Proposal: Transfer the Aragon Project Funds to an Aragon DAO Governed by (Delegated) ANT

For me, this is the most important discussion indeed - without clarity here, decentralizing a HUGE DAO like Aragon might lead to confusion, resources being wasted and no real value being created.

Doing this decentralization gradually would help a lot to avoid those issues, especially the technical ones.

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I may be bringing too much web2 thinking into this, but it sounds like if the proposal is approved we will be working backward from the 30th November deadline.

I agree with @GriffGreen that while there are many details to work out, basically the only one that has to be agreed upon is the MVV.

For all else (non-complete list, based on issues raised here):

  • Technical infrastructure
  • Off-chain and on-chain governing rules
  • Minter contract ownership
  • Legal
  • Admin (i.e. AA committee not wanting/able to make the transfer)
  • Stakeholder engagement

There could be two working groups per bullet - one towards a best-case scenario and one towards a fall-back option (if the best-case team on each bullet is not ready by 30th November, we use the fall-back option for that bullet for the transition to happen)

Is this broadly what you have in mind, or is there a different path around which there is the soft consensus that you mentioned?

I have to note that I am writing this under the assumption that token holders are the main stakeholder to consider with community contributors to the current AN DAO as well as AA/AL team members beings secondary. TLDR: I am assuming fixing coin-voting is not part of the scope of the currently discussed proposal.

This seems like the right forum for such a conversation. While alternatives might have slightly higher convenience factor, they would go against the aspirations for transparency and inclusion mentioned through the thread

Something that came up during a call with @joeycharlesworth today.

Is this $20M budget to sustain both AA and AL teams or AL-only?
If the second, do you envision the AA team to be dissolved?

I think the budget should be sufficient for a merged entity but curious to get @joeycharlesworth thoughts on this.

Adding the thread for charter changes to keep this focused on the Macro discussions: Charter Updates - Discussion

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Thanks @lee0007 for the input.

Certainly, this is a potential and tangible scenario where we might iterate the MVV with the community to build and strengthen their governance knowledge and confidence. A fascinating context where, we could learn from each other while we put the community at the centre, we could collaborate with Commons Stack and @GriffGreen as already mentioned in the proposal.

And this proposal could mark a proven step towards a real decentralisation.

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I would disagree, this forum thread is for discussion of this proposal. I am interested in discussing with @GriffGreen the early ideation of alternative/complementary community governance proposals as they relate to use by AN DAO of the CommonsConfig and TAO Voting tooling - which although they could apply here if already implemented, they are not, and currently beyond the scope of this proposal.

Maybe, not this thread, but this forum is the place to have this discussion.

While the way you framed it, it sounds like some small early-stage experiment, the discussion so far leans towards exploring this is as the main governance mechanism for $300m treasury. Furthermore, there is another proposal directly relating to this one, which envisions the discussion of TAO Voting in the Charter.

Proposal 4 : Voting (July 22)

  1. Addition of Delegate Voting [2]
  2. Delegate voting rules [3]
  3. Staked ANT Voting Future [18]
  4. TAO voting [new]

It would be fantastic to see a ragequit mechanism included in this and similar proposals.

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In the current situation, in which the market cap of ANT is lower than the treasury, wouldn’t this be super risky?

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One of the improvement opportunities that we’ve detected so far is that we should improve the communication between the Aragon Association (AA) /Aragon Labs (AL) contributors and the wider community. Considering the importance of this thread discussion, and for the sake of providing context regarding the current situation within AA / AL, it’s important to highlight the following:

  • The team members of AL and AA are currently undergoing a merge in order to achieve greater product, tech and growth focus, improved overall team coordination and single alignment around ANT.
  • Consent between both AA/AL teams has been achieved in terms of Product, Tech and GTM as highlighted in the following:
  • Merged squads have already been assembled and are actively working on Aragon App (the new frontend application), new Core Smart Contracts, a new SDK, and the open voting protocol.
  • This merger and eventual transition to AN DAO is being advised upon by HoolaHoop, whom I have invited to partake in this discussion as this proposal has important outcomes for the success of this merger.
  • Aragon Labs is a Swiss AG, in other words, a for-profit limited liability entity with shareholders. The majority of the contributors currently sit under Aragon Association and do not have shares in Aragon Labs. Aragon Association owns 51% of the shares in Aragon Labs AG.
  • Under Swiss law, it’s impossible for any company type (AG or GMBH) to not have an economic share class. This obviously creates misalignment of governance interests with ANT. Associations by contrast can have ANT staking mechanisms built into the General Assembly (it’s most powerful body with the ability to elect the committee) and have decisions subject to ANT holder votes.

With this in mind, I would propose that all contributors across AA and AL are transferred into a new Swiss Association (lets call it NewCo for now) with a designated purpose to execute on the existing product development, go-to-market and tech strategies. This will provide the core team with much-needed stability and focus. The proposed funds should be sufficient for the merged team to prove the value of their contributions to the Aragon community and recruit new contributors, including through AN DAO. After these funds have been depleted, this entity would need to apply to AN DAO for further funds.

Under this proposal, Aragon Association would continue to exist with limited funds to manage access to centralised tools and services that may need to be accessed by multiple teams in the network (Discord, Twitter, Aragon Website and so forth). The Aragon Association could simply sub-contract administrative access to these services to the AN DAO or one of it’s guilds to ensure access neutrality across the network. As mentioned on a previous post, I believe the Aragon Association should ultimately be controlled by ANT holders forming the General Assembly.

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Just a quick clarification question @mlphresearch in the proposal you have said “DAO treasury” do you see this as a Multisig or another structure which will manage the treasury.

If a multisig, do you see this as an election process and if so how many signers. I would think a 7/13 for safety of the treasury.

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Another important legal implication that seems worth to mention is that the approval of the proposal - in granting to the DAO a substantive governance power over the entire treasury - would probably modify the nature of the ANT token: from utility to something more similar to a security.

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Hi there!

First of all, sorry for participating late in the conversation. It’s been quite overwhelming for me to keep up with all the most recent and important conversations happening in the Forum (I believe this is a shared feeling among other contributors within AA/AL too).

To put myself in context: I’m currently acting as co-CEO of Aragon Labs, the Swiss AG for-profit company that was set up between Aragon Association and the Vocdoni team after joining forces back in December 2020 with the objective of bringing decentralized voting tech to mainstream.

I believe that I speak on behalf of many AL team members when I say this:

  1. We are happy to change the current setup if that can increase incentive alignment towards ANT, and we feel comfortable with switching to a non-profit legal entity that unifies all core contributors. Vocdoni’s roots have always been tied to a non-profit / public good ethos, and we’ve historically used “for-profit” entities as a vehicle for fund-raising only.
  2. We welcome the initiative of decentralizing Aragon, and we believe it’s a step in the right direction. Considering the significance of the process, we feel that process should be safe to try from a governance perspective. A gradual roll-out with clear milestones would be our preferred approach so that we can fail small (I’m sure there will be failures, and we should welcome them. We just need them not to be fatal). On a personal note, I fully trust in the capacity and outstanding work that community members such as @lee0007, @fartunov, @AlexClay, @daniel-ospina @b3n are spearheading, and I hope I can contribute positively to this conversation too.
  3. We believe that the best way we can help bring value to Aragon is to ship innovative Product and Tech aligned with Aragon’s Manifesto, which we are using as our MVV. We are now focusing on the short term to reach operational excellence so we can ship at the speed that the industry requires, and we look forward to increase our engagement within the AN DAO with better communication and coordination with the community.
  4. We welcome collaboration with other teams who also want to build products and tech that supports Aragon’s mission (1Hive, EVMCrispr, others).

Overall, feeling positive and excited towards this new phase for Aragon.

Joan

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Can you share more info please on this? in which jurisdiction(s)? To confirm, if ANT holders controlled the General Assembly of the AA and it’s funds via an appointed committee, assuming there was not a large scale transfer to the DAO, do you see that as better from a security risk standpoint?

Also tagging @ronald_k for input here.

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Regarding this topic:

  • There are several proposals for enhancing the utility of ANT that are related to securing components of the decentralized infrastructure of the Aragon Stack. If an increased utility is provided, wouldn’t this strengthen the utility classification of ANT?
  • Why would granting the DAO power over the treasury modify the nature of the token towards a security? Shouldn’t this be the opposite, as we’re advancing towards “sufficient decentralization”?

Joan

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Hi brother :hugs:. I respond also to @joeycharlesworth

The law which is more important for us is the Swiss one. And of course @ronald_k has the last word on this topic.

The essence of the problem is that with the proposed setting the tokenholders could theoretically distribute the treasury among themselves, as a company that distributes the dividends or that goes into a liquidation procedure. This would make ANT an investment token in my opinion. Given the peculiar features of Aragon (big treasury compared to the marketcap), this is something that we have to bear in mind with particular attention.

This problem could be avoided with particular limitations concerning the DAO governance. But it is something that requires a proper assessment.

Thanks for the clarification :slight_smile:

Seems to be that adding provisions on an amended Charter that prevent such scenarios would be a good way to prevent that security threat.

Looking forward to hear about Ronald’s feedback on this one!

On this, the current charter already has a requirement for finance proposals to include a justification of why the proposal would be likely to increase the number of active Aragon DAOs. As such, it’s unlikely that anyone would be able to make a finance proposal for an ANT holder dividend payment and get it passed.

If that’s insufficient, we could simply add an immutable clause to the new charter that prohibits dividend payments to ANT holders.

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This is a joint statement by all of the Aragon Research team.

General comments:

  • We fully support the idea of being part of a DAO, funds included. This is why we joined Aragon.
  • However, we think this proposal must be amended to enable an in-depth debate on such a sensitive topic and thus requires:
    • The information provided must be more detailed to show the suitability of the proposal to achieve Aragon’s mission.
    • The time schedule is too tight to make the required amends and allocate enough time to include all stakeholders.

Specific comments on financial aspects:

  • Given the total amount of funds, the transfer of assets should be implemented gradually through a number of iterations, according to a clear roadmap and subject to clear criteria. These criteria should include a measure of the maturity of the governance of the AN DAO.

Specific comments on governance aspects:

  • We think that the proposed quorum and thresholds are too low.

  • As is the case with most DAOs, the AN DAO suffers from a severe lack of engagement by ANT token holders (as already pointed out by Brent in a previous comment). As the AN DAO will eventually be managing a considerable treasury, it is crucial that it achieves functional maturity in terms of both governance structure and rules, as well as token holder engagement. To achieve this, the charter will need to be amended, most likely in several iterations. We may also consider adding some type of incentive for participating in governance and voting. This will take time. We note from empirical observations that delegated voting does not increase voter participation if the distribution is already highly non-uniform (see for example https://compound.finance/governance) or there is a cost to token delegation.

  • The iterative process of improving the AN DAOs governance can be used to gradually add innovative features to the AN DAO (for example weighting votes for accounts linked to an identity protocol, anonymous voting using zk proofs, quadratic voting).

  • In order to become natively delegatable, the ANT ERC20 contract would have to be updated by adding the [ERC20Votes extension](ERC 20 - OpenZeppelin Docs). This would open up the possibility to use it in bribery protocols/vote lending platforms.

    • Vote lending / bribery is forbidden per our charter (see chapter 4 “The Community Guidelines”, “Our standards”), but there is no technical measure to prevent the usage of bribery/vote lending protocols.
    • Assuming that holders lend their ANT, this makes DAO more vulnerable to governance attacks (see a recent governance attack being launched against Compound) as they become cheaper.

    The other option is to separate the delegation logic from the token so that it is part of a governance module, which might require a security audit.

Questions to the proposer:

  • Is the proposer willing to agree to a gradual transfer of the funds given the risks pointed out, or are there arguments speaking against this?
  • What is the motivation behind/benefit of using delegated voting given the concerns mentioned before?
  • How is the accounting/operational side intended to work? How will the particularities of each team be taken into account? (e.g. in research, the working cycles are usually long, the outcomes are frequently intangible, and failures are not uncommon).

Thanks for the useful debate.

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