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What is Aragon ?

Aragon is an open-source software used to create and maintain DAOs(Decentralized autonomous organizations).

What is DAO?

DAO stands for:

  • Decentralized: There is no leader, decisions are made in a bottom-up way.
  • Autonomous: DAO is a digital jurisdiction that bypasses political and national boundaries. Members of DAO vote on proposals to come to a common consensus. They can also pool in additional funds to sponsor a project.
  • Organization: Has rules and manages funds held in its treasury. It has digital courts to solve disputes.

Here is a comparison of DAO to a typical company:

What role does Aragon token(ANT) play ?

  • Aragon is itself a DAO. ANT is the governance token of Aragon network. ANT holders get rights to propose and vote on updates. They influence future of Aragon.
  • There may be disagreements among the DAO members. Members need to stake ANT tokens to raise disputes in Aragon court. Judges also need to stake ANT to preside over a case.

Origin of Aragon

Luis Ivan Cuende and Jorge Izquierdo built Aragon network in 2016.

Luis Iván Cuende (born November 26, 1995), is a Spanish computer programmer. When he was 12, Cuende started his first free Software project, a Linux-based operating system. At 15 HackFwd named him “Best Underage European Programmer.” At 17, he was advisor to Neelie Kroes, then the European Commissioner for Digital Agenda. In November 2015, he co-founded Stampery, which leverages Bitcoin Blockchain to generate an immutable record of existence, integrity and ownership of any data or communication. In January 2016, he was the youngest Forbes 30 under 30 in technology.

Jorge Izquierdo (born March 2, 1997) is a Spaniard computer programmer. At 15, Apple awarded him a WWDC scholarship, for the most promising young app developer. One year later, he launched an app that reached number 2 ranking in the Spanish App Store.

Aragon team raised 25 million dollars during Aragon ICO in 2017.

Aragon network was launched on Etherium mainnet in 2018.

What problems does it solve ?

Humans have tried to organize themselves using various kinds of governance models: monarchy, aristocracy, timocracy, oligarchy, theocracy and tyranny, etc. The key aspect of any philosophy of government is how political power is obtained – the two main forms being electoral contest and hereditary succession.

Democracy is a form of governance in which people choose their leaders, who govern them. Today, most countries follow some or the other flavor of democracy:

Democracy is not the perfect form of governance. It has many problems:

  • Tyranny of majority: Majority pursue their aim at the expense of minorities. This results in oppression of minority. In democracy, majority uses voting process to pass proposals in their own interest, excluding minority groups from the distribution of benefits.
  • Rational ignorance: Public needs to educate itself to choose a good government. It is difficult to collect right information and time-consuming to learn about every candidate. The cost of educating oneself outweighs any potential benefit one could expect from a single correct vote. Most smart people, who could actually make a difference – think voting is a waste of time.
  • Unjustified power: This usually springs from centralization. People in governance have power over the masses. Most politicians use this power to enrich themselves and their friends. Its human nature to help their family and hurt their enemies which cannot be changed. It’s not the abuse of power that’s the problem. It’s the power to abuse.
  •  Accountability: Most governments are large organizations with strict hierarchies. They are the last ones to digitize records and make their functioning transparent. It is not possible for a citizen to gather all the permissions and search through records of government offices.
  • Inefficiency: People in power do not face the same ruthless competition that the private sector has to face. This shields them from the struggle to improve themselves.

Flawed selection process: A candidate only has to get 51% of votes, but they go to the legislature to represent 100% of the district.

Rigid and slow: Proposals are passed and executed at a snail’s pace. Even for exercising small changes over your environment (your city, state or corporation), you might have to go through cumbersome and opaque bureaucratic processes.

Corruption: Absolute power with no accountability leads to corruption. Smart and honest people avoid politics whereas unethical crave power. This results in government becoming even more corrupt as time passes.

Walk away: People do not have the option to walk away if they are unhappy with the government. Governments pass difficult migration laws and use violence to keep their citizens struck within their boundaries.

  • Lobbying: Individuals with money influence politicians to make laws that benefit them at expense of others and environment.
  • Inefficient judicial system:
    • It takes years to come to a decision.
    • Winners are not compensated for the time and money spend fighting false allegations.
    • Judges do not face any repercussions for giving a wrong judgment.
    • Corrupt judges take bribes to pass wrong judgments.
    • Languages are not reliable for writing contracts. Different parties can interpret the same text in different sense.
    • Law is a vast and complex subject. Every country has its own law. Lawyers have to study and practice for years to get a hang of it. It is not possible for every citizen to know all the laws that apply to him.
    • Governments have to spend enormous amounts of funds on enforcement agencies(police, jails etc) to implement judgments passed by courts.
    • The person with talented lawyer has higher chance of winning. A lawyer with better track record also gets to change higher fees. The justice should not depend on how a  an adept lawyer navigates a complex and corrupt judicial system.
    • Judges and lawyers are at risk of physical violence because of nature of their job.

There are many places where the judicial system is so corrupt that people have completely given up hope of justice. Image of people burning Supreme court in Venezuela 👇.

  • Flawed voting process:
    • No direct democracy: People do not get to vote on proposals directly. They make a vote every 4-5 years to choose a leader who makes all decisions on their behalf.
    • Most of the voters do not think long-term and are swayed by popularity of a candidate seen in the last few days before elections.
    • Even in this digital age, complete nation has to stand in lines and wait for their turn to cast vote. 
    • Votes are still counted physically in many parts of the world.

Direct governance, people directly voting on every proposal instead of choosing leaders who decide for them was not possible till now. This was because the coordination costs were high in the old world. But now, thanks to the Internet and decentralized governance, developers can engineer systems to empower people’s voices to their fullest DAOs aims to fix governance, justice and voting process:

  • People can collaborate from all over the world without worrying about physical and political boundaries.
  • DAOs makes it possible for group of people from all over the world to form a organisation with set of rules, funds and system to resolve disputes.
  • Descions are made in a bottom-up manner without the need for intermediaries.
  • There are minimal chances of corruption as all the actions of members are recorded on blockchain.
  • Voters can choose to remain anonymous – this reduces risks of violence significantly.
  • Minimal time and resources are wasted in organizing voting and governance.
  • Members can exit if they are not satisfied with the decisions made by DAO.
  • Members do not have to vote on every subject. They can delegate their vote to another member they feel has better grasp of the proposal.

Power has a natural tendency to reinforce itself and become corrupt. If power becomes centralized, it doesn’t have to answer to anyone. Decentralizing power is essential to minimizing corruption.

Decentralized organizations change our relationship with governance: from something that is imposed upon us by others, into something we choose to opt into. Where we are equally serving and served, rather than just serving.

Earlier only academics used internet – browser allowed everyone to use it. Similarly, Aragon makes it easy for existing blockchain dApps to form a DAO to govern their project.

Aragon Manifesto

Aragon team believes that freedom to organize ourselves is a basic human right. You can read their manifesto here: Aragon manifesto.

How does it work ?

ANT is an ERC 20 token. Aragon network was built on Etherium blockchain. Aragon provides tools to create and maintain DAOs.

Here is a step-by-step guide for making a DAO 👇.

Aragon apps

DAOs made using Aragon are modular in design. Developers can mix and match various apps to make custom DAO to suit their needs:

  • Tokens: The Tokens app is used to manage membership and voting power in an organization.
  • Voting: The Voting app is used to see all open and closed votes. Voting app can also be used to start a new vote and poll tokenholders in the organization about an important issue.
  • Agent: The Agent app enables Aragon organizations to interact directly with any other smart contract on Ethereum. Before Agent, an organization would have to nominate a trusted party to interact with an Ethereum smart contract on its behalf.
  • Finance: The Finance app is used to manage the financial resources of an organization. Users can see the balance of each asset the organization owns, a history of past transfers, and also create new transfers from the finance app.

Aragon keeps building new apps. You can check out all the available apps in their app centre.

Agreements

A legal agreement is a written document that identifies parties’ roles and responsibilities under the agreement.

Instead of legal agreements companies can use Aragon to sign digital agreements which are safely stored in blockchain. The big difference is they auto-fulfill. They can enforce transactions autonomously. The contracts hold funds in escrow and can be paid out automatically as soon as parts of the agreement have been satisfied.

In case of differences, parties can approach Aragon court to settle their dispute.

Aragon court

It is not possible for developers to visualize all the possible future scenarios and code their outcome in smart contracts in advance. Memebers of DAO can approach Aragon court in such cases of subjective disputes.

Aragon court is judicial branch of Aragon protocol. It mimics working of courts in our society. A typical dispute’s life-cycle is:

  • Any member of DAO can appeal to Aragon court by submitting evidence and staking tokens to create a dispute. Staking of tokens is necessary to raise dispute so that members do not spam the network. The other party also has to stake tokens if they want to oppose the disagreement.
  • Member who submitted the appeal automatically wins if the other party does not stake their tokens.
  • Judges also stake their ANT tokens to preside over a case. Their chances of getting drafted are directly proportional to amount of token staked.
  • Judges examine evidences submitted by parties and give their ruling.
  • The party that gets maximum votes from judges is declared the winner.
  • Tokens of loosing party and judges who voted in favour of loosing party are distributed to winners.
  • Losing party can escalate the dispute to the next round of jury voting if they are not satisfied with the results. Loosing party has to stake more collateral for appeal to move forward. In case other party does not stake additional collateral, decision will automatically be ruled in favour of party that deposited collateral.
  • Each appeal round brings in a larger and larger group of judges until the fourth and final appeal round, when all active judges are invited to vote.

Working Demo

Aragon is fully functional product and projects are using it to form DAOs.

Popular projects that have created DAOs using Aragon are:

Governance model

Aragon project is governed by Aragon DAO. They follow the same standard of decentralization that they recommend to others.

ANT holders form part of Aragon DAO. Members submit proposals to DAO. Other members vote to pass or reject the proposals. The weight of vote is directly proportional to amount of ANT member is holding. Proposals that are passed are developed and implemented.

In case of differences, members can approach Aragon court to resolve their disputes.

Aragon one

Aragon One is a Swiss for-profit company formed by the founders of Aragon.

Just like other projects, they also submit proposals to Aragon DAO. If the proposal is passed, they receive grants to develop and implement the project.

Competitors

Major competitors of Aragon project are:

How much money does Aragon project have for future development ?

  • Aragon team raised 25 million dollars by selling around 28 million ANT tokens(70% of total supply) for developing Aragon project in 2017.
  • The team does not have any plans for future follow on token offerings.
  • Aragon does not have a profit model – it does not have any source of ongoing revenue. However:
    • Price of ANT tokens held in the treasury may increase.
    • Aragon can pass a proposal to charge small fees from members using DAOs and court services of Aragon.

For more details read their transparency report here.

Tailwinds

  • First mover advantage: Aragon protocol is building core infrastructure for building DAOs. They are first to the market and do not have any significant competitors.
  • Partnerships: Most of the popular projects are using Aragon to build DAOs.
  • Switching costs: It would be very difficult for DAOs to come to a consensus and organize migration to a new platform.

Challeges

  • Scaling issues: ANT is an ERC 20 token. Aragon is built on Ethereum. Ethereum has limited block space, which makes it difficult and expensive to scale. Etherium has high gas fees, which discourages participation. Aragon team has two options:

    • Migrate to some other blockchain.

    • Wait for Etherium to solve these issues.

  • Anonymity and reputation: Aragon will have to strike a balance between:
    •  Allowing reputation points to users for their past actions.
    • Members remaining anonymous.
  • Uncensorable communication: Members must have a platform where they can have free discussions over proposals. Currently, their conversations are scattered all over Facebook, Telegram, etc that can be censored.
  • Aragon DAO can make changes to core Aragon protocol which will effect every DAO built using Aragon. For example, Aragon DAO can pass a proposal that every DAO will have to pay monthly fees to Aragon etc.

Tokenomics

Aragon has max supply of approx 39.6 million ANT tokens. The tokens were distributed in 2017 as follows:

  • 70% public sale.
  • 15% kept as reserve with Aragon foundation.
  • 15% awarded to early contributors and founders.

Vesting schedule

No ANT tokens are locked up. ANT circulating is equal to total supply.

Token Inflation

All the ANT tokens ever minted are in circulation. There is no inflation in Aragon. Aragon DAO does not any have plans to mint new ANT tokens. However, they have the option to suggest and pass proposals for minting new ANT tokens.

Demand pressure

Token’s price increases due to demand pressure.

Demand pressure on ANT token will come from:

  • Govern Aragon: Only ANT holders can submit and vote on proposals. The weight of vote is directly proportional to ANT holdings. ANT holders are members of Aragon DAO and have power to influence future of Aragon. People will acquire ANT tokens to become members of Aragon DAO.
  • Aragon court: Member has to stake ANT tokens to submit an appeal. Judges also have to stake ANT tokens to preside over a case.
  • Speculators: They will buy ANT tokens in hope of future price appreciation.

Supply pressure

Supply pressure on a token decreases its price.

ANT token does not have much sell pressure:

  • ANT token does not have any institutional investors who would want to sell ANT and lock in their gains.
  • Aragon has no inflation. No rewards are being paid out to any actors in the ecosystem

Market cap

Aragon protocol aims to disrupt government structures and the judicial system. It affects all the countries and every person on earth. Governments all over the world spend trillions of dollars on maintaining governance and judicial system.

Aragon token has tremendous room to grow even if it can take a small portion of the market.

Indicators to watch out for

  • YouTube: Aragon YouTube channel is growing.
  • Twitter: Their Twitter following is growing.

Aragon is gaining popularity on social media

Future possibilities

Aragon has the potential to change how we form groups and govern ourselves. Some favorable outcomes of Aragon achieving its goals are:

  • DAOs already hold digital assets. Soon they will hold land. DAOs will become countries as nation-states fail because of ever-increasing distrust and unhappiness. Constitution will be written in code and will be enforced by smart contracts.
  • These countries will treat their citizens as customers. They will compete among themselves to provide the best services at the lowest price otherwise citizens will choose other DAOs.
  • Aragon DAO will be used for forming every kind of organization: marriages, companies, NGOs, sports teams, countries etc.

Final remarks

Humans are social animals. We have been organizing ourselves in groups for millions of years: tribes, teams, communities, cities, countries etc.

We need a robust and fair system to govern ourselves in which power does not get concentrated in hands of a few.

Aragon team has taken up one of the most difficult problems ever faced by humanity. They are against well-established incumbents who have access to all the resources and means of violence.

Change of power structures has always been accompanied by massive amount of violence. However, it may happen that existing incumbents are unable to attack the evolution as it does not have any leader and is not restricted by physical boundaries.

Do further research

You can continue your research by using following resources:

Further reading