Anthony Leutenegger - DAO Modularity - The Next Unlock

Transcript

um great thank you so much um Hello everybody welcome um it's great to have a very small but powerful group here um as mentioned I'm Anthony the CEO of Aragon um Aragon's been building Dow technology since 2017 um and actually have been part of the Swiss Community since early 2018 um we have uh several different Tech Stacks that have helped Dows govern themselves on chain um we have over $40 billion in tvl um and last year um we launched a new Tex stack taking all the learnings that we extrapolated from the last fiveish years um to really create something new that would be very future and forward looking and support Dows and

moving forward because of some of the issues we had seen so I'll be talking specifically about Dow modularity governance modularity this new tech stack and how that's going to help um this next generation of dows from learnings from the past so let's talk about little bit about the state of governance today um especially in relation to Dow tooling Q the burning room I like to include some memes um to keep things light and fun so we always hear this Dows don't work sort of statement which doesn't really make too much sense but one of the things that is a problem is they have a lack of reliable secure governance tooling their options don't fit the needs and what

they're looking for um they're very cookie cutter right now which explain in a second um and members don't care enough to participate we have a huge amount of voter apathy we don't have a lot of Voters that are actually participating um for various reasons um and so what we need uh is to try and get Beyond this this scope so as I said organizations um aren't cookie cutter um so why is there governance um protocols with cookie cutter governance experien problems obviously and it holds them back from decentralizing from moving forward um as you can imagine if if you only have a few types of governance methodologies that technologically exist on chain um in the ecosystem it's pretty hard to move Beyond those to ideate new

ways of for Dows to become successful um so what we end up having is is is a lot of dows have the exact same model that can be just you know most of them are just token weighted voting for example so Dows have different needs they're obviously trying to reach different goals not all Dows have the same goals and so we need to create flexibility for these Dows to be B to build how they want to reach their goals just like if it's a you know nation states for example businesses um Community clubs like all these different organizations around the world don't have the exact same structure why because they have different goals so one way to get around that which we've seen in the space is custom governance builds think of the AES the makers um they're able to because they

have a ton of resources they're able to simply spend a lot of money spend a lot of time get a lot of developers in the room and build custom governance what they need right but not everybody can do that it's timec consuming it's resource intensive um you need developers and often it's monolithic um you know it's not easy for another organization to take this and grow and and and grow it out for their own uh organization Aragon does provide custom governance builds for organizations um but how can we take that and make it more accessible to organization other Dows around the world so build a modular stack we hear a lot about modularity um at the

infrastructure level you know blockchains being modular Celestia is a great example is really uh the the big one right now talking about modularity but we're starting to see modularity up into the defi level and now we're building something for Dows in the Dow level Morpho is a great example of a of a protocol that's building modular and Aragon's now building a dow stack that's also modular so what does that look like so Bitcoin might not fix this but our new protocol Aragon OSX does so it's a new generation Dow framework and as you can see here we've actually separated a lot of the governance and other types of logic from of fouryear Dow from the Dow contract and the permission manager itself so the

Dow Vault itself is simple and secure and the Dow actually manages permissions to these plugins and most of or a lot of the customized logic that you may need for your Dow is actually built into these plugins and I'll explain that a little bit more forward um look at them as plugins as as a way to install different types of governance governance for example um and when you're doubt wants to involve in governance you're able to unplug or detach one of these plugins and plug in a new one and so for the first time with onchain governance you're actually able to change your governance on the Fly and you can start to have a dow that can evolve and adapt over time previously you would have to uh

either rebuild your Dow Fork another Dow and this creates you know potential security problems and so this makes it a lot easier it makes it a lot faster and more secure which I'll mention in a second so obviously an example would be you could start your Dow with a multisig you have offchain voting you have a multisig it's trusted some people would not even call this a dow but then you decide okay I'm going to now upgrade my Dow to have token weighted voting you launch your token you put up a proposal within that multisig and you're able to un uh uninstall a plugin and install a new plugin which is token weight of voting so now your token holders are able to vote let's say in 10 years and and and one of the issues in our space right now is we don't really have a lot of data of

what a dow is going to look like in 10 years there is no Dow unless you consider Bitcoin a DA that is more than 10 years old right so everything's quite young and new but in 10 years you may not want token weight of voting anymore maybe now you want to change to one person one vote okay so then you uninstall and you can change to one person one vote so this avoids the great thing about this is avoids trusted intermediaries and Dows right now are too heavily reliant on these trusted intermediaries to um propose actions proposals to actually execute on these actions um and so that's one of the fixes that um it it does so the plugin model is um first of all it's a lot safer um it's easier and most importantly it's faster

and right now you know we working with a lot of dows it can take multiple years to actually launch a large Dow multiple years of building your community multiple years of working on the legal aspect the tax aspects um and then you have to build the Dow and that that build can take sometimes as long as 6 months in and of itself so by reducing the time it takes to launch these Dows um the cost of course and increasing security you're starting to to allow for this technology to flourish allow for organizations who don't have all these resources to do the same thing as Dow with resources so let's go over some examples now because it's like okay great there

are these plugins right from a technological perspective like you can uninstall them install them that's great but okay let's let's look at some examples and and Ben actually sort of showcased what um some examples could be funny enough and so let's take a look so the first one could be multi-chain governance you know we're starting to get into to a very fragmented World um in the crypto space where people have assets across different chains and now what does that mean is that governance may exist across different chains um so stat labs for example uh their tokens located on five different chains well okay well how do they how do they actually then vote on chain if all of these tokens are across different chains well you can install a multi-chain

governance plugin and we've already built this um you can then U basically create a custom census where you can pull tokens from different chains comprise that voting power together you could uh and then your token holders can vote and guess what your Dow is still going to live on your layer one so your Dow can still live in on ethereum where it can have the maximum amount of security and liquidity but you can have tokens across different um different chains and still get your voting power and the great thing about this is now you can start reducing voter costs one of the biggest issues we have is that um people don't want to participate because uh on Shane they're going to have to spend anywhere from $5 to $30 to vote and how many of you here if you're asked to vote weekly are going to actually

want to spend that much money to vote on a proposal right so here you actually have voters getting voter costs on a layer two which could be a couple cents on polygon it's probably one cent um but then actually have your Dow living on an L1 and then the you can execute this payload onto the L1 so now we're starting to again allow for Dows to be living across different um different chains different ecosystems and still be able to keep all that voting power on chain removing trusted inter intermediaries so the second what Ben mentioned is a topic of conversation right now is multi-body governance by camel systems um granular permissions means we can separate groups with

different governance permissions and they can exist in one Dow a cool example so um let's use Lio as an example Lio probably right now somebody asked if there's a DA who has multiple tokens um in and and can make decisions in one Dow that's pretty rare but actually Lio have announced that they're launching exactly this so basically Lio has their ldo token that's the token of their Dow and when they have proposals um the Lio Community whoever holds ldo can vote on this proposal now the problem with this for Lio was that actually um yes ldo holders are very important but they user are Stak eth holders and there's over

$40 billion worth of St eth holders now how does ldo token holders which could be comprised of a market cap of a couple hundred million make decisions for the 40 billion okay so they're adding in a system which will allow State eth holders to actually veto an ldo token holder vote if it um compromises State eth itself now this is going to open up other questions for ldo ERS of course and like what is the purpose of that token Etc but they're trying to keep it a bit separate but at the same time yes State eth holders will now be the power holders in votes and so now you have multi-body governance system two tokens one Dow and this can start to start to

change you can even have a multisig we're working on one right now where the multisig is the core team will be able to create protocol upgrades or move a treasury amount from the multisig optimistically if after 7 days nobody vetos from the token holder Community then that proposal will automatically execute right but this now allows for them to work optimistically but then you have this group of of token holders who don't have to vote every day they can simply look at the vote itself and say um this is totally fine the team's doing what they want to do leave them alone not going to veto let it pass if they see a malicious proposal one day they can say oh no no no no we're not going to allow for this we're going to veto it but then you can even add

another layer on top of that you can add a layer where in this same multisig if a majority uh or um um a maximum majority uh is reached so a 10 out of 13 on the multisig then it's going to actually pass through token holders for an emergency proposal and will upgrade the protocol okay so now the power holder is still the multisig but only an emergency situation so you have three layers of governance happening there so this is the type of customizability you can create with a modular stack which you cannot create on a monolithic stack at least not easily um or securely so optimistic dual governance this has been by far by far by far the most popular sort of feature and request that um Dows

on the space have coming uh have come to us to build it's relatively new but we have over $1.5 billion worth of tvl building actively on this stack right now um we obviously can't announce who they are yet but coming soon which is really exciting so another really cool thing about this plugin system in this modular stack is now you can finally have Network effects right once the plugin has been created it is reusable by any other Dow through the Aragon plug-in repository this create network effects right so this you could end up having what's called like a like a Marketplace for governance um and the great thing about this is previously if you have a a cool monolithic Dow the a DA for example if you wanted to have the exact

same type of onchain governance build that they have you would actually have to Fork the entire code you would have to then somehow manage to fix it to work within the the parameters of your Dow um and that can open up security risks I mean it's not that easy to do it's not so easy to just Fork uh a dow like that and then it automatically works for your Dow no it's quite tailored to their governance um right and so um the great thing about Network effects is now for the first time if a plug-in is built so a governance type methodology Etc and audited any other Dow that wants to use it can simply actually go into the airon plugin repository and plug that plug that plugin in and start using it and so this means it's a lot faster and cheaper

for smaller Dows who may not be able to afford um to build their own Plug-In or have it audited now they can access that exact type of governance plug it into their Dow and start moving forward um and this is really has the potential to democratize um access to governance tooling around the industry like this could be really really big in 10 years you could have thousands of plugin built all different types of custom governance types and it doesn't just have to be custom governance you know it could be toonomic models that are included into the governance and people can simply take that and install it in their Dow and start running with it so this could really really open up a next wave of of dows that have the ability to customize themselves and change over time so it makes it safer again faster

and it also reduces liability whenever you can remove trusted components you can to some degree reduce liability a lot of teams come to us like let's be frank and that's what they're worried about why are they building a da it's not just to have a community it's often because they are building um a huge protocol for example they want it to be resilient capture resistant I typically use Lio as a great example because I feel like they're just so far ahead in terms of they don't they're looking at not being captured by by a regulator right they have 40 billion in tvl you know let's be honest like the E ethereum itself is quite reliant on lighter right now you know that that might not be the best thing but it is what it is um and they're great stewards of of of the ethereum ecosystem but they cannot

afford to be taken over by a bad actor or by u a regulator so what are they after they're after resilience so what do future proof governance add up to it means that you're able to adapt and change over time um a lot of dows um have not been able to do this a lot of them are stuck in Old technology that may still be very very powerful but that is extremely hard to to upgrade or change as their doubt evolves um and this is really concerning no organization in the world no country or nation state in the world is stuck or hopefully not at least uh is is is unable to change and that's what's

happening to many to many of these Dows because only now are we starting to see these Dows come to an age of maturity where maybe they do need to change I think we have to be very realistic of that um as an industry we often want to move way too fast we expect that Dows and their governance systems um and and their communities are going to pop up and automatically start working very well and be extremely decentralized um but that's just not the reality communities take time to build products take time to build resilience takes time to build um and thus you need a dow tooling stack that allows you to actually grow over time um and this is what underpins a truly resilient D so modern problems require modern solutions

yeah so I think that's really it I mean the important part is that Dow tooling is going to continue to grow and adapt with the industry there's not too many players actually working on this we're very proud to be working on this um we want to ensure that your Dows however you envision them growing over time and progressively decentralizing that you're able to do that um so of course if you have any questions um if you want to talk shop if you have a dow that um you think um needs to change or be fully on chain whatever that might be come speak to us I have some great teammates here as well some of whom are smart contract developers um ux professionals frontend developers and we're here to answer any questions so thank you so much really

appreciate it thank you Anthony uh we have time for questions I can see already today you're teaming thanks uh thanks for the very interesting presentation uh I think it's absolutely fantastic and absolutely needed that D have this all these possibilities to create uh this uh organizations and to create these governance uh models um I'm just uh wondering because now with all these opportunities or possibilities in the future and I know you're providing that technology uh I see also more challenges

maybe for THS to think about sensible Oran organizational designs for example um so out of your experience with uh discussions with those what are they or do you see some strategies they employ to think about how should we set up this organization especially if they now have almost Endless Possibilities uh once there will be all these uh modules yeah so um great question um often um I mean I think the important thing is first is is what does it Dow to do I think that's the first thing when we have a client come to us and they say we want to build this type of dat we say okay like what are you trying to actually achieve and let's be honest like what like be honest with yourself what are you trying to achieve

are you trying to exit early as a Founder are you trying to create um reduce legal liability and risk on yourself are you trying to be like Lio and um help secure ethereum and um be extremely resilient towards any type of capture whether that be a nation state trying to capture you are you a small startup like so so first of all like let's let's actually figure out what you're trying to achieve here um because most are not trying to just grow a community right so once you start to Define these goals then you can start to look at okay what type of governance might you want to use um and we do typically see people copying other methodologies that they think might be good for them and this is challenging because as I mentioned there's actually

not a lot Dows have not existed for a long time so we need to look just beyond the Dow space we need to look at governance as a whole now I would say some popular ones that we see um right now um Dows that are a bit younger and less mature that are launching typically want to have checks and balances so give their token holders the right to veto for example but still allow the core team to function and operate quite quickly you know um a doubt a very decentralized doubt on the social layer it's important we extrapolate the two there's there's a technological layer which is typically what Aragon works on and then there's this social layer right you can have a down with a small community very small community that's completely on chain that's totally

totally fine right but if you're if you're a new business I'm trying to build a product you might not want um tens of thousands of Voters voting on what your next feature is for example or maybe you do maybe that's how you want to build your product right but let's say you don't you want to move fast Scrappy build your product well that's when you can have a dow where you have optimistic dual governance your team is able to focus work um you maybe you want to have still some Community engagement on your on offchain on your in your Forum but then you give them the hard power they can veto a bad you know a malicious protocol upgrade or you know sending more than 50% you can customize these parameters sending more than 50% of the treasury out at one time you can really start to with with this

technology start to actually like create custom parameters using our permission management system to decide like okay how how are they able to interact right so I'd say like typically they look at previous models and the good thing about this is let's get some new models out there let's play around with them let's test them and see if they stick and see if other organizations can then for free just take those models plug it into their Dow and start to move forward but not easy do you have a followup question maybe maybe an additional comment yeah about the previous models because I would also argue or I hope that uh Dows in the future will also look not only at previous Dows but also maybe at traditional organizations because I mean organizational science has a long

tradition for several decades uh if not centuries and I think many things can also be learned there and then trying to do this in a more decentralized way could also benefit those sure yeah I mean we have a lot to learn from I mean we have thousands of years of data and history of governance and there's no reason why we can't learn from that I think you have to you have to look at what does what do onchain components and this is where it gets confusing like we want to focus on being onchain because that's the whole point of this technology what does it uh unveil or what does it support if you're moving off chain then then I think you can really start to focus more on traditional methodologies if you want because I mean what what are you here for like for for having these these

onchain components allow for certain things right and they allow for your token holders to have the hard power it allows for um you to be resilient um these are the types of things that I really think from an onchain perspective create uh the most value um and and whether it's offchain or onchain you as an organization need to decide how that fits into you reaching your goal I think too many people want to decentralize without thinking about like what am I actually trying to achieve here um and that's really important thanks for the questions uh thank you for your presentation so I also think that da is the future and we have not thousand of years of data Maybe 700 because of Switzerland with for the only Dow

working now um my my question is about your business model for for between oron X and um and uh deep Dow we absolutely need great tools uh governance uh is crucial uh for for really decentralization to achieve decentralization so between uh the beginning with a startup like centralized we need agility but with the time we need security and also decentralization so what's what's your business model um so what's the cost like I'm fing a d so what what would be my cost the cost of the members yeah the question is like what is our business model I guess how are we making money like you know um we don't charge right now so and we haven't so um basically

you can spin up your Dow the only cost will be gas so on ethereum Main net that could be anywhere between1 and $400 it really depends on gas prices maybe even cheaper um on an L2 it can be cents actually um we don't CH where we generate Revenue in our business model is we build customed Dows for clients currently um so if uh if um won't see any names if a big Dow wants to to to create some complex governance structure and they don't want their developers to build it typically you know most Dows their developers build their product then have to also build their Dow at the same time and this this obviously is not not not great for actually creating your own product we're experts at building Dow tooling we will build it for them they pay us um sometimes that includes we help with govern governance um

ideation um finding delegates if they want a delegate program um so that's sort of how we generate Revenue there are other ways we sometimes can get um within the platform so there's a great front end where your Dow can can can manage itself it can put up proposals it can U manage its treasury we can also scrape fees not off of the user we never charge the user off of let's say if you want to connect to Unis Swap and you trade with Unis swap directly from your Dow or cow swap well we can maybe scrape a fee off of from them so we try and generate revenue from different methodologies that don't impact the user itself obviously we're completely open source technology so it can and and you know it can be forked quite easily if we started just tapping and and charging people for launching their Dow it could

be forked for example um but but our ethos anyways is to try and democratize this this technology than noris thank you so much uh ladies and gentlemen uh we have another question I just wanted to say that yes one moment please we uh I just wanted to say that uh our next speaker Frisco Dan anonia unfortunately will not be here so we do actually have more time for questions so if that's okay with you Anthony yeah yeah I mean yeah no worries please great great presentation Anthony um and impressive what you guys are building thanks uh the modularity aspect is great in terms of the initial design and also the ability to adapt over time um the

question I had is around security safety and also how do you actually transition from one module to another is that programmatic is that vote based or is that manual how does that work from a transition standpoint and how do you make sure it's safe yeah so um great question so basically the way to transition this this change is actually to put up a governance vote which is really really cool so you actually create a proposal now you probably need some developer support there to be honest but you put you create a proposal to actually with and and within the payload is the change which allows you to actually change to uninstall one plugin and install a new plugin so it's quite secure in that sense I think as long as the plugin that you are using is obviously really wellb built um obviously um plugins if you're

building your own plugin you have to create your own custom logic you need to have it audited so make sure it's audited and we help with all these types of things um but but the process itself is is quite seamless um in that regard and and and is much more secure than other methodologies of trying to change your governance I can't remember the Dow but about four or five years ago a DA tried to somewhat change its governance and it forgot to like deinstall like a permission that it had and and that actually left a huge vulnerability and it was drained by a white hat hacker actually luckily um so this actually is a very clean system right that's why modularity is can be so beneficial it's a very clean system which allows for this transaction which is very clearcut and I think it auto uninstalls the

permissions for you um to make this yes to make this actually so like it takes care of that automatically our system which is super good another thing for security is because um you have your um your plugins and the Dow contracts don't don't change for example um we actually can propose security upgrades for your Dow we can never touch your Dow the minute your Dow launches it is completely autonomous we never have access to that Dow however what we can do is we can propose a security upgrade and your Dow then can decide and it's actually really cleanly put in the UI if you use our UI you can click uh um put to proposal basically and it will create autocreate a proposal with that payload for your voters to vote if they want to

upgrade the Dow contract so it's actually immutable if you want it to be mutable to some degree like you don't have to accept these upgrades you can leave Dow on V1 forever or you can actually accept Aragon to propose you upgrades and and and and and trust us to have uh the highest level security for you so we keep it optional um your Dow your rules we like to say my pleasure do we have any other questions right here hey um great presentation uh when the concept of a DA and maybe Aragon was founded you know crypto market cap was maybe measured in billions maybe hundreds of billions now we're at 2.5 trillion and growing how do you see the role of Dow and Aragon evolving

accordingly yeah great great question um yeah that's a really good question we definitely have seen quite a few changes so the first Aragon stack the first Aragon stack was the first Dow framework ever created so for the first time a dow didn't need to just create itself for example and all custom code and logic they could go into Aragon and use a framework that was already created for them and those back then to me are still the OG truest Dows actually they're the ones where the protocol is actually governed by the token holders in the Dow itself think Lio decentral land nfx sarcophagus these types of older Dows um actually since then we've seen a reversion in my personal opinion a

reversion where a lot of dows uh their Protocols are no longer governed by token holders so you've had a a move and this I think primarily came due to the bull market in 2021 where um gas cost became so high to actually vote and manage on on a layer one on on the ethereum mainnet um that Dow started moving to offchain voting and so sadly what you've seen is a huge reversion where most Dows now are not Dows they're their Community votes completely offchain um no verif viability whatsoever and then uh a a group of trusted stakeholders go and actually execute on or or not on what the community decided to vote on um and these are some of the biggest Dows in the space um you know arbitrum for

example which has a wonderful Community the only thing that Dow controls in arbitrum is the token contract and some of the ARB token itself the same goes for optimism for example the token holders do not govern the protocol itself and so I I would say we've seen quite a large reversion um from the original concept and the original Dows created which I guess to some degree is sort of sad but that's the market dynamics people didn't want to pay they said we're all going to move off chain and just trust people so now actually in the last year maybe because it's a because of the bare market we've started to see a little bit more of more onchain governance which is really really cool more Dows moving onchain um obviously now you can launch Dows on layer twos so if you come on the Aragon website in 10

minutes you can launch it Dow on bass polygon arbitrum and so now the the the cost to vote is starting to decrease so you're starting to see more onchain governance and then I showed you that multi-chain governance plugin where actually you can now have Layer Two voting costs with a layer one Dow and actually you can add a pay master in you can start to extrapolate a weigh the fees for your voters so I'm actually quite bullish I think in the next 3 four years we're actually come come way back and we're going to start to see onchain Dows fully governing on chain as we solve some of the issues that have created voter apathy so yeah does that answer your question thank you so much thank you so much Anthony uh we would have one last question is that all right with you yeah of course no

worries hello uh I'm actually using Aragon for my project um oh sorry could you speak up um I'm saying um I'm actually using uh your um framework for my project how many projects are using our framework yes yeah so um oh do you have another question I see you yeah well uh actually my question is uh do you have like some uh incub are you incubating project are you helping project to to start up yeah so okay so two questions there how many Dows are on Aragon second question are we helping incubate Dows so the first answer is we have two text stacks the original from 20178 and the current version the old version is more tvl over 40 billion in

tvl um there's probably like 10 major major Dows on it the new stack we've had over 7,500 Dows launched on the new stack smaller more Scrappy Dows and that makes sense because it was a newer product we wanted to make sure that newer smaller Dows less at stake we're launching on it now we have well in the we're into the hundreds of Millions on tvl on that stack so we're definitely in the thousands in terms of doubts that have actually launched on Aragon which is great in terms of helping incubate we don't help help incubate currently um by providing grants or money we do provide a lot of support So if you if you are really interested in in getting support just reach out and we're able to give you ideas we have a great Education portal that our team works on it has tons of information on how to launch

your Dow um how to run your da how to manage your da um so we're always willing to help of course in that aspect cool thanks thank you so much Anthony uh thank you again uh to the whole audience [Applause]