ConstitutionDAO, a decentralized autonomous organization that was gunning for the US Constitution, will be calling it quits after failing to purchase a rare copy of the document at Sotheby’s auction house last week.
Despite failing to fulfill its primary mission, organizers believe that the DAO “still made history” in its attempt to rally the decentralized community to buy the historic document. According to them, their efforts “have educated an entire cohort of people around the world — from museum curators and art directors to our grandmothers asking us what ETH is when they read about us in the news.”
ConstitutionDAO was able to raise $48.9 million from over 17,000 people to buy the Constitution. However, it lost the bid to hedge fund billionaire Kenneth Griffin.
According to Graham Novak, a ConstitutionDAO organizer, “the community has taken all actions that it was organized to accomplish.” Consequently, the group has announced that it will be shutting down.
How about the funds raised?
Well, the big question remains what will happen to the almost $49 million that has been raised. Although there were discussions on keeping the project running and shifting focus to a new idea or organization, the group’s primary purpose was to win the US Constitution.
“Ultimately, we’ve come to the decision that continuing on without the unifying mission of buying the constitution, setting up more official governance and embarking on a new chapter is not something that we as a core team are able to support,” the team said in a tweet.
Moving forward, the DAO has promised to return the donations back to its community. However, some members are concerned about how much would be returned.
For clarity, the donations are being held in a multi-signature wallet that is controlled by 13 “core contributors” to ConstitutionDAO. Nine out of the 13 contributors are required to sign a transaction before any funds can be transferred. The same method will be used to return the funds.
After careful consideration of feedback given by our community members and partners, we’ve decided to issue donation refunds through the same Juicebox mechanism by which donations were originally collected, rather than attempting to immediately launch a new governance plan and token at the same time as the refund.
This may not be as simple as it seems as there are already accusations floating around. On Sunday, Nike Bax accused the core contributors of “making internal decisions that are causing insane volatility.”
Bax goes further to explain that a snapshot of the holders of the group’s governance token, PEOPLE, was taken at a specific Ethereum blockchain on Friday (at around 6:12 UTC) despite warnings from Juicebox against the downsides of such an approach.
Shortly after, some PEOPLE holders dumped the token for Ethereum, forcing the value of the token in relation to ETH to plummet by over 82% within a few minutes on Uniswap. As expected, former PEOPLE holders felt there was no need to continue holding the tokens since a snapshot had already been taken. With the value down, speculators rushed to purchase the token. The team later announced that it was scrapping the snapshot method.
It is worth mentioning that donors will still have to pay gas fees to claim their ETH. According to Dune Analytics, donors spent nearly 200 ETH or $866,918 on fees. At this rate, they will not be able to recover their original investment. It is even worst for smaller investors as the cost of fees may be worth more than their contribution at the current transaction costs of the Ethereum network.