Monetisation alternatives in Open Source and the Aragon Network - PanAragon team


Posting as a separate thread as the alternatives are interesting to consider and discuss as a community.

NOTE: Please note that the description of the monetisation strategies below pertained to our original FLOCK proposal, which we intend to submit at the next AGP to allow the community more time for consideration. These points remain valid and we are happy to flesh them out over the course of the next few months. In the meantime, we have updated and are submitting a revised shorter proposed under the NEST route.

Our original grant proposal shared our ideas about how best to bridge Aragon ethos and mission that we share with the real-world use cases using our product-market-fit research to date. Due to short timeframe for consideration, we are submitting a shorter proposal for the NEST vertical, as recommended by the Aragon and intend to be applying for FLOCK vertical for the next AGP.

A core objective of our PanAragon proposal is to bring a dose of pragmatism to what we all agree is an important technological and societal mission. A long-term outlook requires long-term funding. We are here to propose how long-term funding can be addressed, what models have worked historically and what new approaches can be considered. Happy to flesh this out in more detail if there is sufficient interest on the part of the Aragon community and AA.

The post is broken down into these main parts:

  1. OSS monetisation strategies proven to work to date
  2. Monetisation strategies for decentralised networks
  3. Aragon ecosystem financial sustainability proposal

1. What OSS monetisation strategies have been proven to work to date?

Historically, OSS monetisation strategies have been limited to integration work. RedHat and Linux have built multi-billion dollar companies focussing on OSS integration with enterprise clients. As we know, RedHat have been recently acquired by IBM for anand Linux, with all of their revenues driven by integration, customisation and training fees.

2. Monetisation strategies for decentralised networks

Recently emerged and still emerging decentralised networks are still finding their feet, however two main monetisation strategies approaches stand as viable (a) network fees and (b) service provider fees:

(a) Network fees: let’s focus on DeFi projects as a most appropriate comparison group:

  • Veil charges a 1% fee per trade as well as a 1% settlement fee if you elect to use the Instant Settlement feature, despite the fact that it is open-source project.
  • IDEX charges 0.2% for the market taker and 0.1% for the market maker.
  • ETH2DAI: DEX integrated in MakerDAO ecosystem doesn’t charge any commission from users; they pay only gas fee for transaction mining.
  • bZx Protocol charges lenders a 10% fee. This fee flows form a decentralized insurance fund redeemable against BZRX tokens. It de-facto pegs the lowest value of the token to the amount of assets, that can be received by redeeming of one BZRX tokens. So, the team implied commission, that works for system stability but also drives the demand for a token with protocol adoption.

(b) Service provider fees:

  • Bancor was charging $150,000-300,000 for adding a new trading pairs into their ecosystem. These funds were used for buying BNT tokens, which thereafter were used for liquidity provision to a contract. It can be referred to some kind of a commercial fee for integration a new asset (obviously, ETH can be used for liquidity provision instead of BNT tokens).
  • Developers building on Aragon Network

3. Aragon Network Monetisation proposals

A summary of fee models to ensure long-term financial sustainability of the Aragon Network ecosystem is below. These fees can be paid in ANT tokens or by other means, and used by Aragon Association to cover operating expenses, incl. protocol maintenance and development.

Considerable savings as a by-product from scalability solutions will define the exact fee levels. In our further posts, we can discuss pricing policy and rationale and comparison with other market precedents.

Fee model Commentary
Network fee For-profit user-owned organisations historically charge their members an acceptable fee level - this model has been validated.
Fee-sharing agreements PanAragon AFOs network, that will be monetized through fees. We can be a pioneering project for using such fee-sharing approach.
One-time integration fee The overall fee pool can be government by a smart contract and split between the Aragon Association and integrators in a pre-agreed proportion.
Recurring or pay-per-play product-based fees to developers The overall fee pool can be government by a smart contract and split between the Aragon Association and developers in a pre-agreed proportion. Finance- and community governance-oriented tools as well as domain-specific tools built on Aragon, e.g. crypto-fiat conversion, access to financial markets, identity and compliance services, legal services, etc.

NEST PROPOSAL (Alternative to FLOCK proposal)

Given the time restrictions for a full FLOCK proposal and the kind feedback that the Aragon community have taken the time to provide to us at short notice, we are adjusting our proposal to NEST. In this proposal, we remove the elements deemed non-essential and focus on the part of the original proposal that received the most positive support so far: a layer-2 solution for voting on Polkadot as a core technology buildout for Aragon.

A dedicated chain for voting will reach a consensus and broadcast the final voting results to the Ethereum network. This approach will help reduce Aragon’s current gas consumption from 150k+ to almost 0 fee burden. Transferring other functions to parachain will allow AraChain to be implemented. An additional advantage of this solution is the portability of DAO from Ethereum to Arachain and vice versa, thus expanding the reach of the Aragon ecosystem and helping bridge ecosystem tribes.

Looking forward to community feedback and happy to expand more on the monetisation models, particularly with reference to historical analysis of user-owned organisations have conducted and referenced in our original submission.