The difference now is that it’s indisputable. The biggest and most well-funded DAOs in the ecosystem are struggling. These projects are unable to adapt over time, and even after spending millions of dollars attempting to do so, end up putting their users at risk while stagnating slowly to death.

The good thing is, we can finally move on and we have a path forward. Even more, we have no choice—governance isn’t optional.

At Aragon, we’ve experienced this firsthand. Our own challenges, alongside those of Compound and Arbitrum, amplify what we’ve learned and validated all to be true. Monolithic tools that are widely used today need to be replaced with modular ones. They know, we know, and the industry is now starting to wake up to this urgent reality.

We’ve spent the last 3 years consulting with leading industry projects like Lido, Polygon, Mode, Curve, and many more, to begin fixing that. New tooling, at the very least, must allow for:

1. The best decisions to be made by the best people: allowing organizations to tailor decision-making processes to their unique goals, risks, communities, stakeholders, and internal cultures—overcoming one-size-fits-all governance models that slow down decision-making and put projects at risk.

2. Future-proof and adaptable organizations: A modular framework enables organizations to more safely and affordably adapt over time, evolving their governance structures as their needs change—resolving the problem of DAOs becoming entrenched in their existing tools, struggling to upgrade them over time. Every organization must adapt over time, or die.

3. Network effects that benefit everyone: By allowing for the reusing of existing components, a modular framework reduces the need for custom development, allows a project’s resources to be redirected back toward the thing they do best—delivering on their own value proposition—and reduces the security risk surface of newly introduced code. No more forking and re-writing, just installing.

One-size-fits-all governance doesn’t work

Organizations are groups of people organized around a shared purpose. Governance is needed when there is division in opinions, beliefs, or preferences held by its members about actions to take in realizing this purpose. How well they resolve these divisions are ultimately what determines their success.

Whether it’s a web2 startup, a non-profit foundation, or a parliamentary democracy, we know different kinds of organizations need different kinds of governance.

The next generation of organizations are moving from enforcement of their governance by legal frameworks to automatic enforcement codified into smart contracts. However, this new software is significantly less mature than the legal frameworks of their traditional counterparts. These new orgs are still facing the same tangled mess of human (and non-human) actors with their own diverse interests.

Onchain governance is enabled by the capabilities of smart contracts, and not the other way around. When the industry moved toward a more representational form of governance, it’s not surprising that vanilla delegate-based token voting became the de facto implementation; it was simply easier to extend ERC20 governance tokens to have a delegate function than build a complex system from the ground up.

That doesn’t mean that all organizations will benefit from this implementation. To the contrary, these existing governance frameworks lack the flexibility to account for the complex internal realities of each project. Just as one-size-fits-all governance doesn’t work for traditional organizations, it won’t work for onchain organizations.

Modular systems are built to embrace the diversity of organizational forms. They are even more important in a maturing industry where change happens fast and often, making the ability to securely adapt imperative.

The hidden cost of monoliths

The leading frameworks for onchain governance are modular from the perspective of smart contract developers who copy paste code from Governor or fork their favorite projects. They aren’t, however, modular for this second generation of DAOs using them, who ultimately end up bearing the costs and risks of their inflexibility.

Customizing these frameworks requires projects to hire developers to modify the contracts and pay for audits. Millions of dollars can be spent annually for a single DAO’s maintenance—going to security and custom tooling services. This diverts resources and attention away from a project's core development activities.

For pragmatic founders leading some of the most promising new projects in the industry, these high costs make governance an afterthought—they often don’t even know where to start. It’s an especially difficult first step because they know they could be stuck with their choices.

Smart contracts are "sticky" with high migration costs. But, unlike the smart contracts they’re being built on, organizations aren’t immutable.

As an organization matures and its market evolves, the complexity of stakeholder groups and internal functions grows. Their governance needs change.

The ongoing costs of maintaining one-off, customized monoliths accumulate over time. These costs do not accumulate on the tooling provider; they accumulate directly on the project to the benefit of the tooling provider. Maintenance effectively turns into a money pit.

Even worse is the added security risk introduced by code changes. This is the exact reason why Offchain Labs recently halted the myriad of proposed upgrades in the Arbitrum DAO.

Projects wouldn't have to take on the full burden themselves if they could leverage the network effects of shared interoperable components built by an evergrowing community of developers. They would be more readily able to tap into these network effects if the tools they’ve chosen were built with this in mind from the start.

Aragon OSx: permissions as a primitive

The marketing team doesn't usually need to be an admin on your GitHub, just like the CFO doesn't need the Twitter password or banks shouldn't (in theory) be allowed to freeze your assets.

It’s no different onchain. Every action—defined by a solidity function signature—can be guarded according to the rules of an underlying permission management system.

Most onchain governance frameworks have some system for handling access control - it’s just a matter of how flexible and interoperable they are with other primitives. For example, Governor’s governance primitive is delegated token voting, but developers can extend it by adding an access control system directly to the Governor. Safe’s governance primitive is a multisig, but developers can add modules that have their own role system.

Aragon OSx flipped this on its head by making permissions themselves its core primitive. This allows us to put an organization and its assets at the center, and push the governance to the edges. An organization may in the future no longer need token voting at all, but they will always need permissions.

For this reason, we expect a gradual convergence towards a common permission management standard, effectively making Aragon OSx the hyperstructure for onchain governance.

Plugins: making “governance legos” a reality

The flexibility of OSx permissions is derived from their simplicity and standardization. They delimit who can execute actions.

Permissions are granted or revoked to any Ethereum address, not simply “people” controlling externally owned accounts (EOAs). Namely, permissions can be granted to an OSx plugin address. Plugins contain governance logic inside of reusable contracts. Each plugin is limited in scope, for example in a token voting plugin or multisig plugin.

Plugins are built to be atomic, with single-purpose logic that is easier to reason about and compose with one another, rather than having to detangle it from a large monolithic architecture. This allows organizations to combine multiple smaller interoperable pieces, mixing and matching them to compose entirely new governance designs uniquely suited to their needs and adapt as their project evolves.

Plugins can be easily deployed by our factory contracts and installed without writing a single line of code—organizations simply need to grant the right permissions directly to the plugin. This approach reduces the risk of error and security vulnerabilities inherent in custom implementations. If a new plugin ends up needing to be built, they will only have to audit the code that is necessary.

Modular governance patterns

Modularity is the antidote to the limitations of one-size-fits-all governance. When the pieces of modular systems come together, the whole becomes greater than the sum of its parts, unlocking a new realm of solutions.

Our approach to modularity is informed by conversations with countless projects and learning from their needs. Even though every project needs something unique, there are always patterns.

Flexible governance processes

Governance processes are inherently complex, involving multiple stages that should work together more seamlessly. In the current state of onchain governance, these workflows often depend on disconnected tools like Discourse for discussions, Snapshot for offchain signalling, and an onchain voting mechanism for execution. These fragmented handoffs are inefficient and error-prone.

To address these challenges, our modular framework is based on three constructs - Processes, Stages, and Bodies:

• Processes represent distinct governance activities, or “proposal types”, required to execute specific tasks or "actions." A DAO can have any number of processes.

• Stages are the sequential phases within a process that a proposal must progress through to be approved and executed. A process can have any number of stages.

• Bodies are plugins that evaluate and update the status of stages based on their governance logic. A stage can have any number of bodies.

By codifying Processes, Stages, and Bodies into a flexible, audited plugin, we have generalized the need for governance to take place over time, supporting any extension of this pattern, without requiring custom development or auditing. This gets us flexible and customized governance setups with all the benefits of being onchain but in a more secure, efficient, and scalable way.

Optimistic governance

Optimistic governance allows proposals to pass by default unless actively vetoed. First pioneered by Aragon with Govern and Court in 2021, it is now a native feature of any governance process built on OSx. Any body can be configured as a vetoer at any stage of any governance process.

By “optimistically” assuming success unless vetoed, optimistic governance significantly reduces governance overhead. Stakeholders don’t need to participate in every decision. Routine or non-controversial proposals can pass with minimal oversight, freeing token holders, busy board members, or unrelated teams from constant participation. This approach prevents voter fatigue while still giving oversight when necessary.

Unlike the more common all-or-nothing token voting of monolithic frameworks, which burdens voters with every decision, optimistic governance lets organizations stay focused and safely ship.

Proposal types

Not every decision—financial, technical, or strategic—should follow the same process. Modular governance allows each to be handled separately, with processes granted only the onchain permissions they need, eliminating reliance on trusted intermediaries and offchain bureaucracy to manage the different decisions an organization needs to make.

By granting different permissions to different processes, a single DAO can achieve true "separation of powers," where different bodies are limited to participating in the processes they are responsible for and no other body can override them (unless they are specifically given permission to!). For example, token holders might be able to vote to add or remove members of a council that governs via a multisig.

This separation of powers introduces checks and balances, addressing the flaws of monolithic, token-based systems like Governor, where a super-admin acts as god.

It’s also more efficient. For instance, zkSync’s deployment of three separate DAOs for different governance processes triples their maintenance costs and complexity. With proposal types, these processes could be consolidated into just a single DAO deployment.

Adaptable governance

The pace of our industry is notoriously relentless. Regulatory uncertainty, technological advancements, and evolving stakeholder expectations are constants—not exceptions. To be successful, onchain organizations must adapt.

Modular governance provides the tools for this adaptability by breaking systems into discrete, interchangeable components. Organizations can install, uninstall, and update individual plugins without overhauling their entire DAO. Proven components can often be reused.

This approach builds on three key principles:

• Encapsulation: Modules handle distinct functions, preventing changes in one from disrupting others.

• Interoperability: Standardized interfaces ensure seamless integration of new components.

• Reusability: Components gain trust and over time, accrue “lindy” as they are repeatedly used in different contexts.

Aragon DAOs, unless configured otherwise, are autonomous. This ensures power remains fully within the organization itself, even during upgrades, without reliance on external development teams. Compare this to monolithic systems like Governor. For instance, a recent Arbitrum DAO proposal to upgrade contracts came to a halt amidst a debate around the fact that it wasn’t an upgrade at all, but a deployment of completely new DAOs. This isn’t a new or rare phenomenon and has happened to several large DAOs recently. These debates and the ensuing risks will only become more common as DAOs mature and require change.

A modular design could have mitigated these challenges, reducing costs and risks associated with the changes. Adaptable governance, powered by modularity, will be what separates organizations that are surviving today from those that will be thriving tomorrow.

Conclusion: The modular governance imperative

Monolithic governance frameworks are putting at risk the very things they are intended to govern – revolutionary DeFi protocols, public goods funding protocols, Ethereum scaling solutions, and all the other exciting things that we are in this industry for.

Despite the clear benefits of modular governance, many projects remain tethered to monolithic tools and extractive providers. Why? The issue isn’t talent—governance professionals and DAO builders are eager to innovate. Instead, they’re constrained by laborious decision-making processes and rigid systems that aren’t appropriate for the actual problems they’re trying to solve. It’s a difficult loop to innovate your way out of. Delegates with no skin in the game and tooling providers have incentives to reinforce the status quo of unchecked vanilla delegate voting, yet are themselves the decision makers.

But things are changing. Governance experts and communities are recognizing the need for modular systems that unlock them to do better work and set their organizations up for success.

Aragon OSx is the framework to make this shift, fully onchain and trust-minimized. With flexible governance patterns like Processes, Stages, and Bodies; optimistic governance at any Stage to reduce overhead; permissioned proposal types for true separation of powers; and adaptable frameworks that scale with organizational needs, OSx organizations are scalable, efficient, and future-proof in a rapidly changing industry.

Since 2017, Aragon’s mission has been to prove that onchain governance can help organizations reach their goal. The same conclusion is reached, again and again: the future of governance is modular.

Stay tuned as we have some huge updates coming in the next few quarters that will further unleash the power of modular governance.

We’ll be using DVT and teaming up with Obol and Diva to provide our team members with the support and education they need to succeed.

We hope organizations across web3 follow suit and join us in decentralizing Ethereum, the infrastructure we rely on to build our protocol and products.

superphiz.eth

@superphiz

I am a huge #Stakefromhome advocate and hope this @AragonProject internal program gets picked up by all of the organisations in web3! We all have a duty to help decentralizing Ethereum, the infrastructure we rely on to build our protocol and products.

11

10:27 PM • Feb 7, 2024

Why Aragon is #TeamStaking

Help secure the future of DAOs. DAOs rely on the decentralization of the underlying network they are built on. Without an unstoppable network, DAOs themselves cannot be unstoppable. Decentralization ensures that the network is censorship and capture resistant. If there is one chink in the armor, it will eventually be exploited.

Decentralize the Aragon infrastructure. Having our entire team running their own nodes builds capacity to run certain pieces of our own infrastructure—whether that be running a backend or using a long latency service to decouple vote actions from their timestamps, ensuring voter privacy.

Learn and have fun. The best way to learn how Ethereum infrastructure works is by participating in it. Team staking is also a great opportunity for team-building. Running a cluster is one way we can work together to achieve a common goal!

"Staking isn't only about maximizing revenue. Revenue is part of the reward for providing value to the network. Ethereum has put a lot of effort into designing a system that, unlike other blockchains, can be made extremely resilient to interferences, but it's up to us to take advantage of these possibilities and make Ethereum an uncensorable, unstoppable network."

- Pol Lanski, COO of Dappnode

How #TeamStaking works and how your organization can replicate it

We hope organizations across web3 follow suit and join us in making Ethereum more resilient. Here’s how the program works:

1. Decrease the cost of Dappnodes for our contributors by buying in bulk and subsidizing a portion of the costs. If needed, contributors can pay back the cost over time.

2. Provide educational workshops and 1-on-1 support for stakers with providers such as Obol and Diva.

3. Use DVT technology for #TeamStaking, so that it's accessible to everyone. It also protects your contributors against single nodes failing or acting maliciously. With Obol, you can create clusters and decrease the required bond. Or you can remove the bond all together and run validators through Lido or Ether.fi to scale and diversify their operator sets. Soon, Diva will launch on mainnet and this self-bond will decrease to 1 ETH.

“Home staking is at the heart of Ethereum decentralization and something we focus on enabling with DVT. We are very excited to be supporting this initiative with Aragon, and we hope that this is the first of many that participate in Team Staking.”

- Brett Li, Chief Growth Officer of Obol

#TeamStaking powered by Dappnode, Diva, and Obol

Dappnode makes it easy and accessible for anyone to run a node from home. Encouraging our teams to stake from home not only adds more nodes, but increases the global distribution of the network. The more individual nodes we run all over the world, the more resilient the blockchain is.

Distributed Validator Technology (DVT) is what makes team staking possible. This makes running a validator more accessible and less risky, because responsibilities are split amongst a group of computers rather than just one. In our case, we’ll be forming groups of Aragon team members to join forces and run a validator together. Using tools like Obol and Diva, you don’t need to have 32 ETH to run a validator—you can pool your ETH with others.

Obol’s Charon is a DVT middleware, enabling one or many Ethereum validators to be run by a cluster of nodes. Using splitter smart contracts, node operators can divide up the initial 32ETH requirement and also the staking rewards earned. Protocols like Lido and Ether.fi are integrating Obol DVT to scale and diversify their operator set.

Diva is a liquid staking protocol using distributed validator technology. It is resilient and trust-minimized, because keys are split between computers rather than a single individual holding them. We’ll be testing Diva protocol on testnet for now, and preparing our teams to participate in the mainnet launch.

On top of running our own validators, we will also choose minority Consensus and Execution clients. Client diversity is important because running execution and consensus clients that do not have a majority share can help mitigate severe risks for the network, such as the consensus layer not being able to finalize, or forking and finalizing incorrectly.

“We are thrilled to have been chosen to be part of Aragon's #TeamStaking initiative and have the chance to support them on something we truly believe is at the core of Ethereum itself and fully aligns with Diva Staking's foundational values. We encourage more teams to follow suit and join the movement to make every DAO, every team, and every community more and more decentralized.

- Raul Calvo, CEO of Diva

Gather your own team and start staking

We hope you’ll join us in helping to decentralize and secure Ethereum. Reach out to Dappnode to start team staking in your organization!

Our mission stands: to enable onchain organizations to experiment with governance at the speed of software.

At its essence, we see governance as the process of making and enforcing binding decisions. In a traditional political jurisdiction, these decisions are codified into law and enforced by a trusted system – often using force. Our vision is a world where humans can coordinate by the rule of code, reducing the need for enforcement through the threat of violence.

Admittedly we are far from that vision and onchain organizations face many challenges. Their needs are diverse, technically complex, and mistakes can be catastrophic. And, being on the cutting edge, they need to change constantly to survive. We as tooling providers need to stretch beyond serving the existing needs that DAOs have today, by building infrastructure for them that is future-proof and meets the demands of tomorrow.

We joke that our mission is to enable governance at the speed of using software, not writing software! The speed at which governance models can adapt and evolve is a problem we are hungry to overcome. Aragon isn’t just here for a quick win, but for a fundamental shift in how humans govern.

Our new tech stack, Aragon OSx and Aragon App, is solving for these challenges and pushing our mission forward.

We, the Aragon X team, are laser-focused on the following initiatives for 2024:

1. Low/no cost onchain voting: DAOs are not only secured by smart contracts, but also by the participation of their members. It’s still too expensive to vote on mainnet, where most DAOs want to be deployed. We have to reduce the cost of voting onchain so that anyone can participate, even if mainnet gas prices rise.

There are multiple paths towards reducing voting costs and preserving the security of onchain transactions. One is to integrate blockchains that are specifically built for auditable and censorship-resistant voting at scale. The other is to integrate our Multichain Governance Plugin into the Aragon App, allowing voters to vote for a few cents on an L2 while allowing the DAO to live on an L1, and thus keeping the benefits of increased security and liquidity. Both of these options could allow for near zero gas costs and could be abstracted away for voters completely.

We as an industry need to stop taking shortcuts by simply moving actions that should be onchain, offchain. By moving voting offchain we erode the values that a blockchain offers and open the door for more censorship and manipulation, something blockchains and in particular Ethereum were created to reduce. If we can ship onchain voting at low or no cost, we can finally unlock huge potential for DAOs and their safety.

2. Modularize the UI (Aragon App): Currently there is no singular DAO platform UI that offers a performant human-friendly experience for experimenting with DAO governance. The DAO user experience today is a piecemeal experience fragmented across platforms – some things offchain, others onchain with “trusted” handoffs – often requiring coding experience.

Our plan is to hyper-modularize the Aragon App, enabling builders to launch a custom DAO without writing one line of code and interact with it all from one place. Any DAO should be able to:

1. Change its governance over time.

2. Have multi-stage proposals that move through multiple governing bodies.

3. Have multiple governing bodies participating in a proposal in parallel.

4. Define separate proposal types with their own governance processes and granularly defined permissions, allowing different processes to provide checks and balances that protect and secure the DAO.

We also aim to continue iterating on the permission management system of Aragon OSx and make it increasingly accessible to everyone in the Aragon App. We want to make it easier for DAOs to identify and change permissions down the road with the same granularity that they would if working directly with Aragon OSx contracts.

3. Custom DAO Services: DAOs have unique needs. When we talk to DAOs, rarely are two trying to overcome the same problem with the same solution. There are lots of considerations - anything from legal to organizational design to everything in between. And all of these decisions could have a material impact on their future. This is why we have begun DAO consultancy and development services. We already have a lot of interest and are building several custom DAOs for projects worth billions in TVL, and we intend to scale our abilities to ship more of these custom DAOs as demand increases, so don’t hesitate to reach out today!

4. Your DAO, Your Code: Right now, building custom DAO contracts and UIs are expensive in both cost and developer time. It’s an opportunity cost, when instead, projects could be focusing on what they do best - developing their own technology. That’s why we’re now offering a “build-it-yourself” custom development experience. It should be as cheap, fast, and maintenance-free as possible, so your devs can get back to working on your product.

To do so, we’ve launched a new clean and forkable UI for any project that wants to create a DAO with custom governance requirements beyond what currently exists in the industry, and we already have a few DAOs testing it out. One of these governance designs that is being implemented with the forkable UI is Optimistic Dual Governance, which gives key stakeholders a veto safeguard while allowing core teams to work efficiently. We’ll be sharing more about this soon, so stay tuned!

In short, by the end of 2024 your Aragon DAO is going to be extremely easy and cheap to launch and operate—no matter how complex of a governance design you have—all onchain, and all in one UI. It will be the end of using 5 or 6 tools and platforms to meet your needs.

This is just a taste of what we are working on in 2024, and we are excited to see what unfolds throughout the year!

If you have questions, some ideas to share, or want to follow along on this journey:

• Join us on X and Farcaster

• Subscribe to our weekly newsletter, The Eagle

• Introduce yourself in Discord