What do NounsDAO & John Cage have in common?
Time. Albeit, Nouns are more timeless.
In 1985, contemporary composer John Cage wrote a solo piano piece called ASLSP (As Slow as Possible) that can last anywhere from 20 to 70 minutes. In 1987, Cage adapted it for organ, and in 2001 - 9 years after Cage's passing, a small German church constructed a customized organ to perform this piece over the next 639 years. 639 years was chosen because that was the age of the aforementioned church. The most recent notes, G# & E, were on September 5, 2020, and the following scheduled note, G#, will occur on February 5, 2022. The final note will occur on September 5, 2640. A new Noun will also be auctioned off that day.
On August 8, 2021, NounsDAO auctioned off its first Noun.
On August 9, 2021, NounsDAO auctioned off their second Noun.
At the time of writing, August 31, 2021, NounsDAO is auctioning off their 25th Noun and will continue auctioning off new Nouns every day until the end of time… or at least until the end of Ethereum.
NounsDAO is an NFT project built on Ethereum that harnesses time as its sole method of distribution and decentralization. Each Noun is a generative 32x32 pixel NFT made up of people, places, and things. Their features are random and are controlled by a smart contract that automatically places the Noun in the winning bidder's wallet while simultaneously creating a new Noun to be auctioned off exactly 24 hours later. 100% of the auction proceeds are deposited into the NounsDAO Treasury and are governed by the aggregate of Noun NFT holders. At the time of writing, 24 Nouns control 3260.6022 Ethereum ($11,003,847.70 at a current ETH price of $3,374.79).
John Cage and NounsDAO are both manipulating our perception of time. When we ingest content, we expect there to be a beginning and an end. The end doesn't necessarily have to be a resolution, but it has to be there.
ASLSP dabbles with the concept of timelessness, but the piece ultimately ends; the intention is to elongate expectations. NounsDAO, however, can potentially live perpetually.
I'm sure you know, but I'll clarify:
DAO = Decentralized Autonomous Organization. Many crypto projects are governed this way: token holders vote on how platforms operate. It is an attempt at a decentralized alternative to companies.
NFT = Non-Fungible Token. NFTs are tokens but not the same as any other NFT. Bitcoin, for example, is a fungible token. Every Bitcoin is the same as every other Bitcoin.
Since 100% of auction revenue is deposited into the Treasury, every 10th Noun for the first five years will be gifted to the founders (Nounders).
DAOs have been all the rage recently. While their history is murky and their legal statuses are unclear, their potential is undeniable. Most active DAOs have been formed in the past two years and are generally based around a DeFi or NFT project.
Rather than have a centralized command center (C-Suite Executives), DAOs ideally enable all participants to have a substantial stake and say in the trajectory of a project.
I say ideally because doing this is easier said than done. To participate in the DAO of a project like Uniswap's, for example, you need to have a UNI token to vote on proposals. What if a VC funding round allowed the VCs to have 51% of the UNI tokens before they were available for the public? That is not the case with Uniswap, but it can easily be the case with other projects. There are tokenomic structures and vesting schedules for advisors & investors to help avoid this, but ultimately, you want the token's distribution to be extensive.
NounsDAO is taking this framework and making one slight modification. Instead of releasing all the tokens that control the DAO at once, they are releasing one Noun every day. Each day the NounsDAO Treasury ideally gets a bit more decentralized and the previous Noun owners' say gets a bit more diluted.
I say ideally again because you never know - maybe Softbank is buying every single Noun for the first year. They would have more than a consensus vote for at least another year if they didn't buy any more Nouns after their 365th. This would take an absurd amount of capital, but it's not impossible. It would also not be in Softbank's best interest as they would just be controlling their own money and creating another subsidiary of Softbank.
As you can see, proposals to the NounsDAO require at least 5% of Nouns to be involved. This can be one person, or it can be a group of people who all own Nouns. With a current average price of 135.86 ETH ($458,493.654), you need at least 679.29 ETH ($2,292,468.27) worth of Noun NFTs to submit a proposal.
These proposals can be anything from donating to charities (as seen in the picture above) to change the amount of the Nouns supply required to submit proposals.
Think of everyone with a Noun as being on the Board of Directors of a company without a C-Suite.
To do everything that NounsDAO is doing, you need blockchain technology. Specifically, you need smart contracts. The smart contract that governs the auction process deposits all of the auction revenue into the above contract address, which serves as the NounsDAO treasury. You can see every transaction made to and from this contract here.
Imagine if the US government was a DAO and there was a public ledger of how they spent the $2 Trillion in Afghanistan.
Nouns can be fractionalized just as any other NFT can. It's the same business model as Masterworks.io, where you fractionalize expensive art pieces so anyone can buy pieces of them at lower prices.
Currently, only one Noun - Noun 11 / Party Noun - is available in fractional form. Check it out here - one token of Noun11 is worth roughly 0.0014 ETH, and there are 118,998.81 Noun11 tokens, so the implied valuation is 167.849 ETH ($566,455.127).
Does fractionalization affect the voting power within the DAO? No. Fractional Nouns will be, for the time being, excluded from voting measures.
Given that this project is barely three weeks old, the community is still new, and the DAO has not had much time to submit and enact proposals.
Although they have succeeded in doling out a total of 30 ETH ($101,243.70) to 6 different charities, you can see that the 30 ETH have been disbursed in the internal transactions tab on the NounsDAO Treasury address on Etherscan.
In the Virtuous Cycle page of their documentation, the Nounders proclaim the necessary comingling of the art, DAO, and treasury fund features. Each new piece of art brings in funds from the crypto community; the DAO then governs the funds to invest them back into the crypto community.
Without one of those features, the model does not work.
While the Treasury can do whatever it wants, it seems like the goal is to ensure the viability of the NounsDAO community. According to the Virtuous Cycle, the vision is to turn Nouns into an 'internet-wide event' so projects revolving around Noun artwork and integrations would be prioritized.
The art is open source, so anyone can build on top of it.
Below you can see the hand-drawn Improper Noun set. The artist is releasing a new one daily and can be connected with on Twitter here.
Here is a set of paintings designed by the AI process known as GAN. Connect with the Noun GAN Study artist here.
This last screenshot showing 20 more derivatives of Nouns was taken from the newly released website nouns.com.
Nouns.com is a new nexus for the Noun community. Aside from Discord, it may become the central hub for all Nouns. It contains features such as NounsChat, NounsDEX, NounsBlog, and everything you need to operate as a Noun in the famed metaverse, CryptoVoxels.
Below is a snippet of what is being built at 1 Nouns Road in Crypto Voxels. Blockchain-based digital worlds are still finding their place, but I find it easy to imagine dozens of Nouns hanging out as their avatar in this context.
Not only is there all the above, but there is even a hot or not game based on Nouns called want2bnoun (12BNoun.eth).
In case you were wondering, Noun 2 / Pineapple Noun is currently tied for 1st place with Noun 7 / Mirror Noun.
No NounsDAO review would be complete without a reference to SharkDAO.
SharkDAO is the infamous sub-DAO within NounsDAO.
To be clear, NounsDAO is the primary DAO of the Nouns. It is made up only of people who own full Nouns. There can, however, be sub-DAOs within NounsDAO. SharkDAO is an example of a group of Nouns who decided to start their sub-DAO. It consists of Nouns 2 (Pineapple Noun 👀), 5, and 15. Anyone can join their Discord as they are looking for other Nouns, developers, designers, and more to build their community.
Every DAO is different, but the ethos remains the same. Decentralized governance.
NounsDAO is genuinely unique. CryptoPunks are known for being one of the first generative NFT sets to take off (next to CryptoKitties), but their community infrastructure pales compared to NounsDAO.
They don't have a treasury, and what happens if 3AC buys 5,001 of the 10,000 CryptoPunks. After 250 years of healthy and technology-extended lives, Su Zhu and Adam Davies decide to become digitized versions of their favorite punk. Do the remaining 4,999 get inherited by their offspring or stay in a defunct wallet forever? Will it be put into a trust? Many variables.
NounsDAO will have a similar issue for the previously auctioned Nouns, but there will be a new Noun every day, decentralizing the governance. No one person or entity can control something forever like they can with finite amounts of time.
John Cage introduced time into his art in ways that were not initially understood (Check out the enthusiasm surrounding his 4:33 piece). NounsDAO is doing the same.
Just yesterday, Noun 24 sold for 194 ETH. That's $655,669.56. How many three-week-old companies have the ability to accumulate $655,669.56 in revenue in one day?
Each Noun holder represents a 1/24th, or a 4.17% say in the DAO. Because of yesterday's purchase, each Noun holder came into indirect control of another $27,319.57. After today, each Noun holder will represent a 1/25th, or 4%, say of what's done with the NounsDAO treasury.
After tomorrow, each Noun holder will represent a 1/26th, or 3.85% say.
Nice write up here, Zach! Your authenticity and dedication shines brightly.