Messari: A Detailed Analysis of the DAO Infrastructure Aragon Network Product Structure and Development Status

Original Author: Eshita Nandini, Chain Catcher

Original Title: 《The Aragon Network》

Translation: Hu Tao, Chain Catcher

The Aragon project was established in 2017 with the aim of supporting decentralized governance. It provides templates for successfully launching DAOs in just a few minutes and allows for further customization using modular applications. Within the Aragon network, there are various products designed to support the launch and maintenance of DAOs, specifically for optimizing the voting process. Decentraland, DAppNode, API3, NFTX, and several other well-known projects are currently supported by Aragon.

As an early project, Aragon was the preferred template, but it gradually became a less attractive option for DAO formation with the introduction of updated tools.

Aragon Network DAO

Aragon started as a centralized project, with Aragon One as the main team for several years until the end of 2021. The launch of the Aragon Network (AN) DAO marked the beginning of Aragon's progressive decentralization. A DAO consists of several sub-DAOs with the following responsibilities:

• Main: A discussion space for all ANT holders to propose and vote on treasury decisions.
• Executive: An elected group overseeing the overall strategy of the DAO.
• Compliance: An elected body focused on protecting the DAO.
• Tech Committee: An elected group primarily responsible for reviewing and maintaining the codebase.
• Aragon Court: The Court is an Aragon product used to resolve disputes during the proposal process.

The AN DAO symbolizes the hierarchical structure of most DAOs, as the elected committees are granted autonomy to make administrative decisions involving their expertise, such as the compliance sub-DAO. As of now, the AN DAO is not included in any legal structure.

ANT Token Issuance and Supply

The ANT governance token was launched through an ICO, raising $25 million. At the end of the issuance, the total supply was 39.6 million ANT.

The distribution is as follows:

• Token Sale (70%)
• Aragon Foundation (15%)
• Early Contributors (15%)

Aragon launched a second token, ANJ, for its Court product, which was supported by ANT but was later discontinued.

Aragon's Product Suite

The Aragon network consists of four parts: Client, Govern, Court, and Voice.

Aragon Client

The Aragon Client provides DAO templates. At the end of last year, the Client launched on Polygon and Harmony, significantly reducing the costs of creating and managing DAOs. High fees forced many DAOs to use off-chain governance solutions like Snapshot. Typically, off-chain functionalities lead to a loss of transparency, which contradicts the architecture of open organizations. As one of the first projects supporting DAO construction, Aragon achieved initial success and popularity but has since been somewhat overlooked. Of the over 2,000 Aragon DAOs deployed since 2018, only 300 were launched in 2021, down from 700 the previous year.

Launching a DAO on Ethereum is often expensive, which can explain the decline of the Aragon Client. Therefore, Layer 2 became a reasonable choice—some well-known DAOs already exist on Polygon, such as KlimaDAO and MetaCartel. With the launch of the Polygon Aragon Client, over 1,000 new DAOs were formed, while only about 90 were launched on Harmony.

Since the Aragon Client was deployed on Polygon, the number of new proposals through it has quickly surpassed the number of proposals on Ethereum. This may indicate that builders are adopting L2 for their communities, but it could also suggest that activity on existing DAOs on the Aragon client is less vibrant. As of now, there are only 12 Aragon DAOs on Ethereum with funding exceeding $1 million, which is very small compared to the substantial funds existing today.

Aragon Court

For blockchains, the idea that "code is law" is both a feature and a flaw. When it comes to edge cases and subjective issues, smart contracts may struggle to discern what is logical and what is fair. As a solution, Aragon uses Aragon Court to resolve complex disputes with a jury. As a decentralized oracle protocol, Aragon Court can be used by Aragon DAOs to resolve subjective disputes with binary outcomes. Aragon Court allows stakeholders to discuss ongoing proposals when they disagree.

A separate token, ANJ, was introduced as currency for members to stake when disputing proposals or if they wish to serve as guardians (i.e., jurors) in Aragon Court. In 2020, the ANT token was upgraded to V2, and ANJ was discontinued, replaced by a single governance token instead of a dual-token system.

Currently, those wishing to become guardians in Aragon Court need to stake 100 ANT tokens to be considered for the role.

Aragon Govern

Govern is the governance layer that involves all aspects, except when the Court is needed in case of disputes. To expedite the decision-making process, Aragon implements optimistic governance or "lazy consensus," meaning all proposals pass unless challenged in the Aragon Court during a delay period.

Colony DAO also adopts optimistic governance. Proposals pass by default, but members can motion to challenge any proposal. To do this, members must also stake an agreed number of internal DAO tokens. This provides a self-regulating system where members are essentially "putting their money where their mouth is."

To advance this concept, the team proposed the ERC-3000 standard in 2020, which is a proposed on-chain specification for contracts to execute optimistic governance decisions made off-chain. However, this EIP has not been adopted outside of Aragon.

Aragon Voice

Aragon Voice is still in the testing phase, allowing users to create proposals for any ERC-20 token and vote on them on L2. Voice is powered by Vocdoni OpenStack, a fully anonymous voting protocol.

The Return of DAOs and Hierarchies

In early 2021, 11 members of Aragon One resigned, citing a lack of transparency. As a result, the association began to decentralize, leading to the formation of the Aragon Network (AN) DAO. However, the formation of the DAO was not influenced by several key members of the founding team.

Decentralization exists on a spectrum, and its two ends are not practically observed in practice. When control is thoughtfully shared, the core team prepares for the success of the DAO as they begin to relinquish full authority. Through its governance and approach to forming DAOs, Aragon indicates that complete decentralization may not be the key to running and maintaining an organization.

In projects like Orca Protocol and Index Coop's working group, there are flatter versions of hierarchy than traditionally expected. DAOs continuously rethink and reform hierarchies that suit them.

Conclusion

Aragon's advantage lies in the flexibility for users to customize templates according to their preferences, removing some constraints. Aragon also heralds optimistic governance. After all previous forum discussions, proposals are typically sufficiently refined upon release to align with community wishes, making it likely to pass.

Despite the recent product launches, there is little evidence that Aragon DAO is a popular choice for formation or management compared to other DAOs. Additionally, since the departure of core team members, there has been little coherence within the Aragon team, and overall execution has declined.