Nepal, DAOs and Secret Voting with Aragon CEO Leuts.eth
I spoke to Leuts.eth, CEO of Aragon, a DAO tooling protocol that gives organizations the tools to build, govern, and accrue value effectively onchain. Aragon was probably the first organization I became interested when I got into crypto since they were the first to take seriously the potential for DAOs and onchain governance, We spoke about the history of Aragon, their latest feature enabling private voting and whether Nepal is actually a DAO now. This episode is sponsored by NYM, the world's...
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Transcript
They said to me, I want my grandmother to be able to vote on a blockchain ensuring, like, an incorruptible voting process. Right? And for me, that really stuck. Lido is governed on Eragon. What does that mean? It means that when they want to upgrade the Lido protocol, staked ETH, which, you know, right now is has over $40,000,000,000 worth of assets. Right? The token holders actually vote to upgrade that with no trusted intermediary. And the same goes for Nepal here. Like, you know, it it's very exciting to see a group of young people putting up a vote for the next leader of the country on Discord. But, like, the reality is is, oh my god. Like, we don't actually want that to be a precedent. Like, that is terrifying. Like, Discord is not Yeah. A secure, transparent voting, you know, platform. And that's the pitfall of most organizations is imagine imagine choosing one form of governance and assuming that will work for a hundred years of your company. It it makes absolutely no sense. Right? You have to have flexibility, and and we knew that people were unable to get their assets out of the bank itself, because the Lebanese government and bank were just like, we don't have the money. We're, you know, not getting it. You know, had those things been run on chain where these people were lending their assets or storing their assets, they could have gotten that out had it been a DAO. And that's my hope for the future is that, like, you know, coffee cooperatives in Colombia or wineries in South Africa or these types of things can all be governed on chain. It would be super cool
for me. This episode is sponsored by NIM, the world's most private VPN that protects your Internet traffic and metadata. Unlike traditional VPNs, NIM uses a decentralized mix net to scramble your Internet data, hiding who you're talking to, when, and how often. You can switch between full mix net mode for maximum anonymity or a faster VPN mode for everyday use. Pay in crypto or fiat, and even your payment stays anonymous thanks to z k powered anonymous credentials. Take back control of your online life at nim.com. Sign up today using the code blockchain socialist and get an extra month for free. Hi, everyone. You're listening to the Blockchain Socialist Podcast, hopefully again. And I have today Lutz, the CEO of Aragon. You guys may know of the Aragon project as one of the first projects, I think, as far as I I remember in 2016, 2017, being focused on governance, specifically on Ethereum. It was one of the first projects I was really excited about when I was first getting into crypto and had, lots of ideas about how the technology and smart contracts could be used. So it's really exciting to finally have someone from Aragon to come speak on the podcast. It's gone through several different phases and changes, so, we can talk a little bit about that and and see what is the current state of Aragon and what they've been up to because they've released some interesting features including private voting, which I think is really, really interesting to finally have that available on the Ethereum Blockchain. But, yeah, Lutz, would you like to give a quick introduction to yourself and what brought you into crypto and, being CEO of Eragon?
Yeah. Thanks so much. Really happy to be here and talk about where Eragon's at. I think, obviously, as you mentioned, Eragon has one of the longest histories in, you know, on the Ethereum network. And right now is probably at the best state it's ever been in terms of adoption and usage, and and that's really exciting. I joined, actually, I joined a subsidiary of Aragon, called Vokdoni in, early twenty twenty one. I had been in crypto before that, but not but not working. Friends of the podcast were on Vokdoni on a few few months ago. Wonderful. Yeah. They're a great team, with just an incredible mission. You know? So I was we were just with I was just with my team last week in person, and we were talking about, like, what are the use cases of crypto? What has, like, really stuck and and held on longest, let's say, you know, DeFi being the main one. But then the second one that we clearly saw, was was about, of course, ownership in general, and and, and that leads us to think about, like, how things are owned. And and voting is one of the main methodologies by which we make decisions. And and BookDonny has been a leader in blockchain based voting since, you know, dating way back, 2017, and, it's great to see them still forging on. But, yeah, I originally joined, BookDonny and was really passionate about what they were trying to bring and their mission. And, you know, like, TLDR, what it was, like, very simple. It was like, you know, they said to me, I want my grandmother to be able to vote, on a blockchain ensuring, like, an incorruptible voting process. Right? And for me, that really stuck. And I still think that although it's not necessarily the sexiest or it's not the most money making, let's say, although one could argue that corruption costs the world world billions, if not trillions of dollars, but, you know, incorruptible voting is is a is a beautiful thing, and it's something that touches nearly everybody in the world. You know, even, you know, the first I think it was the first time Donald Trump, for example, was was voted into power. I think it was 60% of people didn't believe that that vote was, like, authentic and that it you know, there weren't problems with the vote. And that's in The United States Of America, right, which is, like, you know, one of the has one of the strongest, like, democracies in the world. And so it goes to show you, like, how strong that mission was, and I really believed in that. And I was super excited about that. And, that eventually led me to joining the Aragon team and sort of moving from Baghdadi to Aragon, which was working at this, like, deeper primitive level of of ownership or control on the blockchain, and what people sort of just refer to as DAOs nowadays. Although I think there's just a there's a a lot to unpack into what a DAO is and the sad reality of people not understanding what it is. But, but both, organizations were very strong mission, vision driven and orientated. And, even to this day, when we hire people, one of the main reasons they wanna join the team is this extreme clear, mission, and they want to bring value to the world and and to this industry. And these are the organizations that are doing it. So that's why I joined Aragon, and I progressed sort of through the ranks, let's say, into taking over Aragon as the CEO about two years ago, really trying to create, like, strong fundamentals and and trying to actually make Aragon itself sustainable, and to generate revenue and and to realistically build, you know, tooling that isn't just mission driven, but also actually, like, is grounded, in in in usage by real people every day. And so we really focus on our users now and ensuring that they have the best tool they need to succeed, which we can discuss in in a moment. But yeah.
Yeah. Sure. I mean, maybe maybe a bit later, I would love to also, ask pick your brain a little bit about the, the current situation in Nepal, maybe, if you're For sure. You're into the the diary later. I forgot to I forgot to add that into the questions, but, next, before we get there, I think for for context, maybe it'd be good to explain what exactly is Aragon
and who is it made for. Yeah. Perfect. Great question. Let's start. So Aragon is most famous for building what we now more refer to as, access control like an access control protocol or framework. This allows x person to do x action under x circumstance, really simply put. This is we call governance in our industry, like this blanket term governance. Right? It's like who controls and owns something. And directionally, as an industry, we've always pushed for things to be more decentralized. So the ownership of a protocol or something to be more decentralized from a security and safety perspective. Right? And so we create that tooling and to allow you to quickly, you know, launch your organization. You can even launch your token on Aragon. You can distribute that token to people. You can manage your protocol upgrades. You can manage your, you know, your treasury or funds. And you can do that, through different methodologies. As I said, x person, you know, to do x action or x circumstance. And so now, you know, nowadays and I'll talk a bit about it. Like, we've we've made it very modular and flexible. And so the point is it's not just all token holders can vote on all proposals, and that happens. We've realized that doesn't work. It also doesn't mean that everybody has to be on a multisig because that also might not work well either. And so it's allowing you to really design the governance for your organization so that you can govern different things, different permissions via the right people or right stakeholders. Right? And then, hopefully, that helps you reach your goals. Right? And then, of course, to drive value back to that to to whatever methodology you're using, so a token, for example, so that it's has a value so that when it's being used as your form of governance, that it actually has a lot of value and can be secure. Like yeah. So that's the simple so a good example is so Lido is is governed on Aragon. What does that mean? It means that when they want to upgrade the Lido protocol, staked ETH, which, you know, right now is has over $40,000,000,000 worth of assets. Right? The token holders actually vote to upgrade that with no trusted intermediary. And this makes it very decentralized and very safe, which, you know, Lido having so much, ETH secured under you know, within its protocol is very, very important. For other projects, they may want to insert trusted intermediaries and multisig that can execute or not, or like Tyco who we're working with, they may want optimistic governance where only, you know, only the, protocol can be upgraded by the team, but then token owners can veto for safety. So we can design all these things, like, out of the box, no code very easily for you to, you know, and anyone to manage their their protocol and their organization.
And is it because I imagine, you know, governance is a very wide range of different things. You could you could put an infinite amount of things that, like, are the variables for, you know, what decide whether some action goes through or not. How did you guys,
how did you guys account for, like, the, I guess, the the breadth of things that could be possible in in that design? Yeah. You're right. We are definitely the most broad, which is super tricky because the broader you get and what you offer, the more complex it can sort of be for users. But it was extremely clear because we've been around since 2017, and we've worked with projects, and we understand you know, we've learned from their pain points that the traditional methodology, of just token holders voting on everything, I call it referendum based governance, simply wasn't working. And sometimes, multisadence were not strong or good enough as well as you saw by the $1,500,000,000, you know, hack that was, you know, happened to Bybit. So, so we thought, okay, we need to create what we call the governance designer, which really allows an organization to more customize, like, their governance themselves. And what this could sort of look like very simply is that, okay. You know that for protocol upgrade, the reality is is that the only people who can understand what that payload would be upgrading it is really gonna be developers as a whole. Right? So maybe your stakeholders there are the you know, those developers, the ones who can put up a proposal, but you wanna defend, you know, your token holders. You wanna defend the people in that protocol itself. So maybe providing them with a veto via the token is the best method. They don't need to vote every time there's a protocol upgrade. They don't have to you know, they just need to ensure that their funds are safe. And And we do this through Morpher, for example, through Guardians, like, basically and using, like, the deposit token. So for all their vaults, you know, like, the vault curator can create an upgrade. But guess what? The USDC depositors can actually decide to veto that upgrade if they want to defend themselves and exit. And that's all they're looking for. Right? And that's very different from, like, a treasury based approach or a grants based approach or a growth based approach, where let's be frank, developers are probably not the right stakeholder to be the only ones initiating, a movement of funds. Like, that's typically finance people. It can often be growth people. It could be token holders themselves. And, you know, they then could have the power to do that with the right checks and balances. And so right now within one project, we no longer have all token holders vote on everything, which just doesn't make sense, for most case scenarios. And we don't have, you know, multisig of team to make decisions, everything. We can have this style of governance, optimistic governance, as I mentioned, just for the protocol upgrade. And then we can have a different style of governance for the multisig all within one executor, one contract, or one organization. So you can start to really get granular about how actually an organization should be run and how its assets should be governed, more appropriately. I hope that makes sense.
So then so I'm just thinking, like, whenever so you have to if you want x to happen when some condition is in that, the the x that can happen would need to have a payload. It would need to have, like, the the instructions of what gets triggered. Exactly. And I guess you guys make the that that payload can be whatever
you want, I guess. Yes. And Any on chain action, basically. Right? And that's why we really differentiate DAOs at Aragon as being completely on chain versus this sort of, you know, this sort of, more off the chain sort of voting decision making. Because at the end of the day, what we believe makes it decentralized, autonomous, especially, is that that payload is on chain. There's no intermediary that needs to be in between the payload and the execution, right, which is really important. And so, like, again, it could be a protocol upgrade. It could be a movement of funds that's done on chain. Right? Could be move the movement of an NFT. It could be upgrading code of, you know, set of smart contracts. Anything that is governed on chain, that's the x. That's what you is the really important part that we allow you to execute on safely and securely with whatever methodology you want. So when we said buy x, it could be digital identification based governance. It could be multisig. It could be token holders. Whatever that stakeholder uses on chain to, like, you know, signify themselves a wallet and a base address, right, as in a multisig, they can do that, and we can mix and match them together. That's the cool part. We have multiple governing bodies for one, permission that needs to be upgraded or changed.
Okay. Yeah. There's a lot. We'll we'll we'll get more into that. But maybe, one thing I think would be interesting to just kind of recounts to also, also provide context for people is that, you know, you guys have gotten to this point because you guys have been around for a long time, and you guys have been through, you know, basically, the from the start, basically, what DAOs ever, were dreamed up to be to whatever they kind of were at a in the 2022, I wanna say, period to what they what they are today. So I think it would be interesting just to recount a little bit of the the history of Aragon. I mean, for me, I remember, you know, it was the the first Ethereum project working in governance, and I was really excited. And I bought I bought some ANT tokens because I was just, like at the time, I was, like, fine. Like, at least there's another there's one of these projects is working on governance because that was the thing that I was, fascinated by.
But, yeah, would you like to maybe recrack recount a little bit about that history and how the organization has has grown and and learned from it. Yeah. There were two, you know, very young visionary founders, and Luis and Jorge started I think they started working together in, like, 2016. And and then 2017 through '18 is, when they started building on on Ethereum. But back then, there wasn't a lot of tooling around. You had to create your own tooling to reach your own goals. And so, well, how do you how do you, like, actually control something safely? Like, back way back then, like, often, it was like an EOA that would have to would have control over things, somebody's, you know, wallet, and their ledger. You know? And so okay. Well, they created these smart contracts, which we now call a DAO framework, which is what Aragon is, like, sort of famous for. It's what I was just describing, which is, like, it allows us to create this this, decentralized autonomous organization where, you know, we can, you know, as a collective, govern and control and secure, you know, our protocol or assets. And they created that, Aragon OS. So this is the the the v one version that Lido, Decentraland, Curve use, still to this day. And then after that, they thought, okay. Well, we need to now look into, you know, other mechanics for governance because, well, we don't think that this, you know, might be the only mechanic. So then, you know, they had something called Aragon govern, which was an optimistic the first form of optim optimistic governance, which is becoming back in fashion now, which is really, like, a trusted party can put up a proposal only, and then token holders can veto if there's a problem. Otherwise, it passes organically or, you know, automatically. And this this this makes things move faster and more efficient, which most, you know, companies or organizations in crypto need is to is to still have, like, to move quite quickly. And then, and then there was the famous Aragon Court, which was like, okay. But what if there's, like, a disagreement over something? How can we, like, actually fully on chain, you know, come to a solution over a disagreement? You know, is very famous for this in pushing it on. We deprecated ours years ago, which was, you know, allowing third you know, sort of trusted to some degree third parties to adjudicate over disagreements and make a binding decision on chain who wins. So Airgun, like, created all these sort of, like, governance related products, I think, for themselves in a way, dogfooding, and which is what they became quite quite famous for. Then the team, obviously, everybody knows, at that time, split apart, and and there was a couple organization sort of, I would say, is a no man's land. And that's when I came in with my team, sort of picked up the flag and sort of run started running towards this new organization, this new Aragon. And that's where we reinvented the DAO framework to be modular, which is what I told you before, to really allow for a lot of flexibility, so you could design your governance safely, also to be future proof, because we saw that projects like Lido, Compound, you know, these great OGs were sort of stuck in their in their DAO frameworks, and it was too dangerous to move or to add things, upgrade, quite challenging. And so we started building this new DAO framework, and now we have billions in TVL on this. We've got great clients, you know, like Polygon, Tyco, you know, that are that are using it, you know, these quick these famous roll ups. And and they really have been pushing the governance design space, using this new framework. And that then that led us to, like, this year, I would say. So, you know, we have that new framework. We now know how to help organizations create value, and now we want to distribute value back. Because what we've realized is right now, there's a there's a deep struggle for most projects to retain, value in their token if without, you know, without value accruing to the token or without, you know, strong utility for the token. What happens is token holders start to sell the token. So the last six months to a year, we've been really focused on this, you know, meta called token value accrual, and it's providing the infrastructure for organizations to drive the value that they they create. Could be revenue, could be emissions, incentives, and to actually distribute that safely and securely to the token and, thus, token holders so that there's this long term alignment. And and curve on Aragon really, like, I'd get it that first, I would say, with the VE gauge system, and that's really come back around now. This new VE gauge system, we have new products like Katana, Pendle, you know, even Athena with staking at least are are are really, like, trying to create long term incentive alignment. So token holders hold the token long term, participate in governance if required to secure, you know, what they're holding long term, and then to be rewarded for that. And this flywheel is becoming, again, quite popular, and and we are sort of the leaders in in offering this infrastructure, for product tokens, which is an integral part of governance or or the safety and security of of most organizations anyways.
Right. Right. I mean, in in many ways, it sounds like, we've we've kind of come around a little bit full circle to I mean, essentially, what is, like, also fairly common in, like, corporate governance. I mean, that this is, like, a big part of how, you know, you want to keep your stock price high for for some of them. But, yeah, I'm I'm skipping ahead a little bit. But with this token value of accrual, I'm curious is like, what I guess, what what are some of those ways that that happens? Is that, like, I would think, like, providing like, revenue share would be,
like, a major one, I guess, or one of them, but there's probably there are other ones as well. Yeah. The two I would say there's two, like, main methodology in our issue. One one is, like, a buyback and burn. So it usually involves buying back the token. And then there's buyback and distribute. One, I would say, is trying to more be focused on price at the expense of growth, and the other is more focused on, price and growth. It's just a more complex system. Like, a buyback and burn is a very easy system. Obviously, you know, a organization simply buys back some tokens from the open market and then burns it. Mhmm. It's easy. It it's not proven to be super effective, to be honest. Curve and Michael just put out quite a big paper about, how they've played with both buyback and burn and buyback and distribute, buyback lock and distribute. And the buyback lock and distribute was a far superior, system for locking supply and and and hopefully then creating sort of price support. And the other methodology, which is the eGauge model. Right? That's like the buyback lock. So token holders lock for x period of time. Used to be four years now up to four years. Now it's quite flexible. Some people have it as some product have it as a day, thirty days, one year. You know, it's, like, very customizable with our tooling. And then that that locks obviously this token supply, and then they take the the value, that they bought back, with excess revenue or with emissions, and then they some of that gets sent to token holders for allocating more of that budget to growth. That could be to new projects launching on a chain and, you know, from a Katana perspective, could be adding liquidity from a curve or airdrome perspective. So there's, like, different methodologies, but it's really focusing more on, like, long term incentive alignment for growth. And those are the two main methodologies when we talk about token value accrual in the current state.
Okay. That's interesting. I wanna get back on the modular governance framework that you're that you're mentioning. So what are some of the principles that you keep in mind when building out these types of new features? I feel like this is a kinda like the the holy grail is is modularity and it's like, you know, after, you know, at least for me, you know, spending quite some time building out various different apps and products, like, it's building for modularity is not easy. I'm sure to think about, like, in the future, what are the ways that your, you know, framework is potentially going to be used or not is, it takes a lot of thinking actually.
So I wonder what what kinds of principles do you guys try to keep in mind whenever you're thinking about modular governance? Yeah. We try to keep in mind in mind, a few things. One is to try and not make it overly complex to deal with. Like, you know, monolithic, you know, products are often a little easier, to sort of build off of launch on, get started. But where they fall or fail is usually later when you need the modularity to adapt or change or be flexible, and governance has to be that. Like, it it it's ridiculous to think that governance would never change, and that's the pitfall of most organizations is imagine imagine choosing one form of governance for the and assuming that will work for a hundred years of your company. It it makes absolutely no sense. Right? You have to have flexibility, and and we knew that. And going about building that is quite challenging because it still needs to be simple, safe, and secure for the users, and and these are very important core primitives. Like, there's only three of them in the industry that have a ton of value on them. SAFE, which is a monolith. It's a multistig monolith. Very powerful, very good, very simple. The governor, you know, opens up a governor sort of monolith, which is just token voting. And then there's the Aragon modular stack, which, you know, can like, basically, we have, like, this core primitive, which is the DAO, which is like the executor and the vault. Right? And then you can plug in different modules or plug ins. And these plug ins allow you to govern using one or many plugins. So, basically, you could take what is governor, which we call our token voting plugin, and you can install that into enable token voting. You can install safe or our own multisig, you know, wallet based voting. You can install that in also. And now you can and then you can swap them if you want. Right? So you can say, I wanna move from a multisig to token voting. I'm just gonna uninstall to, the multisig, and I'm gonna install token voting, the the modules. And then I'm off. And it's very simple. You don't change the the the the execute. You don't change the core logic. You don't need to fork anymore and and and write more code, which creates, you know, security problems. So it's more future proof in that sense. And we wanted to make sure that that could be done very securely and easily because if somebody's changing their governance on the fly while they hold a billion dollars, that has to be done relatively safely. So we wanted to make sure these modules were compartmentalized, and that we removed any, you know, dependencies, that could create sort of sort of problems down the line. And and so far, that's that's been a big success.
Right. So would that be, like maybe this is getting too much in the weeds, but that is that, like, having a almost like a wrapper around the treasury in some way that has parts that allow for modularity versus, like, an all enveloping, you know, system that then you have to remove to put another all enveloping system, if that makes sense. Like, you're you're creating kind of, like, plug in like, plugs
that you can just attach to and take off and attach the other things. Exactly. Yeah. Like Yeah. Like It's exactly interfaces, I guess. Yeah. Exactly. Yeah. You have these plug ins, and and and you allow to install or uninstall them using factories, and it makes it a much more stable sort of system, and more secure in that sense. It took some time to really come up with it and build it. But now that it's going, it also means that we get network effects, which has never happened before. So with monoliths, you you can't have network effects. Like, if you want to, you know, reuse something, you have to fork it. You have to rebuild it. You have to change something. You have to audit it. It can cost, you know, 20 to $100,000 to audit. And then you have your DAO. And if you wanna change it, you have to touch the core logic, right, and make those changes and reaudit it. Well, with, like, a factory, you know, based system that's modular, you inherit sort of the security and you inherit, the security of of the other plugins that are created by other projects as well. So if Aragon creates a, a plugin for optimistic governance with Tyco, right, and we audit it, well, guess what? It doesn't need to be forked again. Any other DAO can simply choose to install that governance plug in into their DAO, and off they go. No need. It's already been audited. You don't need to change it. You just need to install it. And so we get what what sort of is almost like a a governance marketplace. They almost get this ability for projects to come in, who's sort of what governance methodology they want, could be often a very successful project, install it, and then customize, obviously, what they want in terms of quorum or, you know, these types of things, you know, minimum threshold, etcetera. And then and then they're off. They are running, no cost, really fast, really easy, safe and secure, inherit the Lindy, of the project before them. And so it it's a more scalable system that we think can reach the mass audience. What we know is, like, we're not gonna reach mass audience if every single person who needs to launch a company has to literally go and code something themselves or fork code, you know, of another project and then and then import that into a UI or build their own UI and get going. Like, no organization in its early stage has the time for that. We need to make it really easy and quick for them to get going right off the bat.
Right. Right. So, I mean, I'm I'm curious what is your then, like, your vision for how people use, I mean, whether I mean, in the context of Aragon or just, like, kinda crypto governance in general, like, what, what is your maybe it was this is yeah. Your five year vision of, like, types of things that that we're doing.
Yeah. I envision And governing. I envision projects coming in earlier to use Aragon OSX, the protocol, as their executor, because a lot of developers early on don't know what their governance is gonna be in the future. And so what they usually do is they point all these permissions or they point the ownership or access control of this protocol, you know, to a safe, or somewhere, and then they need to change it in the future. And then they have to go start changing code within their protocol to make these changes in the future. And they have no idea what their governance is gonna be, and that leads to risks down the line. So I do foresee in the next five years, developers start to use OSX as, like, the executor for their where they point their permissions earlier on, and then they can change their governance later. So it can be on a safe interacting with the Ergon OSX protocol early. And then guess what? They don't need to change anything, within the code base later on. They can just simply change that safe to a DAO, token based, or to digital identification based, or a mix of both. And so that will mean it's safer and easier in the future for projects to actually, just from day one, offload this, like, decision of how to govern something dictating it's gonna be x, y, or zed earlier on. And then, of course Mhmm. Our like, we're very bullish, as I said, on the token value accrual. So, like, we've realized that, like, tokenized projects just aren't gonna be successful if their token has no value because they use that token, within their protocol. They often use it for to fundraise, and they use it for any type of, you know, methodology. And we have to ensure that they're worth something. They they have ownership and control something that, you know, they aren't just some ephemeral, you know, side thing that that a founder launches and then leaves. And so we really believe that ensuring that at least that there's a plan for value to accrue to the token at some point, that that will give, you know, those buying tokens a reason to buy and hold them and potentially participate as well if need be with those tokens.
Right. Right. Right. I mean, this is yeah. I mean, if if within the context of, the crypto space where so many tokens have gone to zero because, I guess, they weren't they weren't able to find, some kind of product market fit or find how a reason for for people to actually use their token, you know, it is important to think about, value accrual probably for a little bit so that your your token doesn't go to zero and you lose your, you lose the people who are supporting you in the first place. Absolutely. And I think that, like, you know, the key is is we have to create a system that's better than the traditional world.
Like, seeing projects like circle, I you know, IPO, I think of the huge wake up call, in my opinion, to our industry. It still means that that's a better methodology, right, in general. Right. We definitely want those types of projects to launch a token because, I mean, that's what we're here for. That's how we think we can democratize, you know, access to, to people being able to enter the market, participate in the market, and all, you know, create value together and grow together. That can only happen if it's if it's easy for people to participate, but the IPO system isn't that easy for people to participate. They can't get in early enough. They have to get in too late often. It's usually already captured very early on by, you know, large conglomerates, large, you know, VCs, etcetera. So, like, trying to really democratize access to the space is super important. And so we need to simply get the tooling to a better place where it's actually more advantageous to launch a token versus to, you know, IPO for big companies like that. Or it's easier to quickly launch your project on chain rather than try and find a bank, you know, launch it through, like, you know, through lawyers and spend all those fees and go down this traditional route, which is very lengthy and tiresome and, and full of bureaucracy and high costs. Like, the hope would be you come online, you know, on chain. You can deploy your legal wrapper with met you know, Metalex, you know, with Gabe Shapiro is quite well known. You can attach that to an Aragon organization where you can deploy your token and distribute distribute it to those who have fundraised by a legion or echo. And then you can build it safely. And then once you start creating a ton of value, you can reward your token holders back again. You know? And this is like a system we see being infinitely better than the traditional market. I just don't think we're quite there yet in terms of the tooling, but we're getting closer and closer, honestly, every
day. Right. It is now that now that you're making me think about it, I am thinking about all the amounts of, USDC that I've used over the years and how I'm going to get zero zero out of it in their IPO probably.
Yeah. Yeah. The amount of people that have yeah. He probably did get zero, and now they're launching their own l one, you know, as well after after having, you know, the entire Ethereum community used and and brought USDC up along with their team. They did great work, I'm sure. But, you know, like like, it was the Ethereum community that really got USDC, you know, funded and and full of liquidity and used all everywhere. And I use USDC all the time. And and now they're they've gone through an IPO, and they're launching an l one. Like, where's the alignment there? You know? Yeah. Nowhere.
Yeah. Yeah. Yeah. That's a bit, yeah, unfortunate. I think and, you know, we're and then we're seeing this is also we have we have, like, a triple a triple whammy, I think, like, a couple weeks ago, like, the Google one, the Stripe one, and this Circle one. I think they're all different, basically, corporate blockchains that they're trying to start. Exactly. They're all little ones.
I think they're all EBM compatible at the very least, which is, you know, a positive for sure. And and but but yeah. Like, will the value be driven back to to Ethereum? I think that's yet to be seen. There's, you know, arguments on both side both sides. You know, there's questions. I you know, there are positives to that kind of signaling. You know, it very clearly means one of, you know, two things. Like, I don't really fully believe that, like, the that technologically, Ethereum l twos are not capable of of doing that. Like, if there's the latency issue, which is great for Ethereum to know that that's why, you know, Tempo decided to go that route and that Ethereum's road map can adjust to something like that. You know, which is super important. But, you know, it's probably still financially a better business decision to launch an l one. And, you know, they wouldn't be like, these these smart people, they would not be launching l ones versus l twos if they didn't truly believe that it was a better business decision, whether that's technologically or monetarily. So, like, we need to get to a state where that it's just the best decision to make an l two. And I still think l twos are winning, but, like, yeah. Like, we have to keep learning and and building as a community.
Yeah. What are your top bits of advice for organizations looking to do on chain governance?
Yeah. I mean, my my bits of advice are are simply to to to be truthful and honest to what goals you're trying to achieve and and design your governance around that. You know what I mean? I think often in the past, you know, decentralization or or was sort of done or fakely done in order to try and meet some type of random regulatory rules that were not very clear or that what lawyers were trying to get them to do. And and and at the end of the day, like, that killed a lot of projects. Like, I think projects need to be really focused on trying to create value through their product first and foremost, and their governance should be designed around that. And, after and once they decide to launch, you know, a token, for example, or head down that route that they meaningfully, you know, decentralize in in different methodologies. Again, like, you don't need to have a referendum based voting for every decision. Like, you don't have to do that anymore. Right? Like, you can provide security to your protocol with a veto. You know, you can create a design space that is very efficient, that is, you know, optimistic and optimized. And so to really, like, do some research before you actually go ahead and just launch your token and claim to be decentralized, and then ensure that that if you you know, when you do that, that it's meaningful and and honest and, it's very clear, you know, regulations in The United States at least are heading in this direction and are gonna force projects to actually decentralize if, you know, the Clarity Act has anything to say has anything to say about it. And it's a bit of a shame that it took The US regulatory system to sort of, like, create this these requirements for projects that, you know, we could've should've self policed much earlier.
Right. Right. I mean, do you think so then, I guess the question so so you mentioned earlier or or in the interview that you were hoping that developers choose to come to Aragon OSX earlier in the process Yeah. Does that mean that, like, this is also like, thinking about on chain governance is also important even before decentralization.
Does that make sense? They they have to. Like, literally, when when when a developer builds their protocol, they have to decide who controls what. Like, you're out. You have to. And so starting earlier and and baking in a system, and it literally just requires pointing an address to an airgun DAO, which can be spun up no code. Like, doing that earlier means that that you actually don't need to think about it from day one. You can have your multisig from day one, but you know later down the line that you can transition with no problems very easily and securely. So, definitely, my biggest advice is, like, come speak to us sooner than later because it's a huge pain point that you're just pushing off till later. That can be solved right now for free, no code, really quickly. It's just a bit of a different, you know, mindset than what has traditionally happened in the past, which is to be just use, you know, ownable and access control, you know, sort of out of the box and and pointing it to, like, a multisig. So definitely would advise speaking to us earlier. You know, we also support with, you know, with all with helping you through your decentralization road map and and token value accrual and everything. So getting getting ahead of that before launching your token, before, you know, opening up your protocol is is is definitely something I recommend.
So I'm curious to hear, like, what a lot of the things that I assume is that, the types of organizations that are using Aragon for the most part, the most at least are ones that are kinda, like, product based or that have some sort of products that they, that they run that is, a for profit business or something like that. But what I'm curious to hear is your dream type of organization to use Aragon. I think one of the, like, one of the things that I've kind of, you know, seen, or, like, one of the interesting bits of history about DAOs for me is that, like, it used to be called decentralized autonomous corporation. That was, like, the first that was the it was DAC at first. That was the first acronym before before Vitalik made the wise bit of a, suggestion to, Ginger to DAOs since, the idea of using kind of automatically executing code with with value, in it. That it doesn't necessarily have to be a for profits corporation or something like that. This was, you know, I think I think it was, like, just a a testament kind of to certain libertarian, ethics of some of the the earlier people who who who decided that, and I think that kinda limited their imagination a little bit. But I think, like, by now, that kind of, like, idea has I think most people who are in DAOs have a belief that it shouldn't be just for profit entities that do this, but like any other types of organization broadly. So I'm curious to hear what your what your thoughts are and are what are some of these gene types of organization, and is it is is Nepal one of them? Great point.
Yeah. I mean, yes is the answer. So I think where where, immutable slash decent or and or decentralized access control works the the best is in adversarial situations. Like, in Switzerland, do I need to run my organization as a DAO? Depends, but not as much. Like, we don't we have very clear, strict legal rules that people can follow. The code, you know, code is law. You know, it's all followed here. You know, there's a great system. It's low corruption. You know, for the most part, as it stands currently, things work very well in this country. But where I think DAOs should have and could have been, utilized the most is in, you know, adversarial, you know, geographic locations where that isn't the case, where trust you can't trust a government or you can't trust, you know, intermediaries to, you know, to have your best interest, at heart. And that could very well be, you know, a group of freedom fighters in Ukraine, you know, in the Donbasque where, you know, Russia have taken over this, you know, land trying to manage their assets together without a local bank, you know, taking them. Or or or speaking of banks in in Lebanon, you know, where people were unable to get their assets out of the bank itself, because the Lebanese government and bank were just like, we don't have the money. We're, you know, you're not getting it. You know, have those banks actually have those things been run on chain where these people were lending their assets or storing their assets, they could have gotten that out had it been a DAO. Right? But nobody could have stopped them. Right? And the same goes for Nepal here. Like, you know, it it's very exciting to see a group of young people putting up a vote for the next leader of the country on Discord, but, like, the reality is is, oh my god. Like, we don't actually want that to be a precedent. Like, that is terrifying. Like, Discord is not Yeah. A secure, transparent, voting, you know, platform. And it's exactly in these types of situations where you could easily have corruption actually, you know, change the the inputs of the vote. And, anyways, because no power could actually be executed by the vote in Discord, it really was up to the military to decide whether or not they wanted to take this 200 person vote and enact it on, you know, the entire population. And so there was no power or control of money or of or of power. You know? It was it was simply just like, yeah. 200 people voting on Discord, and the army is saying, okay. We'll, like, we'll do it. And it's like, jeez. Like you know? So, like, yeah. Like, yeah. This would have been a perfect case scenario where transparent votes would have been, you know, you know, incorruptible where you could have seen who voted on what. And with, you know, privacy in in play there, you could have known that this person voted for this, but not actually tied the vote together and knew what they voted for from a privacy perspective. But you could have known that those votes really mattered and counted, and nobody could have, like, you know, censored them or censored some people or changed the outcome of the vote. And then if it was actually moving money or, like, giving access, let's say that that if government posts were controlled on chain, like, what they could access to do their jobs, well, by giving access control to the president or prime minister, you know, to actually log in, you know, and and, you know, execute on certain actions would have been very powerful. Obviously, we were not at that state yet, but you get my point. These are the types of times when a DAO and these decentralized access control mechanisms would play perfectly. And that's my hope for the future is that, like, you know, coffee cooperations, in cooperatives in Colombia or, you know, you know, or wineries in South Africa or these two type these types of types of things can all be governed on chain. It would be super cool for me.
Yeah. Yeah. Just a a note on the the Nepal situation is gonna be I mean, my my video editor is from Nepal, so I've been talking to him quite a bit, about the situation. So it's really, really interesting. And, you know, I got I got a little bit of flack for some people on Twitter because they take my tweets too seriously. But, I, you know, with the discord situation, I was just able to enter the discord. I had never been to Nepal. I don't know. I don't speak the language at all. I didn't check. There's no civil resistance. I mean, so in some sense, it's like interesting it's an interesting it's interesting for me at least to where I'm, like, I was able to take a tiny part in that history of being in the Discord, you know, seeing everything in English was interesting. Like, what so at first, it was kind of, like, raised a little bit of a red flag in Nepal. Why is everything in English? But, you know, my video editor told me that, like, a lot of them, they do speak English online for whatever reason. That's, like, fairly common, so that might be part of it. But, yeah, there's there's a lot of, like, open questions of, like, you know, who exactly is behind the nonprofit that's running a lot of these things. Like, I don't I don't really know. Again, I'm not not trying to take away necessarily their work if it's good work, and I also don't wanna, like, be super trusting if, there's people I don't know. So a lot of there's a lot of, like, these open questions that we can't say, and, like, Discord is an American owned business that has zero accountability to Yeah. Nepali people. So, like, why, you know, for so for me, I was, like, pushing back a little bit online, to people talking about, you know, that Nepal is now a DAO and it's governed by a DAO. I just think like like we should have much higher standards than than this. I mean, it's a it's a, you know, but it's still a fascinating thing that's happening, but come on. It's not a DAO. Let's like be let's be honest with ourselves. Yeah. That didn't happen. Yeah. Maybe it could happen in the future, but it didn't happen right now. No. Definitely not. I mean, I think I actually think I made the joke. I said Nepal DAO quite early and as, like, literally a joke because
the jokes in the past have been DAO equals Discord is, like, the biggest name of the DAO world, which is just like DAO equals Discord. And I was like, here we go. A country just voted their new leader in Discord. It's gotta be DAO. So for me, it was definitely tongue and cheek. Now I I get it. Like like, there's a lot of revolutionary people, you know, in our industry and on and on and online on Twitter. And it's excite you know, it's exciting to see young people come together and overthrow a government and try and make change. But, like, yeah, like, if we're being real here, like like, woah. We definitely don't want, you know, you know, to choose leaders of governments on Discord. Certainly not. You know? And if it's in English, I can guarantee you, like, I don't know how many Nepalese people are, you know, in their seventies living in the countryside who should have actually participated in that vote, you know, or in that Discord speaking English. Like, who knows? Right? So, yeah, it's it's it's not really a great sign, to be honest. But but I think what I like about it is there seemed to be a lot of optimism at least from an external perspective looking in. Right. You know, getting rid of corruption and and and trying to move that forward. And and I put out a tweet, you know, and Gabe Shapiro was like, hey. You need to go do this. I was like, oh my god. Which was like, yeah. Like, if people seriously if anybody watching this, like, seriously knows people on the ground there who can put us in touch with the right people, we've moved far enough in this industry that we could definitely start some pilot programs in Nepal to actually have blockchain based voting there and just start to try and move that needle forward. It's possible, and we definitely wanna wanna be involved and and and and help out. Like, this is a great use case.
I mean, it's like yeah. It's, fascinating fascinating situation. I mean, it's it's really interesting that they they voted in a pair from what I understand, the the the new prime minister is, like, an older woman who was, like, the chief justice, who was, like, one of the, you know, people who were fighting against corruption, I think, in the twenty tens. Yeah. So she does have that that background in her. So it'll be interesting to see how things pan out. Will she be it'll be interest I mean, you know, I think it I would be fascinated to see, like, a 70 year old be like, let's use blockchain now. But would be very cool. I mean, I think would be very interesting, and, I think those are the types of context and situations where you're really putting things to the test. I mean, there's definitely, when it comes to corporate, like, governance, it's definitely a test there, but I think this is like a Yeah. It's a it's a different beast, a different level. I'm sure. Sure. Yeah. I'm sure you probably know that from, like, Vocdani Exactly. Experiences. That's exactly what we were doing at Vocdani. Right? Doing some like, we did some towns,
in Spain, did some big boats, like, you know, FC Barcelona. But, like, yeah, there there was definitely a thought on, like, how can we build a system where literally a country can do their election on the blockchain. The issue is is from, like, an incentive perspective. Like, the people in power in the countries who need that technology the most are the least incentivized Mhmm. To actually implement it. I actually spoke with a friend of a friend who, you know, has a position of power in a in a large country that's not known for, or is quite well known for its corruption. And I I pitched the idea, like like you know? And I was, like, bloched of his voting, like, incorruptible. Like, isn't this really cool? Something you know? And he was, like, why why would we want that? And I was like, okay. Like, very upfront. Like, how am I supposed to Yeah. I can't I can't benefit off of this. This is the opposite of what I want. I was like, okay. Fair enough. Okay. We'll have to this has to come through a revolution clearly.
Yeah. Yeah. That's interesting. Yeah. But, like, I think in the context of one of the maybe one of the last questions I wanted to talk to you about, you know, thinking about this context as adversarial context, I think one of the other risks as well of using blockchains for voting is that if your vote is publicly accessible, then, you know, that could be a liability in the future. Right? You don't want necessarily who you voted for in the last election to be public for everyone to see to which you can be held, I don't know, culpable for for whatever reason because you voted against the the winning party or whatever in certain countries or contexts. So, like, one of the things that has to be done more or less to do that is private voting. And so from my understand, one of the latest features that you guys released was the ability to do private voting on Aragon using Macie, I believe. Minimal
something collusion. Minimal anti collusion infrastructure. Yeah. Yeah.
Yes. So, yeah, would you like to share a bit about about this, about this feature and maybe nerd nerd out a little bit on, like, the technology behind it and its implications? Yeah. So,
we're super super happy to have announced private voting with Macy. It's definitely in beta. Like, it's a v one, but it nonetheless, it's something that has been missing from our industry for years. And Aragon has worked in the past on for years as well. We had a really great proof of concept with Aztec couple years ago, but there were always significant trade offs to having private voting. And I think back in the day, we were so purist in what we wanted to build that we wanted to build the most, you know, like, decentralized private voting solution. No trade offs attached. There's no such thing. And so the trade off at the time was you had to pay, like, $80 a gas to actually vote. So it didn't it didn't really run with it. So this time with Macy, you know, they were able to build a governance plug in, as I said, which can just be installed into a DAO quite easily and use their system to, you know, comp commutate the votes, and to hide them, obviously. So that when somebody votes, it's private and that nobody can see, nobody else voting can see what they voted. And it's, it's super exciting. It uses, you know, homeomorphic encryption, ZK proofs, to basically ensure that this person voted on this, but that you can't see it, but that you can actually see you know, know, that they can actually know what they voted on. So that's, like, what's super important is, like, before you would you would lose yourself in the fact that UK, you could make something private, but but, but then you wouldn't actually know what you what you voted on. There was no validation of that. And so it makes you consider decide, do you want to have it to be basically, without a receipt or with receipts? So, like, without a receipt, meaning, like, there's like, it's bribe proof. So nobody you can't show anybody. There's no proof of what you actually voted on so that somebody could be bribed to vote on such. So, like, it tries to tackle several things at once, which nobody's really discovered. And the good thing is is now we have this v one up, and it allows people to, like, come in no cost. It's not expensive to vote. It's maybe a little more than normal gas prices. They have to sign up for a a vote beforehand, and then they can participate and actually vote privately. And it's, like, the biggest thing missing in the governance space. The the problems that have arisen from a lack of private voting is everybody just seems to vote yes in every DAO, let's one could say. Like, people seem to follow the herd or the famous people, not wanting to go against, you know, against whoever might have more power. Another thing is is people don't wanna be caught, dissenting. Right? Like, you know, and then it's very clear they dissented, and then there might be repercussions to that. You know? And then people like VCs who are often large token holders, let's be if we're just being completely honest, are too scared to vote from a regulatory perspective or from being sued based on a decision. And so what that has led to is basically is the offboarding of hard power and decision making from token holders to delegates. And just like every system in in in in crypto, if it gets gained, if it's not foolproof, and just like that that, you know, the the sort of delegate system has been gained where you just have a bunch of serial delegates who have no skin in the game themselves. They may not even hold one token of a project. But because they're famous or popular, because they were first or whatnot, they have tons of voting power. And and when you don't have incentive alignment and you have decision making, you often have the wrong decisions being made. And so I the state the space has really suffered from that. So I wanna make sure that people can vote safely from a legal regulatory perspective, that they aren't coerced by other people, and they'll feel like they, you know, have to vote on something without reprisals, and that's what private voting can bring.
Mhmm. Mhmm. Mhmm. And I wonder if part of that also has to do with simply, like, like, token voting being kind of part of the issue, like, part of the issue there as well. But part of it's it's probably a bigger issue even in, like, identity based voting.
Yeah. Yeah. Token but, I mean, took every that there's trade offs to everything. Right? Like, if you did a one person vote, congratulations. Like, great. Everybody has equal say, but then that disincentivizes, you know, people from potentially investing or being involved in a project because those with less skin in the game have the same power, as somebody with more skin in the game. With tokens, you have, obviously, sometimes too much skin in the game is the or skin in the game is the only requirement from, like, a financial perspective. So those who are richer have more power and thus can sort of dictate terms. So there's a trade off to every single governance, basically. So I think getting the incentives right is really important. And one step of that is ensuring people can vote safely and without, you know, without fear.
Yeah. It's the it's the, you know, the polity is kind of, like, super important in in in determining this as well, whether I think crypto just generally has if it's a crypto project, then you're creating a polity via the token versus I think one of the things that, at least for me, would be super interesting is, like, I mean, in the case of Nepal, there are people who are Nepalese. Obviously, if you return Nepal into a DAO, then everyone having a single vote to it would make a lot of sense. But also, I mean, this is the case for, large cooperatives or large labor unions. I mean, having one member, one vote is kind of, it's more or less the norm in those type situations as well, but they already have a polity in place that's not necessary. Like, in those type of cases, that's where crypto is kind of like an extension rather than kind of, like, being enveloped in it, but I think it's slightly different. But,
but, yeah, definitely get your point. Totally. No. I totally agree. Where you are now. It you know, every organization needs to govern itself to some degree a little differently. You have to decide how you're you know, how you wanna reach your goals and what incentives you wanna put in place for people to make the right decisions. And that's just the nature of of the beast, and I think we've struggled in crypto because it's always been an afterthought, instead of a forethought. And and to be honest, like, it's such an nascent, fast moving space. There's just, like, very conflicting challenges from a governance perspective of moving fast but being super secure, but giving power to people who should have power because they are technically the owners versus then being focused. And there's just these, like, very challenging trade offs. And its entire purpose of modular governance is to, like, segment what decision needs to be made and empower different stakeholders to make those different decisions within one with one within one organization. Hopefully, that can solve the the issue. But if look. Governance is, like, you know, thousands of years of of humans trying to to discover the best way to govern things. And, like, obviously, this just can't be done overnight, and we, you know, hubris, like, we as an industry can't just try and turn everything on its head and and hope that it, you know, turns for the best. But I think we've done a good job of it, at least, experimenting. So
hopefully that helps. I mean, I I've I've definitely I've solved governance. I have it in my it's in my notebook. I just haven't shared it with everyone yet. Put it on ten minutes ago. Alright. So thanks so much for coming on, Lutz. Really appreciated you sharing your knowledge and your experience with Aragon. Maybe the last thing if you want to share with people where they can keep up with with your work with Aragon, what are your plugs?
Yeah. Obviously, in boot studies, you can find me on Twitter. I always talk Aragon. I talk everything about our industry. Ww.aragon.org. If you need to learn more about Aragon, if you want to reach out, you can do so via there or to me on Twitter, and we'll help you with anything you need help with, whether it's tokenomics, token launching, you know, governance, access control. We're here to help you. We want our the project to build on our stack physically, and really appreciate your time as well. And and in this podcast, it's really great.
Cool. Catch you later. Thanks.