Why Constitution DAO is About More Than Just “Crypto”
A newly formed decentralized autonomous organization (DAO) has raised over $25 million to purchase a copy of the US constitution. The rare copy of the constitution — one of 13 in existence — is set to be auctioned off at the Sotheby’s auction house.
Who Is Behind ConstitutionDAO?
ConstitutionDAO is a spontaneous experiment by thousands of members of the cryptocurrency community. They pooled their money to make a bid on a rare original printing of the US Constitution. Sotheby’s estimates the document will sell for $15 million to $20 million. The auction house recently made inroads into the NFT and Metaverse space.
The group was formed by several friends on social media platforms when word started spreading about the auction. In a short while, the frenzy caught on. Memes and jokes began to circulate, and in 24 hours, $4.5 million worth of Ether was raised for the purchase.
With the auction taking place on Thursday, ConstitutionDAO was able to raise $27 million. This is well above the upper limits for the auction price, giving the participants confidence of a possible win at the auction. A total of 7,600 Ethereum addresses were involved in raising the required capital.
The group has received backing from institutions, including exchanges and private investors. This shows the wide range of backing it has received.
Chris Dixon, an American Internet entrepreneur, and investor, also announced his participation on Twitter.
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Disproving The Critics
In its short existence, ConstitutionDAO has been a hastily put-together organization. It is, however, taking concrete steps to become legitimized and become a well-run body.
Firstly, ConstitutionDAO has revealed the real-world identities of some of its members. It has also commissioned a limited liability company to place its bid at the Sotheby’s auction. This enabled it to comply with the know-your-customer (KYC) requirements put in place. Furthermore, fractionalization may result in a highly easy-to-pursue securities enforcement action from the US Securities and Exchange Commission (SEC).
Secondly, plans are in place to develop a governance token for the DAO. The $PEOPLE token would allow holders to vote on issues regarding the document’s preservation and display. It is distributed at 1,000,000 PEOPLE for every ETH donated but is not yet being traded.
If historical data proves valid, the decentralized democratic process that ConstitutionDAO intends to employ could be flawed. Infighting, taking sides, and tension over the direction of the protocol could lead to unresolved disagreements. This was seen in the case of the Bitcoin community a few years ago, leading to the Bitcoin Cash hard fork.
Ramifications of ConstitutionDAO
Recent headlines have created a narrative around constitution DAO being an extension of the crypto community. However, there is arguably a much more historically significant moment in the making here if the DAO wins the auction. Aside from holding the record for the largest DAO, it will also be the first real-world proof-of-concept for decentralized organizations.
A successful bid will open up the potential of DAOs’ use cases. On the one hand, it shows the possibility of harnessing digital assets to create change. It also indicates opportunities existing in web 3.0, currently touted as the next iteration of the internet.
In addition to this, individuals worldwide could be encouraged to change things they are passionate about by forming communities around issues they care about. This development could present new ways to the wider public of how to interact with digital assets through DAOs. This has been the case with ConstutionDAO and was highlighted in a tweet by an angel investor, and product manager, Tanay Jaipuria.
However, all of this depends on ConstitutionDAO winning the auction. Time will tell if it is successful or if it ends up being outbid.
Do you think the success of ConstitutionDAO will serve as a blueprint for setting up similar online communities? Let us know in the comments below.