The NounsDAO
What gives an NFT value? Is it the vibe? Is it the artwork that can be displayed online or IRL in a digital frame? Is it the utility offered within a game or virtual world? If you’re unfamiliar with the NFT space, 2021 has seen an explosion of avatar projects with nearly every project following some variation of the following formula. Some projects add unique twists and extra features, but the structure is relatively the same. What's been fascinating about these projects is how quickly they form online communities. When I changed my profile picture to a Bored Ape in May, I was met with an immediate following from other Apes on Twitter, each of us taking the #ApeFollowApe ethos and meme to heart. Other NFT projects have active online communities as well, with each having its own culture and values and using Twitter and Discord as the medium for communication.
Below is an experimental NFT project that stood out the past few years, and that we want to use as the base layer for our very own experiment. Some context:
The OG Edition
Nouns introduced a novel underlying organizational structure to the NFT space. In the case of all PFP projects prior, the primary sales went to a team who then took the proceeds for themselves or figured out how to deploy the proceeds to accrue more value to the projects owners. The proceeds of all Nouns sales goes directly to the Nouns DAO and each Noun represents one vote.
Nouns took inspiration from Cryptopunks to serve as profile pictures and identity in the metaverse, but I think their scarcity makes them much more likely to be used as a mascot-like figure for groups of people. Rather than everyone sporting a Noun as their identity, we will rally around a given Noun as a group. What arises is a confederation of DAOs with different interests that can interact with each other and tap into a large treasury. Nouns DAO then becomes a Meta DAO, where it serves as the liaison and binding factor between Sub DAOs, which in turn will have much more concrete goals. In fact, there's nothing stopping a Sub DAO from joining another Sub DAO, and so on. It's DAOs all the way down.
The Nouns founders, or “Nounders,” reserve the right to veto any “obviously harmful governance proposal” during what is described as a “governance slow start” while the NFT supply builds up. However, they plan to “provably revoke” the veto privilege as DAO membership grows.
Nouns, however, take the formula and flip it on its head:
Nouns are released one at a time, with an auction ending every 24 hours
Every Noun is equally rare
There is no road map from the Nounders (Noun founders)
All IP around the Nouns is licensed under CC0, making it completely open-source and free to copy and modify
And then there is the most important part of the project, the DAO. For those unfamiliar, DAO is an acronym that stands for a Decentralized Autonomous Organization that allows groups of pseudonymous people to control money and assets using Ethereum smart contracts without relying on a centralized person or party.
Imagine the characters without the DAO or treasury. The art would be delightful, but Nouns would be one among a growing ‘sea’ of avatar projects. No, the real magic happens when we add these features together. The characters and the cadence create the culture, which benefits the treasury and the DAO. But this is only half of a virtuous cycle. To complete the cycle, we must feed the treasury back into the culture via the DAO. We should fund and cultivate a community of builders by experimenting, taking risks, and ultimately funding every high quality proposal that could lead to interesting culture and software.
Nouns are a generative NFT project on the Ethereum blockchain. The Nouns NFTs are 32x32 pixel avatars based on people, places, and things. One noun is generated per day. The Nouns NFT is a protocol and open source project. The programming that generates Nouns, and the art, is open-source. The creators of Nouns placed it in the public domain so that anybody may build on it, just as they can on the codebase.
Ethereum block hashes are used to create nouns at random. Because there are no if statements or other rules affecting noun trait scarcity, all nouns are equally uncommon. Nouns are currently made up of the following traits:
accessories (137)
backgrounds (2)
bodies (30)
glasses (21)
heads (234)
Each Noun is a generative piece of art and stored directly on chain. Only one noun NFT is generated per day and is auctioned off every 24 hours, indefinitely. One option for participating in the noun actions is nouns.wtf
Once an auction ends with no further bids, the NFT is sent to the nouns DAO treasury, and then the NFT will be transferred to the winning bidder’s address.
After completion, the auction must be settled due to the way Etherum works. The settlement transaction is responsible for a number of things:
It sends the current NOUN NFT to the winner of the auction
The next Noun is then generated
The next 24-hour auction begins
The Nouns DAO is the main governing body of Nouns and runs on a fork of Compound Governance. The Nouns DAO treasury receives all of the ETH proceeds attained from the daily noun auctions. Nouns can vote on proposals or delegate their voting power to a third party. You must hold a minimum of 1 Noun to submit proposals.
Owning a noun allows you to create and vote on governance proposals, which execute transactions on the ethereum blockchain once they are approved.
Nounders (the Nouns DAO founders) have elected to pay themselves with nouns since all noun auction revenues are transferred to Nouns DAO. These are the original founders who initiated Nouns:
For the first five years of the project, every tenth noun will be automatically delivered to the Nounder's multi-sig to be acquired and split among the project's founding members.
These transfers have no effect on the frequency of 24-hour auctions. Nouns are transferred immediately to the Nounder's multi-sig, and auctions proceed as planned with the next available noun ID.
Many traditional players may not understand the potential value of NFTs and community-developed IP. Brands that release NFTs are still ultimately licensing out owned properties. Nouns is very different in approach. Film studios have worked with public domain creations before, such as with the “Hotel Transylvania” films.
Consider what this means for building a media organization. Legacy media companies like Disney and Sony believe that their value comes in the form of the media they produce. They create characters, give them stories, and control marketing, distribution, and press releases. They protect their work using copyright laws and DMCA filings to prevent others from using their materials without permission. Nouns DAO is betting against that model. So where does value come from? Since Nouns live on the blockchain, they are secured by cryptographic truth and their provenance is easily verifiable. Rather than having value come from specific instantiations of media, like a Spiderman movie, the value lies in the underlying asset itself—the equivalent to owning the character Spiderman. It’s unrealistic to try to enforce copyright on the blockchain and Nouns is betting that we don’t even need to. By having a community of builders working on open source material, any reference to a Noun makes the token that represents the Noun more valuable. If we consider different types of media entities and how they might be placed on a centralized-to-decentralized scale, legacy media like Disney and Sony would be far to the left and NFT projects like Nouns would be far to the right.
The SquidDAO Edition
SquidDAO is dedicated to building a long term partnership with OlympusDAO. As a result, SquidDAO has committed to holding and staking OHM collected via auctions. By offering OHM-only bidding on NFTs, SquidDAO opens itself up to new potential community members. Therefore, with open tentacles, SquidDAO welcomes the chance to hold up to 10% of its treasury in sOHM. After the OHM auctions are complete, SquidDAO will work with Olympus to release OHM bonds. This will allow Ohmies to get exposure to SquidDAO ETH treasury, without selling OHM.
A mashup of Nouns DAO auctions, Olympus DAO mechanics, and Curve locked vesting and revenue share.
Squid DAO merged successful aspects from different protocols to build a new model for DAOs — funded by NFTs, powered by DeFi.
NFT auction funding mechanism & NFT-based governance — Nouns DAO
Locked token governance — Curve Finance
Protocol owned liquidity model — OlympusDAO
Immaculate inception, fair launch, community owned — Yearn Finance
Ether as reserve currency — Ethereum Community
Users that participate in governance through Kraken NFTs or veSQUID tokens will receive 50% of revenues generated from Squid bonding. (The other 50% will be distributed to protocol contributors).
The CCO Edition
This repo has been forked directly from NounsDAO with a few custom tweaks added. You’re encouraged and welcomed to do the same before you pass it along. The contracts are forked directly from the Nouns DAO repo with a few novel customizations by the Metaverse Engineers as follows; (DOCS)
Integration of multi-token payments for accepting bids in various ERC-20 tokens including $MONA token. We also added the ability to freeze certain payment methods in case we need to do so.
In order to support ERC20 payment, we also added an oracle feed to the auction house contract.
Full deployment to Polygon Network
Custom deployment scripts for editing names and ticker symbols.
Reduced gas fees where NFTs are only minted on a successful auction with 1 or more bids above the reserve price. If there is little interest in a certain NFT, it will simply not mint. The current nouns code always mints and is actually more costly if there is no successful bid as this requires a subsequent burn.
Updated the Nouns DAO subgraph code and Frontend code to meet our standards for UI/UX as well as respond to the necessary contract changes.
Upgradeable versions of the contracts. In the future upgrade, permissions can be forwarded to a DAO or simply to the dead address to make the contracts fully immutable.
The easiest way to create your own DAO, built on the Nouns protocol. To contribute, go to the #1-click-nouns-dao channel in the Nouns Discord.
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