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

Scale/risk can be managed via delegation, the adjustable spending cap, and relying on the most battle-tested infrastructure. Assuming no technical failures (a risk that can never be entirely eliminated), a well-working delegation system effectively ensures that the treasury is managed prudently, while the ultimate decision-making power remains with ANT holders as a whole (ability to override delegate votes or un-delegate at any time).

I think this is where it’s worth studying how other DAOs have solved delegation and legal liability. You already mentioned ENS. Another DAO with a sophisticated delegation system is obviously Maker.

The original proposal envisions standard delegative democracy: ANT holders can freely delegate and un-delegate their voting power, as well as override their delegates’ votes. When you say that there are several ways this can be implemented, do you mean in terms of technical infrastructure?

A potential added bonus of delegation is increasing the token turnout. Of course, that’s contingent on outreach and having enough qualified delegates. Again, a logical starting point would be to rely on the experience of other DAOs that have successfully implemented delegation.

The aim of the proposal is to decentralize the control over the treasury. Other aims are out of scope and are probably better discussed in a separate thread.

2 Likes

Yes, if there’s soft consensus around the direction, the next step would be to map out the different options in terms of technical implementation, prioritize related tasks, and then finalize the proposal.

This could however be changed. The Aragon Association articles can be amended to enable ANT holders to stake ANT in order to be members of the General Assembly and as a result, ANT holders could effectively be deciding who should be elected onto the Aragon Association committee.

At least for now, a centralised entity is still required to pay various centralised suppliers (such as this forum, Discord, hosting providers, financial service providers etc) that cannot be paid by AN DAO directly. I think it’s essential that these services are paid for by the Association to preserve network neutrality. This should not however require a large budget to operate.

The above can apply to the current Aragon Association, or new Swiss Association’s with specific mandates to the Aragon network, dictated in the articles.

Firstly many thanks to @mlphresearch for making this an active discussion. Jumping in to the thread to second a lot of what has already been echoed on the changes to the charter need to be implemented first/alongside to make this safe.

Changes required just from this proposal Include:

  1. Quorums
  2. Technically agnostic
  3. Delegation
  4. Delegate Rules
  5. Signer rules

I will spin up a separate thread in the forum shortly where these technical details can be discussed in a more focused way along side the more macro discussion that can happen here.

Thanks,

Alex

3 Likes

First of all, super interesting to see this proposal… Thanks to everyone involved at placeholder to put this up. To ensure continued progressive decentralization happens in the most productive and beneficial way, we think it is important to ensure we are not rushing into decisions.

Aragon is a product-led organization (at least in my opinion, which is shared amongst many contributors), and therefore should have as a goal the scaling of adoption of the product(s) we create - With this in mind, the progressive decentralization of this organization should happen in a way that supports our product goals. To better understand the proposal, and try to align it with my “product beliefs” I would like to ask the following questions:

  1. Following up on the same concerns expressed by some members, including @brent, regarding the 0.5% threshold - Although this is the current threshold on the Aragon Network DAO chart, wouldn’t this create a fairly large risk that one of the largest shareholders could make decisions with their votes directly? The current AN DAO doesn’t hold all the funds, which decreases the risk of wrongdoing, but given that we are talking about all the funds, it feels this is something that we should review. Would it be fair to say that we might need more distribution of the largest token holders?

  2. Aragon Association and Aragon Labs have assembled an excellent core product and tech team that is super motivated to deliver an amazing DAO platform. That being said, having a runaway of around 2 years for Aragon Labs looks like a good compromise between having skin in the game and personal safety, but might still be perceived by some contributors as a deadline that doesn’t have clear goals on how to be extended. How do the proposers see this potential issue (losing motivation, knowledge, etc) if the proposal passes? Are there some interesting previous examples that we could rely on?

  3. The requirements for the Aragon DAO that is supposed to be created cannot be met with our current products (although those requirements are included in our roadmap for the new product being built) - Could we have an intermediate state for this decentralization process where an initial part of the funds is transferred for the current AN DAO, and the rest when we have the final setup of the DAO as required? Or could we delay the process for a few months, and get the current ANDAO to help build the required features? - I got a little bit confused between steps 2 and 3. One is the setup of the DAO, and the other is about the treasury address and the flow - Does this mean that there is an initial flow of 10% from the current treasury to this new DAO, meaning, the remaining treasury still lives under the association? Or is it something else?

  4. Adding delegation to Aragon Client - Although this can be an option, Aragon Client, although a battle-tested framework, has a lot of UX restrictions, which increases the probability of voter apathy (even having delegation implemented), which could be an obstacle to our objectives of progressive decentralization. This is one of the reasons why we are investing in a new product that can bring a more human-centered approach to DAOs - The 1-hive app might be a good start (which I guess is the same that @GriffGreen mentioned), but could we instead use it as a base to create a new module for the new product? Getting the DAO involved in making this happen would be a perfect scenario.

As a final remark, to @mlphresearch comment

Although this is true, how do you see the potential implications of using another framework to set up this new DAO at this point for Aragon, as a product organization?

Regards

2 Likes

As I mentioned in an earlier comment, as long as Aragon’s raison d’etre is to offer best-in-class DAO tooling, not dogfooding your own product is obviously not a good sign. That said, if Aragon currently doesn’t support delegation but the objective is to decentralize the control over the treasury through a delegated voting system, it makes sense to consider other solutions.

2 Likes

Fully agree, just think we should/could balance speed of decision x benefits of dogfooding

1 Like

The idea is very interesting, but also very disruptive. It means that the current structure set out in the charter must be fundamentally be changed. I understand that the current structure is not perfect, but it works and the DAO kicked-off without any material issues. A fundamental change must therefore be considered very carefully.

Here are major points to be considered:

  • as pointed out by @eaglelex and @joeycharlesworth; the association can only transfer funds to third-parties if such transfer is fully justified by the purpose of the association. Otherwise such amount to be transferred cannot be deduced as expenses for tax purposes and it will be deemed as revenue of the Aragon Association and subject to very high profit tax (would cost the Aragon Association a lot of funds for nothing);
  • A DAO without any legal wrapper is likely deemed at least under Swiss law as simple partnership among the participants. It also means that the assets owned by the simple partnership will be taxed with the participants. In case of such a substantial amount, there is a risk that the tax authorities will go after participants of the DAO to have the funds of the DAO included pro-rata in tax statements of the participants;
  • A new untested structure always comes with additional risks. As mentioned above, the existing structure is not perfect, but it kicked-off. Before introducing any new structure that is not based or wrapped by an existing well established legal wrapper, it should be tested with a small amount of funding like a “lab DAO”;
  • One of the main arguments of the proposal is to have a more decentralized structure. The Aragon association is designated in the proposal as centralized organization. This is only partially correct. A Swiss association is governed by its members that participate in the general assembly which is the highest governing body within an association (also elects the members of the board and other bodies). The association is thus governed and owned by its members. The more members an association has the more decentralized it is. Furthermore Swiss association laws allow to fully distribute the power within the association and to introduce next to the general assembly and the board, a treasury body, a compliance body, a technical body, an ethics body, a grants & projects body and an election body etc… By this the power of the board will be minimized to administrative tasks like calling for votes and submit fillings to authorities.

IN OTHER WORDS: if you want more decentralization, the proposal should request the acceptance of the ANT holders as members of the Aragaon assocaition. By this, a massive step to decentralization would be made, as the ANT holders would control the Aragon association and thus also the treasury of the association. In addition, the association provides protection by the legal wrapper and excludes the tax risk for the participants. If there is interest, I’ happy to organize an AMA-session on the beauty and possibilities of the association model.

4 Likes

I also think it’s fantastic to see movement in this direction and I think @mlphresearch 's proposal is well written.

My main question is why start with the treasury? As a new member to Aragon, it seems to me that currently most work is done through AA and it also holds the treasury. Why not start with moving some of the work over to AN DAO.

Moving the work processes to AN DAO will help build confidence in the capability of AN DAO and also naturally draw the treasury into AN DAO as more costs will be handled there. It will also help point out opportunities to improve the platform.

I guess my thinking is most aligned with @ramon 's ideas here.

3 Likes

Decentralising the Aragon Association by having it controlled and managed by ANT holders seems to me like a logical first step and the only way that ANT holders would truly have a say on a large scale transfer of funds to the AN DAO.

@ronald_k - how would you envisage enforcing the same quorum and spending caps that @mlphresearch proposed for the AN DAO, but within the Association?

  • Quorum: 0.5% of total ANT circulating
  • Support threshold: 60% of ANT participating, either directly or through delegation
  • Initial annual outflow gap: 10% of the starting (USD) value of the treasury
  • Minimum delay between vote approval and execution: 5 days

Is that something that could be added to the Aragon Association articles?

The Aragon Association controls the aragon.org domain, Twitter account, forum, Discord, Email accounts, Aragon trademarks and many other centralised software applications all of which are important tools and assets used in the Aragon project which as of today, cannot be controlled by the AN DAO.

Irrespective of the proposal outcome to transfer Aragon Association funds to the AN DAO, I strongly believe the Aragon Association should be opened up and controlled by ANT holders to align interests and implement appropriate control mechanisms and safeguards.

With this in mind, the suggestion to open the Association to ANT holders has my full support and I would welcome your offer to hold an AMA session on it with the Aragon community.

1 Like

I can see solid logic to start with the treasury - it puts focus on decentralizing the work. We (AA/AL) have made some progress but at the same time, have arguably been quite slow due to multiple reasons:

  • Mistakes around the decentralization efforts - both hiring and design
  • Not prioritizing decentralization as an organization across all teams

Overall I am excited about this idea (as probably you can tell from my comments). Is it safe to assume this thread is where the next steps you outline will be discussed, or will there be separate thread’s to approach those conversations in a more structured way?

As pointed out, there are a few options for delegation on Client - TEC, Curve, API3. Maybe the DAO (in its existent form) can fund a team to deploy something that can be implemented prior to a potential treasury transfer.
At the same time, putting our treasury in the new set of Aragon core contracts (which are afaik ready and pending audits) is probably a strong signal t the web3 ecosystem that the new stack is reliable, so maybe getting a delegation module for those is a great opportunity.

1 Like

@mlphresearch, can you please confirm if the proposal here is to also transfer control of the ANT contract over to AN DAO? Or do you view that as not forming part of the Aragon project treasury?

As it stands today, the ANT contract is controlled by the Association which prevents ANT holders from being able to make changes to the supply and overall distribution. This obviously has important implications for treasury management and decentralisation.

That’s not part of the first draft but can definitely be considered for the final version. Obviously, the token contract is a core aspect of the broader treasury function.

2 Likes

This thread will remain the best source with regards to the proposal. However, various adjacent issues/topics have also been raised (e.g. revising the Charter) and these may end up in separate threads.

3 Likes

Apologies for the delay - I will attend to all unanswered comments as soon as possible.

On the issue ANT holders = members, there is a problem to consider, but of course @ronald_k correct me if I am wrong.

I have the feeling that Art. 67 para 1 Swiss CC basically states that the association follows the 1 member 1 vote rule. And the provisions looks mandatory to me. This means that the assembly of members can’t work according to the current token voting system (ie who has more tokens has more voting power).

Therefore giving the power to the tokenholders to cintrol the treasury would probably require the establishement of a different board/organ composed by the tokenholders that rules according to the token voting standard. In any case the assembly of members would always have the final word according to art. 65 Swiss CC.

1 Like

My understanding is that 1 member 1 vote is the default if the articles don’t specify otherwise, but @ronald_k can confirm. “unless provided otherwise in the statutes of the association, all members have equal voting rights in the general assembly.” - ref