AGP 1: Aragon Voting Token (AVT)

[izqui]

Goals

• Incentivize educated and motivated voters.
• Separate holders only interested in speculating from holders that care for the vision of the AN, and have them make the decisions.
• Disincentivize big centralized exchanges (that hold tokens on behalf of the customers) from participating.

Description

AVT is a new token that gets minted by staking ANT in a exchanger contract. Exchanging ANT for AVT has no cost but there is a waiting period in which the holder doesn't have access to their ANT nor their AVT, so it has certain opportunity cost. Converting AVT back to ANT has also a certain waiting period (could be the same or different than the AVT creation period).

During the waiting period for exchange, a holder can expedite their order incurring in a fee in ANT (proportional to a f(x) = 1 / x type curve to the remaining exchange time) that would be split among current AVT holders.

Cancellation of exchange intent during waiting period should also be allowed, receiving their original tokens back (AVT or ANT), without being penalized (or just having half the expedite penalization?).

This creates an incentive for staking ANT and holding AVT, and makes people who are not speculating with ANT the decision makers for the Aragon Network.

AVT details

• AVT is non-transferrable.
• ANT and AVT have a 1:1 exchange rate. Expedited exchange penalization can make a holder to lose part of its stake.

Nice side-effects

• Legit non-speculative holders can earn ANT for just staking, taking ANT from speculators and distributing it among voters.
• Exchanges aren't incentivized to vote with its customers tokens as they need instant token liquidity in case of a withdraw. The 1/x type penalization makes it really expensive for someone that needs instant conversion.
• AVT exchange removes ANT from circulation.

Uncertainties

• AN could mint additional ANT (or AN could allocate some of its ANT holdings) to incentivize voting when total voting quorum is too low. Every marginal voter would make the reward less and less, so it could find a natural equilibrium.
• Should we incentivize actual voting besides just holding AVT. Should penalization rewards go only to holders who vote?
• Should a holder be forced to convert its full ANT balance to AVT? Could be gameable by separating into multiple addresses.
• Given the current implementation of ANT, vested token holders wouldn't be able to vote.

Figures

Figure 1: Normal conversion for a holder that waits. Figure 2: Expedited conversion penalizations.

Penalization function

p(x, t) = x / (1 + (t * f / (w - t))

Arguments:

• x: Number of ANT or AVT being exchanged.
• t: Number of seconds since convertANT or convertAVT was called

Parameters:

• w: Total waiting time for exchange
• f: Slope factor, between 1 and infinity. 1 being a rect and bigger f results in more steep curve.

Figure 3: How penalization curve changes modifying the slope factor

Credits to Joel Monegro for being part of the call where we came up with the idea