If you’re unaware, Nouns DAO is an Ethereum based experimental NFT project that attempts to improve the formation of on-chain avatar communities. We have seen projects such as Cryptopunks attempt to bootstrap a digital community and identity. Nouns are now attempting to take it a step further by bootstrapping identity, community, governance and a treasury that can be used by its community.
The website describes Nouns DOA as “a fork of Compound Governance and the main governing body of the Nouns ecosystem. The Nouns DAO treasury receives 100% of ETH proceeds from daily Noun auctions. Each Noun is an irrevocable member of Nouns DAO and entitled to one vote in all governance matters. Noun votes are non-transferable (if you sell your Noun the vote goes with it) but delegatable, which means you can assign your vote to someone else as long as you own your Noun.” Sounds a little complicated? Let me break it down for you.
What Is a Noun NFT?
Each Noun NFT token is a 32×32 pixelated avatar made up of a variety of different backgrounds, accessories, bodies, heads and signature Noun glasses. In this sense, Nouns are not too dissimilar from Cryptopunks. Each Noun owned grants membership and one governance vote to the Nouns DAO, which was launched in August 2021.
The entire Nouns NFT collection consists of many traits and no two nouns look identical. There are 234 different head traits, 137 accessories, 30 bodies, 21 glasses and 2 backgrounds. The Nouns are a CC0 project, which essentially means that the artwork is in the public domain and the holders have full rights.
What Is The Minting Mechanics?
Unlike the majority of other NFT projects, Nouns have implemented a completely unique strategy. Noun’s Twitter bio states “one Noun, everyday, forever.” What does this mean exactly? It means that every 24 hours, a Noun is generated and goes up for auction. When there is an auction winner and the sale is made, it triggers the next Noun to be generated and put up for auction. The cycle continues.
This clever model means that the project grows in prevalence by one Noun each day, and the team does not need to have any input for the project to self-sustain. A good way to think about this approach is similar to a real-world co-op villagers or settlers game where new members are acquired daily to join the community.
What Is The Nouns DAO?
At the core of the Nouns ecosystem is its DAO. The DAO can be viewed as an exclusive club that people become a part of when they acquire or hold a Noun NFT token. The DAO is the most attractive and beneficial feature of the ecosystem as it controls the Nouns Dao Treasury, which currently sits at 27,045 ETH ($49,719,422.00).
The treasury receives all of the ETH proceeds from every Nouns auction. The only exception is that every tenth Noun sold for the first five years goes directly to the multisig wallet of the Nouns DAO founders as compensation, otherwise known as “Nounders”. Each Noun token grants permission to one vote in the governing body of the Nouns DAO, and the more Nouns that a person holds, the more power they have. A full list of the Nounders can be found under the “Nounder’s Reward” tab on its website.
The Nounders have a special right to ensure that no malicious or controversial proposals can be passed for safety reasons.
What Are Noun DAO Proposals
Separating themselves from the crowd yet again, Nouns do not have a concrete roadmap. Instead, it operates through community proposals. The proposals can be anything and range from charity donations to expanding the ecosystem. At the time of writing, there have been a total of 132 proposals, some have been canceled, some executed, some “defeated”, some active and some are still queued. Notable previous proposals have led to the Nouns mobile phone app, the creation of a Nouns comic book and the introduction of luxury Noun sunglasses into the market.
What Are Lil Nouns?
With the huge success and demand for Nouns, a derivative that has gained traction is called Lil Nouns. Essentially, Lil Nouns are an exact replica of Nouns, but they are smaller and auctioned off every 15 minutes, rather than every 24 hours. Apart from these two factors, Lil Nouns are almost identical to Nouns in terms of website, contract and DAO structure.
Why Has Nouns Been So Successful?
In a market where almost every project is doing the exact same thing, Nouns really stand out with its innovative and radically unique approach. In addition, as opposed to the usual profile picture drop method, Nouns approach really mitigates the risk of rug pulls.
As you’ll know, 99% of projects in the NFT space drop a full sized collection onto the market at once, followed by a roadmap which often over promises and under delivers. This common NFT project structure is often met with failure, as the majority of projects see their floor price ‘bleed’ to 0. Teams often drop the entire collection at once because they want to generate as much revenue as possible, as quickly as possible. However, Nouns have proven that a slow and steady approach can work better.
So here is the good news and the bad news. The good news is that Nouns have clearly been pioneers in the NFT space, which goes to show that there is always room for innovation. The bad news is, if you want to become a member of the Nouns DAO, you’re going to have to pay a premium price. Nouns has been so successful and sought after that its floor price currently sits at 90 ETH on OpenSea. Alternatively, you could try and win one of the daily auctions, but the winning bids tend to range anywhere from 20 ETH to 100 ETH, or more.
The inaccessible and high entry barrier into the Nouns community will only encourage high quality individuals into the DAO. These are the type of people who will help Nouns to continue striving to develop its amazing success story further.
