As the dust settles on one of the most ambitious crypto ventures in recent memory, a slew of unsolved issues linger, starting with the fate of more than $49 million in donations.
On Thursday night, auction house Sotheby’s hosted an unusual bidder: ConstitutionDAO, an ad hoc group of over 17,000 donors who pooled their funds to acquire a rare print of the United States Constitution.
While the bidding finished at $43.2 million, less than the $49.5 million raised by the decentralized autonomous organization (DAO), the DAO was unable to bid higher due to the expected costs of insurance, storage, auction fees, and transportation, among other expenses. A decentralized autonomous organization (DAO) is an online collection of people who use various tools to make governance decisions in a range of domains.
Ken Griffin, a wealthy hedge fund manager, was able to outmatch the group, according to a Wall Street Journal report published on Friday.
Nonetheless, several observers praised the initiative as a stunning demonstration of DAOs as coordinating tools, noting that the entire operation was created and implemented in less than a week, in what insiders called to as a “hyper-growth” firm.
In an interview with CoinDesk on Friday morning, Metaversal CEO Yossi Hasson remarked, “This is a collection of people who were strangers on Thursday, gathering together with a mission to acquire a copy of the Constitution.” With 1,000 ETH ($4.2 million), Hasson was the DAO’s largest contribution.
Who came up on top?
While speculation lingered the night of the auction that another crypto business — perhaps another DAO like Flamingo or Pleasr – had outbid ConstitutionDAO, the winner was declared Friday afternoon to be hedge fund billionaire Ken Griffin.
In February, the founder of Citadel declared that he “doesn’t know how to think” about cryptocurrencies like bitcoin and hence doesn’t think about them at all.
Later in the year, when the industry’s values skyrocketed, he referred to crypto as a “jihadist call” against the currency.
The document will apparently be donated to a museum by the 53-year-old.
Persons in doubt
Juicebox, an Ethereum-based community fundraising tool, was used to raise donations for the DAO. Individuals got PEOPLE, an ERC-20 token that would have given owners governance powers in the ConstitutionDAO, which would have administered an LLC that actually held the document, in exchange for ETH donations.
Some contributors appeared to be betting on the price of PEOPLE rising in response to the DAO’s auction victory, and the token did momentarily rise on decentralized exchanges after donations ended, but the token has since plunged following the announcement that the DAO had lost the auction.
Donors of ETH will be able to retrieve their monies pro rata (minus gas expenses), and more information about the return will be given today, according to the official Discord. It’s unclear whether users will be able to swap PEOPLE for ETH or if donors will simply be able to claim the monies they added.
The DAO was also apparently helped by crypto exchange FTX in changing the contributed ETH to cash; it’s unclear whether the conversion rate at the time of the auction and the time of the return would affect the amount of a refund donors receive.
However, regardless of the method of return, gas expenses may prove to be a considerable obstacle to certain donors receiving their money returned.
With almost 17,000 donors – many of them were new Ethereum addresses – and a median donation of little over $200, the campaign was a crowdfunding success.
— Alison McCauley (@unblockedfuture) November 18, 2021
Donating and getting a refund may gobble up more than half of the average payment, and some analysts have suggested utilizing a layer 2, or companion, system to ensure smaller donors get a larger share of their money back, but no details have been disclosed.
Every day, a DAO
Following ConstitutionDAO’s just-missed-the-finish-line effort, there are now a slew of semi-serious knockoffs and copycats attempting to replicate their accomplishment.
A variety of professional basketball teams, SeaWorld amusement park, abandoned shopping malls for the purpose of converting them to paintball arenas, Sotheby’s itself (in order to prevent an injustice like the loss Thursday night from happening again), and a private jet that flies nonstop between New York and Los Angeles have all been targets of Twitter jokes.
We should form a DAO to rename every Ken Griffin building to Peter Griffin
— Luiz DT (@dgntec) November 19, 2021
Members of the DAO are also pondering their next step.
There’s a nascent movement on social media to find and pursue an alternate item to buy instead of returning payments, but it hasn’t gained traction yet.
— weisser.eth (?, ?) (@julianweisser) November 19, 2021
While no single project has showed indications of life, the trend of flashmob DAOs is unlikely to fade away anytime soon — Google searches for “DAO” are at an all-time high for the year.
Since the fall of The DAO, an early investment experiment whose failure led to the birth of Ethereum Classic, the notion has not received as much widespread attention.
Another auction could be the catalyst for the next major DAO push.