Nouns DAO
What if you could own and build a brand as big as Nike?
Crypto Rabbit Holes is a weekly-ish newsletter where I break down the most interesting web3 projects that are changing how we live, work and play. Subscribe to get notified when the issue is out:
You can also find me on Twitter (@_denze) đđť
Read time: ~6 mins
The Nike Swoosh was designed in 1971 and is now one of the most recognisable logos in the world. Decades from now, we may say a similar thing about the Nouns Glasses. ââ¨-â¨
Nouns Glasses originate from Nouns, an NFT project on the Ethereum blockchain. Each Noun is a â32x32 pixel character based on people, places, and things.â At first glance, you might think that Nouns is â just another silly project creating cute but probably worthless JPEGs.
Youâd be right about the cute bit, but dig a little deeper and youâll see thereâs much more to Nouns.
What is a Noun?
To make things easier, letâs forget about NFTs for a moment.
Imagine Nike was started as a company today, except unlike the Nike we know, every day, one person buys a share of Nike and becomes a part-owner. This opportunity is open to anyone, but the price of entry is money, so whoever is willing to pay the most is let in.
This money doesnât go to any third party. Instead, it sits in Nikeâs treasury, which each of the part-owners have full control over. Each share they own gives them one vote on how the money should be used - for example, deciding the types of products, services and experiences that will be funded under the Nike brand.
Replace Nike with Nouns DAO and thatâs how Nouns works in a nutshell.
More specifically:
One Noun NFT is auctioned off every 24 hours. The highest bidder becomes the owner of the Noun. Noun owners are called Nouners
The daily auctions will continue forever, meaning the ownership share of existing Nouners declines everyday, e.g. when there are 2 Nouns, each Noun represents 50% control of Nouns DAO, but when there are 3 Nouns, that falls to 33.33% each
100% of the auction proceeds goes into the Nouns DAO treasury, which is governed by each of the Nouners. The founding team, called the Nounders, are compensated with every 10th Noun for the first five years
Each Noun held entitles Nouners to one vote on decisions relating to the use of the treasury
The Numbers
Now that you know how Nouns works, here are some numbers that might pique your interest.
To date, 409 Nouns have been auctioned off:
Average price: ~$273k
Average price in the last 7 days: ~$97k
Total raised into the Nouns DAO Treasury (all-time): ~39,500 ETH (~$111m)
Whatâs surprising about Nouns is that despite the high cost of entry, thereâs been consistent demand since the project launched in August 2021. Itâs important to note that these arenât necessarily individuals buying each day. Groups like SharkDAO and Lil Nouns DAO have formed to collectively purchase and own Nouns, making Noun ownership more accessible.
Anyway, where is all that money going?
Funding the Nouns ecosystem
As a project, Nouns is unique is that the Nounders (founders) arenât in control of the Nouns roadmap. Instead, itâs up to the community of Nouners (Nouns owners) to collectively decide how the Nouns treasury can be used to drive value back to the Nouns ecosystem. They do this by reviewing and voting on proposals.
For example:
Proposal 12 requested 11 ETH to provide free prescription glasses to kids in need
Proposal 132 requested 82 ETH to fund the development of Nouns-branded streetwear including t-shirts and hoodies
Proposal 143 requested ~$1m to fund a creative agency solely dedicated to telling the story of Nouns through video (example below).
A downside of those proposals is the amount of friction involved. Thereâs so much money being added to the Nouns treasury every day, but it can sometimes take weeks for ideas to get funded.
To speed up the deployment of capital, Prop House was created from Proposal 23. It lets anyone submit proposals and request for funding. Each week, proposals are voted on by Nouners, and small grants of 1-5 ETH are distributed. Itâs a way for Nouns DAO to rapidly fund more experiements.
Permissionless Possibilities
Another interesting aspect of Nouns is that all the artwork is CC0, meaning it can be used by anyone for any purposes.
Theoretically, this means Nouns can tap into the creative abilities of the entire world to help make their Nouns Glasses as well known as the Nike Swoosh. Itâs a bottoms up approach to brand building, which empowers anyone to take part.
Hereâs a great example â Jack Butcher created a Nouns hat and sold 167 in a little over an hour. He didnât need to ask the Nouns DAO for permission, and as a result Nouns also gets more eyes on their signature glasses. Itâs a win-win.
Whatâs the point?
The Nouns ecosystem incentives initiatives that grow and broaden the reach of the Nouns brand.
As an Nouner, youâd want to fund valuable proposals which elevate appreciation of Nouns. Theoretically, the more people who know and love Nouns, and want to become part of the ecosystem, the more valuable the original Nouns NFT becomes.
As anyone building products, services and experiences within the Nouns ecosystem, you want more eyes on Nouns because that means more attention on what youâre working on. Then, instead of building an audience or customer base from scratch, you can simply tap into the existing Nouns community.
Itâs clear that Nouns DAO is happy to throw a lot of money at a wide range of experiments, but what exactly does the Nouns brand represent?
Seneca, one of the Nounders says that itâs âsomething along the lines of optimistic, absurdist, trying new thingsâ.
As an outsider, thatâs the vibe I get as well. Can they really stick around long enough to become as recognisable as the Nike Swoosh? Itâs ambitious, but they definitely have the momentum, community and funding to make it happen, so letâs see what happens. ââ¨-â¨
What'd you think of today's email?