Aragon’s co-founder explains how Decentralized Autonomous Organizations are changing governance
Luis Cuende hopes for a decentralized future. As the co-founder and core contributor of Aragon, he’s seen multiple new projects spin up as Decentralized Autonomous Organizations, or DAOs.
“We are at this very weird moment in the world where technology has radicalised everything,” Cuende says in a Plumia Talks live interview, “We're aiming to use technology for the opposite – for making people come together and take decisions and make things work in a collective way.”
Here, Cuende shares his vision for the potential of DAOs, including how they can replicate the traditional architecture of a country.
The need for a new system
Aragon is a platform for decentralized governance that allows users to build their own DAOs. Put simply, a DAO is an online community with a shared crypto wallet.
Cuende started the project in 2017 in response to what he saw as a broken political system. “We have massive nation states that don't know what to do,” he says. “Politicians don't even know what they are doing.”
At the same time, it’s increasingly difficult (if not impossible) to get people to coordinate on global issues.
For Cuende, the solution is to incentivize people to build towards peace and prosperity. DAOs are a way to achieve this. Since launching Aragon, the platform now has over 1,500 projects from large decentralized finance (DeFi) operations to building virtual communities for kids. “Combined, they manage more than $1 billion in common finances,” he says.
Replacing the nation state with a DAO
Cuende sees DAOs as sitting between nation states, which are supposed to be common goods owned by no one, and corporations, which are owned by individuals. He wants DAOs to be accessible to anyone the way nation states should be, but also to incentivize people to build things for the future like corporations are supposed to.
This in-between status gives DAOs a unique ability to replicate much of a typical country’s architecture.
From an economic perspective, Cuende sees DAOs as a form of decentralized insurance that’s able to provide a universal basic income to people. “If members think that you can bring value to the table, you get a basic salary,” Cuende says. “So you can actually not worry about making money and you can be more creative.”
Within DAOs, builders can offer a feature called Key Performance Indicator (KPI) Options, Cuende says. These options allow people to purchase a piece of future profits from an outcome they want the DAO to achieve. If the KPIs are hit, the owner of the option is financially rewarded. This model, Cuende says, incentivizes people to take active roles within new DAOs rather than passively buying the underlying cryptocurrency in the hopes of rent-seeking gains.
Cuende says that the strongest feature of DAOs when it comes to replicating nation state infrastructure are their voting mechanisms. DAOs have streamlined processes for voting, particularly for allocating funds.
Using DAOs to build internet countries
There’s a logic extension to replacing nation states with DAOs. “A borderless country on the internet is the perfect use case for DAOs,” Cuende says.
In practice, Cuende says it’s straightforward to setup an internet country as a DAO using a platform like Aragon. “You need some crypto skills,” he says, adding that the startup costs for DAOs include a crypto wallet and blockchain gas fees. Once up-and-running, Aragon offers gasless voting tools.
“The hard part is coming up with incentives and how to make people really engage with the community,” he says. “Creating the actual DAO is quite easy.”
For Cuende, DAOs aren’t just the future of governance, they’re also fun. “You can do some funny stuff like have the DAO own a little piece of land in some Metaverse platform,” he says. “I think that DAO is a perfect organization form for something like Plumia.”