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Imperfect Union: How ConstitutionDAO didn't raise enough money

27 points by conanxin 5y ago

yob22 5y ago
asdfasgasdgasdg 5y ago
Article does not support the assertion in the title. To be clear, I'm a cryptoskeptic. But by the article's account, ConstitutionDAO never "lost its way." They just didn't raise enough money to accomplish their goal. It seems like the founders acted with integrity throughout and did not make any moves that could even clearly be labeled as a mistake.
- rvz 5y ago
  Perhaps the choice of the cryptocurrency that they used and showing how much they raised publicly was their 'mistake' then.
  - asdfasgasdgasdg 5y ago
    Maybe. Those are not clearly indicated as mistakes either (i.e. the article does not demonstrate or even argue that another choice would more likely than not have led to a better outcome). And the article conveys some justification for the choices that did get made. For example, they couldn't use certain "second tier" Ethereum features that would have reduced gas fees, because they aren't approved in states like New York? So maybe you argue that such features should have been used, but then you're optimizing for a different outcome -- the outcome where you don't win the auction. With the benefit of hindsight, sure, but the leaders didn't know before the auction that they would lose. So it was certainly a reasonable choice to take the approach that seemed most likely to raise the most money.
    - rvz 5y ago
      > Maybe... Definitely.
  - throwawaycities 5y ago
    > showing how much they raised publicly was their 'mistake' then. I’ve seen countless people mention this as an issue, but the only time this would really matter is if you win, but the other bidders used the information to bid up the sale price. The fact is the other bidder had unlimited resources and desire to win the auction and so would have outbid the ConsitutionDAO even if they didn’t have knowledge of their budget, it’s not as though Ken Griffin would have given up before his maximum budget because he didn’t know ConstitutionDAO’s total funding.
- dang 5y ago
  Ok, we've put that in the title above.
dmitriid 5y ago
On the other hand, there's SpiceDAO who spent three million dollars to buy a copy of Dune sketchbook (whose starting price was 25k), and pretend it gives them the right to produce new IP based on Dune. So what does that tell you about decentralized decision making other than "people are stupid"?
- miracle2k 5y ago
  Did they pretend and/or think this? The widely shared tweet I have seen simply stated that they want to develop IP based on Dune. It did not say that permission to do so is derived from the book. > (whose starting price was 25k) That is how auctions work. The only concern with such setups is that information about the amount of money available to such a DAO bidder is public knowledge and thus can be exploited.
  - dmitriid 5y ago
    The tweet is this: https://twitter.com/TheSpiceDAO/status/1482404318347153413 https://twitter.com/TheSpiceDAO/status/1482404318347153413 And I'll quote it in it's entirety for posterity: --- start quote --- We won the auction for €2.66M. Now our mission is to: 1. Make the book public (to the extent permitted by law) 2. Produce an original animated limited series inspired by the book and sell it to a streaming service 3. Support derivative projects from the community --- end quote --- Since then they've backtracked saying that they are looking to develop "completely original IP", but that raises the question "why spend money on the Dune book then?".
    - dmitriid 5y ago
      Ah yes. And don't forget their Q&A series of tweets. I'm linking to the best one: https://twitter.com/TheSpiceDAO/status/1484285677646729219?s=20 https://twitter.com/TheSpiceDAO/status/1484285677646729219?s... --- start quote --- Q: Are you aware that purchasing the book does not give you its copyright? A: Yes. After two months of outreach, conversations with former business partners and consultations with legal counsel we were not able to reach an agreement with any of the rights holders... --- end quote --- And yet, they still were "hell bent on buying the book at any cost". Now that they realized they have nothing but an expensive book on their hand, they are "developing a new animated series" that they have no money for. You can see the hilarious exchange here: https://forum.spicedao.xyz/t/original-series-package-strategy/107 https://forum.spicedao.xyz/t/original-series-package-strateg... "all you need to approach a streaming service for a sale that would finance the production is a package and not a finished product" and "We were quoted $500K USD for a writer’s room early on and quickly abandoned the thought" They spent 2.6 million dollars on book. This would've comfortably covered a huge chink of an original animated series.
shubik22 5y ago
The article mentions high gas fees impacting refunds, and I was wondering what the extent of that impact was. The article doesn’t answer that question, but it does link to a tweet which links to a page of stats about ConstitutionDAO that does: https://dune.xyz/ilemi/ConstitutionDAO-Funding-Tracker https://dune.xyz/ilemi/ConstitutionDAO-Funding-Tracker 55.78% of funds returned! Truly an incredible accomplishment, and not in a positive way. (edit: On second thought, does the 44% of original funds remaining include people who haven’t tried getting refunds? Curious if there’s an estimate of ETH lost purely to transaction fees.)
- jfk13 5y ago
  > not in a positive way Presumably it's positive for the people collecting the fees, so that's OK then.
  - oefrha 5y ago
    Which is negative for those of us who want to buy a frigging graphics card at a reasonable price.
    - X6S1x6Okd1st 5y ago
      Post eip-1559 most fees are burnt instead of paid to miners. Here's hoping that eth's merge happens soon
- hanklazard 5y ago
  Yea, if you don’t request a refund, you don’t get it so yes, that % includes people who haven’t requested a refund. Also, this token became a “meme coin” in the weeks that followed the auction loss, returning something like 10x or more on Uniswap. More sophisticated users traded their tokens there, rather than going through the official refund process.
  - ShamelessC 5y ago
    Another reason people wouldn't request a refund would be that they would actually lose money by doing so if their original spend was under 200$ because of "gas fees".
ShamelessC 5y ago
> There were other issues standing in the way of the DAO’s egalitarian ambitions. As VICE’s Motherboard points out, the median ConstitutionDAO donation was $206.26. Those small-dollar donors are seeing most or all of their refunds getting eaten up by Ethereum network gas fees, which remain static regardless of the size of the transaction. This is kind of insane to me. People were shilling ConstitutionDAO _pretty_ hard on here back when this happened. My biggest concern was this was a scam, or that people would use the opportunity to scam in some fashion (still a reasonable theory). Instead, it turns out their supposedly superior financial system can't even handle refunds? Come on.
- pavlov 5y ago
  The scam is the Ethereum ecosystem itself. It succeeded once again in pulling in a few more millions of real money from retail investors who won’t see their $200 donations again. Where did the money go? It provided liquidity to the top of the pyramid, of course.
  - dragonwriter 5y ago
    > investors [...] donations one of those is the wrong word.
  - unboxingelf 5y ago
  - X6S1x6Okd1st 5y ago
    I generally disagree that willing participants who gave their money without expectation of future return are getting fleeced in this particular project. You don't need to look far to find rugpulls https://twitter.com/RugDocIO https://twitter.com/RugDocIO regularaly tweets out ongoing rugpulls. Interestingly though after a technical change in where gas/txn fees go (EIP-1559) any payment of fees actually does go to all holders of ETH proportionally due to fees fueling deflation. Of course even still this is not like a traditional pyramid scheme, but more similar to stock buy backs being fueled by each individual sale that a company makes.
- 5y ago
andylynch 5y ago
It’s very ironic that of all the people for ConstitutionDAO to lose the auction too, it happened to be Ken Griffin.
chaosharmonic 5y ago
This is tangential (and just an observation on poking around their homepage to find out what fwb.help is), but if landing pages are going to swing back toward having 90s-styled tickers, then is there a reason we don't just bring back the <marquee> tag in some form? (Or standardize a modern equivalent, like <ticker> or something?) Asking as someone who actually used these in my nascent dabblings in HTML and is really confused that modern webdev has moved to replacing them all with non-semantic (and manually-styled) <div> tags. I'm sure there's a reason that I missed sometime between my junior high message board days and when I actually picked this up as a profession, but whenever I get an immediate glance at one it's always kind of seemed like kind of a regression. (At the least, having a dedicated standard for this again would allow for element-specific CSS options, like what <li> has for instance.)
otikik 5y ago
DAOs are just another convoluted scheme to try to make people buy cryptocurrency. "The Problem With NFTs" explains it very well https://www.youtube.com/watch?v=YQ_xWvX1n9g https://www.youtube.com/watch?v=YQ_xWvX1n9g

27 points by conanxin 5y ago

Article does not support the assertion in the title. To be clear, I'm a cryptoskeptic. But by the article's account, ConstitutionDAO never "lost its way." They just didn't raise enough money to accomplish their goal. It seems like the founders acted with integrity throughout and did not make any moves that could even clearly be labeled as a mistake.

rvz 5y ago
Perhaps the choice of the cryptocurrency that they used and showing how much they raised publicly was their 'mistake' then.
- asdfasgasdgasdg 5y ago
  Maybe. Those are not clearly indicated as mistakes either (i.e. the article does not demonstrate or even argue that another choice would more likely than not have led to a better outcome). And the article conveys some justification for the choices that did get made. For example, they couldn't use certain "second tier" Ethereum features that would have reduced gas fees, because they aren't approved in states like New York? So maybe you argue that such features should have been used, but then you're optimizing for a different outcome -- the outcome where you don't win the auction. With the benefit of hindsight, sure, but the leaders didn't know before the auction that they would lose. So it was certainly a reasonable choice to take the approach that seemed most likely to raise the most money.
  - rvz 5y ago
    > Maybe... Definitely.
- throwawaycities 5y ago
  > showing how much they raised publicly was their 'mistake' then. I’ve seen countless people mention this as an issue, but the only time this would really matter is if you win, but the other bidders used the information to bid up the sale price. The fact is the other bidder had unlimited resources and desire to win the auction and so would have outbid the ConsitutionDAO even if they didn’t have knowledge of their budget, it’s not as though Ken Griffin would have given up before his maximum budget because he didn’t know ConstitutionDAO’s total funding.
dang 5y ago
Ok, we've put that in the title above.

dmitriid 5y ago

On the other hand, there's SpiceDAO who spent three million dollars to buy a copy of Dune sketchbook (whose starting price was 25k), and pretend it gives them the right to produce new IP based on Dune. So what does that tell you about decentralized decision making other than "people are stupid"?

miracle2k 5y ago
Did they pretend and/or think this? The widely shared tweet I have seen simply stated that they want to develop IP based on Dune. It did not say that permission to do so is derived from the book. > (whose starting price was 25k) That is how auctions work. The only concern with such setups is that information about the amount of money available to such a DAO bidder is public knowledge and thus can be exploited.
- dmitriid 5y ago
  The tweet is this: https://twitter.com/TheSpiceDAO/status/1482404318347153413 https://twitter.com/TheSpiceDAO/status/1482404318347153413 And I'll quote it in it's entirety for posterity: --- start quote --- We won the auction for €2.66M. Now our mission is to: 1. Make the book public (to the extent permitted by law) 2. Produce an original animated limited series inspired by the book and sell it to a streaming service 3. Support derivative projects from the community --- end quote --- Since then they've backtracked saying that they are looking to develop "completely original IP", but that raises the question "why spend money on the Dune book then?".
  - dmitriid 5y ago
    Ah yes. And don't forget their Q&A series of tweets. I'm linking to the best one: https://twitter.com/TheSpiceDAO/status/1484285677646729219?s=20 https://twitter.com/TheSpiceDAO/status/1484285677646729219?s... --- start quote --- Q: Are you aware that purchasing the book does not give you its copyright? A: Yes. After two months of outreach, conversations with former business partners and consultations with legal counsel we were not able to reach an agreement with any of the rights holders... --- end quote --- And yet, they still were "hell bent on buying the book at any cost". Now that they realized they have nothing but an expensive book on their hand, they are "developing a new animated series" that they have no money for. You can see the hilarious exchange here: https://forum.spicedao.xyz/t/original-series-package-strategy/107 https://forum.spicedao.xyz/t/original-series-package-strateg... "all you need to approach a streaming service for a sale that would finance the production is a package and not a finished product" and "We were quoted $500K USD for a writer’s room early on and quickly abandoned the thought" They spent 2.6 million dollars on book. This would've comfortably covered a huge chink of an original animated series.

shubik22 5y ago

The article mentions high gas fees impacting refunds, and I was wondering what the extent of that impact was. The article doesn’t answer that question, but it does link to a tweet which links to a page of stats about ConstitutionDAO that does: https://dune.xyz/ilemi/ConstitutionDAO-Funding-Tracker https://dune.xyz/ilemi/ConstitutionDAO-Funding-Tracker 55.78% of funds returned! Truly an incredible accomplishment, and not in a positive way. (edit: On second thought, does the 44% of original funds remaining include people who haven’t tried getting refunds? Curious if there’s an estimate of ETH lost purely to transaction fees.)

jfk13 5y ago
> not in a positive way Presumably it's positive for the people collecting the fees, so that's OK then.
- oefrha 5y ago
  Which is negative for those of us who want to buy a frigging graphics card at a reasonable price.
  - X6S1x6Okd1st 5y ago
    Post eip-1559 most fees are burnt instead of paid to miners. Here's hoping that eth's merge happens soon
hanklazard 5y ago
Yea, if you don’t request a refund, you don’t get it so yes, that % includes people who haven’t requested a refund. Also, this token became a “meme coin” in the weeks that followed the auction loss, returning something like 10x or more on Uniswap. More sophisticated users traded their tokens there, rather than going through the official refund process.
- ShamelessC 5y ago
  Another reason people wouldn't request a refund would be that they would actually lose money by doing so if their original spend was under 200$ because of "gas fees".

ShamelessC 5y ago

> There were other issues standing in the way of the DAO’s egalitarian ambitions. As VICE’s Motherboard points out, the median ConstitutionDAO donation was $206.26. Those small-dollar donors are seeing most or all of their refunds getting eaten up by Ethereum network gas fees, which remain static regardless of the size of the transaction. This is kind of insane to me. People were shilling ConstitutionDAO _pretty_ hard on here back when this happened. My biggest concern was this was a scam, or that people would use the opportunity to scam in some fashion (still a reasonable theory). Instead, it turns out their supposedly superior financial system can't even handle refunds? Come on.

pavlov 5y ago
The scam is the Ethereum ecosystem itself. It succeeded once again in pulling in a few more millions of real money from retail investors who won’t see their $200 donations again. Where did the money go? It provided liquidity to the top of the pyramid, of course.
- dragonwriter 5y ago
  > investors [...] donations one of those is the wrong word.
- unboxingelf 5y ago
- X6S1x6Okd1st 5y ago
  I generally disagree that willing participants who gave their money without expectation of future return are getting fleeced in this particular project. You don't need to look far to find rugpulls https://twitter.com/RugDocIO https://twitter.com/RugDocIO regularaly tweets out ongoing rugpulls. Interestingly though after a technical change in where gas/txn fees go (EIP-1559) any payment of fees actually does go to all holders of ETH proportionally due to fees fueling deflation. Of course even still this is not like a traditional pyramid scheme, but more similar to stock buy backs being fueled by each individual sale that a company makes.
5y ago

andylynch 5y ago

It’s very ironic that of all the people for ConstitutionDAO to lose the auction too, it happened to be Ken Griffin.

chaosharmonic 5y ago

This is tangential (and just an observation on poking around their homepage to find out what fwb.help is), but if landing pages are going to swing back toward having 90s-styled tickers, then is there a reason we don't just bring back the <marquee> tag in some form? (Or standardize a modern equivalent, like <ticker> or something?) Asking as someone who actually used these in my nascent dabblings in HTML and is really confused that modern webdev has moved to replacing them all with non-semantic (and manually-styled) <div> tags. I'm sure there's a reason that I missed sometime between my junior high message board days and when I actually picked this up as a profession, but whenever I get an immediate glance at one it's always kind of seemed like kind of a regression. (At the least, having a dedicated standard for this again would allow for element-specific CSS options, like what <li> has for instance.)

otikik 5y ago

DAOs are just another convoluted scheme to try to make people buy cryptocurrency. "The Problem With NFTs" explains it very well https://www.youtube.com/watch?v=YQ_xWvX1n9g https://www.youtube.com/watch?v=YQ_xWvX1n9g