GM DOers! 😎
Today, NounsDAO, one of the most innovative and famous NFT communities, is forking, breaking up, sayonara. 👋
This is the first DAO fork that web3 has ever seen, and it could have consequences. We’ll explain it all today!
But first, what's a Noun? 🤔 No, we’re not talking about grammar class! 😅
A Noun is a piece of generative art. Every day, 1 Noun (NFT) is generated and auctioned to the highest bidder.
Thanks to the magic of programmable smart contracts, this will happen every day FOREVER!
In the beginning, Nouns used to cost a lot of $ETH! The first Noun was purchased for 613 $ETH (~$2 million at the time). 🤯
During the bull market, Nouns sold for anything between 50 and 100 $ETH.
All funds raised from the daily auctions went to the Nouns treasury, which got as high as 25k $ETH – $50 million. 💰
The point of the treasury has always been to grow the Nouns ecosystem by spreading awareness of the brand. 🗣️
Over time, they funded hundreds of projects & proposals and gave away tens of thousands of $$$ in the process.
For every Noun, the owner gets 1 vote in how the treasury is spent. Therefore, this organization operates as a DAO.
But something went wrong. 😨
The bear market is making people lose money, and a big part of the Nouns community is now choosing to break up, or the way they call it: Rage Quit.
They gathered up more than 20% of the DAO and asked for a refund of ~$50,000 per Noun.
In today’s newsletter, we’ll break everything down for you:
The NounsDAO experiment 🧪
Why are they really breaking up? 😢
Are all DAOs doomed? 🤔
But before we do, we wanted to announce the Web3 Rabbit Hole winners. 🥳
Congrats to Joe Buhler (1st place - Web3 Investing Masterclass for Free), Henning Grambow (2nd place - 1 Year of Web3 Academy PRO for Free) and Jan, aka our boy h0nza (3rd place - 1 Month of Web3 Academy PRO for Free).
P.S- h0nza is giving away his prize, since he's already a PRO! 🤩
I won a free 1-month @web3academy_ PRO Newsletter
I'm already a PRO Member, so I'm gifting it to a @web3academy_ follower!
Want a taste of PRO reports? Comment below to win!
(warning it's addictive)
I'm already a PRO Member, so I'm gifting it to a @web3academy_ follower!
Want a taste of PRO reports? Comment below to win!
(warning it's addictive)
8
Didn't win? Don't worry! You still get a 25% discount to the Web3 Investing Masterclass AND Web3 Academy PRO, if you completed the Web3 Rabbit Hole Course. 🐇
Now back to Nouns, let’s go! 🚀
Paragraph powers modern newsletters, enabling readers to own their content and creators to share revenue with fans.
Web3 Academy has already transitioned to Paragraph because it’s the future of newsletters.
If you're a creator, writer, or keen reader, explore Paragraph's early opportunities!
What is NounsDAO? Aka The Sunglasses NFT Brand? 😎
NounsDAO is a community where Nouns holders make proposals & vote on things that help the project expand.
The treasury handed out grants to those that were increasing NounsDAO awareness, growing their IP, and making access to the community more valuable (and Nouns more expensive).
It’s a virtuous cycle.
And man, they got big…
+$50,000,000 treasury
Nouns selling for +50 $ETH every day
Their logo seen everywhere in and out of the crypto world
The brand was expanding, and their characters with funky glasses gained a lot of popularity.
The founders (aka. Nounders) were anonymous but fully respected by the NFT community. Oh, and they paid themselves by receiving 1 free Noun for every 10 auctioned.
Nouns were and still are the pioneers of using CC0 (Creative Commons Zero). This means everyone has the right to do whatever they want with the Nouns art, including building a business. (For a crash course on CC0 and NFT IP ownership rights, check out our full article here.)
Smart idea to grow brand awareness…
They spent the last 2 years funding many creators, artists, and even an esports team with the goal of bringing awareness to the Nouns brand.
Over 259 Nouns-branded projects have been built to date, including sailboats…
…NFL campaigns…
… and even whiskey bottles 😅
Looks like the Nouns community had it all and was thriving…
So, why did they end up breaking up??
A Story of Disagreement 🥊
Since Noun #1 sold for 613 ETH in August '21, Nouns auction prices have only gone down. 📉
In May, they were selling for around 25 $ETH, which is one of the reasons why the community decided to propose the fork.
So how does the fork work?
If at least 20% of Noun holders decide that they want their money back, they can propose a fork, which allows anyone to return their NFT in exchange for a set amount of $ETH.
As you can see here, that proposal went through.
How much $ETH would Noun holders receive?
The way this is decided is as follows: Total amount of $ETH in the treasury divided by the number of Nouns in existence.
In this case, the value of each Noun was around 35.5 $ETH, meaning that anyone who decided to return their Noun got 35.5 $ETH in exchange, regardless of what price they initially paid for it.
The ability to opt into the fork was enabled last weekend. Since then, 444 Nouns opted in to leave the community, representing 52.5% of the 845 Nouns in existence.
At the time of this writing, there are 9 hours left until the fork ends, so this number can go up.
(Not so) Fun fact: Someone is leaving 35 Nouns behind (to receive close to ~$2 million). 🤯
So where are all these exiled Nouns going now?
To the Treasury. They’re now called Treasury Nouns.
But why are people leaving the DAO? A few reasons…
Some want to exit because they believe the DAO lacks clear leadership.
Some simply don’t believe in the future of the project anymore.
Others just want to leave because they paid less than 35.5 ETH.
In fact, since the fork was announced, a lot of people have minted at prices under 35 $ETH, and they’re now returning their Nouns. That was a clear ‘free money’ opportunity.
So what happens now?
It’s simple. Those who choose to leave are getting some $ETH back, while the remaining members continue business as usual, only with a shrunken treasury. 🤕
Those who remain seem happy that both dissidents and arbitrators are leaving, and they're hopeful to see a more united and fair community going forward.
Now… the question on everyone’s minds…
Do DAOs have a future? Let's talk about that ⏬
🎙️ Catch up on the latest news in web3
A lot is happening in the world of crypto and web3.
Get the lowdown on the latest news by listening to our Weekly Rollup on your favorite podcast platform.
Do DAOs Still Have a Future? 🤔
Many have used this event to celebrate the ‘death of DAOs’.
The Unraveling of Nouns DAO: A Brutal Reality Check on Decentralized Governance
The collapse of Nouns DAO isn't just a hiccup; it's a scathing indictment of the inherent flaws in decentralized governance models. While the crypto community has been enamored with the utopian…
The collapse of Nouns DAO isn't just a hiccup; it's a scathing indictment of the inherent flaws in decentralized governance models. While the crypto community has been enamored with the utopian…
But that’s not how we see it.
In the case of NounsDAO, we don’t see this as a failure.
Rather, this is a sign that DAOs do work. They just aren’t for everybody.
The fluctuating floor price of Nouns created a fractured community with conflicting interests.
Some realized that holding $ETH is more important than holding an NFT and being part of the NounsDAO mission, while those who bought low have every incentive to sell back to the treasury for immediate gains.
So no, this isn’t the death of DAOs. In fact, it’s proof that DAOs are working.
And let’s remember that DAOs aren’t new (heard of Alcoholics Anonymous?), but bringing them onchain is.
DAOs already exist, we just haven’t really seen a very successful blockchain version yet, largely imo due to how young the space is
An example: Alcoholics Anonymous
Anyone can start a chapter. Anyone can attend. They all self fund/self organise. Nobody needs permission.
An example: Alcoholics Anonymous
Anyone can start a chapter. Anyone can attend. They all self fund/self organise. Nobody needs permission.
And since having operations onchain is a new concept, there’ll naturally be a lot of hiccups.
Besides, the majority of DAO failures come from people:
Greed, apathy, or incompetence of their members.
Having unskilled contributors (members)
Unclear leadership
Lack of a common and clear north star and goal
Lack of regulatory and legal clarity
That doesn’t mean all DAOs are doomed. We have seen great examples such as MakerDAO, managing billions in assets, and ConstitutionDAO almost buying an original copy of the American constitution.
So let’s all take a deep breath and relax. It’s all going to be okay, and we’ll be here to guide you through the wild world of web3, so you can capitalize on being early AF!
Since you're still here, let us know... Will NounsDAO survive? Reply to this email with a Yes/No!
Thanks for reading. And remember, you're strong, you’re powerful, you’re alpha! ❤️
See you soon. ✌️
Join us on Discord | Follow us on Twitter
Disclaimer: This article is for informational purposes only and not financial advice. Conduct your own research and consult a financial advisor before making investment decisions or taking any action based on the content.
Yes! Interesting perspective - https://metaversal.banklesshq.com/p/nouns-fork