Learnings from a Multi-million dollar Test DAO

Transcript

hello hello everybody um thanks so much for coming out to this talk um really excited to be here and to speak to you all so funny enough the title of the talk um has changed a little bit because originally when I put in a proposal to speak here I was going to speak about the Aragon Network Dao which was an old experimental Dow that Aragon had and we've had a lot of interesting things come to light since then and we've launched a new Dao and had some rfe Raiders come into our Dow which was very interesting and we had a lot of a lot of lessons learned from that and so I'm going to talk a little bit more about those today because I think they're going to be vastly more interesting and you're going to learn a lot more from them so very brief history

um Aragon Ico in 2017 it was the largest Ico at the time 275 000 eth in 2018 launched the first Dow framework ever in 2021 actually the founders had a bit of a fault and the teams actually sort of left and the project sort of ended at that point and there was a decision in 2021 to like let's start experimenting with governance let's try and build some teams back up let's get this project back going um as you know argon had a large treasury still does um and really was like Monumental in kicking off doubt experimentation and endow building and so 2021 we launched this experimental Dao I was an optimistic governance now we learned a lot from it especially what we didn't really want to have to be honest with

you and then 2022 is really when this new strategy we put out this hyper structure strategy came out and these new teams formed together none of which come from the original Aragon and then in 2023 actually just a few months ago at Denver we launched the new protocol a new front-end and a new Dao all at the same time it was quite a Monumental moment for all of us so I'm not going to go through all this but these are the two Dows I'm going to briefly touch on today we had an experimental and Dao and the Aragon Dao itself so the Aragon Network down this was sort of our first like let's say start of experimenting with governance um it was an optimistic governance style it had a 30-page charter um it was sort of more of a law is law

Dao a small percentage of people made this decision and and it was sort of a parallel experiment with actually the core teams building um and I remember clearly getting this 30-page document um the day before this Charter was supposed to enacted this day I was supposed to launch and was told tomorrow you will be legally liable for this you should probably read it and everybody in the company was like oh my God I should probably read this Charter and so we did and most of us probably didn't get through it so we learned a lot from that to be honest the Dow was a great way to experiment um and and it was a really popular sort of way at the time to try and bootstrap your community bootstrap people working in your organization um but it ended up being a high cost

with low returns misaligned contributors you know I think I got up to 40 contributors at some point I remember getting an a message from our CMO who at the time said I just received a strange email from somebody who said they're the head of marketing at Aragon but I thought I was the head of marketing at Aragon and so that's when we knew we had to take a look into what was happening in this Dow and and that's when we realized this wasn't going to work you know the the payments that went out to contributors um they ended up cashing out there wasn't a meaningful distribution of hard power and and what ended up happening when you have like a large Charter and complex governance system built up soft power is is people start to take advantage of that in the Forum the ones who understand how this Charter Works uh

and so you know we wanted to double down on the fact Discord or form does not equal Dao at Aragon this is not what we think is a Dao so let's get away from these social ideological battles let's experiment with on-chain governance let's move away from this so we launched the Aragon now later on this was a delegate voting now had a one-page charter it was just the on-chain rules of what is executable in a Dao it was coda's law token holders can override delegates at any time which is really important and it was no longer a parallel experiment full treasury transfer was going to to happen and it was going to happen in stages that was really important that was one of the safety mechanisms we put in place we're going to just dump 200 million dollars into a purely on-chained governance Dow without like a good token

distribution without being prepared so we started slowly moving funds over over time so here are the challenges which led to the incidence of this rfe Raider attack or whatever you want to call it uh shortly after so we were a mission-driven organization everybody who was here for a long time knows the Aragon Manifesto like this is a mission-driven organization but it has a token it has an extensive Legacy legal structure dating back to 2017 which creates obviously complexity when you're trying to dawify can you imagine um really horrible token distribution ENT was owned by maybe four or five people everybody else was lost dating back from 2017 like how do you how do you have these people stay engaged from

2017 to 2019 to 2023 when the project ended for a few months in between right so a lot of complexity starts to add up over the years you know it had actually a utility token classification in Switzerland and we have a lot of regulatory uncertainty which meant that that treasury versus token market cap in Balance which is why these Raiders entered our system which makes sense um was difficult to close written there are many reasons why that is and so finally you have nail in the coffin misaligned small and centralized committee you know with no power with the actual teams or the users so this all leads to to problems as you can see these are challenges that are going to

be hard to overcome so now we begin the the Raiders of the Lost arka I like to call it um sort of funny but but basically one day all of a sudden a 30 40 um different individuals started smashing into our Discord using you know profanity what not and um ended up like requesting obviously beginning to request what you could tell would be the liquidation of potentially of the treasury of the association so this is 200 million dollars and they have already successfully taken over rookstau Temple Dao Rome Dao and our our breezing through different dials Hector dunno and if you notice nouns is now forking that's the same group so super super interesting what they work

on and and to be frank like I'm not I'm not saying there's no validity to what they're doing there actually is a lot of validity to what they're doing um and it's super interesting and they're trying to you know to create end this like Book value difference they are a v value between a token that is worth way less than its treasury so there's some validity to this for sure um but I think some of the issues that that arose were were something like this you know like this is just a message that was sent like they will do what it takes to get what they want because there is millions and millions of dollars at stake so that's posting addresses of contributors and forums that's uh hiring private investigators to follow Founders you know so this is where I think we most of us would agree

boundaries can be drawn regardless of of of what you believe in so this is the huge question what is owed to the mission and what is owed to token holders and I'm not saying I know the answer um really really challenging situation um as you can imagine if there is a legal wrapper around your Dao this to some degree ruins the autonomous aspect of your doubt it may be required it may not be required right but what does this lead to like you know the people on that Association are required to follow the mission they are mandated to do so it's legal amplifications there's tax implications if they don't these are some of the things you have to give up when you have a legal rapper and

so what is owed to the mission and what is O to token holders this is a really really really I think question that people don't realize is super important until the day it's too late and they need to realize that it's that important they need to figure out so I talk about some things that we learned of how not to get stuck in this situation um and so let's talk about them so the first thing is is like how how old do you think your Dow is gonna like how long will it last like you hope it's going to last hundreds of years as an organization right and so you may need trusted mechanisms in your progression to decentralization and that's totally okay I mean we all have to start somewhere we have to decentralize progressively um but there will probably be a moment and it will come where your trusted

actors are compelled to act for something and this might actually be against token holder wishes if your Dow is around long enough this is almost inevitable so one thing you have to start doing you have to start protecting those trusted layers while still trying to hold them accountable and this is really really challenging I mean there's Anonymous ways that we're working on using CK snarks there's obviously like polygon and D is creating digital identification which creates anonymity so there's ways that we can try and protect our trusted actors while also trying to keep them accountable because they need to be held accountable of course so something to think about because that day will come if your dad's going to be 5 6 7 10 100 years old where you're going to need to face that

so Aragon actually um as you know in an Ico really like did that for crowdfunding and this is about token distribution and ownership and that's super super important and what I want to talk about is an important word which is resilience so these are there are many reasons why you want to distribute your token and your ownership but I want to talk about resilience here because this is what Aragon focused on in its Ico and the biggest mistake we made is we didn't continue to work on this on these things throughout its existence and you always need to iterate on this you can't just do an airdrop and then you think six years down the line your dad's going to be exactly the same not many does are that old but we can tell you it's not going to be right

so one of the best ways to sustainably create resiliency of a non-chain organization is through incentive alignment so my friends at Lido we're very very close with Lido see some of us in the crowd and I think this is a great example and this is what Dows need to be working to to add as a mechanism in how they create resilience resiliency so Lido uses Aragon for its governance our protocol our framework and we stake a considerable amount of our eth with Lido so we have incentives here they need us to succeed and we need them to protect our money and actually what we create for them helps them actually helps us protect our own money and so by

by doing potential token swaps with organizations with this kind of incentive or ecosystem alignment we then have added another layer where we are participating in each other's governance and so now if Aragon owned tokens of light or light on tokens of Aragon we could participate in each other's governance for each other's benefit and for thus our own benefit so trying to find these types of situations with your protocols or products is a really great way to create circular incentive alignment and get tokens in the right hands of people who are building using your products using your protocol and thus are going to benefit off of it so you can protect each other basically

so who you want to do these with those that rely on you for their success users integrators service providers these are people you definitely want to have your tokens when you're talking about resiliency when the best time to achieve this is when you have product Market fit and that's I know really challenging to come by these days but you need to create mechanisms to increase this token and send alignment over time it's not about just a launch you can't just launch a token airdrop your token and think in five six years which you know seven years which is how old Aragon actually is is that it's going to be your Dow is going to be the same or your token distribution is going to be the same so you need to keep working on that and then how this is a really big question today I know a really popular

methodology like Diva just launched their token which is like non-transferable airdrops as a way to start people aren't dumping your tokens right off the bat this is just one idea so um at the end of the day I think if you're building a a resilient Dao one that you want to last for dozens of years or longer you really um need to be able to adapt adaptation is key um as I've mentioned over and over like not many Dows are very old and the ones that are the ones who are being successful are the ones that are able to adapt so some methodologies obviously we need to start simple start safe and evolve over time

build allowing for flexibility to change over time this is really really important like you don't want to put your Quorum rate too high for example and then not being able to adjust that after so start and adjust over time constantly make adjustments like as adjustments are coming just like building a product as adjustments are coming in you're getting validation or information you're getting validation keep adjusting these you know these things don't have to be set in stone build transparently it goes without saying that if people understand that you're a mission-driven organization this is going to help in them understanding that that's where they need to vote or that's where where the power May lie and then finally using modular tools this is exactly why we actually have built an entirely new protocol like the old Aragon OS has over 15 billion dollars in tvl that's

governed by those contracts um yet we're still pushing for a new protocol which is going to be highly modular adaptable and is what's going to allow Dows to actually change and be able to do what we're saying right now over time rather than launching your Dow and starting being stuck in it and not being able to adjust so super super important um adaptation equals resilience so that's it thank you so much let's keep building building resilient Dows and let's build better together [Applause] how much time there's one minute if anybody has one question I'd be happy to take one

question otherwise thank you so much thank you foreign [Music]