NounsDAO: What the fork?
The Tally Newsletter, Issue 105
Welcome back to the Tally Newsletter, your weekly source for DAO governance insights. I'm coolhorsegirl and I’m so stoked to be here. 🟣
You’ve heard of the Ethereum Classic fork and the Bitcoin Cash fork, but now we’re applying forks to DAOs. NounsDAO is hoping to sort out disgruntled members with Nouns Fork as part of their v3. This is a crazy one with massive implications.
We’re also talking proposals from Nouns (there are lots, as per) aaaaand a potential grants program from Arbitrum. Let’s get into it 👇
🤿 Deep Dive: NounsDAO: What the fork?
What should DAO members do who are dissatisfied and seeking an exit, but still have a financial stake in the game? NounsDAO has a solution.
Enter Nouns Fork (alongside Nouns v3). A fork is a mechanism that allows groups of token holders to exit together into a new instance of their protocol, preserving momentum in the ecosystem. In this model, any token holder can signal to fork (exit) in response to a governance proposal. If a quorum of 20% of tokens signals to exit, the fork will succeed. It’s designed to protect a minority against a tyrannical majority or allow groups to amicably part ways on a conflict of visions.
It's a way to ensure that even if you're not part of the majority, you still have a voice and a way to protect your interests. And it’s a fascinating experiment in decentralization that solves the defeated “Rage Quit” proposal in March.
Charlie Feng wrote an article literally titled "Nouns fork is vulnerable to a dishonest minority." While the DAO fork protects against a dishonest majority who would theoretically use up the treasury on unethical endeavours, it may open up an attack vector for an short-term-focused minority to repeatedly drain the treasury. If forkers disagree with a vote, they can ethically and amicably leave. But the ability to fork opens the opportunity for others to leave solely because they see a fork as a better financial deal than remaining in NounsDAO.
What this means in practice: If you and 99 others fork Nouns at a time when there are 500 Nouns in existence, 20% of Nouns have forked, and they can walk away with 20% of the treasury (which is at over $54m). At NounsDAO, that’s a massive amount ($10,800,000 to be exact).
From Dennison’s thread, “if you establish the precedent of letting people quit and get their money back, then Nouns treasury can never grow beyond the “book value” of a Noun because doing so would make it economically viable to fork again.” A vicious cycle, potentially. We’ll have to see.
⌛️ Onchain Proposals
Onchain DAOs are decentralized autonomous organizations that operate entirely on the blockchain, using smart contracts and other blockchain-based technologies for its operations and decision-making processes. Tally believes that true DAOs operate onchain.
Summary: Launch Arbitrum grants program with a budget of $1M spread across 2 quarters to fund teams building apps on top of Arbitrum in a transparent manner. Questbook—the team that leads Compound grants program—will help facilitate the set-up of 4 Domain Allocators to manage the budget.
Voting ends: August 3rd
Summary: Yep, exactly what it says.
Voting ends: July 23rd
Summary: Nerman was funded by Nouns DAO through Prop 77 and offers customizable Nounish event feeds for Discord channels. 26 ETH to continue development of Nerman.js - Nouns SDK and the Nounish event feed discord bot.
Voting ends: July 24th
Summary: $52k to launch a stamp-collecting campaign to nounify Korea. What’s changed since last submission is funding (down $13k) and offerings (removed magazines and downed t-shirt batch size) since previous proposal.
Voting ends: July 26th
Summary: $95k in USDC for the creation of the first episode in a, 13-episode animated series, featuring Nouns. Delivery in 4 months after proposal passage.
Voting ends: July 26th
📝 10 Things To Read or Listen To
📄 “Rethinking Legitimacy in DAOs” by philh
📄 “Ripple is a security and it isn’t” by Matt Levine
📄 “Nouns fork is perpetually vulnerable to a dishonest minority” by Charlie Feng
📄 “DAOs Are Playgrounds for Growth and Development” by BanklessDAO
🧵 “On ENS” by punk6529
🎧 “Designing Diverse Teams w/ Kaitlyn Smith” on Rehash
🎧 “Does user ownership matter?” on On the Other Side
🎧 “Arbitrum - DAO Governance Highlight” on Delegate
💫 DAO Talk: DAO Tokyo roundtable: what does DAO mean to you?
🤭 Meme of the Week
Tally CEO and Co-founder Dennison Bertram gave a talk on “The Hyperscale Public Infrastructure Thesis for DAOs” at ETHCC—watch the replay in just 15 minutes here.
~ coolhorsegirl 🐴
p.s.- I’m in Paris this week for EthCC! Nothing better than a few crypto parties after my redeye from Thailand.