Disclaimer 1: This is a high-level, preliminary idea intended to carry over momentum from previous discussions and gauge community feedback. Based on the community’s response, we’ll adjust accordingly and put more specifics around the various parameters as necessary
Disclaimer 2: Delphi Ventures holds a position in $ANJ. While we’ve tried to consider what’s best for the network but our opinions may nevertheless be biased by our holdings
As the recent discussion has shown, there is currently a lack of clarity regarding the relationship between Aragon Court ($ANJ) and Aragon Network ($ANT), resulting in some tension between the communities.
In this post, we propose some initial ideas regarding how to delineate the lines of sovereignty relationships and value flows between each community. We expect that Aragon Court won’t be the last asset to be spun out by the Aragon Network and our hope is that this can act as a framework to guide future discussions.
At a high-level, we see Aragon Network as the Aragon “Holding Company”, with Aragon Court as the first of many independent, partially owned subsidiaries. Under this model, $ANT holders govern the network reserve (which owns, among other assets, tokens in the subsidiaries) and and is responsible for allocating resources (both financial and non-financial resources such as human capital) to existing and new subsidiaries in a way that maximises the growth and value of the network.
The subsidiaries operate independently with their own individual mandates, stakeholders and treasuries, with the Aragon network initially funding the treasury and taking a sizeable part of the token ownership. As such, while the subsidiaries are independent, $ANT holders still retain a strong influence on governance as well as aligned incentives in the form of shared upside in the subsidiary’s success.
Given the early stage of $ANJ and of the majority of the initiatives likely to arise within Aragon’s ecosystem over the next few years, we suggest Aragon initially captures value from these initiatives via token ownership rather than fees. The reverse would be like a VC firm investing into an early stage company and then immediately expecting to extract dividend payments. Not only would this be an inefficient use of capital as the money is simply being recycled back and forth, it would also be counterproductive as early stage, network effect businesses need to grow before they can extract value. Effectively, $ANT holders can be seen similarly to a Corporate VC, subsidising its subsidiaries with capital and resources at an early stage and then capturing value later via fees later once a robust fee market develops.
This also has the added advantage of allowing $ANT holders to select from a variety of opportunities within the Aragon Ecosystem based on their specific risk profiles and preferences. More enterprising $ANT holders can stake to an early stage DAO with a mission they believe in, helping to bootstrap and govern it. On the other hand, more conservative $ANT holders will be able to stake $ANT in order help govern the Aragon Network Reserve, taking on less risk and lowered potential reward as they benefit from the aggregate performance of all subsidiaries rather than making concentrated bets.
Specifically, our proposal is that Aragon Court is given independence from the Aragon Network, spun out to its separate DAO with its own treasury, initially consisting of the ANT in its bonding curve. However, the Court cannot realistically operate independently from the beginning since it is reliant on the Aragon Network not just for funding but also for lead generation, infrastructure, human resources and other support. In order to align incentives between ANJ and the Aragon Network more broadly, we propose that the network mints 100,000,000 $ANJ tokens and sells them to the Aragon Network at the conversion price of $0.015 $ANT per $ANJ. We further propose that the Aragon Network’s ANJ tokens are locked with a 1 year cliff and 4 year linear vesting schedule.
This way, assuming the price stays the same, $ANJ total supply would increase to 228,645,461, with a fully diluted market cap of around $11M (circulating supply would remain fixed at 128,645,461). The Aragon Network (i.e. $ANT holders) would control 43.7% of the token supply and voting power in the Aragon Court DAO. In addition, the Aragon Court DAO would have a treasury of 3,745,531 $ANT, consisting of 485,000 $ANT currently in the bonding curve + $1,760,531 $ANT premine “debt” owed to ANJ holders + $1,500,000 ANT purchased by the Aragon Network in exchange for 10,000,000 ANJ, for a total Aragon Court treasury dollar value of ~$12,000,000. This would allow Aragon Court sufficient resources to bootstrap itself, including implementing the supply-side incentives we suggest in our proposal, while also giving the Aragon Network skin in the game and aligned incentives with the Court.
Regarding the conversion proposal, we suggest that this is kept open but changed to a two-way conversion. This gives a chance for ANT holders who believe in the Court’s new independent vision to take a larger stake in it. Similarly, it gives a chance for ANJ holders who aren’t onboard with the new plans to signal their disagreement by exiting the system.
We will continue taking an active role in the newly formed Aragon Court DAO, and as our first proposals we suggest:
- Improving the Fee Model
- Removing Bonding Curve
- Implementing Supply-Side Incentives
- Creating sub courts or hubs within the Court, specialised in certain verticals
The first three proposals are discussed in our governance post which you can find here or in video format here. We will also adjust the supply-side incentives to take into account the new, reduced treasury.
The last proposal we feel is extremely important also so that the Court can be effectively used for more different kinds of proposals requiring specific expertise for jurors. A key near-term example here is the Optimistic Voting stuff which may require developers to quickly and accurately adjudicate. We suggest using an architecture similar to Kleros’s sub-courts or Jur’s hubs (p28) in which jurors can setup hubs requiring specific skills or backgrounds, and charging different levels of fees. $ANJ would still need to be staked by all participating jurors, but this could be staked either to the General Court or to specific hubs based on the juror’s expertise. While this fragments security, the General Court can still be most secure as hubs can also choose to accept general cases which the General Court then routes to them as required.From a Court user perspective, they can either subscribe to the General Court or to specific hubs, and dispute fees are paid to the jurors adjudicating on the case as previously. We will put more detail around this in a future proposal but wanted to outline the high-level idea.
As always, we welcome the feedback from the Aragon Community and Team to enable us to arrive at the best outcome for Aragon Network. We will respect whatever decision the community comes to and are thrilled to be a part of this process