Aragon VE Governance

Description

Aragon’s ve-governance system is a tokenomics-first governance framework designed for onchain organizations. It enables DAOs to align user incentives with the protocol, reward long-term participants, and build an active ecosystem using staking, dynamic voting power, emissions, and bribes.

Previously, DAOs looking to implement VE mechanics needed to fork complex DeFi protocols, which can be difficult to customize and risky to modify without a rock-solid grasp of the complex, onchain mechanics. With Aragon VE, we provide:

  • Customizable Contracts – Tailor escrow, voting, and reward mechanisms to your DAO.

  • Deployment Support – Our team has hands-on experience from projects like Mode and Puffer.

  • UI Kit – A ready-to-use governance UI that can be easily tweaked for a new organization.

  • Process Integrations – We have ready-to-go integrations with service providers to ease the operational burden of setting up and managing incentives.

If you’re interested in building a VE governance system for your organization, you can:

📖 New to VE Governance?

Vote-Escrow (VE) governance is a proven model for aligning user incentives in token-based communities. It was popularized in DeFi, allowing protocols to reward long-term stakers with increasing governance power.

How it Works

  1. Users lock tokens in an escrow contract.

  2. They receive veTokens, which represent their voting power.

  3. Voting power scales with lock duration – longer locks mean higher governance weight.

  4. Votes influence protocol incentives, typically directing emissions toward specific pools or initiatives.

To dive deeper into VE mechanics, check out these resources:

🛠 Understanding the VE System

Core VE Concepts

Vote-escrow systems share a set of common mechanics, which can be customized based on DAO requirements:

  • 🔒 Locking & Escrow – Users deposit an ERC20 token in an escrow contract to mint veTokens (can be veNFT or veERC20).

  • 📊 Voting Power & Time – Voting power is a function of the lock duration (longer locks often mean more influence).

  • ⏳ Epochs & Voting – Governance decisions are made in fixed voting cycles (epochs).

  • 📈 Gauges & Incentives – veToken holders vote on "gauges," which direct emissions, rewards, or protocol incentives.

  • 🚪 Exit Queue (Optional) – DAOs can define cooldown periods, minimum lock times, and exit fees for unstaking.

🏗 How Aragon’s VE System Works

Unlike traditional ve implementations, Aragon’s system is:

✅ Modular & Customizable – Each component (escrow, voting, rewards) is separate and configurable. ✅ Designed for Progressive Decentralization – DAOs can start with a multisig and evolve governance over time. ✅ Production-Ready – Used in Mode and Puffer (Mode Governance, Puffer Voting). ✅ Comes with a UI & Integrations – Ready-to-use frontends and integrations for bribes & emissions.

Governance Core

  • Multisig Governance – The DAO can start with a multisig and transition to full onchain governance.

  • Aragon DAO Contract – Flexible permission management, supporting both token-based and multisig models.

  • Factory Contract – Stores contract references for streamlined deployments.

Voting & Escrow Contracts

  • Voting Escrow – Handles staking and computes voting power.

  • Gauge Voter – Allows veToken holders to vote on governance proposals (typically emissions).

  • Escrow Curve – Defines how voting power changes over time.

  • Exit Queue – Configurable unstaking mechanics (cooldowns, fees, min lock periods).

  • Clock – Standardizes voting epochs and voting windows.

  • veNFT Lock – ERC721 representation of staked positions.

Need a ready-to-use UI? Aragon offers a UI Kit for VE builds, along with integrations for bribes and reward distribution. Contact us for more details.

⚙️ Key Governance Parameters

Your DAO can configure governance mechanics based on its needs. Below are the key parameters:

Voting Power Curve

Parameter Description Considerations Example

Max Multiplier

Max boost for long-term locks

Too large favors whales; too small reduces incentive

5x

Max Duration

Time to reach max multiplier

Too fast removes incentive to hold, too slow discourages staking

4 years

Warmup Period

Time after locking before voting is allowed

Prevents timing exploits

24 hours

Exit Queue

Parameter Description Considerations Example

Cooldown

Delay before unstaking is allowed

Prevents last-minute vote manipulation

3 days

Min Lock

Minimum staking duration

Helps prevent governance instability

2 months

Exit Fee

Percentage tax on unstaking

Discourages short-term farming

1%

Epoch & Voting Configurations

Parameter Description Considerations Example

Epoch Duration

Total voting cycle

Short epochs increase admin work; long epochs create voter apathy

2 weeks

Voting Period

Duration of active voting

Needs to be long enough for participation

1 week

Distribution Period

Time for emission allocation

Allows protocols to process rewards

1 week

Checkpoint Intervals

Frequency of voting power updates

Recommended to keep fixed

1 week

🔄 Workflow Breakdown

Escrow Process

  1. Users lock tokens into the escrow contract.

  2. A veNFT (or veERC20) is minted representing the staked position.

  3. Voting power starts at a base level and increases over time.

  4. Users must wait out a warmup period before voting.

  5. To unstake, users enter the exit queue and wait for the cooldown period before withdrawing.

Voting Process

  1. Administrators define voting "gauges".

  2. Voting cycles follow fixed epochs:

    1. Voting Phase (e.g., 1 week) – Users vote on gauges.

    2. Distribution Phase (e.g., 1 week) – Votes are locked, and emissions are distributed.

  3. Users can reset votes to unlock their stake.

  4. Voting power updates happen at fixed intervals.

🔗 Next Steps

  • Developers: Follow the README to deploy the contracts locally.

  • Projects & DAOs: Contact the Aragon R&D team for managed deployment and governance design.

  • Community: Join our Discord for support and discussions.

Ve Governance →