/ ethereum

Understanding the Aragon Token Sale

What is Aragon?

Aragon is a platform that allows anyone to create and participate in a DAO. In the founder's words, "Aragon was born to disintermediate the creation and maintenance of companies and other organizational structures." This is a radically ambitious goal. The typical intermediaries that are involved in the creation and maintenance of companies are the government, banks, and lawyers. As ambitious as this goal is, you can already see Aragon making significant progress towards it with their alpha software. The Aragon alpha already allows people to do all the basic things they need to run an organization including assigning shares and roles to members of the organization, managing bylaws, accounting for transactions, and voting on decisions. They are still running on a test network, so it will be some time before the first organizations start using Aragon for real, but they have a lot of organizations testing the software already.

Tomorrow, Aragon will hold a token sale to raise funds for the development of the Aragon Network and software. Token buyers will be able to exchange ETH for ANT, the Aragon token that enables buyers to participate in the governance of the Aragon Network.

Disintermediating the Creation and Maintenance of Organizations

Having started an LLC in the past, I have felt the pain in the creation and maintenance of a legal company structure in the US, but I would not choose to sidestep this process for fear of the legal consequences. For that reason, I am already a little cautious in considering using their software, and when considering buying ANT. I am sold on the concept of a DAO, but in practice, I think the first generation of DAO's will have to tailor their smart contracts to adhere to local laws as well until the government is able to catch up and understand the concept. And I don't think this is an impossible task. As I mentioned in my last post, the JOBS Act lays a legal foundation for equity-based crowdfunding. As long as it is possible to create a DAO that adheres to these rules, then Aragon could be an immensely powerful tool to create an organization on the Blockchain. But at the very least, Aragon's software could still be used to create an operating agreement and cap table that is enforced by code and easily understandable without having to hire a lawyer. This alone makes the software exciting. Entrepreneurs could register their company as an LLC in whatever state they want and use Aragon to manage agreements among the founders and investors who they know personally. This type of use case doesn't quite live up to Aragon's vision, but it is still valuable while anonymous token crowd sales live in a legal gray area.

The Aragon Network, a Decentralized Court

A unique and interesting feature of the Aragon platform is the idea of a decentralized court system that is able to settle disputes between organizations when agreements encoded in smart contracts aren't enough. I think this is one of the features of the Aragon platform that gives it the potential to become really powerful. On a FAQ on Youtube with the founders, they mentioned that someone wants to use Aragon to govern their private island. I can imagine Aragon or a system like Aragon being used as the foundation for new governments in the future that are created in new frontiers like Seasteads or Mars.

Features of the App

I don't want to waste too many words explaining the current features of the Alpha, because they have a page on their site that does this elegantly with animations. You can download and try their software directly as well.

Founders

The founders seem to have credible backgrounds. Luis was a Forbes 30 under 30. Jorge has a Github profile and has clear technical skills with the development of the alpha.

How Do You Benefit from Holding an ANT Token?

It seems like there are three main benefits from holding ANT:

  1. The ability to vote on how the Aragon Network operates
  2. The ability to participate as a judge/jury in the decentralized court
  3. The ability to receive dividends, if the Aragon Network decides to issue dividends

On Dividends

The whitepaper never explicitly mentions that ANT tokens could potentially pay dividends, and to me, this is a strange admission as it is a strong value proposition to holding the token. The network has a clear way to draw revenue through a fee that all Aragon organizations will pay. The whitepaper suggests that this tax could potentially be used to pay for the development of the network, but the foundation already receives 15% of the proceeds from the sale. My speculation as to why the founders avoid explicitly mentioning the possibility of dividends is that it considered best practice by Coinbase not to market a token sale as a potential investment:

Marketing a token as a speculative investment, or drawing comparisons to existing
investment processes, may mislead or confuse potential buyers. It may also increase the likelihood that the token is a security. Using a short, relevant disclaimer which accurately describes the risks of the tokens, protocols, and the network is useful. Long, legalistic disclaimers about the risks of investment are not helpful to buyers and may provide the impression that the token is an investment.

Using the word "dividend" or "ICO" are discouraged for this reason, and I think this may be the reason why they avoid talking about the possibility of the Aragon Network issuing dividends to ANT holders even though it seems that it is technically possible, and even likely that she (in the whitepaper, the founders refer to DAOs as "she") will decide to do so.

Terms of the Sale

The terms of the sale are somewhat complex and confusing, but seem fair in comparison to many other token sales. Some important points:

  • 70% of the tokens go to purchasers in the crowd sale, 15% go to founders and early contributors, and 15% goes to the foundation.
  • Founders and early contributors' tokens have vesting.
  • There is a hidden cap to the crowd sale. I listened to the founders explain how this works and why they are doing it, but cannot honestly say I understood much of their explanation.
  • There are lots of security measures built in with the intentions of protecting everyone involved in the sale. It's important to note that the Aragon project is so complex that these security measures by no means guarantee the safety of the sale. There are a lot of smart contracts involved, and a lot of money will likely be at stake, but it is good to see them taking common-sense measures like code audits, and bug bounties.
  • The ANT token is a MiniMe token, which enables it to be forked. I understood this to mean that the token can be forked in the sense of creating a new token with different logic, but the same equity distribution.
  • ANT sale begins on Ethereum mainnet’s block 3,723,000 — May 17, ~3 pm GMT

Read more at:
https://aragon.network/
https://blog.aragon.one/aragon-network-token-sale-terms-8998f63a3429

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