The community of NFT holders prominently featured Ethereum collection Nouns broke in two late Friday evening a proposed fork of the project was completed. Holders of more than half of all Nouns NFTs chose to leave – collectively withdrawing more than $27 million worth of ETH from the project’s coffers.
The owners of a total of 472 Nouns NFTs – out of 846 total, or almost 56% of the collection – joined the fork, taking with them almost 16,757 ETH ($27.3 million at the moment) from the current Nouns DAO treasury to a new DAO organization.
A DAO, or decentralized autonomous organization, is an online group with tokenized membership and shared goals. Ultimately, the amount of Ethereum leaving the treasury will be reduced to approximately 35.5 ETH per NFT, or approximately $57,850.
As a result of the fork, owners’ original NFTs will be returned to the DAO treasury and each holder will receive a replacement NFT with identical artwork to the new DAO. The new DAO will makes holders “rage” and take their share of the treasury – that 35.5 ETH per NFT – and forfeit their profile picture (PFP) forever.
This move signals a lack of confidence among many who purchased the current Nouns DAO format, which has seen millions of dollars worth of ETH spent since the project’s debut in 2021 to fund a series of Nouns-themed projects.
Millions of dollars have been collectively used for various noun-themed projects aimed at spreading the brand, including a parade float during the 2023 Rose Parade, vinyl toys, 3D printed clothinga comic book series, esports team and other initiatives. A noun NFT was equal purchased and awarded to Bud Lightwhich one then used “Noun glasses” in the 2022 Super Bowl commercial.
But as with much of the NFT spacethe market value for nouns has fallen sharply from the peaks of late 2021 and early 2022. On secondary marketplaces, the price floor (or the cost for the cheapest NFT for sale) has fallen from a USD peak of $267,000 worth of ETH in December 2021 to about $ 57,740 today, according to data from NFT price floor.
With about 3 hours to go, more than 50% of the nouns are splitting. that’s a huge vote of no confidence in leadership. I hope all founders take notes and learn something from this.
— gmoney.9dcc.eth (@gmoneyNFT) September 15, 2023
In other words, while the open-source Nouns brand has potentially grown over time through various DAO-funded media projects and marketing campaigns, its market value has declined significantly. Some members now seem eager to spend money amid the brutal bear market and earn some sort of return, rather than staying in the community.
“This isn’t great,” pseudonymous NFT holder Hindsight wrote on the fork page. “And yet despite this strong signal, there is no recognition, let alone concrete discussion, about what led us here and the details of how we can avoid them in the future or solve them now. Ultimately, no organization can defy the gravity imposed on it by exacerbating poor decision making.”
The fork was made possible earlier this year by a Nouns protocol upgrade. It allows NFT holders to do that propose a fork to exit the DAO and jointly reclaim a portion of the treasury, and if a quorum of at least 20% of the tokens join through their respective holders, then it will be executed and ultimately completed after a waiting period to allow additional holders to enroll in the exit plan.
Even after the split, the nouns DAO still has 13,310 ETH left, or worth almost $21.7 million. The remaining NFT holders can still vote on proposals and help allocate funding in an effort to continue to grow and support the brand, which is built on a Creative Commons 0 (CC0) license that allows anyone to use the artwork to create and sell derivative projects. .
After the fork, let’s prioritize a healthy DAO (where auction > book) by increasing spend and distributing forked nouns. pic.twitter.com/ZbvWk81YCB
— seneca (@cryptoseneca) September 14, 2023
Co-founder of One Nouns (or “Nounder”), pseudonym Seneca, tweeted that the remaining members just need to step up their efforts “by increasing spending” to nurture builders and creative projects and “spread forked nouns” to potential participants to help in that process.
“One of the lessons of the fork is that if you do not use the treasure chest, in the game of nouns it will inevitably be captured,” Seneca wrote. “It’s a part of the game that has now been made explicit.”