DAPPCON 2019: Building a New Digital Jurisdiction for DAOs - Jorge Izquierdo (Aragon One)

Transcript

I'm so ready for our next speaker continuing on the topic of downs we have Jorge if Carl from arrogant did I say that right thank you from Aragon on building a new digital jurisdiction for dows and we will have time for Q&A as well so make sure your kind of critically analyzing a presentation and getting ready for some questions at the end Thank You Jorge thank you hello everyone so yeah I'm corrugated I'm the one of the co-founders and the CTO at Argonne one which is one of the one of the companies working on T on the Argonne project this is a little background on what argon is argon is a decentralized application to create and manage decentralized organizations and on

etherium we have a pretty modular framework to be able different types of organizations so you have like some different templates so you can create the organization that you want and you can also install different governance modules or different applications to customize the organization as you as you wanted it's built on the etherium right now we're deployed on mainland and also viruses it's but it's really easy to deploy to an EVM compatible chain and right now it's available on the web it also works in mobile and we have a desktop app if you want the true decentralized experience of using Aragon right now we have 600 more than 650 dowse Ronnie so that'sthat's really exciting and around 700,000 die equivalent worth of assets secured by

secret by r1 but what I want to talk about GJ it's this concept of the dr1 network that we call a digital jurisdiction for firdaus so some of the doubt said having created in Aragon they actually have like like a legal were like a legal counterpart to to Tao so people are actually managing their daolon etherium but there's a legal entity that's behind that so for example that's how we use at our one 1r1 there's a legal entity but we also use our going to manage or or company but the argo network is excuse to provide services it is how we call sovereign Taos that there are doubts that don't

have any legal counterparty they're just running in code and there are a few services that real world organizations can use such as the access to the to the legal system that are kind of missing him down so this is the idea of the of the Aragon Network providing some of these services that reorganizations get but for firdaus and the principles for the for the Aragon network are first and foremost is fully obtained using Aragon is free and has always been freed you don't need to have any token or pay anything juror organization is fully standalone and you control your organization fully and that will continue to be that way if you don't want to have any anything to do

with your network that's fine you can keep using Aragon on your own we also have this concept of picking your own services we don't want to put services that some organizations don't want to use so it's like fully obtaining what services an organization wants to use then there's this concept of true limited liability how organizations in LAN jurisdiction work is that if you if the organization does something bad at the end of the day you have unlimited liability in the way that the government can come grab you and put you in jail for the rest of your life for something that you do in organization with with the Aragon network there's always like a true limited liability that is

collateral based all your agreements and things that you do or based on a collateral that you put there and then that's the maximum liability that you have so in an agreement there's a certain amount of collateral and it's not possible to get penalized for more than that and also its community it's truly community governance the area where network is controlled by int holders and they will continue to to be that way so in terms of the the first person of the of the r-1 network I would argue that it's already running I need to be running since November 2018 this is when a GP one was passed a DP one stablish the process for governance

proposals in in our one it was accepted with ninety nine point ninety seven support by amt holders so it was like a pretty you know there was no controversy around the around hypnosis and we've been running boats every every quarter so far we've done three boats and there have been 26 Arvin governor's proposals that may be too deep a load of those 21 ATP's passed and six were six five were rejected and around a 8.17 9 million die have been allocated with the with the process around three point four four million AMT have been allocated with the with the ATP process and so far it's been it's been running pretty pretty

smoothly we've had some interesting atps that had a lot of controversy but it's it's good that the process has been working well so far so how does the process work is a kind of an overview of the of lifecycle first like anyone in the community can come up with an idea that they want to make happen and even it can be anonymous or pseudonymous we've had a couple of a GPS that were proposed by by anonymous people and that were since then a provider network and happen so there right now for tracks one is association that is kind of making decisions of for dr1 association kind of like policies or how how the associations should do some things then

we have finance which are Decius which is like okay we want to do a finance transfer for for something like finding a core team it can also be mated and these are these boats require more support because these are related to changes to changing the process itself or they can be a proclamation that it's a a fun way for the network liked it out you to say something as its own entity and this is for example how the first Seraphim vacation was established like the fight for freedom day when it was t-tau that made the decision to to do this then there's this process of fact having a community discussion and we'd say someone says okay I'm gonna propose an MGB for two entries in the community

discussions this usually happens around the forum and then there's a moment when there's a draft for the proposal that gets who made it into the into the into the github repo for 48 EPS then there's a community revealed is something that has been added to a process recently and then there's these step number five that I want to get into more there's a review by the Aragon Association world that is used as a curation process for proposals to make sure that the proposals adhere to the values of the of the network and finally if it passes this process there's some da GP gets added to B to D max argon network code which happens every every few months so why do we need this argon Association for review for four ATP's as

I said anyone can sue made any proposal at any time and people just would just be able to vote the thing is that before a GP one there's this ATP zero that is the argument festal the services the values of 40 what network does every ADP that gets passed needs to adhere to ADP 1 0 and ATP 1 and the thing is like ATP 0 is it's pretty subjective it's a stands for what values of the network are but it's really really hard to impossible to write that in solidity code or any programming language use at the end of the day they're their values and it's also there for preventing 51% attacks that we will get into that later and there's also the aspect that right

now in DB 0 PR 1 network did this is signals that are being sent to the urban association but the proposals are actually being executed by the Oregon association so what's this 51% attack that we were talking about this like a very the simplest 51% attack that you could propose but yeah it depresses in an organization with simple majority Bodeen someone can go and propose ok we're gonna transfer all the funds in this organization to smart contract that will split defense that come in to anyone that votes YES on this proposal this is something that has zero costs to the attacker if you can create a

proposal you can just submit this trend and create days and it's also a pretty trustless commitment it's a kind of sketchy that someone is saying ok let's steal this money from everyone among the ones that are in our cabal of stealing the money from detail but it's actually pretty tresses you just write a smart contract that will get the money and we'll split defines proportionally to everyone that votes yes so this is this is very this very dangerous in in Taos and it's like the worst thing is that it has zero costs if you have a town in which it's permissioned and people are getting into the Tao because they they knew someone then you could have like

some of Shan skin in the game in the form of reputation and you wouldn't want to create this proposal but we're talking about a totally open down which anyone can create a proposal and the and people can be so Donna most and this becomes a real a real concern a simple way of preventing 51% attacks is allowing exit and this is before a proposal is actually executed and the fans are removed from the organization do you allow people that John are not in favor of the proposal to not only vote no but say ok I'm gonna take my money with me so do you execute that but I'm getting all my money the issue with exits is that it really only works if

the token holders of the organization have a legal direct claim on the assets of the organization and this may not be the case in all types of organization if you if you were to create a doubt to go over and say protocol inflation in watching like the token holders not know necessarily have a direct claim of their proportion of the of the funds or it could be get also complicated if the Dow is making for-profit investments that will get a returning me in the future so exits don't really work well if the holders don't have just like a direct payment on the assets also passive membership becomes very very risky thank you someone goes on vacation and doesn't

see the boat the boat going on when they come back they may find out that their Dow was trained some people were able to exceed but a lot of other people that just even see the boat they just lost all their all their money and also there's a huge Griffin potential because one this attack is free to do to anyone you can propose anything to the Dow and and the issue is that if this attack were to happen and even if everyone were able to exit it's like a very very weird thing that if someone attacks the governance of the tality organization is basically created and then we have to create a new organization meting if that were to happen with with an corporation in the

real world there's an attack on the governance and then all the shareholders take all the money and then the company needs to be created again it really it's really not scalable but we are building one one up to allow having these types of exit use the dandelions organization pretentions app that basically allows you to this sort of exits before in our proposal is executed it allows people to exit them take their their money with them kind of in a simple exit way but the the thing that I really want to talk about today it's the approach that we're taking for the for the Iowa Network v1 and it's something that we call proposal

agreements proposal at women's try to make fiduciary responsibilities in the organization in the way that when you create an organization you can set what the rules for making proposals in these certain accessories are and these are not only the code that you set up the governance system for your organization and you say okay we're gonna propose this way and we're gonna have a 50% majority but also having subjective rules for what types of proposals can be made in the organization this is a draft of the of the proposal agreement for the Argonne Network says that proposals mass meeting with made in good faith with intention to improve the networks

operational efficiency quality breadth of service and benefit Ont Holgersson eco an issue that last part is kind of to prevent this 51 percent attacked aspect in the way that if you create a 51% attack proposal it will certainly not benefit all the all the token holders equally okay sorry so yeah how does he how does this work in terms of the flow the in order to create this proposal agreements we are gonna need that the proposer that it's gonna once something to happen into town needs to one review the rules of the organization and make sure that what they're proposing actually is valid for

the organization's rules and then at the moment that they create the proposal not only they will submit the proposal but they will have to deposit some collateral along with their proposal and this is their way of saying okay I've read the organization for my proposal adhere to rules and I'm putting I'm risking this amount of money in case that the proposal it's actually not valid then people can review the proposal review the rules and if they disagree that the proposal doesn't go with the rules someone can take on the other side and say okay I challenge this proposal and I'm gonna have deposits on collateral increased to do this money if the proposals and ends up being valid

and at this point is when we involved a subjective Oracle that will tell us what whether the proposal was valid or not we will get into later and then at this point when the proposal is is created I'm sorry when the proposal is challenged we actually stop the body for that for that proposal we post it and when the Oracle comes back with the resolution of whether the proposal is valid or not at that point we resumed Bodeen and people can continue voting or the proposal is cancelled and the podium stopped and also at this point we give the stake and the collateral to the to the winning party of the dispute so this is kind of like tea more technical flow

of how how this works the proposed advisor them creating the boat directly it goes through this proposal agreement contract that we'll be able to one create the boat and then post it or resume it depending on T on the result of the Oracle so T as you may be thinking like the interesting part is what is this subjective Oracle and how how does this work and for this we were building the a dispute resolution protocol called the erm own court the first version of the aerilon core we're building it purposely for resolving these types of disputes but it could be used for other things in the in the future and the mechanism is really simple

people like their jurors that want to help in deciding whether this proposal are valid or not let's take agent II into the court reporting curve in order to work for the court their chance of being selected to adjudicate cases is proportional to the stake that day that they submit and in case that they don't support they end up in the losing side of a dispute they will they can be slashed and we're building this with the trying to make it as efficient as possible both in okay we want to involve the minimum number of jurors possible and get to the final ruling as fastest as fast as possible as well so in terms of disputes power works when someone challenges a proposal a

dispute will be created in the in the court and then at this point we select a number of jurors for adjudicating this dispute they're randomly selected based on their based on their stake and then they have a period of time to review the case with the evidence that has been submitted by by both parties and at that point a committee reveal to a certain volume jurors cannot serve what the ruling is with other with other jurors if they're caught doing this they can be slashed and they're both will be will be invalid and at this point the boats are then tallied and the their cycle winning winning outcome for further bullying and that will become C provisional ruling

for for this dispute if this dispute is if this ruling is not is not appealed then it's considered a final ruling and and that's it but also there's an appeals process for for appeal in if one of the parties doesn't think that the that teachers role in T in the right way so for the for the appeals this this is how this is how the flow works there's first the education teachers boat and they produce always a provisional volume this can be one of the one of these two options at this point there are two options if no appeals are created in in a peer time then define the provisional ruling becomes a final ruling and that's it but

there can be also an appeal a party that says okay I don't agree with ruling a I think the ruling actually should be rolling B and at this point they also need to deposit some collateral behind their appeal saying okay I support I think that the the the ruling should actually be appealed and here if there's another step in which someone needs to confirm the appeal in order for another adjudication around to be created if there a period of time passes and someone has appealed and says okay I think this should be rolling B and no one takes on the other side of the bed saying okay no I think he should still be ruling a as the se jurors were saying the ruling is automatically flipped and

the dispute is is finalized but in case that someone takes on the other side and says okay it is I confirm the appeal then we go back to the adjudication process and involve more jurors at this at this point in order to limit the amount of time that a dispute can take there's only a limited number of regular appeals as we call them that can happen every appeal like increases the number of jurors that become involved but after a certain number of rounds if it's again appealed if there's something that we call the final appeal and producing TVs be one of the of the court is gonna be a simple majority vote we fall off the of the jurors so it's like a steak let's

take both there's also slashing if they don't end up in the in the right side but it's this is this will produce a final ruling in the court that will be an appealable I just at this point having this we are sure that in like around a month at the worst case we will have a final final ruling and in the future something that we're currently researching is using a future key market for this so in the case that the final appeal were to be appealed we would open a future key market saying okay if ruling a was the final ruling what would be the price of a MT in X amount of time what would be the price in case P and then based on what the is higher in both markets you basically

make the decision for what the final ruling is this can only work at the latest stage when there's like a certain big amount of steak involved in a dispute and a big amount of attention in a way that if the court were to make the wrong decision the price of amt could be impacted because there will be less fees in the future because people will lose faith in the in the oracle then in terms of of settlement it's important to know that even if we involve very few jurors at the in the initial rounds of the of the dispute the day sure that they should always both not for what their local bound jurors will vote for but for what they think the final outcome will be so in the in this case we have a very

simple at the simple dispute that has two two rounds in the first round there are only three jurors in both and then we had one angel boudin for when one of the rulings and two demons podium for the other ruling so at the end of round one geez second ruling was the one that was winning there was an appeal and then five jurors got involved and in this case there were four jurors podium for the first appeal for the first ruling and two and one person voting for the other one so this wasn't disputed this was an appeal so we consider this the final ruling to be the ruling the first ruling so we will go and the two jurors that voted for the losing role in get

flashed and let's say that they take its last room token that gets given to de jure that that boded favor and also in this case do only be one one token slash that will be split among the four jurors and also this dessert will get all of the feasts that were generated in this round and in the other jurors they will get the fees that were generated in that round and the fees are always proportional to the number of jurors that got involved in in a certain round so in terms of in terms of fees there are two types of leasing the in the Oregon Court first we have the dispute fees that were the ones that we were seeing before these are always proportional to the number of jurors

that are involved in a dispute and there always distributed to the root jurors that support the winning side in a dispute we also have this other concept of subscription fees in order to use the court and the idea here is that if you have a an Oracle that works really really well it kind of creates it increases incentive not to create bad proposals in the first place because you know that the that the Oracle will resolve against you and you will lose your mistake that you created with your proposal so in a if the court works really really well you can create an incentive not to use it because you know that works well but this can lead to jurors stopping to use the court because

they they're not getting money with this because these dispute fees are proportional to the amount of of activity and disputes that get created to the record so this concept of subscription fees allows us to have like a constant and predictable revenue depending on how many organizations are depending on on the court for their further operation and no necessarily of how many disputes get sent to the to the court and this is a flat fee for everyone that is using the court for now and this is distributed to all the active yours during a period of time and also some revenue gets gets out of that for the for the network itself to manage so kind of to wrap up as a conclusion

the urban network v1 will be a fully sovereign doubt that doesn't need an external body to curate proposals because it will be able to create proposals itself through proposal agreements attorneys from the front they are a long cord from the subscription fees and we will be launching it later this year so kind of to contribute and read more here some some useful links of the white paper yeah the people for the federal court and the r-1 chat and the argon forum where we do most of our research I have a quick question the number of times that a dispute can be

appealed is this predetermined before the dispute starts or they never know how many rounds they're gonna have yes this is predetermined for these Bhoots arts so when I speed gets created you have kind of a do you know what's the maximum amount of time that this can take until you have a final final volume yeah yeah so deep the amount of rounds is its predetermined because each round takes up a certain amount of time yeah yeah well two more questions that I've seen the people who put up their hands run back here hey Jorge I actually got two questions first one is about the topic

that was in previous talk continues organizations what's your philosophical speaking what's your opinion on continuous organizations what are their pros and cons in relation with the with the doubts and are they good mechanism to to fix the exits that you were speaking in the beginning of your lecture continuous organizations yeah there is super super interesting model we're actually going to have a fundraising module that will allow people to get in and out of four of the house in a in a similar fashion so we are definitely definitely interested out of interest put up your hand if you've

ever used it Dow interacted with one okay that's a thank you oh hey what's the most interesting Dow is the out of the 650 on Eragon that's that's a very good very good question I would say that we're seeing cows that just seen or stats that we had no idea that people were using them for stuff that we're building in the in the future so some people were doing fundraising in a way that they couldn't do in any in any other way and importing a massive amount of of users that way yeah and then there's some interesting that are connecting to other protocol so they're lending money on on compound and

final question hello so one question about this lation of the jurors that rule for the loose inside if they know that the general opinion is towards one side which incentive do they have to vote for what they think is right oh they shouldn't do that they should vote for what they think the majority should what's good about that I mean it's it's the only way that we will like at the end of the day you have the teachers that if you cannot encode their subjective opinion judges have a way to very efficiently think what the majority of the population of jurors will think to get to a final problem but yeah they

should always boat for what they think they're their peers will vote they can try to convince them in in other ways but if they still think that they will go in in a certain way they they should go with that