ConstitutionDAO’s bold crypto bid for the U.S. Constitution fails

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There are 13 surviving copies of the original printing of the Constitution of the United States. Today, a Decentralized Autonomous Organization (DAO) announced that it had lost its bid to buy from art dealer Sotheby’s after a high-stakes bidding war that caught the internet’s attention. Yet the daring rise of DAO, a group of people who met on the internet, is a unique case study of the art of passing groups of people into crypto, one meme and one auction at a time. .

After a brief wave of excitement on Twitter, where some members of the group mistakenly announced that they had won in a live chat on Twitter Spaces, the group issued a statement saying he lost after all. The group “broke records for the most participatory money in less than 72 hours,” the statement said.

An organizer told the group’s Discord channel that he lost because he did not raise enough money to establish a reserve necessary to maintain and maintain the document on an ongoing basis. ConstitutionDAO participants will be able to get their money back, less gasoline costs, according to the group. Since there are no governance tokens that have been issued to participants yet, returning money could be even more complicated if some members wish to remain in the group.

Austin Cain and Graham Novak, two 25-year-old Atlanta residents working in finance, first launched a Discord chat to kick off the effort, which now has more than 8,000 members. Within a week of its launch, DAO has raised over $ 40 million worth of ETH on Juicebox, an early stage DAO platform.

The effort, widely deployed via Twitter and a burgeoning Discord server, is a window into what a community effort might look like in a Web3 universe, where shared ownership and transparency are guiding principles. There is widespread interest in the opportunities presented by the DAO structure – the value governed by DAO treasuries now exceeds $ 6 billion, by some estimates.

Last week Daniel Monteagudo got a message at 7:57 p.m. from a friend asking if he wanted to make a call in three minutes with other people who wanted to buy the Constitution using ETH. He finished the movie he was watching, jumped on the phone and decided to support the cause: he has so far invested $ 1,000 of his own money and currently manages the Twitter account of ConstitutionDAO.

Unlike most DAOs, ConstitutionDAO is not tokenized, which means that someone joining Discord for the community does not need to have an investment in the organization. It’s different from, say, a Bored Apes Yacht Club, where users need to be able to afford one of the expensive NFTs in order to gain access to the members-only community.

“It was really weird,” said Monteagudo, of the momentum of the project so far – which has attracted over 19,000 members, including Grimes, to join the DAO. “But I think people are excited to raise a ton of money very quickly to mobilize action towards a specific goal.”

Using a third-party dashboard, Monteagudo estimates that 13% of ConstitutionDAO contributors are using ETH for the first time. The same platform reports that around 44% of people who have contributed to ConstitutionDAO have less than 40 transactions in their name.

The thrill of bringing people into crypto is therefore an exciting side effect of ConstitutionDAO, as theatrical as it sounds. It gives people a way to understand the impact and feel of a decentralized community, while also appealing to their emotions in a way that the U.S. Constitution might be able to do on an abstract work of art.

“DAOs help large groups of people work together around the world. Businesses can do it, but they tend to take a long time to set up and it can be difficult to pay people across borders, ”he said. “With DAOs, it’s easy to create a global organization. “

The multitude of new users can be exciting, but it also means that someone has a responsibility to educate the new crypto about where their money is going – and if it will even come back. At first, for example, the ConstitutionDAO team had to change their rhetoric from “owning part of the Constitution” to “you will get governance tokens” so that contributors understand exactly how their money would be spent.

“I just think because the Constitution is the reason a lot of people – let’s say 3,000 people, have gotten into crypto, so I kind of feel responsible for making sure they’re doing it right,” Monteagudo said.

Upstream founder Alexandre taub wants to completely delete the term “DAO”; instead, his company takes a page from the Dapper Labs book and renames the structure to “collectives.”

“We are not reinventing the wheel. Pooling money with friends has been around for a long time, paying membership fees with communities has been around for a long time, ”Taub said. Instead, DAOs are a bet made by individuals who want one of two things, the founder continued: to make money or to gain a sense of belonging and transparency within a community. This last piece, although more promising, seems “less sought after, discussed and discussed at the moment”.

Partly for this reason, Upstream announced today that it is creating a platform to offer DAO-in-a-box. He envisions a world where collective members can contribute money to a shared ETH wallet, draft proposals on how the money should be used, vote on decisions and choose delegates to have more voting power in the within the community. By creating a comprehensive space for users to configure DAOs, Taub believes there will be more clarity around governance and compliance.

“The Upstream Collective is going to be a lot of people’s first time in a DAO and using a MetaMask, Ethereum wallet and getting used to it,” Taub said. “It’s a good thing in general that more people understand the future of how the money is going to flow because we’ve come across the chasm.”

Upstream is just one of the many startups that have recently entered the fray to accelerate the development of DAO. Andreessen Horowitz backed DAO tool builder Syndicate in August, and Utopia Labs raised $ 1.5 million for a DAO operating system in October.

While groups like ConstitutionDAO embody the promise for DAO supporters of the emerging structure, they are not immune to criticism generally leveled against new crypto technology. Some view ConstitutionDAO as just a stunt buy, pointing out the large number of alternative uses for the millions of dollars spent to purchase the document.

Attention-grabbing programs have helped people understand the power of new technologies like NFTs, but they aren’t and shouldn’t be crypto’s only draw. That said, as is often the case at the start of new technology, an event that appeals to those new to crypto can be useful for education, albeit imperfectly.

Beyond organizing to bid on rare historical documents, DAOs have a wide range of potential use cases. There are designer DAOs like Mirror that allow people to monetize their work in a fractional way and projects like PieDAO that use structure to make business decisions similar to a company. The most important DeFi (decentralized finance) lending platforms, such as Uniswap and AAVE, are governed by DAOs.

Some established DAOs that were launched for the purpose of making a one-time purchase have since expanded their reach. PleasrDAO, for example, was originally created to purchase a Uniswap NFT artwork, but has since made inroads into DeFi and launched an incubator. Because it has gained so much popularity and attracted abundant resources, ConstitutionDAO could easily do the same.

Taub envisions potential long-term uses for DAOs that could serve the public interest – for example, in local government, where city residents could vote directly on how treasury funds are used. But Taub also recognizes that their novelty and association with a notoriously homogeneous, white, male Web3 community means DAOs have a long way to go.

It should be noted that the governance token structure that underlies many DAOs awards voting rights based on the amount of money each individual has donated. ConstitutionDAO will likely sport this structure in the future, although ConstitutionDAO’s Discord chat is open to everyone for now. So while DAOs offer transparency and ownership, it might be an exaggeration to call them democratic, as those who cannot afford higher stakes will not have the same level of voice over group decisions.

And as with other emerging Web3 technologies, DAOs facilitate huge capital transfers with little formal oversight or regulation. Those who are drawn to the vision of the community they offer may still be afraid of losing their money or being victims of fraud.

Joining a DAO can involve huge risks, given the regulatory gray area in which they exist today. In most US states, DAOs are not governed by a concrete legal structure, so protocol developers and participants have increased accountability to the shareholders of regulated companies.

Until these obstacles have been overcome, DAOs are likely to focus on social groups and niche communities like ConstitutionDAO rather than pose a material threat to entrenched corporate and societal structures. But once the infrastructure exists, DAOs could move from crypto-curious user groups buying niche items and having fun on the internet to serious collective entities that act like businesses but can be more agile and inclusive in their business. their decision making.



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