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1/ Why the @AragonProject vs. @autarklabs legal drama is NOT an existential crisis for the DAO space
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2/ If you hadn't heard, the Aragon Association (AA) is suing Autark, an Aragon Flock grant recipient and developer of the Open Enterprise app suite, for breach of agreement https://twitter.com/AragonProject/status/1263840185818722304
3/ AA claims they offered the choice of running a community poll or settling privately to protect Autark's reputation, but were forced to take it to the Swiss courts when Autark made legal threats https://twitter.com/licuende/status/1264087849768542208?s=20
4/ Autark claims they were forced to make legal threats because the Association didn't honor the contractually obligated notice period before cutting funding https://twitter.com/autarklabs/status/1263975360930041856?s=20
5/ Immediately, the community argued that the AA are hypocrites for not using Aragon Court (AC) to arbitrate the dispute, with Autark offering to amend their agreement for this purpose https://twitter.com/autarklabs/status/1263879336311918592?s=20
6/ Proponents of using AC believe the AA could offer a deal that gives Autark the right to fall back to the Swiss courts if they (or the community) don't trust the impartiality of the AC ruling https://twitter.com/evan_van_ness/status/1264999439518892034
7/ These proponents view the drama as a governance crisis, arguing that the most important thing is setting precedent and upholding community trust in Aragon Network's decentralized governance https://twitter.com/thegostep/status/1265000786976743425?s=20
8/ However, opponents argue that, although it might uphold the legitimacy of the Aragon Network, there is more risk that it would undermine the legitimacy of the AC (which will be fundamental to Aragon Network’s next phase of governance)
9/ AC is beta technology that is currently only being tested in the App Mining program https://twitter.com/JakeVartanian/status/1263884458844979201
10/ And in Autark's own words, AC's market cap is too small to be sybil-resistant against a dispute of this scale https://twitter.com/AaronFosterReal/status/1265317719207038976?s=20
11/ Aragon Court is not a court, in the same way that smart contracts are not really contracts. AC is a dispute resolution mechanism in which "jurors" act as oracles for human-readable agreements. https://twitter.com/jbrukh/status/1262767594920165377
12/ This is useful for enforcement of subjective matters such as content moderation and 51% attacks, which are likely to be simple judgments such as “does this proposal follow the proposal guidelines?”. Swiss contract law is in another league entirely. https://twitter.com/ElliotLebby/status/1265023587951484928
13/ AC’s enforcement of human-readable agreements makes it easier for DAOs to form ricardian contracts as legal wrappers (constitutions, charters). https://twitter.com/r_ross_campbell/status/1262797907931037696?s=21
14/ This will enable DAOs to arbitrate internally rather than escalating to courts. This is what Aragon means when they call themselves a “digital jurisdiction”.
15/ However, AA have already filed in Switzerland as a protective measure to claim jurisdiction, due to Autark’s (alleged) threats to file in the US, which may interpret the contract differently. So that ship may have sailed.
16/ In fact, if escalation in the US was always an option for Autark, AC may have never been a strategically viable option for AA, because you can't (yet) claim jurisdiction in AC.
17/ Despite this nuance, many are calling this an existential failure for the DAO space, accusing Aragon of being a fake. https://twitter.com/insideNiMA/status/1264652676106784768?s=20
18/ BUT, Aragon was never a DAO to begin with. The AA was always meant to be a transitory entity. https://twitter.com/licuende/status/1263853527199350784
19/ Why? A classic chicken and egg problem. You can’t use a product before you’ve built it. https://twitter.com/anastasiya_vc/status/1265340072901173248?s=20
20/ However, thanks to Aragon's work on tools like AC, true DAOs are closer to becoming a reality
21/ @POKTnetwork is planning to be the first adopters of the AC and the functionality it unlocks for human-readable agreements
22/ We’ve designed our DAO’s constitution to enable members of the DAO to moderate each other and protect themselves from rogue members who would attempt to subvert the rules, knowing that AC will ensure a fair ruling.
23/ We’re pairing this with an ownerless foundation that is designed to have more than just a signaling relationship with the community.
24/ All decisions signaled by the DAO, including the appointment/removal of directors, must be carried out by the directors of the foundation, subject to any legal/fiduciary limitations. See highlighted DAO clauses https://pokt.network/wp-content/uploads/2020/05/Pocket-Network-Foundation-Articles-of-Association-Highlighted.pdf
25/ Aragon formed the AA at a time before many advancements had been made in this space. Credit where credit is due, our work builds upon the great work of teams like Aragon and would not even be viable without a tool like Aragon Court.
26/ But what’s important to note is that, even in our transparent case, the directors of the foundation have the right to veto any decision made by the DAO that conflicts with their fiduciary duty (such as paying a contributor that allegedly hasn’t delivered on their proposal)
27/ Ultimately the AA is a traditional legal entity stewarding funds for the success of the Aragon Network; it is the legal responsibility of the directors to protect these funds. Even a foundation as DAO-friendly as ours doesn’t change that fact.
28/ Until DAOs are no longer reliant on traditional legal entities for their interactions with meatspace, DAOs will have to accept the compromises that come with meatspace laws.
29/ We should all take a step back and recognize that, while this may be an ugly situation that could have been handled with more grace on both sides...
30/ ...decentralization is a process, and few have pushed this process along more than Aragon.
