Aragon Association Takes Action to Safeguard the Mission of the Aragon Project and its Community of Builders
Today, the Aragon Association(AA) acted on its responsibility to secure its treasury and mission against a coordinated attack on the Aragon DAO. The Aragon DAO was recently deployed to progressively decentralize the governance of the Aragon Project’s treasury and core infrastructure. Shortly after the AA sent an initial transfer of 300,000 USDC to the Aragon DAO, the DAO came under a coordinated social engineering and 51% attack.
The Aragon Association will only continue transferring funds to the Aragon DAO, if it has reasonable assurance the funds will go into the hands of builders advancing its mission, as per its mandate. To this end, it is announcing a grants program to be distributed through the Aragon DAO and governed by ANT Holders, to ensure the project’s resources continue to fund builders who are launching DAOs, dApps, and plugins on the new Aragon tech stack.
This will enable builders to kickstart their ideas faster on Aragon OSx and Aragon App. Since its inception, Aragon grant programs have played a key role in the industry, seeding important projects like Snapshot, Frame.sh, and Dappnode. Grants can be a critical first step when launching new projects.
Aragon’s actions, a necessary response to coordinated attack
The recently deployed Aragon DAO came under a 51% attack by a coordinated group described as “Risk Free Value (RFV) Raiders” connected to the dissolution and liquidation of Rook DAO. Evidence indicates that their involvement is aimed at extracting value from Aragon for financial profit. The Aragon treasury was established with the explicit mission of supporting builders to advance decentralized governance infrastructure. Given the imbalance between the value of ANT and the treasury, this form of attack was anticipated.
The Aragon Association has the responsibility to allocate Aragon’s treasury for its stated social non-profit purpose. In addition, mission-alignment is critical to continue making progress on building decentralized governance infrastructure. Our recent actions are intended to clarify the purpose of the treasury and misunderstandings regarding the nature of ANT and its role in the Project.
The Aragon Network Token (ANT) - A utility token by design
In 2017, Aragon founders Luis Cuende and Jorge Izquierdo deployed the Aragon Network Token. The token was created to fulfill a bold mission: build decentralized governance infrastructure that would revolutionize social structures and organizations. This vision was a rallying cry for a visionary community of developers and, within 26 minutes, it became the 4th largest crowdfunding event in history at the time of the sale.
ANT qualifies as a utility token under the regime of the Swiss regulator. That means ANT is designed to serve a specific purpose: to facilitate participation in Aragon’s governance technology, which exists to advance and protect Aragon’s stated mission.
The purpose of the token is to provide ANT Holders permissionless, trustless, and censorship-resistant decentralized governance participation in working towards the mission of the Aragon project.
As a technology, tokens can serve a range of purposes. Some tokens may be created and used as financial instruments, but ANT is not one of them. When utility tokens are manipulated to achieve profit-making ends, it can come at the expense of achieving a project’s social mission and result in regulatory enforcement actions.
Due to the ambitious mission and long-term vision of the Aragon Project, the treasury raised during the 2017 ICO has been carefully managed and paced out to provide the necessary years of runway for builders to deliver public infrastructure and revolutionize human organization. From delivering the first DAO framework, to securing 12B in TVL for leading projects like Lido and Decentraland, the Aragon treasury has been used by builders to create significant value for the industry.
Over time, due in part to the volatility of crypto markets and the long path to protocol-market fit in an ever-changing industry, the treasury outpaced the value accrued to ANT. While small market cap tokens suffered across the board, the original $25 million treasury appreciated significantly since 2017. The value of ANT did not keep pace with the value of the treasury behind the project. This opened a significant vulnerability, which Aragon both understood and prepared for.
51% attack attempted by “Risk Free Value” Raiders
Risk Free Value (RFV) Raiders, who have self-described themselves as The Vultures of Crypto, are a sophisticated, well-resourced, and coordinated group of actors that target crypto projects with an imbalance between the value of their token and treasury. Their goal is to target treasuries and manipulate the price of tokens for financial gain, at the expense of the organization’s mission. It’s important to note, large financial players, in this case Arca Capital Management, may collaborate with RFV Raiders to achieve their ends.
The Aragon treasury was a clear target, and came under a 51% attack by coordinated RFV Raiders in the Aragon DAO. This group of actors has been complicit in breaking down many DAOs and their communities, including Invictus DAO, Fei Protocol, Rome DAO, and Temple DAO. It is worth noting that one member of the group has been jailed for his involvement in the Mango DAO exploit.
Most recently this group led the financial takeover of Rook DAO, attacking the organization with social engineering tactics and dissolving the DAO and liquidating half the treasury for their financial benefit.
The attack on the Aragon DAO began on May 2, when there was a sudden and suspicious uptick in Aragon Discord server activity. Moderators observed signs that this activity was coordinated; an observation that was validated through further investigation. A review of Discord analytics determined:
- The majority of individuals engaged in this activity had joined the server less than 45 days earlier (for context, the server has been in operation for over 5 years);
- Over that time period, the group posted less than 1 message per day (0.8);
- On May 2, the group posted 69 messages within hours.
Based on these observations, moderators took action to temporarily ban a small group of users who were engaging in harassment in the channel and contributor DMs. On Twitter, individuals associated with the Rook DAO takeover attempted to use the temporary ban to generate a movement against Aragon.
Onchain data shows that, in the months leading up to this attack, Arca and the other RFV Raiders were actively stockpiling ANT. In the days following the attack, the Raiders began rapidly wrapping their tokens enabling them to reach a majority vote in the Aragon DAO. In the absence of clarity into the Aragon Association’s position, ANT could be misunderstood by token holders as being a financial instrument, ultimately taking funds away from the builders pursuing Aragon’s mission.
An example of this lack of clarity is evident by members of this group advancing a platform on the Aragon forum seeking delegation to manipulate ANT as a financial instrument for financial profit, which the Association may not be in a position to uphold.
Foreseeing Risk, Pivoting Wisely
The Aragon Association foresaw this risk. It is the key reason it did not move its full treasury, $200 million, onchain all at once by the soft dates originally proposed. Aragon Project’s progressive decentralization is a process and there is no shortcut to decentralizing safely; doing so requires both proper economic incentives and mission-alignment.
The actions undertaken by Arca and the other “RFV Raiders” pose a number of risks to the safe governance of the Aragon DAO. These include: the legal risks to the utility classification of ANT, the violation of Swiss association law, as well as the legal stewardship obligations of the Aragon Association to the treasury.
This said, the Aragon Association deployed a decentralized autonomous organization, the Aragon DAO, that is completely independent from the Aragon Association. The Aragon DAO is governed by wrapped ANT (wANT) Holders. The Aragon Association cannot intervene in the Aragon DAO. The Aragon DAO will continue to exist in the Aragon ecosystem and remain governed by wANT Holders.
While the Aragon Association foresaw the risk of a 51% attack, the breadth and depth of the coordinated attack is both a wake-up call and a pivotal learning experience. Progressive decentralization is an ongoing process and we are committed to moving the treasury into the hands of ANT holders when it’s safe, and for the purpose of advancing the project’s mission. That said, these events have confirmed our conviction that no project can rush towards the ideals of decentralization at the expense of security.
Introducing the Aragon Grants Program: Who it’s for, How it works
We are announcing a grants program to continue making treasury funds available to builders who are launching DAOs, dApps, and plugins on the new Aragon tech stack.
The Aragon DAO is unstoppable. The funds held by the DAO will remain onchain and are governed by wrapped ANT (wANT) Holders. Rather than categorically refusing to send more funds to the DAO deployment, Aragon Association has clarified its intentions for further transfers of funds: distributing grants for builders. Aragon Association plans to continue to support this DAO to further the growth of the Aragon ecosystem in a way that ensures mission-alignment. A grants program is one step toward kicking off the growth flywheel of builders to extend the functionalities of Aragon OSx, as outlined in the Strategy to Become a Governance Hyperstructure.
The AA will keep following a gradual transfer approach, making sure it aligns with the mission of the project. This approach creates a more balanced incentive structure and better alignment with the Aragon Association’s purpose.
Details on the grant program, criteria, and process will be coming soon. The aim is to seed the next wave of unique DAOs, governance experimentation, and aragonOSx plugins.
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