Saturday, September 30, 2023

Nouns Fork: Angry NFT holders withdraw $27 million from the project

The community of NFT holders from Ethereum’s prominent collection split in two on Friday evening as a planned fork of the project was completed. Holders of more than half of all Nouns NFTs have opted out, withdrawing a total of more than $27 million in ETH from the project treasury.

Owners of 472 Nouns NFTs, out of 846 total, or nearly 56% of the collection, joined the fork, taking nearly 16,757 ETH (equivalent to $27.3 million today) from the current Nouns DAO hoard into a new one DAO organization with.

A DAO, or Decentralized Autonomous Organization, is an online group with tokenized membership and shared goals. Ultimately, the amount of Ethereum flowing out of the treasury is approximately 35.5 ETH per NFT, or about $57,850.

The fork will return owners’ original NFTs to the DAO treasury and each holder will be issued a replacement NFT with the same design for the new DAO. The new DAO will allow angry holders to take their share of the treasure, i.e. that 35.5 ETH per NFT, and give up their profile picture (PFP) forever.

The move signals a lack of confidence on the part of many who have embraced the current Nouns DAO format, which has seen millions of dollars of ETH issued to support a variety of Nouns-themed projects since the project’s debut in 2021 finance.

Millions of dollars were collectively used for multiple Nome-themed projects aimed at expanding the brand, including a float for the 2023 Rose Parade, vinyl toys, 3D printed clothing, a comic series, e-sports equipment and other initiatives. A Nouns NFT was even purchased and given to Bud Light, which later used “Noun glasses” in its 2022 Super Bowl commercial.

But like much of the NFT space, Nouns’ market value has fallen sharply since highs in late 2021 and early 2022. In secondary markets, the floor price, or the price of the cheapest NFT offered for sale, has fallen. According to NFT Price Floor data, ETH holdings rose from a high of $267,000 in December 2021 to about $57,740 today.

In other words, although the Nouns open source brand has potentially grown over time through various DAO-funded media projects and marketing campaigns, its market value has declined significantly. Now, amid the brutal bear market, some members appear eager to cash out and reap some sort of return rather than remain in the community.

“This is not cool,” pseudonymous NFT owner Hindsight wrote on the fork page. “And despite this strong signal, there is no acknowledgment or even concrete discussion about what got us here and how we can avoid them in the future or fix them now. Ultimately, no organization can defy the imposed gravity by working cumulatively.” Bad decisions.

The fork was made possible by an update to the Nouns protocol earlier this year. It allows NFT holders to propose a fork to exit the DAO and collectively claim a share of the treasure. If a quorum of at least 20% of tokens join via their respective holders, it will be conducted and eventually completed waiting period to allow other holders to enroll in the exit plan.

Even after the fork, the Nouns DAO still has 13,310 ETH or almost $21.7 million. Remaining NFT holders can continue to vote on proposals and help allocate funds to further drive growth and support for the brand, which is based on a Creative Commons 0 (CC0) license that allows anyone to create the artwork and selling derivatives to use projects.

Seneca, one of the co-founders of Nouns, tweeted that the remaining members should intensify their efforts by “increasing spending” to encourage builders and creative projects and distributing “split nouns” to potential participants to aid the process.

“One of the lessons of the diversion is that in the Noun game, if the treasure is not used, it will inevitably be captured,” Seneca wrote. “It’s a part of the game that has now become clear.”

Nation World News Desk
Nation World News Desk
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