From a meme to $47 million: the future of constitutional DAO, cryptocurrency and crowdfunding
Jonah Ehrlich is one of the core members of a group called ConstitutionDAO, which raised funds to try to buy an original copy of the U.S. Constitution at an auction held by the high-end auction house Sotheby’s.
Raising funds on the Internet is a fairly familiar idea-from new products, movies, scientific research to politics, there are crowdfunding activities. But most of the crowdfunding activities we are used to are carried out through a central service agency. Kickstarter, or GoFundMe, or Indiegogo.
But the DAO in the Constitutional DAO stands for a decentralized autonomous organization. Jonah and about 30 other people formed the DAO, and then provided people all over the world with the ability to donate money to it using the Ethereum blockchain . In exchange, they will get the right to vote, decide what to do with this copy of the constitution, and what the organization should do in the future. And this attempt to raise funds has been very successful. ConstitutionDAO raised approximately US$47 million and verified with Sotheby’s Auction House sufficient funds to participate in the auction.
Jonah explained how ConstitutionDAO started, what happened to the auction, if they won, what was the actual plan to deal with one of the only remaining copies of the Constitution, and what will happen to all the money now.
There is a lot of content in this story that hasn’t really been told–I think it’s a very useful point of view, that is, the promise of encryption technologies, such as smart contracts and DAOs, and having a group of people do it together…well, and with The tension between reality and everything.
My biggest question is why they need this technology to achieve their goals. I think this is a big problem with many cryptocurrencies. I really appreciate Jonah for coming to my interview and discussing this issue with me.
The following content comes from the sharing of the conversation between Jonah Erlich and Nilay of ConstitutionalDAO.
For clarity, this manuscript has been lightly edited.
Nilay: Jonah Ehrlich, you are a software engineer and you are one of the core contributors of ConstitutionDAO. Welcome to our talk show.
Thanks, Nilay. It is a pleasure to be here.
So from my understanding of your project, you want to buy the constitution.
In the beginning, I just made a joke on Twitter and wanted to make a very real bid for a copy of the U.S. Constitution at the auction. In just one week of trying to achieve this goal, we saw and used the power of the Internet, which was truly a great experience.
There is a lot to talk about, what happened to the bidding, how the auction process actually went on, and what you plan to do with the funds you have raised so far. You raised approximately $47 million-although this is an Ethereum number, so this number is always changing-but I want to start with the most basic things. DAO stands for decentralized autonomous organization, but what is DAO?
The definition of DAO is a group of people coming together around a shared community and a shared resource. The most interesting description I heard is that DAO is a group chat with a bank account. In essence, what DAO lets you do is to have this very lightweight organizational structure, able to move around the asset and interact with the world.
We spent a lot of time in this show discussing the organizational structure: there are very few DAOs that are truly lightweight in the end. If you have a group chat with a bank account, how do you decide how to spend the money in this bank account?
“If DeFi is an accelerator of financial history, then DAO is an accelerator of organizational history.”
It depends on DAO. The DAO structure is indeed in its infancy today. What most of them do is a voting process. Basically, everyone who holds DAO tokens can vote. They will make a suggestion: For example, we want to buy a constitution. All token holders can get voting rights. Now there are more complex and interesting mechanisms in the DAO world that are under study. A joke in the crypto world is that if DeFi (decentralized finance) is accelerating the history of finance, then DAO is accelerating the history of organizational structure. Because DAOs are so new, most of them operate on this very simple direct democratic structure.
If I donate to ConstitutionDAO, what am I actually buying?
The donation to ConstitutionDAO means-if our bid is successful-we will be granted the right to manage the U.S. constitutional documents. We tried to bid and won one of the remaining 13 copies of this document. At that time, the DAO will vote on how to deal with it. For example, we have some museums queuing, and they will make suggestions on how their museum should store and display this document. The DAO will also be able to vote on what text should be displayed next to this copy of the constitution. What information do we want to share with the world? Suppose the DAO wins a copy of the constitution and we display it in a museum. We may have the remaining funds to give a community that is really excited about doing things. Token holders will determine the future direction.
I saw on the website that when someone makes a donation, they are essentially buying a governance token. The token is called $PEOPLE, which is very interesting-buying $PEOPLE has a dark meaning.
Yes, this is a dark side. This is something we act very, very quickly. In fact, we are planning to rename the token to a more positive name.
How do you plan to rebrand its brand?
It will be WTP dollars-our people. This is the main idea. We really hope that this DAO is a positive thing, so when members say they are uncomfortable with the name of the PEOPLE token, we really listened to the opinions of the community. It was something that was selected very quickly, and we wanted to adapt to the requirements of the community.
When someone buys a token named $PEOPLE or $WTP, do they have a ticket for each token?
We have not yet figured out the governance model. In the rush to be able to buy this document, there are many details that we have to figure out after we win. In fact, when we won, we were discussing different governance models. One of the big concerns is that some big holders of the cryptocurrency world-we call it giant whales-will have too much control over what happens to files. Our important message is: This is a movement to serve the people. This is a document of the people, so we want it to be controlled by the people.
We are looking for different mechanisms. We are looking for direct democratic voting: a symbolic, a vote. We are also looking for a ticket for each wallet, this is not an exact representative of a person, but it is very close. Quadratic voting is another mechanism. When a person owns more tokens, the voting power will actually be weakened: you will not have a hundred additional votes for every one hundred additional tokens. But as the number of tokens increases, the number of votes will decrease.
When you say that the DAO is accelerating the history of organizational structure, you are describing the history of accelerating democracy: establishing a voting system and figuring out how these votes will represent a group of people. However, a group of people must make these decisions; it is not entirely democratic. What does this mean for ConstitutionDAO?
There is a good concept called progressive decentralization: it is really difficult to really start a completely decentralized thing, so you have to start with an initial team, build something, and then bring it to decentralization. Our plan for ConstitutionalDAO is that once we win this auction, we will achieve complete decentralization as quickly as possible.
A lot of what I hear about blockchain projects is trust and verification. What is the accountability mechanism for this process? If I buy this project, you have promised to decentralize as quickly as possible. What made you do this?
Everyone involved in this project is very public. The signers on our [multi-signature wallet] are very public. We work with an excellent non-profit organization called Endaoment. They help donate on-chain, keep documents and make our bids on behalf of Sotheby’s. The personal reputation of trusted people in the cryptocurrency community is at risk, bringing us to this point of decentralization. This is indeed our heavy reliance at the beginning of this process. The situation with many new technologies is that, unfortunately, you can’t do things perfectly the first time. We are still very, very early for DAO capabilities and cryptocurrency capabilities. We hope that we can act as quickly as possible to get things done, and at the same time keep our promises, and we will achieve our goals. I feel very confident that if we win this document, we will achieve our goal soon.
I want to promote it because I heard from the cryptocurrency community that you don’t have to trust others: software will do it for you in a certain way. We can establish automated, transparent or verifiable accountability mechanisms-all of which do not require some central control. In reality, many times you have to trust a group of people to do what they say to do. When you raced in this event, did you perceive this kind of tension?
You are 100% correct. You must trust the core team of ConstitutionalDAO. Initially, we had a so-called multi-signature-basically a smart contract that would hold funds controlled by 13 different signers. Seven of them must sign to move funds. Initially, for their safety, these signers were anonymous because it was a large sum of money and we were worried about their personal safety. But we heard voices from the community. “Hey, we don’t agree to do this.” Many people don’t want to donate because they are anonymous, so we ask signers to voluntarily let us know if they are willing to share [their] identities so that we can put them on our website. Everyone decided to volunteer. This is definitely an iterative learning process.
In the long run, the trust aspect is something we absolutely want to minimize. I think what is really interesting here is how to use these trust assumptions to connect the physical world with the encrypted world. How do you ensure that the physical files are actually managed according to the wishes of the token holders? One idea we explored is to transfer the DAO to 501(c)(3), where the bylaws will require the signatory to act according to the wishes of the token holders.
The wishes of the token holders are expressed through a voting plan that you have not yet determined.
Yes, there are great tools out there, but we haven’t officially confirmed anything yet.
If you have to trust a group of people-some of whom I believe you know personally-in the end, voting just means a certain degree of politics. Why do you need a decentralized global computer network to manage it? Really, you just bought a stake in something to provide you with some management rights. This is like every company in the United States.
The way I like to think about this problem is in terms of the two main types of agreements we are used to in the world. One is an agreement between people and society. These are along the laws prohibiting theft or tax avoidance. You are not doing bad things to a particular person-although some of them do have individual parties-but you are enforcing the rules of society as a whole.
The other part is the agreement between individuals and the agreement between entities. I think this creates a lighter arbitration framework for agreements between individuals, so we can put as many things as possible in the code instead of in legal documents. When it’s in the code, it’s much easier to actually simulate what happens. It is much more difficult to explain it in an unintentional way. You can put in the places you want people to explain, but it creates a lighter and more effective system for agreements between people. This is why it is really important. It is on this decentralized structure because it allows us to act faster and more efficiently in this sense.
For me, put this into practice. I went to law school. I spent a few years studying contract law, and although I am not sure what I learned, I keep it till today. Contract law is a very complete legal system, and there are hundreds of years of doctrine behind agreements between people. What can you put into the code to automate contract law?
Many things are already running today.
But why do you need a decentralized computer network to manage some of the texts of the constitution proposed to be displayed in the museum? Why is this impossible on a centralized computer?
Centralized computers have no guarantees like you do on the blockchain. For example, you can directly read and audit the code of the protocol you are interacting with, which is much more difficult in centralized services. This is not important for some big things, such as a highly regulated financial institution. This makes it easier for a newcomer to enter and create a new service, someone can audit the code and say, “Hey, this is exactly what it does”.
Obviously, we cannot expect all kinds of people to audit the code. Most people don’t know how to read the code, but in this field, there is a growing industry chain of very powerful smart contract auditors and a better understanding of what is best practice and what we hope to get from these smart contracts result.
Are smart contract auditors just lawyers?
No, they are software engineers.
All right. Likewise, my history is a very simulated version, that is. I will write you a contract. I will send you that contract. Unless your lawyer has read the contract, you should not sign the contract. Should I wait until my smart contract auditor reads it before signing the smart contract?
Whether it’s your smart contract auditor or a company you trust. In fact, I have a very good example of a smart contract, which you may find interesting: in the technology world, for technology employees, a very common thing is the issue of attribution-you join a company, you get stock options , There is a year of cliff. What you can do is put this attribution right into a smart contract. What’s really interesting is that you can actually see these funds. They are in that contract. You can withdraw them at any time, so it’s not that you get your equity within a month, but you can withdraw them at any time, every block. Almost a steady stream of these equity is pulled out of the contract, and it’s obviously lighter.
I have read some of these attribution contracts, they have 200-300 lines of code. If you use the same one repeatedly, you can verify that this is the same attribution contract used by Google for 100,000 people-you will know that this is a safe thing, and you may be able to trust it relative to the repetitiveness of legal documents. For example, when I read the lease of my apartment in New York, I have New York fire safety regulations in it. I don’t know what exactly I need to read here. In the software, with this idea of modularity, I can say, “Okay. I know there is this fire safety regulations module here, and I can move on.”
I think many lawyers will say the same about how they read contracts. There are many intersections between the way lawyers work and the way software engineers work. Larry Lessig (Larry Lessig) had a great article a long time ago called “Code is Law”, this is —–.
But what I want to refute is: For software, you can choose your own interface. For legal documents, you do not have this option.
This makes a lot of sense for financial instruments and payment tracks. In this project, you are trying to do something more subjective: decide which museum gets the constitution. I still don’t know why this needs to run on a decentralized computer network, rather than a model where a group of people you trust give you some shares in their organization and let you manage these people.
I see. Part of the reason is the speed of our actions at the time. It is impossible for us to do this through traditional payment processing mechanisms. We have some very, very large payments coming in. We have a donation of 4.5 million dollars, which arrived overnight. Most payment programs will not handle this situation in 15 seconds like a blockchain, so this is an important part of using a decentralized system. It is also significantly more difficult to put these voting rights in place using traditional systems. This is not common outside of the financial world, and it is not a financial instrument-it is a donation and control of documents. This is why this technology is necessary, because it gives us the ability to govern without the cumbersome means of going through many different and truly important processes. It also guarantees that the holders of votes are who they say.
I think it makes sense, but at that time, the second half of the puzzle was not assembled yet. These tokens do not actually give any clear rights or voting structure. I’m curious why people buy something they don’t know what they got, but before we discuss the donation and voting structure within the DAO, I want to talk about how ConstitutionDAO started. The Constitution DAO has 30 core contributing members. How did it all start?
“It started as a meme.”
Like all great things on the Internet, it started with a meme. There is an article about Sotheby’s auctioning a copy of the U.S. Constitution. Some cryptocurrency people are joking, “Oh, what if a group of cryptocurrency people get together and buy the Constitution?” These jokes became more serious. A joke, and then there is an amplification effect, half of the people are joking, and the other half are very serious. At the end of the conference call, everyone decided, “Okay. We really want to do this.”
There is a precedent for cryptocurrency groups to place bets in auctions–for example, PleasrDAO bought a Wu-Tang Clan album for $4 million–so we thought, “Okay. This is a significantly larger “At the time, we thought it was 20 million dollars, but it was possible. It was then that we began to plan and organize. We set up a Discord and a website. We started talking with museums and suppliers. Just seven days later, we had a representative bidding at a Sotheby’s auction for nearly $50 million.
What is your role in this organization?
Many things are super vague, and our progress is very fast. The last thing I am responsible for is the induction training for newbies: how do we teach those who are new to cryptocurrency how to participate safely? We also have an open Discord room, where we help people solve problems. I also made some contributions to marketing and some strategic matters. We have found that people are very flexible to move from place to place to where they are needed.
It’s interesting. Novice entry is the reason why you are participating in the interview now, that’s me. I appreciate your expertise. When you talk to a supplier, you obviously need a bank partner. You have a partner called Endaoment-this is a good name; in the middle is “dao”, not “DAO”. This is perfect. That’s a lot of people trying to do a lot of things at the same time. How is it actually formed? Don’t you know it will form?
We really don’t know until the end. There are many things happening, unresolved, and there are many uncertainties. As we raise more funds, our legitimacy has become greater in different institutions.
This is largely an American story. The American story is that if you have more money, your legitimacy will increase.
“The American story is that if you have more money, your legitimacy will increase.”
right. I think many people are very curious. One of the most meaningful parts of this experience is that we are talking to some museums and they want to learn more now. They saw that we raised 40-50 million US dollars, depending on the price of Ethereum. They once said: “We need six months to raise this money. Let’s talk about: How did you do it?” Obviously, there are some very specific developments happening here, but they are now Collective ownership and all the different things we discussed with this organization are very curious.
Are you more interested in the copy of the constitution, or more interested in the speed of technology and organization?
I am interested in both parts of it. What really interests me is this story-there are many people who are interested in this project for different reasons, and I encourage you to actually take a look at our fundraising website. We use a platform called Juicebox. People can leave a message explaining why they want to donate. They wrote something very beautiful and heartfelt: Talking about them being the descendants of slaves, they are very happy to have this document now, even though there are some terrible things in it. The immigrant wrote, and the parents also wrote that they are happy to share this document with their children one day. The different emotional stories that this project evokes in people’s hearts are indeed what attracts me. I am also very curious about technology, but this is a secondary factor.
It’s interesting. In the vortex of activity seven days before the auction, the auction itself, and after being out of the circle very quickly, we almost only heard news about technology. We heard that this project proved X, Y, and Z about the entry of cryptocurrency into the mainstream, and about DAO. What I find very challenging is that I rarely hear about the Constitution. There are only 13 copies of this thing floating around, and it seems that this thing is a meme. Like all Internet jokes, one element is just a troll. When you really have to govern this copy of the constitution, do you think it will be reversed?
What I want to refute is that this is just a joke. I think people have reasonable excitement and curiosity about having this document. A large part of the narrative revolves around technology, because it is such a new thing. This technology is a very misunderstood thing, and people are still trying to understand it, but all great technologies exist for one reason: to enable people to use it. This is why I say that people and their stories are what motivates me.
But you are right-technology is really important because it drives the narrative. “Hey, these crazy cryptocurrency guys are going to buy a copy of the U.S. Constitution. What is the DAO? Why do they raise “on-chain”? What does “on-chain” mean?” The combination of these two factors is what drives this narrative . Technology, yes, is an important part of it, but again – technology just enables humans to do better things.
The opposite is that people are spending money. I watched your educational video on how to donate. You suggest that people add 100 or 200 dollars to their willingness to donate to pay for gas, which is the transaction cost of the Ethereum network. For many people in this country, that is real money. Quite a few people have already contributed, but the second half of the project is really not planned. What do you think is the next step after raising funds and winning the Sotheby’s auction? What should happen after this?
We have the idea of doing 501(c)(3). None of this has been finalized, but the specific plan is for Endaoment to keep the documents until we have a legal structure.
My real problem is: your organization spends money, and you just want to give it to another organization. This is a very complicated contractual relationship, right?
Are you planning to write a contract with Endaoment saying “we will hand over the guardianship of this document to you”? Is there a lawyer in this relationship?
As we have already discussed, this is a very experimental technique. This is something we do in a very light way because it is so new. This is what we do in a very trusting way. Endaoment is very famous in the cryptocurrency community, and I believe they will not want to risk doing negative things. This is the structure that drives this matter. In the future, I hope to see a better legal structure to make this kind of project possible. One of the biggest lessons of ConstitutionDAO is that the technology is so close, but we are not fully prepared yet. There are a lot of rough edges that need to be polished so that it becomes so easy in two to five to ten years.
Of course, is this a technical issue? This is the question I keep thinking about. What I understand is the payment track and financialization, which are now basically operated on computers owned by banks. Let’s decentralize these computers-I can get from here to there. You have one of the 13 remaining national founding documents, but you have not yet planned what to do next. Technology can’t help you solve this problem, can it?
Someone must hold it, store it, don’t destroy it. You have to make sure to do this the moment you get the file. Who will do this?
This is both a technical issue and a regulatory issue. Some of our partners are ready to actually keep these files. Sotheby’s is willing to keep it for another 30 days. One of the reasons we did not pay the full price is that we knew that we needed money to keep the documents, as well as to pay fees and taxes. This is not only a regulatory issue, but also a technical issue, because we have to figure out these structures. There are now so many great organizations working with regulators to make it easier. What I want to say is that this is one of the things that makes cryptocurrency different from many other technology industries. Some organizations, such as Coin Center and Blockchain Association, are working very hard to make regulators understand. Many of these are not trying to persuade regulators to let everything run free, but, “Hey, let us think very carefully about what a really good policy framework looks like to maintain America’s competitiveness while also guaranteeing investment. The safety of the person.”
Wait-how do we find regulators in what you plan to do with the constitution?
So what I’m talking about is that it’s a technical and regulatory issue, and I’m trying to link these two things together so that we can figure out how an entity on the chain can capture from a very specific physical file. live.
Which part of this is regulated?
There is no clear tool for DAOs to interact with real-world entities.
So you raised a bunch of money in this DAO. Have you established a limited liability company? It costs $50 to build one.
Yes. If the relationship with Endaoment is not successful, we have a limited liability company as a backup.
Okay, so the DAO has money, and it holds the money on the Ethereum blockchain. Do you plan to transfer the money to Endaoment? Are you going to give it to them?
We put the money in an FTX account, Sotheby’s will use it to verify the proof of funds, and Endaoment will bid on our behalf.
This is a win-win situation. I give you this opportunity. Sotheby’s verified the money.
Thank you. I am grateful for that.
This is a big problem; I don’t think Sotheby’s has done this before. I’m just curious about the actual steps: you have the money, and then you make a bid. If you win the bid, what will happen to the money next?
It will either go directly to Sotheby’s from FTX or go to Sotheby’s through Endaoment. I am not directly involved in this process. As I said, I am more involved in the novice onboarding and marketing work, so unfortunately, I don’t have a practical specific answer.
The reason I asked so clearly is that if I were a potential investor considering funding this project, “what will happen next?” would be the answer to the question I want to know.
Indeed it is.
Who will get the constitution in the end? It seems that this part is not actually released. You are just a third party I have to trust. There is no software contract or standard legal contract. I can take a look and say that we are going to transfer $47 million to Sotheby’s. Then, somehow, this intermediate organization-whose governance relationship with ConstitutionDAO is unclear-will get the constitution, and then other things will happen. For me, this is all a lawyer’s business: convert the limited liability company to a 501(c)(3) and return the documents. Do you have a lawyer’s budget?
Yes, that is part of our budget, and you are right – there is a lot of trust here, but we are very transparent from the beginning, it is a very trusting process. When we started, it was not a completely scattered thing. The core team is working hard to achieve gradual decentralization as quickly as possible. We have been very transparent about these trust assumptions from the beginning. People feel they can trust us, and they come to participate in this journey. We really appreciate this.
You said that when you started, about half of the people thought it was a joke, and half were serious. Some people propose to burn the constitution symbolically. What is the internal politics of this core group during this week?
There is a lot of internal politics. I think the most interesting thing is the speed of our actions and how this really cultivates trust, and the fast pace means that people really have to choose. If I work on this project, who can control this? Who has decision-making power? Many things are often unclear. One thing that often happens is that we will vote on Discord, and you may have an hour to express your opinion in the core team.
Some of these are very big decisions. This is largely in a very high-trust environment. There are many newcomers who don’t know each other, but almost everyone has at least one person they knew before, so this is a very loose network, and everyone knows each other vaguely. Internal politics are mainly differences in direction. There is actually no real politics, like you get in the company, because everyone has such a sense of mission and knows that we just need to get things done quickly.
I have been thinking that the focus of blockchain technology is decentralized trust-building a trustless system. Many of our conversations have returned to this environment of high trust between people, so I am just trying to explore this tension.
I think this goes back to the fact that Surun DAO infrastructure. We did use some great trustless technologies, such as Juicebox, which led us to fundraising. People can look at Juicebox’s contracts and see how they work. This part is really important to us. This is done in the contract. It is not just a multi-signature for fundraising.
There are some other features that are very important, but this brings us back to the fact that we are still in the early days. This technology is still so new. People like to compare it to the early days of the Internet in the 90s. I think this is very accurate.
How do you think software will really change the politics of an organization?
This is a very broad question.
You need to make a decision. You vote in Discord. This has changed the value and speed of decision-making, I’m sure. For example, DAO can work like direct democracy, with a token for each vote-just the simplest framework to consider. You will still have the token holder’s block politically interfering with the token holders of other blocks. You will still have inherited investor meetings where you vote for leadership. How does this software really change these results? Or are we just speeding up for this result?
For looking at software, it is actually best to look at the more mature DAO, because there are some really interesting and innovative things that people are studying. There is a DAO called Index Co-op, which makes index funds: for example, you can buy DeFi Pulse Index, which has 20 different DeFi tokens. This organization is completely a DAO. Vote to decide which products to release, who will manage the products, the funds used for marketing-all these things are managed on the chain. What they found is that a more complex organizational structure is needed to be able to keep up.
Recently, there was a very interesting discussion on their forum, which led to a change in the organizational structure. Index Co-op now has what they call the Smart Owl: Council members are committed to intervening when there is a lack of clarity, and to find out The way to solve the problem, or bring the problem to someone who can solve it. What makes this very clear is that what is really interesting about this software is that you can essentially define the hard capabilities of someone in an organization.
Can they call a function on the smart contract? Can they control a certain amount of funds in the treasury? Some more cutting-edge, more developed DAOs are more interesting cases to study this problem, because they have been actively working on this-take Index Co-op as an example-for more than a year, and someone has been working full-time on the project.
I found the whole thing very attractive, but at the end of the day, ConstitutionDAO was the one who raised all the funds and got all the attention. For me, this is the gap when I look at statistics. For 5% of your donors, this project is their first transaction with a [cryptocurrency] wallet. Almost half of your donors have less than 40 transactions with a wallet. You brought many people into this circle. This is the trust many people have in your funds. What happened now?
You’re right. This is a lot of people trust us and give their money to us. This is why two things are very important here: the first is transparency. Throughout the process, we were honest about everything that happened.
The second important thing is refunds. This is an important reason why we chose a smart contract for fundraising activities because it has a built-in refund function. We did exactly what we said. We want to raise funds. We are going to bid at the auction. If we lose and we do lose, we will provide a refund. People can apply for a refund.
Let’s talk about auctions quickly, and then let’s go back to the issue of refunds. You raised 47 million US dollars. Your highest bid at the auction was $43 million. Sotheby’s must verify the number of your highest bid, and then they tell you to keep some taxes, fees, storage, and all of these reserves. This is how you get 43 million dollars. When did you know that $43 million is the highest price?
This is a very, very fast thing. We made a proof of funds three hours before the auction. We hope to be able to continue fundraising in the last few hours, but we fully understand that we must go through this process to ensure that they can verify that we have the money. This is very new to Sotheby’s, and we are really grateful to them for choosing to work with us and verify these funds with us.
ConstitutionDAO did not win. Ken Griffin, a well-known billionaire investor who runs Citadel, won the auction. His price is $43.2 million, which is not much more than the funds raised by ConstitutionDAO. I think this is quite frustrating.
It is frustrating, but this is the world. If we cannot win on our own merits, then I think we just need to work harder to build a stronger ecosystem. I think this is an inspiring moment. I want to congratulate “Ken”. He has some great plans to display this file so that people can see it and participate in it. I hope that after this, Ken can also seize the opportunity to participate more deeply in what we are doing.
Ken, if you are listening–I am sure he is listening–please contact Jonah. How does it feel for you to watch an auction?
A group of us actually finally got together in New York to watch the auction together. That is exciting. Internally, we know the name of the person bidding on our behalf, but obviously, we cannot announce it until the auction result comes out. During the auction, when the numbers kept climbing, I felt like I was going to throw up. If we win, I might already be crying. This is a very stressful experience, especially after this crazy week.
One of the coolest parts is meeting a lot of people I know online. It was a very interesting experience. Even if we lose, people are a little sad, but there is a lot of hope for our achievements. We put DAO on some of the largest news publications in the world and made people aware of this technology. We let all these new people really try this. This is an important part of new technology, especially for cryptocurrencies: when people actually try it, they tend to understand it better.
As a student of technology history, one of the things I like to think about is the way people adopt new technologies – usually, it’s because they have to do it. If you think about email, for example, in the 90s, the attitude of many people was basically: “Why should I use email? This is ridiculous.” Fast forward to now, it is, “If I don’t use email, I will be fired because I am not capable of doing my job.” The Constitution DAO is by no means a project that everyone needs to participate in, but it is a start to arouse people’s curiosity. It makes more people ask: “What can I do with this thing?”
Do you think you have introduced more people into cryptocurrency and DAO, or more people into the constitution?
There must be more people who know cryptocurrency and DAO. I think many people know what the constitution is. I think their interest has been stimulated because they are already familiar with the constitution. I think people also like Nick Cage’s meme very much.
They are very good.
At the end of the auction, there was a lot of confusion. You know the identity of the person bidding on behalf of ConstitutionDAO, but the public does not know it. We don’t know who the bidder represents. Immediately, the Twitter space was full of cheers. “We won.” How did this disconnect come from?
We don’t know how this happened. Everyone on the core team was told not to post on social media until the official results came out. The people associated with the space are not affiliated with our team. This is some typical social media chaos that happened there. It’s really unfortunate because when people think we won, I saw some memes. With so much joy, it really feels helpless to let this official statement come out. I think there are many things that still deserve optimism and excitement. Unfortunately, people who have nothing to do with the team have to do what they do on social media.
When did you discover it? Now that you know who is bidding, do you know it right away?
Yes, we will know right away.
What is the plan to release this information?
We are waiting for Sotheby’s final confirmation, and then we have an official statement to post on social media.
After some initial confusion about refunds, you have refunded about 55% of the money. The entire project will be liquidated and the refund will happen in some way, but then there are some calls that you have changed the process. How is the refund now done?
Just to clarify this point, we haven’t actually changed it. We are exploring another way, but we decided not to. We went back to the original plan, just because we felt it was the easiest and safest.
Tell me the difference between the two.
We explored several options, and we haven’t actually decided on one completely yet. Our plan is, basically, to re-deposit funds into the Juicebox contract. Then people can withdraw their refund.
This is the current situation.
What is the other plan you explored, but you decided to oppose it?
The other options are not worth studying, but we basically decided that all these options have enough technical risks. With technological risks, there will be the risk of us losing people’s money, which is unacceptable.
One of the challenges now is that people have paid a $100 handling fee to donate $100. Now they may have to pay a $100 handling fee to get their $100 back. Some people have paid more money than they invested in order to get their money back. Isn’t this one of the core challenges of the entire project-transaction costs actually exceed everything else it accomplishes?
This is a very important criticism. The cost issue is something we have been transparent from the beginning. We tell people, “Hey, the handling fee is part of it. There is this transaction fee, and there is another transaction fee for the refund.” People realize this. This is part of any new technology.
This reminds me of a story very close to my heart, about Nintendo’s Iwata Satoshi. Satoshi Iwata was developing the gold and silver coin games of “Pokemon”. Pokemon gold and silver are two different broad areas to explore. The ink cartridges they used at the time were very limited in storage. In the software world, there is a legend of Satoshi Iwata. He basically figured out a way to compress the contents of these two regions into the ink cartridge.
This is the era of cryptocurrency that we are now in. We still haven’t got all the scalability and all the bandwidth to come up with. Now, we are still in the early stages, trying to install as much as possible at the lowest cost. This is part of the technology. Many things started with a slightly worse experience than the technology at the time. But over time, as technology improves, it becomes significantly better. Another example of this, I bet we will see in the next few years, that is self-driving cars-now worse than people, but in the end I hope to never drive again.
I agree with your opinion. We talked a lot about self-driving cars in previous talk shows. The idea that the technology will get better over time does not solve a problem, that is, someone loves it when they buy the constitution, but now they pay you 200 yuan because they give you 50 yuan. How do you solve this person’s problem?
This is why there is transparency from the beginning. This is unfortunate. I hope to have a lower cost. There is a solution for scaling, but they do not have the refund function in the contract, which is really important to us.
We feel that we need to be super transparent from the beginning, especially when we are only targeting those who we call native to cryptocurrency. They understand that expenses are part of it. For those who are not familiar with cryptocurrency, this is why we want to make it very clear in our education that there are costs for using the network.
You refunded about 55% of the money. We have all the great statistics about people who donated for the first time or close to the first time. This is also the first wallet, do you ask for a refund? Does the remaining 45% of the funds come from your first-time donors? For me, this will be very convincing.
I hope I have these statistics for you. The dashboard we have about who donates and how is a dashboard built by the community. This is a very cool thing about this technology: a completely unrelated person can actually pull out the blockchain data and make this dashboard that shows what’s going on. I’m sure that for that person, making a refund dashboard is not that exciting. They did a little bit, but didn’t put the details on such things as who and how much each wallet is. There is an overall refund dashboard.
Therefore, we do not have this data, unfortunately, but I do think that this is not even a person on our team, not an affiliated person-there is just a third party who wants to obtain this data. Because it is public on the blockchain, they can share it with us and the world.
But doesn’t this issue involve all the issues we have been talking about? It’s all about trust, transparency and accountability. In the frenzied competition for things to do, building dashboards is always the lowest priority. I understand this, but at some point, knowing who your donor is and taking care of the newest donor should rise to this priority chain, right? Have you ever thought, “We should figure out who the people we introduce to cryptocurrency are to make sure they feel taken care of because this is a major victory for this project now”?
This is why we are still active in the discussion forum, providing support for those who are trying to figure out how to do this. The dashboard will be great, I agree, but I prefer to deal with people who ask me directly—whether personally or by leaving a message, or in the general discussion area—”Hey, I’m working on this. Can you help Is it?” Or, “I’m not sure if the fund has been transferred out. Can you check it out?” It’s great to have a dashboard where we can share with others, but I’d rather work with these people to make them truly Get these refunds.
45% of the money is put there. This number has dropped, at least before we started recording, I looked at the dashboard. It looks like you have reached the 55% refund, which has been there for several days. Why do you think this is?
I think part of the reason is the handling fee, as we discussed. Part of the reason is that people don’t pay so much attention. Many people in the crypto world move very fast, and they miss some things-most of them are aboriginals of cryptocurrency. They have 50 different things, they are watching at the same time. I expect that this number will continue to weaken over time, but there are many people who just throw bets around in cryptocurrencies to see what happens.
The $20 million “let’s see what happens” money is now in the bank, or is it on the chain?
To clarify, I think the handling fee is an important part of it. I don’t think their attitude is “Let’s see what happens”, but they have not paid attention or made time to do it. This is very exciting. When you donate to buy a copy of the constitution, you want to jump in right away, but asking for a refund is not so fun, so I think people are not so anxious.
A classic business model is to let people apply for refunds.
No, we do not have the opportunity to obtain these funds.
If after five years, there is still money in your wallet, what do you plan to do? The price of Ethereum has changed considerably. Five years later, if the 45% of ConstitutionDAO’s money is still there, it may be worth another $50 million. What are the plans?
These refunds will be provided indefinitely. The smart contract is on the chain and it cannot be modified, so someone can come back in 20 years and say, “Oh, I realize I still have funds here. I want to pull them out.” I expect many tools will become better . One thing that is really popular now is apps that tell you how many subscriptions you don’t know. We will start to see a lot of blockchain-based things, because people will realize that they have money in every corner and they are not worth it when they first put it there. Then, over time, you will find, “Oh, I should really grab this.”
The secondary market for $PEOPLE tokens has been formed. This seems very strange, because this secondary market has nothing to do with an ongoing organization. What do you think of this problem?
When we choose the platform to use, we must make a series of trade-offs. We really want to optimize refunds. Part of it is to choose Juicebox-it has tokens, even if we didn’t win the auction, you can ask for tokens. This is not something we recommend people to do. We tell people to just ask for their refund.
With blockchain, you can’t really stop people. It is no longer a team-related thing, we are closing this project. This is something that exists on the outside, but it is not something that we have been acknowledging.
Do you know why people want to create a secondary market for this token?
People like these memes.
Do you think this is the reason?
Yes. People like to remember; they like to have fun. I think one of the things I learned from exploring the world of cryptocurrency is that it is difficult to rationalize many different momentums – things that happen with the memorization of memories and information. I think that if people are having fun and they are doing their thing, then I won’t try to explain it too deeply, because I just want to break my brain.
This is where I want to end. We have discussed a lot of really big ideas here. I think that, fundamentally, people are trying to raise a lot of money to buy a copy of the constitution, which is pretty cool. However, at the end of the day, the Internet is always good at launching money rockets at things. You can go back to the ice bucket challenge. When people launch money rocket launchers to the ALS Association, they are not necessarily ready. You hope they will use the money to do good deeds, and hope they really invest in research – fortunately, in this case, they did.
The top layer of this dynamic is the financialization of the rocket launcher of Internet funds in an extremely surprising way-the development momentum of this method has also broken my brain. Do you think this is good? There is now a secondary market token, originally intended to manage a physical copy of the constitution, but now it is just playing in the wreckage of this project. This doesn’t seem very good-it actually goes against your goal. I want to know if you have considered this kind of tension.
This is a very good philosophical question and a very good specific question. My belief is that people will do what they can, they will be curious, and they will try something. I think that as a society, our job is to figure out what we want to produce from it – and what we don’t want to produce from it. It’s interesting to push boundaries; I’m not talking about this case specifically, but about how we repackage and organize information, value and governance, and all these mechanisms. It will take some time to figure out what is the right thing.
In fact, compared to some other governments, I really appreciate the way the US government treats cryptocurrency regulation. This is one thing. The US government has given the industry some breathing room. They said, “Well, let’s see what’s going on deep here. We will try to understand this more limited group of people who know they are entering a very high-risk asset class. We want to start from this smaller What to learn in the community?” I really want to emphasize again that what we are doing is a donation of governance – voting on the future of this document. How can we make this document a thing governed by the people?
You have introduced these concepts to many people, this is the first time. Now some of them have taken their refunds, some are waiting for the handling fee, and some are just happy to participate. What do you think should be the harvest of this group of people? Can they spend their money on cool souvenirs that come with the community? Or should they be more interested in this project because it is a fundamental new tool for corporate governance?
I think it is the latter. What do you want to happen in the world, and how do you make it happen? Is this the right tool set? Really interesting DAOs have emerged in large numbers, and they are doing many exciting projects. There are a few examples: a DAO is working on prison reform. Another is studying how to create more public scientific research. One is acquiring another document: the anti-slavery document in American history.
We are already beginning to see the effects of this. In the long run, we will see more DAOs, for those trying to accomplish goals that are not suitable for the company or non-profit organization structure, and more like a community collective. We will see many people learn from what we do and build better tools and better best practices.
Let’s end where you started: the interface between the world of cryptocurrency and the DAO community and the real world has not yet been established. I understand why it happened in financial institutions in the first place. Those are all computer things. Literally, we just hired an Excel influencer on the show: Most people in this industry use Excel or computers to do things. You can immediately automate and reorganize these contracts on a decentralized database.
When you are talking about prison reform-that is the institution in the world. This is not computer work. What do you think is the next step between the DAO coming together to form a governance collective and influencing the real world? What is the next most important step?
There are a few things that DAO can actually do today. The thing we need to bridge the gap is to figure out what smart contracts can actually control, because this is the source of DAO’s power. For many DAOs today, most of what they do is just send treasury funds; $20 million is used to start a cryptocurrency lobby. This is a real world example from Uniswap , a decentralized exchange that has a vote to start this cryptocurrency lobby group.
However, I think that over time, we can build more functions for the power of the DAO-whether it is from voting power, what actual token holders can vote, or the DAO grants very specific, specific and Elected representative with the power of audit.
I think I can talk about this issue for another hour. I really want to know whether lobbyists can now choose which steakhouse they take elected officials to. Can the DAO vote on this? It will be very interesting, but you have given us so much time. What is your next step? What is the next step for the core members of the Constitutional DAO team?
ConstitutionDAO is ending, the official event is closed, and the refund is also going to be carried out. Everyone is scattered into different projects. I have a day job as a software engineer in a very different-but I want to say equally exciting-part of the technology industry. People are doing the work they have been doing, but I hope we will see more work from this group in the future. This is really incredible. What I want to say is that one of the best parts of this experience is that I made some new friends. When you can call someone you know on the Internet and say: “Hey, do you want to play? Do you want to have a cup of coffee?”
This is good. Jonah, thank you very much for coming to our show. Thank you for your participation. I am truely thankful.
Nilay, thank you for inviting me. This is a great experience, and I am very happy to embark on the journey of understanding cryptocurrency with you.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/from-a-meme-to-47-million-the-future-of-constitutional-dao-cryptocurrency-and-crowdfunding/
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