I wanted to revisit my previous forum post about long term sustainable funding models for Aragon. That post was written in February and since then there have been a few notable developments that are relevant to the topic of funding Aragon.
- Research and development efforts on the Court have come a long way and there is more clarity on how ANT will be used in the protocol.
If you haven’t already I recommend checking out the latest revision of the whitepaper, this revision focused on the challenge that DAOs/On-chain governance processes face with regarding to protecting the interests of minority stakeholders, and how for Aragon Organizations the concept of a proposal agreement and the Aragon court’s dispute resolution service provides a solution. It also details how the court mechanism and staking will work.
Most relevant to the topic of long term funding is how fees are captured by the court, and how ANT is used to stake in the court in order to be eligible to provide dispute resolution services in exchange for fees.
That information can be used to create a model of fee revenue given a certain number of subscribed organizations and dispute volume. Which can be used to model the expected value of participating as a juror in the court based on the current amount of ANT locked in the staking contract. We can also use the ratio
r parameter in the staking formula to determine for a given amount of stake in the contract, how much ANT must be locked into the staking contract.
Trying to make assumptions right now would be wild speculation, but the takeaway is that there is a clear relationship between demand for the courts services and demand for ANT, and that there is an indirect but logically sound relationship between the growth in adoption of Aragon organizations and growth in demand for the courts dispute resolution services.
- Aragon Black’s flock proposal which included development of Apiary was approved in ANV2.
One of the biggest barriers to adoption of Aragon organanizations (in my opinion) is a way to bootstrap funding and liquidity for a DAO. Apiary addresses both of these pain points, and I expect it will be a major catalyst for more serious adoption of DAOs.
Additionally, there has been discussion about how Apiary can be used to either generate fees or drive demand for ANT. The proposal I support is to have organizations which use Apiary for fundraising, maintain an ANT collateral pool with around a 1% reserve ratio. For organizations, this would have little impact on them as they would need to have collateral held in the bonding curve reserve to in order for the automated market maker function to work, and by using ANT they are able to use the ANT in their bonding curve reserve to participate in Aragon Network governance. From the perspective of ANT and the Aragon Network, this arangement is great because it aligns the value of ANT with the success of organization on the network while ensuring the distribution of ANT is pushed towards the most active and successful users of Aragon. It also drives demand and liquidity for ANT, without the need to impose fees on users of Apiary. From an end-user perspective, the ANT reserve can be managed by market arbitrage so users don’t necessarilly need to acquire ANT before joining an organization through the bonding curve they can simply use DAI.
- The proposal to restrict Aragon to only develop on Ethereum did not pass in ANV-2.
While there is not a tremendous amount of research going into the Ara-chain right now, it remains (imo) a really promising potential path for Aragon. Not all organizations will benefit from the security/cost tradeoff associated with daily operation on the Ethereum mainnet.
A PoS side chain of some sort would be a better solution for many organizations, especially those where the bulk of their activity happens internal to the organization and they are not necessarilly always interacting with other external contracts or applications.
With that in mind, as soon as Cosmos SDK or Parity Substrate makes an EVM or eWASM module available. It will be trivial for us to create an Aragon PoS Sidechain where ANT is used for staking. Similar to the Courts staking model, this would offer additional “work” utility and revenue potential for ANT.
I’m curious what peoples thoughts are on these efforts, whether they make sense, or whether there are other potential paths we should be focusing on in the near future?