Aragon - Blockchain Solution To Corporate Governance
February 19, 2019
When you think about cryptocurrency what comes to your mind? Digital assets, anonymity, decentralized, community, Bitcoin.
After Bitcoin forged the way for peer-to-peer decentralized digital transactions, Ethereum provided a foundation for decentralized applications (DApps) and now there is a plethora of blockchain projects with unique applications and ideologies.
A common misconception is that "crypto is an individual only endeavor". This is wrong because even large companies can form a unit (node) on the blockchain network. Blockchain technology can be applied in company management as a form of hierarchy and governance tool. This automatically transforms a legacy company architecture into a Distributed Autonomous Organization (DAO).
Aragon is a decentralized app (DApp) that anyone can use to create and manage a GLOBAL, bureaucracy-free decentralized organization, company or community. Aragon runs on the Ethereum blockchain. What makes Aragon unique is its robust governance layer and its use of flexible "weighted agreements" to create and enforce transactions on the blockchain.
So why is Aragon important for DAOs?
Most companies are created with the aim of making profit. However, running the company comes with many costs/expenses in different departments ranging from production to administration. These companies will also interact with others and usually a "board of directors" or major shareholders alone decide the fate of the company. These fragmented parties can potentially be compromised and begin to function as Points of Failure for the company.
With Aragon, the bylaws of the decentralized organization are embedded into the code of the smart contract, using complex token governance rules.
Source: Top Down Organizations vs. DAOs
Principles of Aragon
The Aragon platform is comprised of 4 core principles for managing DAOs,
- Well defined bylaws that specify permissions granted to users (nodes)
- Decision making governance system,
- Mechanism for Issuance and control of tokens/capital
- Accounting system for managing funds within DAOs.
How does Aragon achieve decentralized governance?
UniversaBlockchain puts it best
The idea behind DAO companies is that the rules upon which the company functions are enforced digitally. Other decisions are made by shareholders who control a certain amount of the tokens, or smart contracts, who can vote for decisions. Preprogrammed rules describe what can happen in the system. Certain rules are hard-coded into the company like the amount of dividend payouts or determining a certain event in the company. Other things like, determining which project will receive money is decided by letting all token holders cast their vote.
Advantanges of Aragon
While most companies use intermediaries that make up 20-30% of the company's expenses, Aragon reduces administrative fees to almost zero. This is because everything is done on the blockchain. The Blockchain utilizes trusted time-stamping to combat counterfeit transactions, eliminate corruption and removes the need of a third party intermediary (dedicated personnel to monitor).
With Aragon we can now have companies without CEOs or hierarchy. This eliminates all the office politics that plagues company progress. Major decisions of the company can be subjected to votes and abuse of office/position is greatly minimized or eradicated.
Aragon encourages investment because in order to enforce an agreement on-chain, parties of the agreement must deposit collateral in the form of digital assets for the duration of the agreement.
Aragon uses its own custom token (ANT), as a stability reserve to support governance of the network and as a reserve currency for collateralizing agreements.
Launching your own DAO
Open the Aragon mainnet on your browser
Make sure you have Metamask extension installed on your browser. Metamask is compatible with Firefox, Chrome, and Brave Browsers.
You can Create a new DAO or register an already existing company. You will be prompted to pay a creation fee of 0.1 ETH to register your DAO.
You will be prompted by Metamask to approve the transaction. After that is confirmed, you will be directed to the Control Center of Your DAO.
From The Control Panel you can now issue tokens, set voting parameters, define new rules, issue payments and so much more. It's pretty easy to use.
The Aragon Network is a powerful tool that every serious business or company should employ. It sparks a new level of company unity and responsibility. The source code is available to everyone. Each member of the organization has the ability to independently monitor every stage of the project development. By allowing people to coordinate organizations, Aragon enables a borderless, permissionless and more efficient creation of value.