Nouns DAO Forks Into Two with $27 Million "Divorce Fee"

A significant portion of NFT holders has agreed to fork Nouns DAO, dividing the treasury into two and allocating over $27 million to the new DAO.

Nouns DAO Forks Into Two with $27 Million "Divorce Fee"

As of the update on September 18, 2023:

The final vote saw 472 Nouns agreeing to fork the DAO, out of a total of 845 NFTs, meaning nearly 56% of the collection voted in favor.

This exceeds the initial threshold of 20%, indicating that the decision came from substantial holders, not just small investors.

Additionally, the project's treasury has been split, with 16,757 ETH allocated to the new DAO, equivalent to $27.3 million at the time of reporting.

To receive this amount, the 472 NFTs must be returned to the DAO treasury and replaced with identical NFTs for the new DAO. Subsequently, the new DAO will allow holders to withdraw and receive 35.5 ETH per NFT, effectively leaving the Nouns project and losing their profile picture permanently.

Original Article:

Following numerous “dramas” within DAOs, some have introduced new mechanisms aimed at protecting smaller investors.

In simpler terms, DAOs vote based on token holdings, where those with larger assets have more influence. This often leads to decision-making being dominated by large organizations and whales rather than smaller investors.

Therefore, some DAOs have recently developed mechanisms allowing if 20% of holders want to “walk away,” they can fork a portion of the treasury. A prime example is the recent case of Nouns DAO.

Nouns is a popular and valuable NFT collection in the digital art space. However, the project has not escaped the general downward trend in the NFT sector this year, with blue-chip collections dropping 83% from their peak prices.

Price drops mean many investors are facing losses. For instance, some investors have had to sell at a loss, such as one who sold BAYC NFTs at 624 ETH after holding for nearly a year.

The same is true for Nouns, where many investors have become disillusioned and wish to cut their losses. However, selling at the current market price would result in substantial losses. Instead, some have used Nouns DAO’s fork mechanism to claim a share of the assets.

Update: Over 20% of Nouns Supply Signals Fork

Currently, Nouns DAO's treasury holds 30,620 ETH, equivalent to $50 million. If the fork proceeds, departing investors will receive a share of 7,669 ETH, or $12.4 million.

The vote for the split has been ongoing for 7 days, with 216 Nouns participating, representing over 25% of the total supply. Therefore, it is highly likely the fork will be approved.

Source:Nouns.wtf as of 01:40 PM, September 09, 2023, Vietnam time

The community is divided on this issue. Some support the new mechanism as it provides a safeguard for minority investors and could signal a new direction for DAOs. Others are skeptical, fearing that powerful groups may exploit the new system for their own gain.

There have been reports of certain wallets accumulating more Nouns NFTs recently, leading to suspicions that a group may be planning to fork Nouns DAO for ulterior motives, rather than just small investors wanting to leave the project.