Decentralized organizations requires a new way of thinking, not just in the way it will function on a day to day basis, but also how it can be governed, how to stick to the original purpose of your organization, how disputes are handled, how to prevent that disputes drag along and bring the whole organization to a grinding halt.

Just read up on the recent history on BTC forks, EOS constitution amendments, token burns, reserve pools, the list is long and many projects are testing all sorts of mechanisms to resolve issues, stop bad actors, prevent attacks and keep things going. All with more or less centralized bodies necessary to come to a reasonable concensus in the end.

But what if you are setting up a truly decentralized autonomous organization (DAO) that is spanning the globe, has no formal registration in any country and all decisions that affect the DAO’s purpose are initiated bottom up. The DAO’s main purpose may shift over time, the surrounding world may require updates in the DAO constitution and any such change requires agreement amongst stake holders. Inevitably, conflicting interests would surface at some point and you must have some mechanism to deal with conflicts in the DAO design.

At the start of any such project, a limited number of founders would have a strong influence in the whole setup of a DAO, but the “DA" part will have to be in by design. As soon as the project matures, the founders will loose control and decisions will be made by stake holders. So it is up to the founders to think this through in all sorts of scenarios to make sure the whole purpose of the DAO would survive when they hand over the reigns to a large group of stake holders they can not and will not control.

Aragon is developing tools to do that. The project started to disintermediate the creation and maintenance of organizations and allow equal access to governance and collaboration for everyone. The Aragon Network is specifically designed for effective dispute resolutions in DAOs. It encompasses a set of courts, independent jurors and a staking mechanism to incentisize and reward good behaviour, penalize bad actors, all using smart contracts to keep the outcomes transparent. It is also way faster than traditional court procedures.

Permissions

If you allow the Aragon Network to regulate your DAO, the Aragon organization will have a permission registry of addresses that have access or initiate forward actions such as a voting app that forward an action once an approval vote has passed.

Take the following example where an organization wants to allow treasury funds to be transferred when the following chain of conditions are met:
proposed by a registered member
approved by a majority of members
are within a pre-determined budget

Going backwards over this schema, the Vault will execute the transfer of assets only when the Finance application instructs to do so, implementing internal budgeting rules. This in turn can only be initiated by the Voting application which must have succesfully passed a vote. The Create Vote role is an exclusive right of the Token Manager of the DAO’s native token. In turn the Token Manager will forward proposals from DAO token holders.

The proposal must be in a human readable terms and comply with standards to grasp the intentions easily. Also a deposit must be made in Aragon’s native currency ANT before the Voting app will carry this forward. Both aspects would inhibit bots to bombarde the DAO with proposals.

You can imagine a situation where a hostile liquidation of all funds is triggered by a few large token holders. This is where it gets interesting. Any individual token holder should be allowed to challenge such an action.

Dispute Creation

When a challenge is started, the organization will set an initial amount of ANT that needs to be deposited by both the proposer and challenger as well as dispute fees. These funds may eventually be lost or returned by the parties involved depending on the final outcome. The challenger may also provide evidence why the submitted proposal is not in line with the original DAO set of agreements. This step will then stop the voting process immediately and the case will be scheduled for review.

Aragon Court Protocol

The review process relies on a decentralized oracle protocol (the Court), where jurors stake their ANT in order to earn the right to perform dispute resolution service and earn a portion of the dispute resolution fees. Jurors will be drafted based on stake-weights and a randomization procedure and are required to commit a ruling within a predefined period. Once all drafted jurors have committed, the verdict is returned based on the majority decision.

So anyone who wants to participate as a juror (for a wide variety of DAO’s and all sorts of disputes) would need to acquire ANT tokens and then deposit in the Court’s staking contract. From that point on, they are considered active and can be drafted to review cases. A single juror can be involved in multiple reviews at the same time, fixing a portion of the juror stake for the duration of the process.

Juror Ruling

Jurors are expected to provide a ruling for or against a proposal within a certain timeframe. The rulings are kept confidential (hashed) until the Reveal Period is started and they reveal their vote publicly. Failure to act within those time frames will trigger a penalty for that juror. When the Reveal Period ends, the majority support of the drafted jurors will be used as preliminary ruling.

This need not be the final step, the proposer may appeal and the above process will start again, but now with a larger set of jurors. This cycle can be repeated an X-number of times which will be set in the agreement between Aragon and the DAO. Each time an appeal is registered, both sides need to deposit additional collateral. Failure to do so by one of the parties will automatically make the ruling permanent in favor of the other. When both sides do not deposit, the preliminary ruling will become final.

Fees

All the aggregated juror fees (and penalties) will be distributed proportionally among jurors that voted for the final ruling round. When this process works well and the expectation grows that dispute resolution is reliable and fair, the number of disputes may become more rare or are settled in early rounds, thus decreasing the incentive for jurors to stake. This would harm the system and therefor ANT fees are also captured on a more recurring basis:
Subscription fee. Organizations that use the Court as arbitration provider will be charged for the agreement to remain valid over time. These fees will be split over the ANT treasury and all actively staked jurors
Dispute fee. These are captured at the time a dispute or appeal occurs and will be distributed only to drafted jurors who rule in favor of the winning side.

Obviously, the Aragon Organization itself is also governed by this same mechanism via all ANT holders and its conditions give a good example how it may work:
Initially, all votes will last 1 Month, require 50% Support and 1% Minimum Acceptance Quorum. Creating votes requires depositing 1000 ANT into a Proposal Agreement with the following terms:

Proposals must be made in good faith with the intention to improve the Network's operational efficiency, quality, or breadth of service, and benefit all ANT holders in equal measure.

The whole system is more detailed and complex than described here, if you want to read all details, check out the white paper from the link below. Just to be clear, the Aragon token ANT (ETH20) that is used to run the Courts & Jurors system is not the DAO token, that may be on a completely different chain.

Conclusion

The Aragon Network could be a true digital jurisdiction, global and free of bureaucracy. For decentralized autonomous organizations or charities that potentially are governing substantial funds, this may be a good mechanism to hand over the control to the community while at the same time have precautions in place that their funds can only be applied within the scope of their organization’s purpose. Always outsource where you can when there are more dedicated tools available that would take you years to build yourself.

Try it out on their Ethereum Rinkeby testnet or read up on their forum to see how others do it. They have a very responsive community that will surely help you out to get started.

The Aragon token has a circulating supply of 30 M and a total supply of 40 M and is currently hovering around 0.70 US$

Links

https://aragon.org/
https://github.com/aragon/whitepaper
https://rinkeby.aragon.org/#/
https://forum.aragon.org/