Sometimes NFT pictures are worth the hype
NFTs are not just pictures. But, sometimes that’s all they have to be.
Last week, we launched DISTRBTD with a manifesto that took aim at the largest problems facing the blockchain industry and the toughest questions nobody seems to want to answer.
We implied that the current state of crypto and NFT mania is in many ways toxic and invaluable to human progress.
We stand by these thoughts. But I’d like to take a look at one NFT collection in particular that represents the best of what the bull-run narratives of 2021 claimed to be creating.
It’s called the Nouns DAO and it’s the purest form of what it means to launch a decentralized brand on the blockchain.
Nouns DAO launched August 8th, 2021 by auctioning off the first ‘Noun’ (pictured below) in an Ethereum bidding contest that awarded the NFT to the highest bidder and made them a member of the Nouns DAO (Decentralized Autonomous Organization) until they no longer hold their Noun.
Since then, every day, exactly one new Noun has been auctioned off in this fashion. A ceremony that is designed to continue forever.
A Noun is a generative NFT that randomly combines different visual traits to form an image like the one seen above. Unlike most NFT collections, that image is stored ‘on-chain’ meaning it’s imprinted forever on the blockchain.
Holders of a Noun get a governance vote in the Nouns DAO, where 1 Noun equals 1 vote. The collective votes on proposals set forth by the community that seek to propel forward the mission originally set upon by the founder, Punk4156 (an alias).
The purpose of the project is to create a globally recognized, decentralized brand, by crowdsourcing progress until they achieve that goal. Many NFT collections attempt to have their community feel a stake in helping them achieve brand awareness, but Nouns were able to innovate on the method for accomplishing that. How? By embracing decentralization in every way possible in order to empower their communities.
What does this look like?
Well, first let’s look at the primary community, holders of a Noun. They get exclusive access to governance of how the DAO spends their ~32 million USD at the time of writing this article. That pool accumulates because all proceeds from each daily auction, as well as all secondary royalties from trading of Nouns, are placed directly into the treasury. The organizing team keeps none of the proceeds, but opts to receive, as payment, every 10th Noun. That might seem like a bad deal but Nouns have sold for as much $784,862 USD on the secondary market. Not a bad 10 day haul.
The top Noun sale.
The value of being a member of the Nouns DAO, thus, is jointly formed through access to large amounts of capital and ownership of a valuable collectible, attached to an exponential brand—a brand built via a positive feedback loop created when members of the community don’t just get to benefit from the success of the project but are incentivized and empowered to help it succeed.
The Nouns DAO experiment has led to activations around the globe that were organized and funded by the community. Proposals for skateparks, sponsorships, and more have been executed in a frictionless and autonomous way. In many ways, the organizing team doesn’t have to do anything, although I’m sure they’re among the most active participants.
What’s more is that laying a foundation for a thriving and productive community wasn’t enough for Nouns. They sealed their success and status as a ‘decentralized brand’ by providing unbridled creative access to the IP through Creative Commons licensing. Meaning anyone can use the brand’s assets and imagery (including all the art) to create and commercialize anything they want. The result is they’ve expanded the surface area on which their decentralized brand can achieve crowdsourced success. More value goes to the holders of the scarce ‘Nouns’ by incentivizing individuals to borrow the brand equity and further Nouns’ global mission.
Now, if you’re not familiar with many NFT projects you might be wondering what’s special about this, so let me be the one to tell you that most NFT projects offer no shared licensing, have no shared treasury, have artwork that is not stored on-chain and so can be altered at anytime, and have an incentive structure (royalties go directly to team not treasury) that benefits primarily from trading of their assets rather than growth of their brand.
NFT projects have deservedly been scrutinized and ignored by critical people for very good reasons. Many spent 2021 attempting to kickstart global brands through the guise of decentralization, but by providing no value of ownership to that brand, holders were left with false hopes. Nouns DAO is considered one of the top collections and in my opinion will be a top global brand for the simple reason that they have embraced what the technology is really about. Decentralization. It shines through everything they do as a benefit for those who take part. And that sounds like the making of a great brand to me.