DAO Legal Battle: Aragon vs Autark Community Grant Dispute

When it comes to the growing DAO movement, virtually all of our coverage has been sunshine and rainbows. With the rare exception of DigixDAO, we’ve yet to see any major contention when it comes to distributed communities fighting for a common goal. However, we just saw one of the first major DAO disagreements in the form of a legal dispute between Aragon – a leading DAO provider – and Autark, a project building coordination tools for digital cooperatives.

1/ Today, we disclosed facts about the operations of @AragonProject: https://t.co/31fuADKycJ

— Autark (@autarklabs) May 22, 2020

This post sparked a wider response from the Aragon Foundation themselves, namely in the form of a thread from Aragon’s co-founder Luis Cuende.

For those who don’t know, the Aragon Association has taken legal action against Autark…

This is ugly, but they threatened to sue the Association and claimed a whooping amount of $800k. Read more 👇https://t.co/Dt9Z0Rjjki

— Luis Cuende 🦅 (@licuende) May 22, 2020

 

What’s interesting about this story is that Autark were once core contributors to Aragon, with the project primarily being funded by Aragon’s ecosystem grant program. Now, we’ve seen quite conflicting stories and feel it’s our duty to share both sides.

What’s To Know?

Back in 2018, Aragon launched a program called Flock – a grants funnel to reward Aragon contributors with capital to build out extensions and tools to further the Aragon ecosystem. Aragon has stated that some of the more notable outcomes of this program include projects like 1Hive and Aragon Mesh.

Autark was one of those grant recipients, originally receiving funding to the tune of 390k DAI and 350k ANT (vested over 4 years) via AGP-19.

However, Flock was ultimately disbanded for a suite of reasons including lack of accountability, high coordination costs, and difficult KPIs to monitor success. Looking at this from both sides, it’s understandable that the Aragon Foundation would cut the ties on a program that was spending such a vast amount of funding on initiatives – like Autark – which Aragon says has demonstrated little value to the existing ecosystem.

On the flip side, many of the grant recipients – like Autark – were entirely reliant on this project to keep the lights on. While all seemed to be going well when Autark applied (and passed a vote with an overwhelming majority) for their second grant – AGP-73 – it looks like this is where things get rocky.

Following the dissolution of Flock, Aragon stopped funding their preexisting grants, leaving a large sum of funding unallocated to Autark despite the passing of a vote which promised to do so. As stated in Autark’s article, the November 2019 and February 2020 payments from AGP-73 remain unpaid. Autark has stated that they have been in discussion with Aragon’s lawyers since January 2020, all of which was supposed to cumulate in a settlement. However, this past week Augur issued a lawsuit to terminate the settlement, thus propelling Autark to bring this case to the public to shine a light on what many are calling a stiff by Aragon.

Looking at this for the first time, the size of these grants is pretty significant. As stated in the AGP, Autark was set to receive 1.6M (yes million) Dai over the course of a year, split into 400k Dai each quarter. While my experience with grants is not deep whatsoever, these amounts are quite substantial, hence why tempers are likely so high on both ends.

Upon chatting with other members of the community, many have noted that this not the first time grant recipients have been “stiffed” causing many to question Aragon’s commitment to seed their community.

To that end, this story reaches an interesting tipping point when it comes to how this dispute will be resolved.

But, before we continue I would like to note that this is my first time being exposed to many of the individuals involved in this case. My intention with this article is to provide information from both sides based on what is currently public. Please note that none of the above information has been validated in a court of law and that both sides have presented what they believe to be the truth of the situation.

Enter Aragon Court?

Perhaps the most exciting addition to the Aragon stack in the last year was the deployment of Aragon Court – a decentralized dispute portal in which any Aragon DAO can file a claim for governance from ANJ tokenholders. The cool thing about Aragon is that this is just one of the many exciting features (many of which have yet to be released) that shows why it is the industry-leading DAO platform. Taking this a step further, it’s products like Aragon Court that Flock was looking to incentivize.

Now that the story has gone public, community members are calling to have the issue with Autark resolved directly in Aragon Court, using ANJ holders (and the wider community) as a proxy for the dispute resolution.

this doesnt answer why the AF chose to escalate instead of de-escalating to your Aragon Court for a DAO-like resolution.

why did you build Aragon Court, if not for community funding disputes? you’ve basically proven there’s no use case since you won’t use it yourself.

— Eva Beylin (@evabeylin) May 22, 2020

While the Aragon Foundation has voiced that this is a special case in which legal action *should* be resolved in a tangible jurisdiction (in this case Switzerland) it does open up an interesting can of worms. How involved does the wider Ethereum community deserve to be in this dispute?

@licuende what agreement did they breach? can you post a copy of the agreement? or was this some kind of oral agreement or “social contract”?

can you post a copy of complaint filed in court?

— _gabrielShapir0 (@lex_node) May 22, 2020

While it’s far too early to answer any of these questions, this development poises a really fascinating discussion around DAO resolution. As someone actively contributing to wider protocol governance, this topic is increasingly interesting to us as a potential protocol politician.

To stay up on the case, be sure to follow both Aragon and Autark on Twitter. We’ll be sure to update you on any new developments as they unfold!