The election of Donald Trump as president of the United States made a profound negative impact on Luis Cuende. At the time, the then-20-year-old Spanish software developer was living in Silicon Valley trying to build a company that would combat the menace of patent trolls. But Trump’s astounding victory made Cuende realize that rampant intellectual property abuse wasn’t necessarily the worst thing in the world.
“One of humanity’s biggest problems,” says Cuende, “is that we don’t even know how to govern ourselves.”
Cuende promptly abandoned Silicon Valley and, along with his long-time cohort, Jorge Izquierdo, co-founded a new startup, Aragon, that aims to solve the “governance” problem by facilitating the creation of “decentralized autonomous organizations” (DAOs) that live on the Ethereum blockchain. Named after a short-lived anarchist community in Spain that was wiped out in the Spanish Civil War, Aragon is building software that is intended to allow any community or organization to chart their own future and manage their own affairs—”to freely organize and collaborate without borders or intermediaries.”
In late-January, Aragon took a significant step forward. For 48 hours, owners of the Aragon Network Token (ANT), voted on nine proposals that would determine the future direction of Aragon.
Some were minor—like AGP-12, a declaration that henceforth February 10 would be “Fight for Freedom Day”—a “national” holiday for the Aragon community, or AGP-16—a simple proposal to extend the voting deadline. Some were rather major, such as AGP-5—the proposed allocation of $4 million worth of cryptocurrency and an additional 1,675,000 ANT to fund Aragon’s primary software development team, Aragon One, led by Cuende, or AGP-19—a referendum on whether to fund an outside development team with another $390,000 to build additional Aragon-related tools.
With only one exception—the voting deadline extension—all the proposals passed. Only one was seriously contested: AGP-19, the proposal to allocate $390,000 to Autark, a team that intends to build a set of project management tools that will make Aragon DAOs suitable for managing “mega-projects.”
The January vote marked a rare concrete step towards realizing a potent techno-libertarian dream: the creation of digital-indigenous "unstoppable organizations."
At first glance, the easy passage of most of the proposals might lead outsiders to wonder what all the bother was about. In May 2017, Aragon orchestrated a very successful ICO that raised $25 million. As was initially intended, that money is being used to build out the Aragon Network. In the most financially significant proposal, Cuende sought authorization to pay his own team money raised by the ICO that Cuende had originally orchestrated. He got it, but you can be excused for thinking this is a roundabout way to run a company.
But Aragon does not intend to merely limit itself to building software that enables DAOs. Aragon also intends to be a DAO itself—a decentralized digital organization that operates according to the decisions of its token-holding community, to model in its own structure and governance exactly the service it aims to provide to others. From that perspective, the January vote marked a rare concrete step towards realizing a potent techno-libertarian dream: the creation of digital-indigenous “unstoppable organizations” beholden to nothing but their own manifest destinies.
Governance, as humans have been repeatedly relearning since the dawn of civilization, is really, really hard. To ultimately realize its dream, Aragon must solve a set of enormous puzzles that have consistently defied the best efforts of non-digital societies. How do you reconcile the will of the majority with the goal of making the “right” decision? How do you adjudicate disputes? How do you keep the influence of capital from corrupting decisions? It’s all a huge puzzle that the smartest brains in human history have thrown themselves against for millennia. It’s no wonder then, that some of Aragon’s roadmap includes elements that seem more closely derived from science fiction than from grounded reality: Exhibit A: an improvement on old-school democratic voting systems known as “futarchy” that leaves policy decisions up to “prediction markets.”
Published shortly before the 2017 ICO, the Aragon manifesto includes the kind of rhetoric that has long been commonplace in the blockchain world. “Aragon,” it declares, “empowers freedom by creating liberating tools that leverage decentralized technologies.” Combined with the Trump creation story, the over-riding message is impossible to miss: DAOs are intended to help humanity escape the restrictions of nation-states or other territorial jurisdictions, and enter a world where the only restrictions one must abide by are coded into the smart contracts that one enters into.
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There’s no guarantee that any of this will work as intended. There’s not even a guarantee that the value of the Ethereum token will surge again as it did in 2017, lifting the fortunes of all the startups in the Ethereum ecosystem along with it. And for the wider world of blockchain watchers, the very name DAO is deeply tarnished by the spectacular failure of the very first DAO to debut on the Ethereum network, in which a still unknown party took advantage of a programming bug to steal $55 million of ether.
But what’s fascinating for the moment is that Aragon is methodically doing exactly what it set out to do: Building a decentralized organization that calls its own shots. It seems crazy, but it’s true: the Aragon community could have used their ANT holdings to deny Cuende’s Aragon One team funding and give it to someone else.
Before the vote, Cuende told me that if such an outcome came to pass, “I will be pretty sad, of course.”
“But it’s still pretty cool that they could do that.”
Yalda Mousavinia is the leader of Autark, the team that was voted $390,000 to build project management tools designed to expand the capacity of Aragon DAOs. Just the act of winning the grant is a landmark of sorts for decentralized open source software development funding. “For the Ethereum ecosystem as a whole,” says Mousavinia, “I think it’s the largest deployment of capital allocated by a DAO vote to a non-founding team to contribute to their technology.”
In 2016, Mousavinia was a project manager at Oracle ready for a career change. Her big dream—her personal “mega-project”—is the creation of a crowdfunded, decentralized space exploration movement that doesn’t depend on either eccentric billionaires or sabre-rattling superpowers to get a woman on Mars or start mining the asteroid belt. While enrolled in an astronomical engineering certificate program at UCLA, she started to become intrigued with the world of crypto. Eventually she decided that what is now Space Decentral needed to be a DAO if the globally-dispersed, collectively run organization would be best positioned to function efficiently and thrive.
Why a DAO? The Space Decentral white paper, the argument reiterates some of the larger blockchain world’s fundamental tenets: Decentralization is better than top-down control. Tokenizing interactions (Space Decentral will mint an FTL coin) will provide participants with a financial interest in making contributions (and a fundraising mechanism for the larger organization). And smart contracts, argues Mousavinia, are the best way to provide the necessary transparency and accountability to ensure that everyone knows exactly who has contributed what to the project and how they should be compensated. In 2017, Mousavinia started taking a look at the various DAO-in-the-making alternatives available, such as those offered by DAOstack, Colony, and Aragon.
Aragon won out, says Mousavinia, because of its “air of authenticity and the transparency of the project.”
"I saw a lot of evidence that the community was really trying to collaborate, and I was really drawn to that."
“It just didn’t seem to be profit-driven at all,” she said. “It was a very serious, dedicated project with a dedicated vision that seemed very pure. I saw a lot of evidence that the community was really trying to collaborate, and I was really drawn to that.”
In theory, Aragon will provide the governance structures that allows a decentralized organization like Space Decentral to function without running risk of chaotic mob rule and takes advantage of smart contracts to achieve efficiencies not possible in mundane reality. That has yet to be tested in any meaningful way. But the emphasis on collaboration is clearly real. Cuende’s long term vision is Aragon becomes a platform that coordinates and subsidizes multiple different nonprofit and for-profit development teams. The first step in realizing that vision was to split Aragon into a non-profit foundation, the Aragon Association, which would manage the funds raised by the ICO, as well as the election process, and a for-profit development team called Aragon One. Cuende says Aragon One will have to compete for funding against all-comers.
However, right now, Cuende is a board member of the Aragon Association and the CEO of Aragon One, which he acknowledges “isn’t ideal” for the purpose of creating a truly decentralized organization. The potential for conflict of interest is obvious. And it gets worse: Cuende’s own holdings of ANT are large enough that he could have significantly influenced the Aragon voting process if he had chosen to exercise all of his holdings. But for that exact reason, Cuende says he had refrained from voting all his tokens because “I don’t want to artificially influence outcomes.”
Eventually, the goal is to make even the Aragon Association “unnecessary… so that not even Jorge, [Association Executive Director] Stefano Bernardi, or me going rogue can stop the project. The reason the Association exists now is because we don’t want to risk $30m on a very unproven governance model and technology stack. We want the transition to be gradual over the course of the next couple of years,” he says.
Political scientists have been quick to point out that no matter how many DAOs we participate in, we will still be flesh-and-blood entities who live in physical domains that are under the jurisdiction of local laws and governments. And there are as yet few good answers from the blockchain world on what happens to people who don’t have the wherewithal to engage with these new organizations of the future—the mentally ill, the poor, the elderly. How will these new autonomous communities, almost of all which require some form of financial stake for meaningful participation, provide for the welfare of the common good?
Answering those questions is hard, and given the nascent state of so many of the technologies involved, perhaps a challenge best left for the future, when blockchain hype and mainstream audiences finally meet. As Mike Calvanese, the founder of Level K, a blockchain development studio that received a grant from Aragon to build a futarchy app told me, “all this stuff is brand new and experimental. That’s what makes it exciting.”
As a kind of laboratory for wild experiments, Aragon is the perfect place to test a replacement for old-school voting, says Calvanese. “Maybe it doesn’t make sense to roll this out for a presidential election in the immediate future, but if we prove it here then maybe people outside of the community will take notice and we can start to expand it.”
Chris Burniske, a partner in the New York-based crypto venture capital fund Placeholder, which has invested in Aragon by purchasing ANT, cautions that it may not be appropriate, in the current moment, to view what Aragon is doing as a real threat to nation-state integrity.
“We have the potential here,” said Burniske, “to have much thinner but globally provisioned functionalities that are governed directly by subject matter experts, so that those services are actually able to evolve and iterate and continue to provide the best service on a global basis, in a way that’s less messy than what we have now.”
By “functionalities” Burniske literally means organizations that are defined by their ability to provide a specific function to anyone, anywhere, whether that be loans, or insurance, or governance, or identity verification. Right now, he says, “massively stacked platforms like the United States, or Facebook,” try to be everything for everyone without really being transparent about what they are doing or truly accountable to the people that they are supposed to be serving.
"If they are not good governors, it will be forked, or it will be attacked, or something will happen to it where it will be displaced, so it really becomes survival of the fittest.”
“We like to think of crypto networks as forming these thin pieces loosely joined that are governed by the people who are best able to govern it,” says Burniske. “And if they are not good governors, it will be forked, or it will be attacked, or something will happen to it where it will be displaced, so it really becomes survival of the fittest.”
Aragon is building tools for these “globally provisioned functionalities” to organize themselves. By the good fortune of managing to stage their ICO during a year when the appetite for crypto-currency assets far exceeded supply, Aragon equipped itself with the funds necessary to build out its vision and test the thesis that the world actually has an appetite for DAOs. (Aragon managed to protect the value of its holdings from the “crypto winter” crash by converting the bulk of its ether into DAI, a collateralized “stablecoin” created by MakerDAO).
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If Aragon is right, then a growing demand for Aragon services will ultimately translate into a steadily higher valuation for the ANT token, thus creating a feedback loop that allows the organization to sustain itself financially even after it has exhausted its ICO cash. But for that to happen, the core ideological proposition of the blockchain movement—that this distributed ledger technology can actually ameliorate the chaos and greed and malevolence of humanity—will have to be, at least a little bit, proven true.
Where, I ask Cuende, does his faith in blockchain technology as a legitimately liberating force come from?
“I think it comes from faith in humankind,” he says. “You can think humans are evil, or you can think humans are good. But if you believe they are fundamentally just a little bit more good than bad, then that’s actually all you need to build systems that make it easier for people to be good rather than bad.”
“Of course there is a lot of pessimism running around,” he continued. “I do feel that for my generation and the world we live in, it sometimes feels that there are no values at all anymore—that’s almost something of the past. There is no common hope of building a future together as a species. But I think with this technology we can give a little bit of the hope back to all of us.”
Main picture: Luis Cuende. This post has been corrected to show that Autark received $390,000 from Aragon, not $350,000.