On November 2, 2023, a remarkable event occurred in the cryptocurrency world. DAO solution provider Aragon officially announced its dissolution.
Aragon decided to offer its ANT (Aragon Network Token) holders an important option, which is to exchange 86,000 ETH for ANT at a price of 0.0025376 ETH/ANT (about 4.55 USDT, which is not much different from the current market price). The rest of the funds will be used for product development.
Aragon is one of the earliest DAO projects in the Ethereum ecosystem. It successfully conducted an ICO fundraising in May 2017, raising 275,000 ETH, which was the fourth largest ICO in history at the time. Aragon provides a set of templates that enable users to launch their own DAOs in minutes and use modular applications to further customize their DAOs.
Aragon's management team, Aragon Association, said that due to legal restrictions, especially the regulatory risks caused by token speculation and market manipulation, the decision to dissolve could not be submitted through a public vote, but they considered the opinions of the Aragon Governance Forum. However, Aragon's decision to dissolve seems to have been hinted at a long time ago.
Financial opacity sparks controversy
Just last month, members of the Aragon DAO put forward a proposal requiring the project to update and publicly disclose its $160 million financials or they would take legal action.
Tensions between investors and the Aragon Association date back to June 2022, when Aragon investors voted to transfer control of $160 million in funds to a voting DAO by November 2022. However, the funds have not been transferred, and the Aragon Association has stopped publishing transparency reports on financial spending information. Members of the Aragon DAO said they were frustrated by the Aragon Association's opacity and asked the organization to provide an explanation.
Aragon is not the first project to be questioned for its financial opacity. As early as January 2021, Jorge Izquierdo, CEO of Aragon’s parent company, announced his resignation and tweeted: “I resigned as CEO of Aragon One. I am saddened by the problems in the team. Considering that our proposal will not be implemented, I don’t think I can do better.”
A week before Jorge resigned, 12 members including John Light, who was responsible for autonomous business, announced their departure from the team. John published an open letter on GitHub, asking the Aragon Association to disclose its financial and meeting records for external supervision. In addition, he also called on ANT token holders to participate in community governance.
Canceling token voting rights raises potential risks
In May this year, the Aragon Association issued a statement saying that Aragon DAO was attacked by a 51% attack by a coordinated group called "Risk-Free Value (RFV) Attackers", which was related to the dissolution and liquidation of Rook DAO. This group includes a large asset management company, Arca Capital Management. There is evidence that Arca's participation is to obtain economic benefits from Aragon, so the Aragon Association decided to cancel the voting rights of ANT token holders in response to the "51% attack" launched by investors such as Arca.
In response, Jeff Dorman, chief investment officer of cryptocurrency 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 staking tokens drives active participation by token holders.”
In addition, in response to the Aragon Association's claim that "gangs" such as Arca have destroyed many DAOs and their communities, Arca stated that it has not attempted to dissolve Aragon, and that Arca has not invested in Invictus, Rook, Rome or Temple. The Fei Labs team proposed the dissolution on its own, and the Rook team initially proposed to split off the "Incubation DAO". These are all part of the token holders' efforts to achieve the best results.
Regardless of the facts, it is an indisputable fact that Aragon has revoked the voting rights of ANT token holders, and the relationship between the community and the team has become increasingly tense.
Sell or Dissolve
According to screenshots of conversations between an Arca employee and other activists, the Aragon Association considered selling itself to an undisclosed bidder for an unknown price in June 2023.
Screenshots from June 12, 2023 show that the proposed acquisition is expected to take several weeks and the transaction price will be above book value. If the deal does not go through, Aragon plans to re-evaluate the activists' proposal. The screenshots are from a 24-page investigative report on the Aragon Association written by crypto trading firm Patagon Management LLC, which accuses the Aragon Association of years of mistakes, including squandering $180 million worth of crypto assets, and questions whether the organization has complied with Swiss non-profit laws.
While the report did not detail the status of any sale talks, it suggests activists have explored a variety of mechanisms for handling ANT redemptions.
However, in the end, Aragon chose to dissolve and use the treasury funds for the redemption of ANT tokens, and this project, which was once a pioneer in the DAO field, came to an end.
Regarding the current market environment, this incident seems to have made people rethink a controversial issue: Do people need a truly decentralized and community-autonomous "warrior", or a "dragon" with highly centralized decision-making power and irrelevant ideas?