ADVERTISEMENT
Advertise with BNC

Aragon Price Analysis: Robust DAO infrastructure waiting for users

The native token of the Aragon platform, ANT has enjoyed excellent gains in 2019 backed by bullish Ethereum markets and a number of key improvements that has made its Dapp far more usable. User and active address activity remains low, however, suggesting the platform is not yet ready to support an ecosystem of Dapps.

Aragon is an Ethereum hosted decentralized application that lets anyone create and manage a Decentralized Autonomous Organization, or DAO. The platform lets users set up features for their DAO such as cap table management, token transfers, voting, role assignments, fundraising and accounting practices.

The Aragon manifesto outlines the project’s long term vision to utilize the power and security that will emerge from a post blockchain world of decentralized technologies. The Aragon platform will build organizational structures where “Sovereign individuals will be able to freely express themselves and transact with each other without any kind of intermediary exercising their unjustified power and oppressing them.”

Aragon’s altruistic vision, and long term value proposition to empower users to build new forms of community-driven organizations designed to usurp the centralized entities who control today’s digital economy, has attracted sizable venture and ICO funding.

Organizations like Facebook have a long history of user data leaks, and have business incentives to exploit their users. DAOs provide alternative organizational structures that are immediately more transparent, have fewer barriers to governance participation and make it easier for stakeholders to communicate directly with each other.

Each organization in Aragon functions as a set of smart contracts that define the organization’s stakeholders, and their associated rights and privileges within the organization. The contracts directly encode organizations their own permissions and ownership structures. There is no root operator involved in running Aragon DAOs.

Any subjective rights or considerations that cannot be programmed into smart contracts occur off-chain.

FA1

Aragon’s example of ‘organizations’ that may benefit from the DAO structure.

Conditions for voting can be set by individual DAOs, for example, a DAO which functions with its own ERC20 token (i.e. if Omisego decided to run as a DAO on Aragon) could allocate more voting power to addresses with larger native token holdings (i.e. OMG).

Aragon has a number of key features designed to improve the process of building and operating a DAO. They include:

  • Decentralized arbitration: Aragon has a decentralized court procedure that seeks to solve human-focused governance problems within DAOs. ANT holders have the right to vote on the rules that courts will abide by. The arbitration structure benefits from a network effect where the more ANT holders vote on a court design, the more robust it becomes.
  • Upgrading and flexibility: Aragon allows for modularity within a DAO’s smart contract transfer model. Different organizations may have different requirements for operations like payroll allocation (i.e. an extra layer of stakeholder verification via smart contract before final salary payments). Aragon has multiple functionalities within modules designed to cater for custom requirements. Aragon’s ecosystem has different apps that users can add to their DAOs such as community sentiment analytics tools.
  • Ease-of-Access: One of Aragon’s strengths in the DAO space is its usability. An operator does not need to have coding skills to build a smart contract based organization. Aragon has emerged as a leader for driving further DAO usage.

The ANT token is used for governance operations within the Aragon ecosystem. The tokens provide governance and access rights. Aragon has a total supply of 39,609,523 tokens. As per internal documentation, the ANT holdings of Aragon’s founders became fully vested on May 17th, 2019. This suggests that circulating supply now equates to total supply.

FA2

Within Aragon, community members within a DAO can perform an on-chain transaction to vote on questions or issues related to their chosen DAO, posted by the appointed leadership of the DAO.

FA3

Flow of ANT within Aragon.

The ANT token sale ICO collected roughly $25 million in 25 minutes in May 2017. It is the 22nd largest public fundraising event in history. The ANT was allocated to 2,403 unique buyers across 2916 transactions. After the ICO was completed the token began trading on the Bittrex and Liqui exchanges.

On the 17th of April 2019, Aragon released a significant network update in the form of Bella 0.7. It includes a new identity system that lets users add a readable name (tag) to an Ethereum address when viewed for the first time. The readable names are stored on devices to reduce the risk of deanonymization.

Bella 0.7 delivers a production-ready version of an Aragon mobile Dapp that lets users observe and manage organizational activity from their smartphones. The update also adds features for easier updates of apps built within Aragon, transactions with viewable progress, and a more straightforward payroll set up procedure. The update adds to Aragon’s value proposition as the ‘easy’ DOA building tool.

Aragon’s commitment to building transparent, community-driven organizations extends to its own treasury operations. They have committed to documenting quarterly transparency reports.

The transparency reports indicate that over the past (Q3 2017 to Q4 2018) 6 quarters, there has been a 14% increase in salary per quarter. They have also spent $1,130,997 on business expenses (payments to lawyers, laptops, etc) and $465,313 on event sponsorships and conference attendences. The project team gave out $1,118,277 worth of nest grants over the last year to support ecosystem building.

FA4

Current Aragon treasury holdings

The Aragon transparency report also describes the treasury’s crypto hedging practices. Aragon’s operators buy and sell out of ETH positions, and into primarily stablecoins (DAI) but also other crypto assets such as Decred (DCR) and Monero (XMR).

FA5

Despite significant and continued spending by the Aragon Association over the last year, they appear to maintain a strong reserve of both crypto and cash. If bullish market conditions continue, (ETH’s price has risen by over 100% since the 1st of January,) then this will add to the Aragon war chest and likely lead to more investment in development and promotion.

FA6

Source:https://public.tableau.com/profile/brett.sun#!/

The Aragon Network Token (ANT) represents a share of governance on Aragon. It grants voting rights on development proposals across the Aragon platform’s infrastructure. The amount of ANT you own determines the strength of your voting power.

There are signs that the current ANT governance model is dysfunctional. There are a number of issues that are perpetuated by a low voter turnout.The average participation rate in votes is 28.

A number of Aragon network proposal votes have been disrupted by individuals or small groups of large accounts injecting their allocations into the voting rounds and skewing the vote in favor of their preferred outcome but in a direction against the wishes of the wider community.

AGP42, part of the 2nd network-wide community vote, asked ANT holders who have governance rights for the platform, whether the Aragon association should “keep Aragon focused on Ethereum and not on Polkadot”. (Polkadot is a blockchain interoperability protocol).

The vote ended in a landslide “no” vote with almost 70% of allocated ANT tokens participating. However, the pattern of support for the respective outcomes suggests that true community sentiment may not have been reflected by the outcome.

The vote appeared to be close until a sudden surge of “no” votes towards the end of the voting round heavily skewed the results and led to a landslide victory for “no” voters.

FA7

It may have been a coincidence but the lead developers from Aragon did not want the proposal to pass (“yes”) and they stated this publicly. Development is primarily handled by an Aragon-dedicated team called Aragon One.

It appears that a number of smaller voters did vote “no” to the proposal suggesting a large base of the Aragon community agreed with the developer’s views. However, a few medium-sized voters, who may be ETH holders or base Ethereum ecosystem backers, appeared to heavily favor voting “yes” to the proposal.

In the end, a fair result may have been achieved, and one that reflected the wider view of the Aragon community. However, how it was achieved was non-transparent, appears to have been gamed and this creates uncertainty for the validity of other Aragon vote results.

Dapp Usage numbers

Dapp ranker Stateofthedapps tracks the main Aragon smart contracts. It ranks Aragon as the 2nd most popular DAO based Dapp in the platform blockchain ecosystem, and the 50th most popular overall Dapp.

FA8

Over the last month, it has averaged a low ~18 active users a day and 45 transactions a day. The fact that Aragon is the most popular DAO focused Dapp in the space is indicative of the emergant nature of blockchain-based governance solutions.

The DAO space has been given a boost by the release and positive market reaction to the Moloch DAO, which was launched on the Ethereum mainnet and acts as a democratic Ethereum development. Alternatives to Aragon in the DOA building space include DAOstack and Colony.

There are currently 539 DAOs built on Aragon, an impressive number. Only a small portion of these DAOs are active, however. In the week of May 16-23rd, the number of daily active DAOs ranged between 2-15.

FA9

The cost of deploying a DAO on Aragon is relatively cheap, ranging between 0.01-0.005 ETH from 04/01/2019 to 05/23/2019 (or between ~USD 2.45 to ~USD 1.23 in today’s ETH/USD prices). This pattern suggests many DAOs built on Aragon have been experiments, as opposed to tangible organizations with a real need for decentralized governance. Daily votes cast has ranged between 2-49 in the last week.

Some tangible organizations have used Aragon’s solutions to build DAOs and manage decentralized voting systems. Space Decentral is a decentralized autonomous space agency that runs on Aragon, which leverages distributed ledger technology to promote the push for space exploration with global citizens in control.

Space Decentral leader, Yalda Mousaviania, said Aragon was chosen because of the “air of authenticity and the transparency of the project.” She also manages and runs Autarky, a team that creates project management support tools.

Ethereum liquidity protocol solution the Kyber Network, recently trialed the Aragon platform to run a test community vote for the soon to be released Kyber DAO. The Kyber DAO will let the Kyber Network community participate in determining how treasury funds should be allocated to new projects.

Network activity

Derived from the NVT ratio, the NVT signal is a responsive blockchain valuation metric developed by Willy Woo and Dmitriy Kalichkin.

Crypto markets are prone to bubbles of speculative purchasing that don’t reflect underlying network fundamentals. The NVT signal provides insight into what stage of this price cycle a token may be at.

A high NVT signal is indicative of a network that is going through one of these bubble periods and may move towards a position of becoming overbought/overvalued, as the market’s speculative momentum slows.

FA10

An objective observation of the ANT NVT signal leans bullish. Since mid-December 2018, the NVT signal of ANT has begun steadily rising upwards backed by strong price gains for the token. The price of the token has risen ~92% since the NVT signal appeared to bottom out on December 16th, 2018.

There appears to have been enough of an increase in on-chain volume activity to keep a lid on the rising NVT signal and keep it well below historically indicated oversold inflection points. In 2019, Aragon has been applauded by members of the Ethereum community for making it possible to build user-friendly Dapps that shield users from clunky blockchain interactions that detract from the user experience.

This excellent thread from Aragon dev Brett Sun, post Bella 0.7, describes the operations in fitting a user -facing Aragon client in front of a network of smart contracts, and how Aragon’s devs have attempted to do this seamlessly with efficient UI.

While user numbers are low and the demand to build DAOs may be lacking, fundamental support for price gains may continue thanks to the impressive work behind the Aragon Dapp and platform,

PMR signal

Metcalfe’s law is a measure of the connections in a network, as established by Robert Metcalfe, the founder of Ethernet. It has subsequently been used to analyze the true value of network-based financial products like Facebook and Bitcoin. By comparing it to price, it can provide a useful tool to assess whether a token is over or undervalued.

It is also a more straightforward metric to assess when compared to on-chain transaction volume, which can be challenging to measure accurately in USD terms. Addresses are measured as the number of unique sending and receiving addresses participating in transactions daily.

FA11

The PMR signal of Aragon has been historically high and ranged between 6-9 points for most of its existence. This suggests that most of its value is speculative and not driven by tangible user activity and network effects. PMR at this stage is not a useful indicator for future price movements.

In the Brett Sun thread, he describes an Aragon plan to “build the underlying nodes first, then figure out how to incentivize interactions to build network effects.” Essentially a ‘build it, and let them come approach’. As such it may be a while before Aragon is able to generate network effects because of the immature nature of the DAO building space.

Turning to developer activity, Aragon has 75 repos on GitHub with core client activity on a repo titled ‘aragon-cli’, other active repos include the ‘aragon-apps’ and ‘aragonOS’ repos.

Most coins use Github as their open development platform, where files are saved in folders called "repositories," or "repos," and changes to these files are recorded with "commits," which save a record of what changes were made, when, and by who. Although commits represent quantity and not necessarily quality, a higher number of commits can signify higher dev activity and interest.

FA12

Commit activity within the core DASH repo was consistent throughout 2018 with a pick-up in activity beginning in January 2019.

Exchanges and Trading Activity

FA13

The most popular trading option for ANT is BTC with the pair handling close to 72% of daily trading volumes. The second most popular market is the ANT/ETH pair. Together the top two pairs make up over 99% of daily trading volume. The ANT pair is the next most popular. Fiat transactions with USD are also available in Euro and Korean Won fiat options. The USD value of daily volume of the entire ANT trading market is ~USD 12,000.

FA14

A mix of exchanges control the ANT trading ecosystem, with the top 5 pairs spread across 5 exchanges. The ANT/BTC market on Bittrex is the most liquid and active market in the ecosystem. ANT is also tradeable on exchanges such as Bancor and Bitfinex.

Technical analysis

Moving Averages and Price Momentum

On the 1D chart, ANT has followed a negative linear price trend with a Pearson’s R correlation between time and price of ~0.85 (not shown), which allowed a death cross to persist since June 2018. Since early-February 2019, ANT has seen a ~100% surge, which has price currently sitting near $0.70. However, despite the surge, a golden cross has yet to occur with price currently sitting above the 50 day EMA, but beneath the 200 day EMA.

TA1

On the 1D chart, ANT has closely followed Fibonacci retracement levels during this uptrend. Recently, price bounced off of the 0.786 Fibonacci level of $0.64, which loosely coincides with the 50 day EMA. Thus, despite recent weakness, ANT may have solid support to buoy price in the near term.

TA2

Lastly, on the 1D chart, the volume flow indicator (VFI) is still above 0 and trending upward. If the VFI can maintain this positive trend, price is more likely to bounce off the aforementioned key support levels before moving higher.

TA3

Ichimoku Clouds with Relative Strength Indicator (RSI)

The Ichimoku Cloud uses four metrics to determine if a trend exists; the current price in relation to the Cloud, the color of the Cloud (red for bearish, green for bullish), the Tenkan (T) and Kijun (K) cross, Lagging Span (Chikou), and Senkou Span (A & B).

The status of the current Cloud metrics on the 1D frame with singled settings (10/30/60/30) for quicker signals are bullish: price is above the Cloud, Cloud is bullish, the TK cross is bullish, and the Lagging Span is above Cloud and price.

A traditional long entry would occur with a price break above the Cloud, known as a Kumo breakout, with price holding above the Cloud. From there, the trader would use either the Tenkan, Kijun, or Senkou A as their trailing stop.

Price completed a Kumo breakout at the end-March 2019 and has persisted since, despite periodic retests of Cloud support. Currently, price has retested Cloud support of $0.65, and has held to-date, but looks primed to retest once more in the near term. Furthermore, the RSI has been trending lower since early-April, which reinforces the declining sentiment.

However, there are a few positive factors for ANT, including:

  1. VFI is still in the bulls’ favor
  2. Cloud support has held to to-date
  3. Cloud support coincides with 50 day EMA and 0.786 Fibonacci level
  4. RSI is at an acceptable value of 47

If support holds or buying volume resumes, price targets are $0.70, $0.77, and $0.90. If key support fails, additional support levels are $0.56 and $0.50.

TA4

The status of the current Cloud metrics on the 1D time frame with doubled settings (20/60/120/30) for more accurate signals are bullish: price is above the Cloud, Cloud is bullish, the TK cross is bullish, and the Lagging Span is above the Cloud and price.

The slower settings yield similar results; including price targets and support levels, with a Kumo breakout intact, but with key support needing to hold to maintain it.

TA5

Conclusion

The Aragon Dapp/platform has built some impressive infrastructure to support an identifiable value proposition. What has been built so far appears to be admired, but rarely used. Additionally, the current voting model seems to be gameable. There is much building and tweaking still to be done before Aragon achieves what it set out to do in its manifesto.

The ANT token has performed strongly in 2019, with prices almost doubling since the start of the year, backed by excellent performance of the underlying ETH token and bullish market conditions. Fundamentals suggest that these gains may continue due to a recent pick up in on-chain volume supported by a major network update.

The current technical indicators for ANT are conflicted with both bulls and bears seeing signs in their favor. On the 1D chart, both the fast-setting trader (10/30/60/30) and slow-setting trader (20/60/120/30) may view the existing Kumo breakout as sufficient for entering a long position. A more conservative trader may await to see definitive proof that the support level (Cloud, 50 day EMA, Fibonacci) of $0.64 will hold before entering a long position. Successful maintenance of the Kumo breakout and support defense will yield price targets of $0.70, $0.77, and $0.90. Failure will highlight support levels of $0.56 and $0.50.


ADVERTISE WITH BRAVE NEW COIN

BNC AdvertisingPlanning your 2024 crypto-media spend? Brave New Coin’s combined website, podcast, newsletters and YouTube channel deliver over 500,000 brand impressions a month to engaged crypto fans worldwide.
Don’t miss out – Find out more today


ADVERTISEMENT
Advertise with BNC
ADVERTISEMENT
Advertise with BNC
BNC Newsletters: A weekly digest of the most important news and analysis.
ADVERTISEMENT
Advertise with BNC
Submit an event on bravenewcoin.com
Latest Insights More
ADVERTISEMENT
Advertise with BNC