The Nouns NFT collective on Ethereum faced a significant fracture in its community recently. This collective is known for its mission to build open-source intellectual property by supporting various creative projects. However, the community was divided after a widely supported fork. The NFT holders within the prominent Ethereum-based Nouns collection found themselves at a crossroads one Friday. A proposed fork from the project came to fruition, causing a split in the community.
Recent division in the Nouns NFT collective on Ethereum
More than half of all Nouns NFT holders chose to part ways. In doing so, they collectively withdrew over $27 million worth of Ethereum from the project’s treasury, leaving the project in turmoil.
This sudden division saw the departure of the owners of 472 Nouns NFTs out of a total of 846, which translates to nearly 56% of the entire collection. As they embarked on this new path, they took with them approximately 16,757 ETH, equivalent to $27.3 million at present market rates. On average, this means each departing NFT holder received around 35.5 ETH, amounting to about $57,850.
Significant Changes and Loss of Confidence in Nouns DAO Following Fork
The fork’s implementation necessitated the return of the original NFTs to the DAO treasury. In return, each holder was issued a replacement NFT featuring identical artwork for the newly formed DAO. These NFT holders could now “ragequit,” exercising their right to claim their share of the treasury (approximately 35.5 ETH per NFT) while forfeiting their existing profile pictures (PFP).
This surprising turn of events signals a significant loss of confidence in the current Nouns DAO format, which has expended millions of ETH since its inception in 2021 to fund an array of Nouns-themed projects.
These projects aimed to bolster the Nouns brand and encompassed a wide range of initiatives, including a parade float featured in the 2023 Rose Parade, the creation of vinyl toys, 3D-printed apparel, a comic book series, the establishment of an esports team, and various other endeavors. Remarkably, even Bud Light acquired a Nouns NFT, which it then prominently featured in its 2022 Super Bowl commercial.
However, much like the broader NFT market, the value of Nouns has sharply declined since its peak in late 2021 and early 2022. The price floor, representing the minimum cost for the cheapest NFT listed for sale, plummeted from a peak of $267,000 worth of ETH in December 2021 to approximately $57,740 today, according to data from NFT Price Floor.
In essence, while the open-source Nouns brand expanded over time through a plethora of DAO-funded media projects and marketing campaigns, its market value significantly dwindled. In light of the ongoing bear market, some community members appear eager to cash out and recover some semblance of a return, rather than continuing to remain part of the community.
One pseudonymous NFT holder, known as Hindsight, expressed disappointment on the fork page, stating, “This is not great.” Despite this strong signal, there has been no acknowledgment, let alone concrete discussion, about the factors that led to this situation and how to prevent or rectify them in the future. Ultimately, no organization can defy the gravity imposed by compounding bad decision-making.
The initiation of the fork became possible thanks to a Nouns protocol upgrade earlier in the year. This upgrade enabled NFT holders to propose a fork, allowing them to exit the DAO and collectively reclaim a portion of the treasury. The fork’s execution requires a quorum of at least 20% of tokens to join through their respective holders, followed by a waiting period for additional holders to participate in the departure plan.
Even after the fork, the Nouns DAO still retains 13,310 ETH, amounting to nearly $21.7 million. Remaining NFT holders maintain the ability to vote on proposals and participate in allocating funding to further bolster and support the Nouns brand. Importantly, this brand operates under a Creative Commons 0 (CC0) license, permitting anyone to use the artwork to create and sell derivative projects.
One of the Nouns co-founders, operating under the pseudonym Seneca, suggested that the remaining community members should intensify their efforts by increasing spending to support builders and creative projects. Furthermore, Seneca recommended distributing forked Nouns to potential participants to aid in this endeavor.
Seneca emphasized a crucial lesson learned from the fork experience: in the world of Nouns, if the treasury remains unused, it is inevitably at risk of being taken over. This particular aspect of the Nouns ecosystem has now been made explicit, serving as a valuable reminder for the community moving forward.
With these developments, the Nouns NFT collective enters a new chapter, navigating the aftermath of a significant fork while striving to preserve and expand its brand’s influence in the ever-evolving world of NFTs and blockchain technology.