Revisiting Long-term funding models for Aragon

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.

  1. 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.

  1. 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.

Development is progressing rapidly. And the Aragon Black team is begining to solicit applications to prepare for launch.

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.

  1. 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?

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While the court is often presented as a dispute resolution for governance frameworks, really… it’s a dispute resolution framework. A big problem in the blockchain space is determining what data is and is not valid. The court could potentially provide this service as well. Yes, I’m talking about oracles: off-chain data verification. Seems like it would be relatively easy to create an (Aragon) app where you could have a feed of data and then any member of the DAO can challenge that data at any time. This way you would be able to link off-chain data to your DAO. If you didn’t want to bother your DAO members with annoying data verification games, maybe you could out-source this to the Court for a small fee? Is this viable and/or something you guys are thinking about?

YASSSSSSSS :tada:

I’m not an expert… but, it seems that:

  • a blockchain is really just a ton of hashes put in hash trees
  • the hard part is ensuring that data that is added to the chain is valid
  • the service of providing valid and verifiable data is becoming a commodity

Also, in the tech sector, but esp the blockchain sector:

  • developer mindshare is very very valuable
  • onboarding, education, and community engagement takes time
  • building new stuff takes times, and then once it’s built it takes time to get people (devs and end users) to use it and like it

As we look for scaling solutions, we need to ensure that we do not create more work and overhead for DAO developers. The UX needs to constantly be getting better, not more complex.

  • would Cosmos/Substrate EVM/eWASM modules allow dApp/DAO developers to leverage the same toolsets and languages they already know, but just have a different base layer secure the data?
  • would end users who actually participate in communities that use DAOs have to acquire a new set of tools/interfaces to interact with the DAO?

Yes, though the research efforts are very much focused on the scope of proposal agreements and in particular resolving binary outcome disputes. However, we have thought about other theoretical usecases, and there are a ton!

One of the interesting ones actually relates to scaling voting, using an optimistic tabulation approach. Its significantly easier to tabulate votes off-chain in a users browser than to securely tabulate on-chain. With the court you could use an approach similar to carbon vote, where the results are clearly available to everyone, but not returned to a smart contract, then have someone submit the results on chain, and just accept the result as true unless there is a dispute. If there is a dispute it’s reasonably simple to resolve because the outcome “correct” outcome is actually not even subjective.

I think the proposal agreements use case is one of the most important, but its also the tip of the ice berg in terms of the usefulness of the court as an oracle mechanism.

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Hmmm :thinking: this is starting to sound like a 1.X scaling solution… Really the Court is just acting as a validator set for arbitrary data right?

Yeah, we went down that path when trying to think of how to scale voting with something like truebit, and atleast in cases where the data is not incredibly computationally expensive and you have a reasonable expectation that atleast one person is likely to validate the data before the dispute window closes (as you do with voting), the court would work really well.

You still have to have the vote data stored in logs, so you still have to send transactions on-chain when voting, but it can be much cheaper than doing the tabulation on-chain. It becomes particularly useful when the tabulation is more complicated like when you need to evaluate delegations chains for something like liquid democracy.

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Very aligned with this.
As long as the participation is opt-in such as a “DAO members club” with clear incentives for sub-communities. I think thats what you were referring to as market arbitrage / voluntary participation.
Beyond positive effects on ANT price, it can help Aragon governance to be less plutocratic and more representative of its sub-communities as governance moves from hodlers/whales to DAOists/users.

Has there been work done on this since this post? Would be happy to help.

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My thinking is that this will be part of the fundraising template that is provided to orgs. So by default they will have this requirement, but if they deploy their organization using the CLI they can initialize the fundraising app with different collateral settings, so it would be opt-in in that sense.

Beyond installing and configuring the app in a specific way there isn’t any additional requirements for this, so its more a matter of deciding on the configuration that is used in the default template.

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To add to this, this is how I explained the intention behind the ANT requirement in the default template the other day:

The default configuration which is accessible from the UI would essentially use two bonding curves (ANT and DAI) connected to the same bonded token supply. Both of the curves would be exponential, meaning as the market cap and price grows, liquidity should move away from the curve and onto other external markets (eg uniswap). The exact parameters may change but the current thinking is that the DAI curve will have a reserve ratio of 10% and the ANT curve will have a ratio of 1%. Both curves connect to the same bonded token, and interactions with one curve will create an arbitrage opportunity on the other curve. One way to think about this is that for every organization which is using the fundraising platform with the default template, 1% of their market cap in ANT will be locked into the bonding curve collateral reserve pool at any given time. As they grow, more will be locked up, and conversely if they fail/shrink less will be locked up. We believe that this is a win win for Aragon and for organizations on the platform, as it aligns our success with the success of our users, while avoiding the need to charge explicit fees. They would need to have capital in that reserve to take advantage of the liquidity benefits of the bonding curve/automated market maker anyway, and this way they have the added benefit of being able to participate and direct resources within the Aragon ecosystem.

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I assume it will provide some UX challenges… but I really love this idea, its a beautiful way to use defaults to build a regenerative sustainable model to support the Aragon Ecosystem! :+1: :+1:

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