Nouns Fork: Disgruntled NFT Holders Exit With $27 Million From Treasury

The community of NFT holders in prominent Ethereum collection Nouns fractured into two late Friday when a proposed fork from the project was completed. Holders of more than half of all Nouns NFTs opted to leave—and collectively withdrew over $27 million worth of ETH from the project treasury in the process.

The owners of 472 total Nouns NFTs—out of 846 in total, or almost 56% of the collection—joined the fork, and took almost 16,757 ETH ($27.3 million worth at present) with them from the current Nouns DAO treasury into a new DAO organization.

A DAO, or decentralized autonomous organization, is an online group with tokenized membership and shared goals. Ultimately, the amount of Ethereum leaving the treasury divides down to approximately 35.5 ETH per NFT, or about $57,850.

As a result of the fork, the owners’ original NFTs will be returned to the DAO treasury and each holder will be issued a replacement NFT with identical artwork for the new DAO. The new DAO will let holders “ragequit” and take their share of the treasury—that 35.5 ETH per NFT—and forfeit their profile picture (PFP) for good.

The move signals a lack of confidence from many who bought into the current Nouns DAO format, which has seen millions of dollars worth of ETH spent since the project’s debut in 2021 to fund an array of Nouns-themed projects.

Millions of dollars have collectively been used for various Nouns-themed projects with an aim to proliferate the brand, including a parade float in the 2023 Rose Parade, vinyl toys, 3D-printed apparel, a comic book series, esports team, and other initiatives. A Nouns NFT was even purchased and granted to Bud Light, which then used “Noun glasses” in its 2022 Super Bowl commercial.

But as with much of the NFT space, the market value for Nouns has fallen sharply since the late 2021 and early 2022 peaks. On secondary marketplaces, the price floor—or cost for the cheapest NFT listed for sale—has dropped from a USD peak of $267,000 worth of ETH in December 2021 to about $57,740 today, per data from NFT Price Floor.

In other words, while the open-source Nouns brand has potentially grown over time through various DAO-funded media projects and marketing campaigns, the market value has substantially diminished. Some members appear eager to cash out now amid the brutal bear market and recover some kind of return, rather than remain in the community.

“This is not great,” wrote pseudonymous NFT holder Hindsight on the fork page. “And yet despite this strong signal, there is no recognition, never mind concrete discussion, of what led us here and the details of how to avoid them in the future or fix them now. Ultimately, no organization can defy the gravity forced on it by compounding bad decision-making.”

The fork was made possible by a Nouns protocol upgrade earlier this year. It allows NFT holders to propose a fork to leave the DAO and collectively reclaim a share of the treasury, and if a quorum of at least 20% of tokens join via their respective holders, then it will be executed and ultimately completed following a waiting period to let additional holders sign up for the departure plan.

Even after the fork, the Nouns DAO still has 13,310 ETH remaining, or almost $21.7 million worth. Remaining NFT holders will still be able to vote on proposals and help allocate funding in an effort to further grow and support the brand, which is built on a Creative Commons 0 (CC0) license that lets anyone use the artwork to create and sell derivative projects.

One Nouns co-founder (or “Nounder”), the pseudonymous Seneca, tweeted that the remaining members should only ramp up their efforts “by increasing spend” to fuel builders and creative projects and “distributing forked Nouns” to would-be participants to aid in that process.

“One of the lessons from the fork is that in the game of Nouns, if you don’t use the treasury, it will inevitably get captured,” Seneca wrote. “It is a part of the game that has now been made explicit.”