If this is the first time of you hearing about the Constitution DAO, see this picture down below first without googling what it has done.

What do you think discord user “austin” with a pixelated pfp writing in all caps would have achieved with the message he wrote? You would think he’s kind of… well, mental, right?

But what if I tell you they raised 47 million dollars in 6 days?

That’s right, 47 million dollars, from 11/12/2021 to 11/17/2021. Raising 47 million dollars is a small feat compared to some of world’s fund raises/IPO such as Alibaba raising 21.8 billion dollars on their Nasdaq IPO. But, most people don’t know a company has to pay 3% on total money raised to the underwriters (the investment banks), which will help sell the shares and thus raising money. Even on popular crowdfund sites such as Gofundme and Indiegogo, they charge a fee around 5% on total money raised. In the case of Alibaba, the investment banks collected more than 300 million dollars in fee. At 3%, Constitution DAO would have to pay over 1.4 million dollars in fee. Instead, the DAO structure allowed them to pay nothing to no one. The backers of the Constitution DAO only had to pay a small amount of transaction fee (gas fee) to the miners on Ethereum. Only a DAO structure can lower the barrier for people to become stakeholders and drastically increases the value an organization is able to maintain.

You may wonder, how could you trust the person handling the 47 million dollars won’t take your money and run away? We met on the internet, but we are still strangers to each other!

The issue for strangers to work together, crowdfund, and eventually create and distribute value is trust. The investment banks, Gofundme and Indiegogo’s secret weapon is people trust them and that’s why they can charge whatever amount of fees they think is reasonable. I am not arguing the middlemen don’t provide value to project founders and organizations, but it can’t be ignored that they also extract value from project founders and organizations. DAO once again comes in as a better alternative, as proven with the case of Constitution DAO. People can trust the Constitution DAO won’t misuse their money because the money (Ethereum) is on the blockchain, locked up in various smart contracts which prevents embezzlement. Those who contributed money received the “people” token, at a 1 ETH: 1,000,000 $PEOPLE ratio. It was also written in the smart contracts that shall the acquisition fall through, backers could receive their money back at exactly the same ratio. No human interaction or trust is required, for both the deposit and withdrawal process.

And, as it turned out, the Constitution DAO did not acquire the original copy of the Constitution. Ken Griffin was able to outbid them. Naturally, many backers retrieved their Ethereum afterwards, but some kept the “people” token as a souvenir for the Constitution DAO was a great success in terms of fundraise and strangers working together. The wonder of Constitution DAO will resurface again, in the form of other DAOs which we hope to incubate in the future.