Aragon, which raised 275,000 ETH, officially dissolves. Did DAO governance still fall victim to human nature?

Aragon, With 275,000 ETH Raised, Officially Disbands Has Human Nature Undone DAO Governance Once Again?

Author: 0xAyA

On November 2nd, DAO solution provider Aragon officially announced its dissolution.

Aragon will provide 86,000 ETH to holders of its token ANT (Aragon Network Token) for the exchange of ANT, at an exchange rate of 0.0025376 ETH/ANT (approximately 4.55 USDT, which is not much different from the current market price). The remaining funds will be used for product development.

Aragon is one of the earliest DAO projects in the Ethereum ecosystem. In May 2017, it successfully held an ICO and raised 275,000 ETH, making it the fourth-largest ICO in history at that time. Aragon provides templates that allow users to launch their own DAOs within minutes and customize them further using modular applications.

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Aragon’s manager, Aragon Association, stated that due to legal restrictions, particularly regulatory risks caused by token speculation and market manipulation, the decision to dissolve cannot be subjected to a public vote. However, the opinions on Aragon’s governance forum were taken into consideration. Despite this, Aragon’s dissolution was not without signs.

Controversy over Financial Opacity

Just last month, members of the Aragon DAO launched a proposal demanding that the project update and disclose its financial status of 160 million US dollars, or else legal action will be taken.

The tense relationship between investors and the Aragon Association can be traced back to June 2022, when Aragon investors voted to transfer control over the project’s 160 million US dollars to voting-powered DAOs by November 2022. However, these funds have not been transferred, and the Aragon Association has ceased providing transparency reports on financial expenditures. Aragon DAO members expressed frustration with the lack of transparency from the Aragon Association and demanded answers from the organization.

Aragon is not the first to become a target of criticism due to financial opacity. In January 2021, Aragon’s parent company CEO, Jorge Izquierdo, announced his resignation and stated on Twitter: “I resigned as Aragon One CEO. I’m sorry about the issues the team faced, and considering our proposals won’t be executed, I don’t think I can do better anymore.”

A week before Jorge’s departure, 12 people, including John Light, responsible for the project’s autonomous operations, announced their departure. John published an open letter on Githup, calling for the Aragon Association to publicly disclose financial and meeting records for external supervision. Additionally, he called for ANT holders’ participation in community governance.

Cancelling Token Voting Rights, Planting the Seeds of Vulnerability

In May of this year, Aragon Association released a statement saying that the Aragon DAO had suffered a 51% attack from a group called the “Risk-Free Value (RFV) attackers,” which was related to the dissolution and liquidation of Rook DAO. This group includes a major asset management company, Arca Capital Management. Evidence suggests that Arca’s involvement was for economic gain from Aragon, so the Aragon Association will revoke voting rights for ANT token holders in response to the “51% attack” launched by investors such as Arca.

Responding to this, Jeff Dorman, Chief Investment Officer of the crypto hedge fund Arca, said in a blog post, “The narrative of a 51% attack is actually incorrect. We are token holders, and we want to use our tokens to participate in governance. Arca’s staked tokens promote active participation from token holders.”

Furthermore, addressing the claim made by the Aragon Association that Arca and others have disrupted many DAOs and their communities, Arca stated that they have not attempted to dissolve Aragon, and Arca has not invested in Invictus, Rook, Rome, or Temple. It was the Fei Labs team who proposed their own dissolution, and the Rook team initially proposed splitting the “Incubator DAO”. These were all efforts by token holders to seek the best outcomes.

Regardless of the facts, it is undeniable that Aragon has revoked voting rights for ANT token holders, leading to increasing tension between the community and the team.

Sell or Dissolve

According to screenshots of a conversation between an employee of investment firm Arca and other individuals, the Aragon Association considered selling itself to an undisclosed bidder for an unknown price in June.

The screenshot from June 12th shows that the proposed acquisition deal was expected to take a few weeks and the transaction price would be higher than book value. If the transaction did not succeed, Aragon planned to reevaluate the proposals from the individuals. This screenshot was taken from a 24-page investigative report on the Aragon Association written by crypto exchange company LianGuaitagon Management LLC, which accused the organization of years of mismanagement, including squandering $180 million worth of crypto assets and questioning whether the organization complied with Swiss non-profit laws.

The report did not provide details on the circumstances of any sales negotiations, but indicated that various mechanisms for redeeming ANT had been explored by the individuals.

However, Aragon ultimately decided to dissolve itself and use treasury funds to redeem the ANT tokens, putting an end to one of the earliest DAO experiments.

In today’s market, the DAO narrative seems to have been forgotten. And the long-debated question arises again: Do we need a true decentralized and community-governed “hero,” or a “villain” with highly centralized decision-making power masquerading as a champion of decentralization?

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