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

Do you or @ronald_k have prominent examples of this type of DAO practice? It is my impression that DAOs generally prefer the exact opposite path, namely of avoiding organizing themselves inside a single legal entity, which is better aligned with the value proposition of having a DAO in the first place.

I think we’d be the first Swiss Association to do this but will defer to @ronald_k if he has other known examples. To be clear, what I’m proposing is decentralisation of the treasury to AN DAO (controlled by ANT holders) AND having the Aragon Association controlled by ANT holders. The result is obviously more decentralised than having the Aragon Association continue to control access to key resources other than treasury, without ANT holders having a voice within it.

Establishing MVV under the new distributed governance structure can be one of the objectives of revising the Charter.

Ditto.

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Got it. I think a good case study here might be the progressive decentralization of MakerDAO which included the Maker Foundation handing over its treasury to the DAO and the establishment of a DAO-funded Dai Foundation to safeguard the community’s IP. I’m not saying that this is exactly the right path for Aragon but it’s a good precedent to learn from.

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The choice between a minimum viable design vs. trying to anticipate all future challenges depends on the objective. The objective of the current proposal is to distribute control over the DAO treasury through a delegated voting system. However, there may be other objectives that need to be achieved prior to taking this step (e.g. revising the Charter and expanding the capabilities of Aragon tooling).

I would definitely second that.

One does not exclude the other and I don’t see distributing control over the treasury in any way hampering the effort to build up the off-chain social capital and governance capabilities of the DAO.

The timeline can be changed based on whatever is necessary prior to distributing the control of the treasury through a delegated voting system.

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Establishing MVV under the new distributed governance structure can be one of the objectives of revising the Charter.

The proposed timeline needs to be reviewed carefully after we’ve established the list of steps that MUST be completed prior to implementing Steps 2 and 3 of the original proposal. I agree that this includes establishing MVV (perhaps as part of a general revision of the Charter) and figuring out the basics of legal risk mitigation in the context of delegation.

With regards to technical infrastructure, it sounds like the necessary tooling already exists, but there may be a need to port over to a different solution later down the road once delegation is implemented in the current version of the Aragon software. On this topic, I trust the judgement of those most familiar with the technology.

I like the idea of a working group to finalize the proposal and the timeline.

Correct, the proposal assumes token-weighted voting as the default governance mechanism. However, delegation is viewed as a way to empower any member of the DAO based on merit and reputation. In the future, the DAO may implement other governance mechanisms not tied to token holdings.

As @Joan_Arus pointed out, it would add unnecessary complexity/distraction to the voting process by triggering ANT market action. However, it is certainly something that the DAO can decide to implement in the future.

No, the current proposal is to avoid creating a multisig and instead have delegated ANT voting control the treasury directly. The delegates with most voting power would essentially be equivalent to multisig signers, the only difference being that ANT holders would be able to override votes or un-delegate at any time.

The first draft of this proposal includes three safety features: (1) delegation (which is functionally quite close to having a select number of multisig signers), (2) annual spending cap (which caps financial loss in case of a malicious governance attack), and (3) implementation delay (which gives the community time to coordinate an emergency response should a malicious proposal go through). Perhaps you can clarify what you mean by “I’m sure there will be failures”? What are some ways that you think the delegated voting system is bound to fail and how do you suggest these failure modes be mitigated?

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Swiss association law is very flexible and allows to introduce the proposed thresholds.

You can have another voting regime in the association than proposed by article 67 (1) CC e.g. quadratic voting or otherwise.

There are others that already use a Swiss association or intend to use a Swiss association for their DAOs such as Sushi Swap, ReSource Network, YGG (on of the largest play to earn community), HOPR etc. Aragon would not be the first, but still an early mover to become a DAO 2.0. Without a legal wrapper there is a high risk of becoming subject to an enforcement action somewhere in the world.

Are these examples of all token holders becoming members in the same legal entity, or simply setting up legal entities to serve specific functions for the DAO, such as housing IP?

Not all, some projects start by allowing the token holders to make proposals to the association e.g. for the further development of the project; or to elect a minority of the association board; or to govern the treasury of the association; the end-goal is always to shift from centralization to decentralization where the token holders finally become members and take full control of the association. Most project strictly adhere to OSS-principles and when speaking grants do not acquire IP rights, but request the publication under a predefined OSS license.

Are there any live examples of DAOs that use a Swiss association as a legal wrapper with all token holders as its members?

Quorum is based on what already exists as well as voter turnout in the past. What would you recommend as a more appropriate quorum?

Support threshold is raised from a simple majority to 60% (the idea being that a highly contentious proposal would indicate a need for a more widely supported option, while a higher threshold than 60% might paralyze decision-making). What’s the rationale for making the threshold higher than 60%?

Delegation is obviously not a panacea but there are also examples of prominent DAOs with reasonably successful delegate programs, e.g. Maker, ENS. Delegation is a slightly more restricted form of “optimistic governance” that some DAOs have started to experiment recently, giving token holders the option to veto anything that a specialized executive council or various sub-DAOs put forward. Off the top of my head, I can’t think of a successful implementation of direct incentives for governance participation, but I know it’s been proposed here and there so it may be worth studying some examples.

If there are big risks that need to be mitigated first, the corresponding steps can certainly be added to the final version of the proposal.

Direct token holder voting is seen as the default option for tokenized DAO governance. However, I don’t think it’s rational to organize the whole governance process around direct token holder voting. Instead, DAOs should empower its members based on merit and reputation to take ownership of various organizational functions. Delegation is simply one aspect of that general idea.

Whenever delegates and token holders assess proposals, they should obviously take into account the specifics of each team/activity. This shouldn’t be an issue as long as the proposal process is open and everyone adds their perspective in good faith. What kind of problems do you anticipate in the “accounting/operational side”?

That is a valid concern. Basically, the DAO should decide whether to accept vote-buying as part of the DAO governance process, or whether to try and protect against it, although I agree that it’s a difficult technical problem. Ideally, the DAO would have a strong and diverse delegate community with insufficient (or too expensive) supply of ANT available on “vote markets” to maliciously attack the system.

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Appreciate the thought process here. I wonder if a multisig is a better way to safely manage the funds as we transition towards this.

I see a large multisig maybe 10 members + that are required to execute ANT voters decisions as a good stepping stone.

As reference some of the large protocols currently use this model such as Balancer - 6:10 Multisig, Graph Protocol - 6:10 Multisig, Decentraland 2:3 Multisig, . I am thinking of the simplest quickest way to get us to the desired effect, we can then implement delegate voting on top off chain with the multisig simply being for execution.

The technical overhead would therefore be lower than on-chain voting and execution where the risks are clearly higher. *I do want to see this happen in a staged way.

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Thank you for the detailed response!

As things are getting noisy here could you please provide some guidelines on the envisioned next steps and timeline as well as the best way to practically contribute towards fleshing out the proposal (in case there is more structure envisioned, beyond commenting in this thread)…i.e. assuming the emergence of relevant related threads maybe linking them in the original post

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As I mentioned in an earlier comment, a well-designed delegation system is functionally equivalent to a multisig with the added benefit of empowering token holders to vote on their own behalf, distribute their voting power among multiple delegates, or re-delegate at any time, should they prefer to do so. DAOs are also increasingly experimenting with “optimistic governance” mechanisms whereby specialized bodies are empowered to make and implement decisions without a DAO-wide vote, subject to a time delay in which token holders can veto the decision or delay the implementation. If Aragon wants to implement such a system in the future, I think it would be much easier in the context of a liquid/delegative voting system than a traditional multisig. That said, if there’s broad enough interest in taking the multisig route, the initial vote can include that option.