Much ado about… something!
Since everyone and their cat will likely start or join a DAO this year, and practice is essential when mastering any new skill (from kitesurfing to Lojban to shitposting),
as a part of DAO EVERYDAYS series I will aim to write a little bit about a new DAO each day. 🐈
True, the daily thing is overrated, as illustrated by spaced repetition systems. There is also no shortage of DAO catalogues out there already and more will inevitably be added. These posts, therefore, aim to neither be particularly original, nor are they an effective or comprehensive DAO discovery tool. Instead, as I get into this practice, I hope to be able to settle on a way of understanding what any given DAO is about, to always have something to write about, and yes, mint some NFTs in the process!
Nouns DAO
Intro & Funds
In the beginning there was a Noun, and the Noun was… a 32x32 pixel image minted as ERC-721 Ethereum NFT on 2021-08-08, the event and the compressed base64-encoded SVG image itself immortalized in block 129857 (along with a few other transactions).
One of these NFTs gets generated every day and goes to an auction, the totality of the proceeds from which end up in the Nouns DAO treasury.
As of writing, a total of 162 Nouns have been generated and the treasury contains 16,931.8 Ξ or ~$64.4 mil. For comparison, the estimated 2021 revenue for the city of East Cleveland is at about $13 mil.
Governance
How does the treasury get utilized? Through decisions arrived at with a governance mechanism consisting of proposals, of course!
To submit a proposal today, one needs to have 0.5% of the total NOUN supply, (effectively by anyone in possession of at least one Noun before Noun #200).
The more NOUNs you have, the more voting power you bring to the proposals.
With 30 proposals to date, some delightful ones include a proposal to Send a Noun to the International Space Station and one to name a recently discovered species of glass frog after Nouns.
1 NOUN = 1 vote, and one wallet can have multiple. Votes can be delegated to others, allowing for NOUN holders to rely on an aligned representative in all governance matters. If a NOUN holder sells their NFT, their vote goes with it.
Additionally, a set of 10 og wallets (known as Nounders) have control over the multisig, as well as absolute veto power over any proposal. The DAO promises that they will
[…] revoke this veto right when they deem it safe to do so. This decision will be based on a healthy noun distribution and a community that is engaged in the governance process.
Protocol
The protocol for generating the art and running auctions is written as a combination of TypeScript and Solidity respectively, and is decently documented inside of Notion. What stands out are the considerations around auction timing and the compression mechanism for the pixel art itself.
The Nouns DAO governance protocol is a fork of Compound Governance.
Utility & verdict
TL;DR ngmi 👎
Nouns are an experimental attempt to improve the formation of on-chain avatar communities. While projects such as Cryptopunks have attempted to bootstrap digital community and identity, Nouns attempt to bootstrap identity, community, governance and a treasury that can be used by the community.
Source: WTF? at nouns.wtf
I think we should be bold with the Nouns DAO treasury. We should fund and cultivate a community of builders by experimenting, taking risks, and ultimately funding every high quality proposal that could lead to interesting culture and software (especially ‘middleware’) on the Nouns protocol:
- Centralized and decentralized APIs (let’s turn Noun o’clock into an internet-wide event)
- Artwork that adds something new to the cultural conversation
- Integrations with other Ethereum primitives and dapps
- iOS and Android apps
- Hackathons and Documentation
- Things we’ve never seen before
Source: The Nouns Virtuous Cycle at nouns.notion.site
In addition to purely whimsical value of generating permutations of visual attributes, the bigger vision for the so-called virtuous cycle in the community is to fund a set of projects referred to as middleware using a governance mechanism to shortlist the ones that are worth building.
What does it mean for a community if its governance token can be bought? Here I think the top addresses by voting weight of Compound Finance itself can be informative:
While the governance token does not have to be tradable on the secondary market, in practice quite a few governance tokens today are, including NOUNs, and it is a DAO configuration default I hope changes in 2022.
With a treasury this impressive it is difficult to imagine that the DAO will not survive in some shape or form (even if the bear arrives for ETH 🧸).
However, lest we want to preserve the existing realities of wealth inequality, allow for self-dealing, and attacks by well-monied adversaries, any DAO whose governance token I can buy in troves will automatically not make it in my estimation (as far as reshaping organizations and society for the better), even with multisig failsafes and off-chain reputational incentives for the Nounders.