Dear Aragon Community,
This is our proposal for what we believe should happen provided the community votes to deploy Aragon Protocol with $ANT as its native token.
Since putting together our latest thoughts on single vs multi-token tradeoff here, we’ve spent a lot of time speaking to various $ANJ/$ANT stakeholders as well as collaborating with the Aragon One and Aragon Association teams. Informed by these discussions and by our own thinking, we now believe the best path forward to avoid protracted negotiations, align incentives and enable the Court to be successful is to merge $ANJ into $ANT. Crucially, this must be done while appropriately rewarding $ANJ holders to reward their early belief in the Court, reflect the upside they’re now giving up and, most importantly, avoid splintering the burgeoning community.
Before we get into the proposal, a few preliminaries:
The recent discussions have demonstrated the strength of the $ANJ community and its conviction in the Aragon Court thesis. While $ANT holders ultimately have governance power over the Court, we think it’s important to at least understand $ANJ holders’ views and use these to inform $ANT voting. From our perspective, the worst case outcome for both sides is a contentious $ANJ “fork” in which the community is split and Aragon Protocol now has a competitor with the same name (Aragon Court Classic?). Avoiding this outcome is crucial and, our research indicates, easily achievable.
Given any proposal will be decided on and paid for by $ANT holders, we feel it should be primarily framed in terms of dilution paid by $ANT holders vs premium received by $ANJ holders. The former will be used to derive the latter, but we believe it’s easier for $ANT holders to conceptualise the tradeoffs in these terms and determine whether a given level of dilution justifies the benefits.
We think $ANJ jurors who remain committed to the Court vision post merger are more valuable and are worth paying a higher premium to provided they convincingly signal this commitment. Projects such as Synthetix have exemplified the positive effects that locking up users can have on a community and on bootstrapping a supply-side and we feel there are lessons to be learned here. $ANJ holders who want to exit the system should still be allowed to do so and compensated for the upside they’re giving up, but this should entail a much lower premium.
As such, we propose that $ANJ holders who are willing to signal their commitment to the Court post-merger by accepting a lock-up on their converted $ANT are paid a higher price than those who aren’t.
No lock-up (0-2% dilution): $ANJ holders who wish to convert their $ANJ to unlocked $ANT should be offered a price that is at least equal to the price on the bonding curve before it was suspended (0.015 ANT). This would require 1.37% dilution. An additional premium could also be added to reward them for their early belief in the Court, but this should be minimal.
12 Month Lock-up (3-10% dilution): $ANJ holders who convert their $ANJ to $ANT locked and activated for 12 months should be offered a higher premium. These will be active court jurors and can be seen as Aragon paying not just for a community but also for a supply-side.
We suggest the range is from 5-10% but ultimately, we believe the most important data point is the percentage of $ANJ holders that would be willing to lock up their $ANT at different dilution levels and resulting premia. As such, we suggest polling $ANJ holders directly and using this data to inform the resulting $ANT vote. For reference, we’ve included a table with different dilutions, ANJ/ANT prices and premium multipliers.
We propose a 3-step process to help $ANT holders arrive at the right conversion premium to pay for locked and unlocked $ANT.
As a first step, we propose polling $ANJ holders with the following question: “What is the minimum conversion price in ANT you would be willing to accept in order to lock and activate your converted $ANT for 12 months?”. The poll options would be 0.02, 0.024, 0.028, 0.032, 0.034, 0.04, 0.044 and 0.048. The results of this will serve as valuable data points to inform the subsequent $ANT holder votes.
Informed by the results of the poll, and assuming the current vote to deploy $ANT as the native token of Aragon Protocol passes, we suggest two separate votes are initiated for $ANT holders with the following questions:
“How much dilution should we sustain to buy out $ANJ holders who are willing to lock up and activate their $ANT for 12 months?”. The poll options would be 3% (0.02ANT/ANJ), 4% (0.024ANT/ANJ), 5% (0.028ANT/ANJ), 6% (0.032ANT/ANJ), 7% (0.036ANT/ANJ), 8% (0.04ANT/ANJ), 9% (0.044ANT/ANJ) and 10% (0.048 ANT/ANJ).
“How much dilution should we sustain to buy out $ANJ for unlocked $ANT?” The poll options would be 1.37%, 1.5%, 1.6%, 1.7%, 1.8%, 1.9% and 2%
- Execute the conversion according to the prices determined by the $ANT vote. $ANJ holders would be offered two different prices based on whether they want to convert to locked or unlocked $ANT. The conversion would take place over a week, after which prices would no longer be honoured.
Provided a reasonable outcome is reached that satisfies the community, we will work closely with the Aragon team and community in order to design some updated token economics. This will include a fee model, distribution plan and liquidity mining incentives for Aragon Court and the newly merged $ANT token. Our goal is to have a V1 of this by December so that a decision can be reached by the end of the year. This will be the first of many proposals we release, and we also have plans for a Court reputation system and new sub-court Architecture, among others.
We look forward to hearing the community’s feedback on our proposed plan of action. We’re excited to get this conversion finalized so we can all collectively shift our focus to what really matters: growing the Court and making it the decentralised judiciary of the world’s first digitally sovereign jurisdiction.