Last week we told you in Hypertext about the case of ConstitutionDAO : a decentralized autonomous organization that was formed overnight in order to buy the last original copy of the United States Constitution in private hands. What at first seemed crazy, quickly caught the attention of the entire world; to the point that in less than 72 hours they raised more than 48 million dollars in Ethereum. However, the group fell short of its goal, and the recipe for a fascinating story has added an unexpected ingredient: drama.
According to VICE, the consequences of the failed purchase of the historic US document have had a strong impact on ConstitutionDAO. The internal drama has several edges: from the definition of the future of the organization and the distribution of the governance tokens among those who participated in the crowdfunding, to the problems to return the donations due to the high commissions of the Ethereum network.
First of all, it is worth noting that ConstitutionDAO created a token called $ PEOPLE , intended for contributors to the crowdfunding campaign. It did not have an economic purpose, but rather to offer participants the possibility of voting on the fate of the United States Constitution. Specifically, how, where and for how long it would be exhibited. However, the distribution of voting rights was never explained in detail . The organization stated that this was due to lack of time; After all, it all happened in less than a week.
ConstitutionDAO is now suffering the consequences of its meteoric fury
But the great controversy broke out on Saturday, when it was announced on the ConstitutionDAO Discord that the group would abandon the $ PEOPLE token and generate a new one called $ WTP (We The People). The explanation behind this decision was that the original token no longer served any function because it had been created especially for the draft of the Constitution. Therefore, the new token aimed to become the current tool to face new initiatives. As you can imagine, the response from the community was far from what was expected.
With the idea of implementing a new governance token, the proponents of ConstitutionDAO backfired. According to VICE, after the failed auction many users began to exchange $ PEOPLE through platforms such as Uniswap. But the organization's announcement caused the price to plummet and unleashed the ire of taxpayers.
Evolution of the value of $ PEOPLE on CoinMarketCap in recent days Also, on the group's Discord began the cross accusations about whether the group was really being handled as a DAO. By not establishing voting parameters with the existing token, those involved criticized that decision-making is concentrated in a small group; something that, clearly, goes against the raison d'être of a decentralized autonomous organization.
But the twists and turns did not end there. Hours later, ConstitutionDAO retraced its steps and canceled the $ WTP implementation. This means that $ PEOPLE is still the only governance token available, although it is not clear what can be done with it. In addition, several taxpayers have already exchanged them, and some opportunists took advantage of the fact that it was worth practically nothing to buy it in quantity . Since then, the token price has risen to $ 0.0045.
Refunds are also a problem
As soon as it was known that ConstitutionDAO had failed to buy the United States Constitution, the group issued a statement indicating that taxpayers could request a refund of their donation. Thus, participants could recover their contribution by subtracting the cost of gas ; i.e. the fee paid to miners for the amount of processing power required for transactions on the Ethereum network.
The problem is that the price of gas today – and for some time, actually – is very high. Then, those who contributed modest or low figures would not get their money back, since the fee could be higher than the amount to be reimbursed . Keep in mind that the average donation was approximately $ 206; Furthermore, ConstitutionDAO mentioned that “a significant percentage” of the more than 17 thousand donations were made from wallets used for the first time.
What does this mean? That many contributors bought Ethereum on an exchange, transferred it to a wallet, and subsequently to the crowdfunding fund. Each of these movements required the payment of gas, something that must also be paid for when doing the process in reverse for a refund. So, no matter how much users choose to withdraw the ETH from Juicebox , the platform used for crowdfunding, and keep it in a wallet, they must pay at least a commission. And if the amount was not large enough, it is impossible to recover it .
This creates a dilemma for many taxpayers, who have no choice but to trust ConstitutionDAO to present a new project that deserves to be supported; or give the money for lost. In the latter case, some were inclined to burn Ethereum —that is, take it out of circulation—, sending it to addresses from where it cannot be recovered.
The lack of an alternative plan seems to be the great failure of ConstitutionDAO
Image: Sotheby's While social media and Discord debate whether the ConstitutionDAO plan was valid or if it was a scam, the look deserves a deeper look. The organization's crazy plan put the qualities and possibilities of DAO and the web3 on the table. That thousands of people from all over the world have met in record time with a goal, collecting millions of dollars in a few hours, should not be taken lightly.
The big problem with ConstitutionDAO seems to be the lack of a “plan B “. The protagonists of this initiative were convinced that they would buy the US Constitution without mishap. And the reality was very different and hit very hard. So, in the absence of an alternative to allocate the funds in case the main goal was not met, the chaos did not wait. It is clear that the dizziness of the project was a double-edged sword in this story.
