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Aragon: Building Tools for the Organizations of the Future

Summary

Investable, worthwhile project with the foundation needed to scale.  Traction absent to date. Leading to low scores on various dimensions driven by the fact the network hasn’t been stress tested with a large volume of usage yet. Resulting in a token score of 36 out of 50.

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Overview

Aragon is a (DAO), decentralized autonomous organization, functioning as a digital jurisdiction for organizations, entrepreneurs and investors. Looking to do business outside the traditional legal system. Enabling borderless, permissionless entity creation and governance.

Cryptoeconomics (3.5 out of 5)

Aragon provides a governance mechanism for blockchain entities including DAO’s. Parties to these agreements collateralize them using Aragon’s network token ANT. Generating value for token holders as the reserve currency for these agreements.

The ANT token is required for network operations because the jurors who resolve disputes stake ANT to participate and earn ANT for the services provided. Jurors are incentivized to act in good faith. They can lose their ANT if they engage in acts hostile to the networks continuing operation.

An initial fixed supply of 39.6 million ANT was created with most already circulating. Future scarcity is not assured.  At some point, the network’s monetary policy could change at token holders’ discretion.

Aragon possesses solid growth potential, the architecting of the network makes future growth more likely to be linear as opposed to exponential. Organizations entering into new agreements does not increase the value of the Aragon network to organizations with existing arrangements.

Investability (4 out of 5)

Aragon has a transparent community-driven capital allocation process that to date has prudently spent the project’s treasury. Adoption has slowed do to market factors outside the control of the project.

The project’s primary mechanism to capture value is aggregating the demand for decentralized legal services and providing a supply of participants to provide these services. Taking a small cut of the interactions between the two across the network.

Aragon has a strong brand related to its aggressive marketing efforts to expound on the potential of DAO’s as an organizing principle. Binding this vision to the Aragon project itself. Garnering mainstream media attention from outlets such as Forbes which named Luis Cuende to its 30 under 30 list.

Its unique system combining wet and dry to define and resolve legal arrangements provides defensibility against competing projects. Which are more technically focused on providing legal services using smart contracts alone absent a human element?

Distribution (3.5 out of 5)

Aragon’s founder allocation was subject to a 2-year vesting schedule which the project adhered to. Additional preferred allocations to early investors and advisors were also subject to vesting.

The founders preference was to have an uncapped sale to optimize distribution of the token. Coming on the heels of the DAO hack security concerns existed with this approach. They compromised by instituting a hidden cap. Ensure the sale was secure while maximizing the distribution of tokens to as large a group as possible.

The founders chose to allocate themselves 16.5% of tokens with a further 20% going to a foundation they controlled and ~1% to advisors and early investors. Leaving only 62.7% left for sale during the ICO.

While not egregious by ICO standards. Given their control of the foundation, which in their defense they’ve since relinquished. The high number of tokens they allocated to themselves was sub-optimal given the project was pre-product.

~1% going to insiders resulted in broad distribution on fair terms for the allocation sold publicly. 2403 unique buyers participated in the sale.

Supply is currently limited at 39.6 million. Subject to change at the discretion of the community governance process used to manage the project.

Team (3.5 out of 5)

The founders have a track record of historical achievements, co-founding a crowdfunding platform before starting Aragon. Historically, the team’s strength has been technical skills with some recent efforts from the Association to use project funds to try and diversify the skillsets of contributors.

The team does not possess unique qualifications to run a network of decentralized organizations. In their defense given how new the concept is no one really would. They are experienced in building distributed computing systems. Having experience with developing both P2P and crowdfunding platforms.

They are rabidly committed to transparency and are the most transparent project I’ve personally come across.

Project (4 out of 5)

The project is live and has existing users. The white paper was well done but brief and does not provide the level of detail of longer white papers from other high-quality projects.

While there are good reasons to incorporate the ANT token into the network. It could function without it. The project seems to underestimate the risk of forking and removing the ANT token by competitors.

This is a concern because the project does offer a unique value proposition. Combining the power of smart contracts with real-world adjudication services.

Making it an attractive target for a fork if it does gain traction. Since everything is open source.

Scalability (4.5 out of 5)

The project founders have removed themselves from direct involvement. Transitioning governance responsibilities to the community and oversight to the Association.

The founders do operate Aragon One. A team focused on building out the capabilities of the Aragon.

Four teams have received flock grants to date. Flock grants are made to teams as opposed to contributors at a minimum of $1,000,000. Teams are extensively vetted by the Association prior to receiving funding.

A comprehensive roadmap has been published with frequent updates on the progress made towards achieving the roadmaps objectives. Developer tools are consistently improving from the efforts of the Flock teams and other contributors.

At the current burn rate, the project has over 25 years of funding available. This is likely to accelerate as the rate of funding increases to build out the network’s capabilities.

It is unclear how usage is dispersed throughout the world.

Securability (3 out of 5)

Aragon was intentionally built on top of Ethereum for its security versus directly employing nodes of its own. Due to concerns with Ethereum’s forthcoming Istanbul upgrade.

Aragon recently funded the development of a Polkadot para chain. Most large projects using Aragon such District 0x remain on Ethereum and the transition to the native chain built on top of Polkadot is only in its infancy.

Bug bounties are routinely run to identify and fix any potential security issues for its code.

Currently, network usage is minimal so widespread staking isn’t taking place yet. Rewards are untiered and since it is an ERC-20 token it is easily stored securely.

Decentralization (4.5 out of 5)

Four developer teams are currently participating in the Flock grant program overseen by the Association with hopes of adding more.

  • Aragon One
  • Aragon Black
  • Autark
  • Frame

Governance was formally decentralized in July 2018 with the original core team forming Aragon One as the vehicle for their continuing participation in the project.

Ownership isn’t concentrated. ~15% of ANT supply is held in the project treasury. Additional large holders reflect the aggregated positions of prominent exchanges. Max individual ownership of 7.5%. Appears to be project founder.

The project should be able to function normally without its creators given governance has been decentralized. Currently, they continue to play a prominent role as founders of Aragon One, the largest development organization contributing to the project.

Aragon is intended for use globally. Higher network usage required to confirm this is the case.

Engagement (3 out of 5)

Developer adoption of the protocol has been strong as a variety of partners have integrated the network into their offerings. Commenting on Reddit is frequent and active. Price discussion is banned.

Long-lasting ongoing conversations taking place in Chat with active involvement from founders. Activity on Twitter is low and sentiment is neutral. Minimal activity on Google trends across a variety of search terms*.

*Hard to isolate using Aragon and Ant as search terms due to commonality. Drill down search terms such as Aragon network, Ant Token, etc… Do not show much activity.

Risk Management (3 out of 5)

Aragon invested in a full audit of its codebase prior to launch and continues to fund code reviews at the discretion of the community. Anti-fragility cannot be assessed due to low network activity.

Less than 3% of the treasury held in fiat. The project appears to have less regulatory risk than most due to being decentralized.

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