are building open source software that runs on a public network, if we implement fees, taxes, or other forms of monetization which would make the experience of using Aragon worse, there is a significant risk that these changes will simply be forked away and such as fork would be value dilutive because it would undermine the significance of the defaults set by ANT holders through governance. This is not to suggest that there is not a defensible way to implement fees or taxes on the platform and its users, just that this is something that deserves great care and attention.
Broadly speaking, I think the best approach is for the Aragon Network to try and generate revenue through the creation and governance of service protocols–which are significantly more difficult to fork successfully because a fork of a service protocol does not immediately provide parity the same way the fork of a standalone smart contract does.
At a high level, we can think of ANT Governance and the Aragon Network as a way to aggregate value across multiple decentralized protocols. Each new service protocol supporting both direct revenue generation through fees as well as increase demand for ANT.
We can look at the proposed design of the Aragon Court as one example of a service protocol, and examine how the success of the court as a service protocol can lead to a sustainable economic model for the Aragon Network.
At a high level the Aragon Court coordinates human work in order to arbitrate disputes. In order to perform work a “Juror” must stake a court specific work token, for now we can call that token ANJ. ANJ can be minted by depositing ANT into a bonding curve. If you are not familiar with the mechanics of a bonding curves I recommend starting with this article, and if you want to go even deeper read the follow up.
In the case of the Aragon Court, the bonding curve creates a loose coupling between the ANT and ANJ, such that as demand for ANJ increases, market arbitrage will drive demand to purchase ANT and deposit it into the bonding curve. This allows the Aragon Network (and ANT holders) to benefit from the success of the Aragon Court while allowing us to reward jurors for participation without requiring every ANT holder to actively participate as a juror. There are other reasons for using a bonding curve in this situation, but the relationship above is sufficient to understand why the court as a service protocol would drive demand for ANT.
The other thing to notice in this diagram is that when court is used fees must be collected by the protocol in order to compensate jurors for their work. A portion of these fees can be routed to the network, providing a direct revenue stream which can support the continued growth of Aragon. These fees are more difficult to remove (relative to a fee tacked on to the normal operation of an Aragon organization), because a fork of the court would not carry with it the same history of successfully resolved disputes.
I’m optimistic that the Court will become a critical and broadly used service for Aragon organizations (and perhaps even more broadly) as it helps protect the rights of minority and passive participants in organizations, so the revenue potential of the court should scale with the adoption of on-chain organizations.
However, the beauty of using ANT as a governance token and not using it specifically as the “work” or “staking” token for one specific protocol is that we can aggregate and add to the value and utility of the token by deploying additional protocols over time. Some examples of other service protocols which may eventually make sense for the Aragon Network to deploy:
L2 Vote Relay Protocol
We’ve started to explore how to scale voting via aggregation at layer 2, this may offer similar opportunities to defensibly impose fees and use ANT (or a bonded derivative token) in order to coordinate activity of relayers. The result would be a decrease in cost for end users (as there would be less transaction overhead on Ethereum, while simultaneously increasing revenue generation potential of the Aragon Network).
Our research into scalability via L2 Vote aggregation has also lead us to start exploring the feasibility and implications of deploying Aragon (or parts of the Aragon Network) on an Aragon specific blockchain. Securing the Ara-chain via proof of stake would be another potential service protocol that could drive value to the Aragon Network.
Another way to drive demand for ANT is to make it more useful and practical to use it as currency/collateral for on-chain enforceable agreements. This is one of the more controversial ideas in the Aragon Network Whitepaper, and definitely needs significantly more research and modeling–but is attractive because the “currency” use case does not suffer from the same commoditization risks that other decentralized services do.
Currency Stabilization Insurance
An alternative, and perhaps less controversial approach, to creating an Aragon Network currency is to use ANT to govern and insure a stability mechanism. This model would look similar to the token models of SpankChain, Gnosis, and Maker.
App Center Insurance
One of the planned features of Aragon is to enable developers to provide third-party applications for organizations to install and use. However, installing an application into an organization will always require some trust that that the code is not faulty. This presents an opportunity for the Aragon Network to certify (and offer insurance on applications). Users would pay a fee to the network, and in the event that a qualifying bug is found in covered application, the network would provide compensation.
Apiary & ANT Reserve Requirements
Apiary, a platform for accountable crowdfunding being built on Aragon, could impose a minimum ANT reserve requirement. This would ensure that as organizations build on the platform they hold some percentage of their market cap in ANT reserves which would enable them to participate in the governance of the platform. By making this a requirement we can provide a stronger alignment between the governance of the platform and its users.
This ended up being a long post, and I’m sure I didn’t even scratch the surface… I expect that over time we will discover many other potential avenues to generate revenue for the network.
However, it’s important to remember that every single one of them depends on us being able to build a compelling product that people get value from–that is the hard part!
Ultimately, as a platform we will be successful if and only if we can make our users successful. When we see people not just creating and playing around with Aragon organizations but using Aragon to operate successful businesses which would be either not possible or significantly less efficient without Aragon–then the potential for generating revenue from the platform will be massive.
If it’s not already apparent from this post I’m incredibly bullish on Aragon. Our success is far from guaranteed, but there is huge potential here. We are a community aligned around a vision and I firmly believe we will be able to collectively navigate around any obstacles along the way.