Morgan Chittum

<div id="highlights-block_619d5e344d00f" class="highlights">
        <ul>
                <li>ConstitutionDAO said they would be shutting down five days after Sotheby’s auction where they lost their bid to hedge fund billionaire Kenneth Griffin</li>
                <li>Investors have spent roughly 200 ETH or $866,918 on gas fees in making donations to the DAO, according to Dune Analytics</li>
            </ul>
    
</div>



<p>A group of crypto investors raised roughly $48.9 million to buy a rare copy of the US Constitution at Sotheby’s auction house last week. Despite the efforts invested by 17,437 people, the ConstitutionDAO <a href="https://cms.blockworks.co/the-constitutiondao-raises-49m-to-buy-a-copy-of-the-us-constitution/" target="_blank" rel="noreferrer noopener">lost the bid</a> to hedge fund billionaire <a href="https://www.wsj.com/articles/citadel-ceo-ken-griffin-outbid-a-group-of-crypto-investors-for-copy-of-u-s-constitution-11637352087" target="_blank" rel="noreferrer noopener">Kenneth Griffin</a>.</p>



<p>Today, the <a href="https://twitter.com/ConstitutionDAO/status/1463237188661878787?s=20" target="_blank" rel="noreferrer noopener">group announced</a> that its nascent operations would be shutting down.</p>



<p>“The community has taken all actions that it was organized to accomplish,” Graham Novak, a ConstitutionDAO organizer, said in the group’s Discord.</p>



<p>Following the auction at Sotheby’s on Thursday, an admin in the project’s Discord posted that the DAO “still made history” adding that the group’s efforts “have educated an entire cohort of people around the world — from museum curators and art directors to our grandmothers asking us what ETH is when they read about us in the news.&#8221;&nbsp;</p>



<p>The big question then was, what would happen to the money? There were discussions about how to keep the project going, to pivot to a new focus or perhaps fund a political organization. But, ultimately, the primary mission of the ConstitutionDAO was to win the US Constitution, and that didn’t happen.</p>



<p>“Ultimately, we’ve come to the decision that continuing on without the unifying mission of buying the constitution, setting up more official governance and embarking on a new chapter is not something that we as a core team are able to support,” the DAO said in a <a href="https://twitter.com/ConstitutionDAO/status/1463237188661878787?s=20" target="_blank" rel="noreferrer noopener">tweet.</a></p>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">gm frens 👋<br><br>The past 10 days have been an incredible experience. We are so honored and appreciative to have shared it with all of you, our web3 community. <br><br>We know that everyone is eager to hear what’s next for ConstitutionDAO, and we’ve been deeply exploring many options.</p>&mdash; ConstitutionDAO (📜, 📜) (@ConstitutionDAO) <a href="https://twitter.com/ConstitutionDAO/status/1463237188661878787?ref_src=twsrc%5Etfw">November 23, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<p>If the group had won the bid at Sotheby’s, token holders could vote on what happened to the copy of the US Constitution. In exchange for financial contributions, donors had the option to redeem a governance token called PEOPLE through Juicebox at a rate of 1 million PEOPLE tokens per 1 ETH donated.</p>



<p>ConstitutionDAO promised to return contributors&#8217; donations, but some members remain concerned over how much would actually be returned.</p>



<p>For context, the funds collected were being held in a <a href="https://etherscan.io/address/0xb1c95ac257029d11f3f64ac67b2307a426699322" target="_blank" rel="noreferrer noopener">multi-signature wallet</a> controlled by 13 “core contributors” to the ConstitutionDAO. This was an attempt to mirror the 13 colonies at the time of the nation’s founding, according to the project’s <a href="https://www.constitutiondao.com/" target="_blank" rel="noreferrer noopener">website</a>. Nine of the 13 core contributors were required to sign a transaction in order to move any funds.</p>



<p>Over the weekend, the project issued specific guidance to donors, describing the option as “the fairest and safest path forward available at [the] time.”</p>



<p>“After careful consideration of feedback given by our community members and partners, we’ve decided to issue donation refunds through the same Juicebox mechanism by which donations were originally collected, rather than attempting to immediately launch a new governance plan and token at the same time as the refund.”</p>



<p>The process to refund the donated ether has been the subject of controversy, particularly after an investigation from Nick Bax, who outlined in a <a href="https://twitter.com/bax1337/status/1462801325515804678?s=20" target="_blank" rel="noreferrer noopener">tweet</a> on Sunday that core contributors of the DAO may have been “making internal decisions that are causing insane volatility.”</p>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr"><a href="https://twitter.com/ConstitutionDAO?ref_src=twsrc%5Etfw">@ConstitutionDAO</a> core team is either incompetent or malicious. <br><br>They&#39;re making internal decisions that are causing insane volatility. The type that insiders could easily trade on. <br><br>Anybody know an on-chain analyst who knows what to look for? <a href="https://t.co/V8dAxTeHOS">https://t.co/V8dAxTeHOS</a> <a href="https://t.co/afQu1tKmkL">pic.twitter.com/afQu1tKmkL</a></p>&mdash; Nick Bax (@bax1337) <a href="https://twitter.com/bax1337/status/1462801325515804678?ref_src=twsrc%5Etfw">November 22, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<p>According to <a href="https://twitter.com/bax1337/status/1462801325515804678?s=20" target="_blank" rel="noreferrer noopener">Bax</a>, the team <a href="https://twitter.com/ConstitutionDAO/status/1461947431030075396?s=20" target="_blank" rel="noreferrer noopener">announced</a> via Twitter a snapshot of PEOPLE holders at <a href="https://etherscan.io/block/13656500" target="_blank" rel="noreferrer noopener">a specific Ethereum block</a> — at approximately 6:12 UTC on Friday — despite <a href="https://twitter.com/me_jango/status/1462074302774366215?s=20" target="_blank" rel="noreferrer noopener">warnings</a> from Juicebox team members of possible ramifications of such an approach.&nbsp;</p>



<p>Following the appointed snapshot time, certain token holders dumped their PEOPLE holdings in exchange for ETH at the expense of liquidity providers. This dropped the value of the PEOPLE token in relation to ETH by over 82% within minutes on Uniswap.</p>



<figure class="wp-block-image"><img decoding="async" src="https://lh6.googleusercontent.com/hpPGY2sxfZtwt29arqY8uXyPoO9Z2a_17YeIOvR8Rk9mGj2COXIvN47Pe4KprD1pdRp9YYJCcsJ0ti07LtIHAZ2XOww1qPuzGby9HS7VgMOQUBWWzAO01hGuw0oDtB5llC05fxyW" alt=""/></figure>



<p>Since the snapshot had already been taken, the former PEOPLE holders expected to receive their pro rate share of ether, and no longer had any use for the token, thus traded it for as much ether as they could.</p>



<p>Speculators jumped in and purchased the token, a move which Bax described as either &#8220;incompetent or malicious.&#8221; The team later decided that the previously announced snapshot method would be scrapped, a move which resulted in PEOPLE reclaiming its prior ratio to ETH.&nbsp;</p>



<p>ConstitutionDAO has maintained that they would make refunds available to contributors, and later announced that  they would shut down.</p>



<p>Donors still have to pay gas fees if they wish to claim the amount of ETH originally put into the project. Specifically, investors in the DAO have spent nearly <a href="https://dune.xyz/queries/252602" target="_blank" rel="noreferrer noopener">200 ETH</a> or $866,918 on fees while making donations, according to <a href="https://dune.xyz/queries/252602/473047" target="_blank" rel="noreferrer noopener">Dune Analytics.</a> </p>



<p>For some smaller donors, the cost of fees many be worth more than the contribution itself under the current state of demand for Ethereum block space. The ConstitutionDAO <a href="https://etherscan.io/address/0xb1c95ac257029d11f3f64ac67b2307a426699322" target="_blank" rel="noreferrer noopener">multi-sig address</a> holds $2.3 million, as of press time. </p>



<p>“We hope this project will inspire others to build together and use the power of web3 to make a positive impact in the world,” organizers said in <a href="https://twitter.com/ConstitutionDAO/status/1463237200074526726" target="_blank" rel="noreferrer noopener">a statement via Twitter</a>.</p>



<p>ConstitutionDAO’s press contact did not immediately respond to Blockworks’ request for comment.</p>



<p><em>Sam Martin and Macauley Peterson contributed reporting for this story.</em></p>


ConstitutionDAO Will Shut Down After Raising $49M

Sam Martin

<div id="highlights-block_6196a934d789c" class="highlights">
        <ul>
                <li>At 6:30 pm ET, one of the 11 surviving copies of the Official Edition from the Constitutional Convention was auctioned by Sotheby’s</li>
                <li>The concept of using a DAO to purchase one of the oldest governing documents in the world marks a historic moment in the digital asset industry, but also raises questions</li>
            </ul>
    
</div>



<p>The ConstitutionDAO, an aspiring decentralized autonomous organization (DAO), raised roughly $48.9 million worth of ether to <a href="https://cms.blockworks.co/a-dao-is-set-to-bid-on-last-privately-held-copy-of-us-constitution/" target="_blank" rel="noreferrer noopener">place a bid</a> on the last privately held copy of the US Constitution, auctioned by Sotheby&#8217;s on Thursday at 6:30 pm ET. The auction house sold the document for $41 million, but the DAO did not secure the winning bid.</p>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="und" dir="ltr"><a href="https://t.co/6GVxlkvJbj">pic.twitter.com/6GVxlkvJbj</a></p>&mdash; ConstitutionDAO (📜, 📜) (@ConstitutionDAO) <a href="https://twitter.com/ConstitutionDAO/status/1461498841820192771?ref_src=twsrc%5Etfw">November 19, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<p>According to the Wall Street Journal, the winning bid came from Citadel CEO Ken Griffin, who intends to display the artifact in an Arkansas museum:</p>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">Citadel CEO Ken Griffin said he outbid a group of cryptocurrency investors to win a $43.2 million first-edition copy of the U.S. Constitution at auction. He intends to lend it to a free Arkansas art museum. <a href="https://t.co/LiSmlBTdpp">https://t.co/LiSmlBTdpp</a></p>&mdash; The Wall Street Journal (@WSJ) <a href="https://twitter.com/WSJ/status/1461789364946673666?ref_src=twsrc%5Etfw">November 19, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<hr class="wp-block-separator"/>



<p>DAOs are a new governance structure made possible through the internet and cryptocurrencies. After Sotheby’s <a href="https://www.sothebys.com/en/digital-catalogues/the-constitution-of-the-united-states" target="_blank" rel="noreferrer noopener">announced</a> the auction last Friday, a small group of individuals quickly assembled a Discord, Twitter account and website, and partnered with <a href="https://juicebox.money/#/p/constitutiondao" target="_blank" rel="noreferrer noopener">Juicebox</a> to facilitate the pooling of ether for the purpose of bidding.&nbsp;</p>



<p>The ConstitutionDAO has seen remarkable support throughout the Web3 community, currently boasting over 18,000 Discord members, 30,000 Twitter followers, and nearly 17,000 ether contributors.&nbsp;</p>



<p>The funds collected are being held in a <a href="https://etherscan.io/address/0xb1c95ac257029d11f3f64ac67b2307a426699322" target="_blank" rel="noreferrer noopener">multi-signature wallet</a> controlled by 13 core contributors to the ConstitutionDAO — mirroring the 13 colonies at the time of the nation’s founding. Just as nine of the new US states were required to ratify the Constitution, nine of the 13 multisig signers — many of whom are publically identified —are required to sign a transaction in order to move the funds.</p>



<h3 class="wp-block-heading"><strong>What happens if The ConstitutionDAO wins or loses?</strong></h3>



<p>If the group is ultimately outbid, funds will be returned to donors less transaction fees spent on the Ethereum network, according to <a href="https://www.constitutiondao.com/" target="_blank" rel="noreferrer noopener">the group&#8217;s website</a>. The Juicebox platform ordinarily takes a 5% fee of funds raised by projects — which in this case would amount to almost $2.5 million in ETH — however, <a href="https://twitter.com/m1guelpf/status/1460812906539409408" target="_blank" rel="noreferrer noopener">according to</a> multisig member Miguel Piedrafita, the platform is waiving its usual fee for ConstitutionDAO. Juicebox’s author, who goes by the pseudonym “<a href="https://github.com/mejango" target="_blank" rel="noreferrer noopener">mejango</a>” is also <a href="https://twitter.com/me_jango" target="_blank" rel="noreferrer noopener">one of the 13 multisig signers</a>.</p>



<p>The common enterprise is not yet decentralized, although according to <a href="https://juicebox.money/#/p/constitutiondao" target="_blank" rel="noreferrer noopener">the Juicebox campaign website</a>, donors receive a governance token, <a href="https://etherscan.io/token/0x7a58c0be72be218b41c608b7fe7c5bb630736c71?a=0x5dC51D23A09EEb589D1300E914488d7E2a2CE525" target="_blank" rel="noreferrer noopener">$PEOPLE</a>, in exchange for their contributions to the cause. This token will convey no ownership rights over the copy of the Constitution, or the Delaware LLC organized to participate in the Sotheby’s auction. Instead, should the group prevail, the plan is that the new DAO’s members will be able to create proposals and vote on the organization’s future direction and management of assets. Fractionalized ownership of the artifact would almost certainly infringe on US securities laws, and is explicitly not contemplated.</p>



<p>It is worth noting that the amount of PEOPLE donors can expect to receive is tied to the size of their contributions. This begs the question of who will own the largest portion of the voting rights. The bulk of donors are contributing small amounts. Only <a href="https://dune.xyz/ilemi/ConstitutionDAO-Funding-Tracker" target="_blank" rel="noreferrer noopener">187 of the nearly 17,000 donors</a> have made contributions greater than 5 ETH, or roughly $21,000. Another interesting detail is that 2,827 ETH came from wallets that made their first-ever Ethereum transaction. That could imply that the DAO is onboarding new users into crypto — <a href="https://vimeo.com/645896995" target="_blank" rel="noreferrer noopener">a video embedded</a> on the group’s website targets newcomers to the digital asset space — or that participants are creating new wallets to preserve their privacy, for the sole purpose of sending ether to the cause.</p>



<div class="wp-block-image"><figure class="aligncenter"><img decoding="async" src="https://lh6.googleusercontent.com/f3i2D5Dgb-Gk9XJwE554agqVwKQqF46clWPf2Olhq3hIZ59E09jOU4RvGH3-C8Qc8Q-9qm_DbZ2uDQUcWRp4Gs_qMvswcBxp-FIJdBf6kePOwi749NZykeSEEPfi-sv36KVP98lT" alt=""/><figcaption>Raised ETH per funder</figcaption></figure></div>



<div class="wp-block-image"><figure class="aligncenter"><img decoding="async" src="https://lh4.googleusercontent.com/wsg5tLCM9_0bng2PcWZY2LUj5gbVre2j0qMDVVZnDcYKdLpwhLQ5xfNY0qyT5XU298ZDnMzEYvmWbXa_QenDzKBuGr86Yj1gbNKGl-3E330ENBh-vE8-cFw67QHFx5Kb7h3Xg18y" alt=""/><figcaption>Total raised sorted by Ethereum wallet activity</figcaption></figure></div>



<h3 class="wp-block-heading"><strong>Who owns what now?</strong></h3>



<p>According to the <a href="https://docs.google.com/document/d/1oMbg2d_7QmhO7QtoLmIeqg9HCdNfZgoC_w7oi7RMD7Q/edit" target="_blank" rel="noreferrer noopener">DAOs FAQ’s</a>, the LLC is legally owned by community members Alica Ma and Julian Weisser. The organization tapped <a href="https://endaoment.org" target="_blank" rel="noreferrer noopener">Endaoment</a>, a tax-exempt Community Foundation built for decentralized finance and focused on social impact, who passed KYC requirements with Sotheby’s to make the formal bid on behalf of the DAO.</p>



<p>As it currently stands, Ma and Weisser will have legal ownership over the document if the auction is won. The FAQ promises that DAO members will be advisors to the LLC owners on all actions taken. The LLC aims to change the structure to become fully decentralized over time, but for now DAO contributors are placing a great deal of trust in these two individuals.</p>



<p>The group also raises the question of whether its core members will be compensated for their efforts, but they do not answer it, instead opaquely mentioning they “intend to submit a proposal to be voted on by the community.”</p>



<p>Due to the short timeline, the core contributors to the DAO are prioritizing the logistics behind purchasing the Constitution over the details of the DAO’s structure, as they write in the DAO’s FAQ:</p>



<blockquote class="wp-block-quote"><p><strong>“We recognize that much more detail is required here! Due to the unusual and extremely short timeline of needing to rally around obtaining the Constitution during the auction window, we have not been able to focus on giving the technical aspects of DAO governance mechanics the careful consideration and community deliberation this topic requires.”</strong></p></blockquote>



<p>While the movement to purchase a copy of the US Constitution is a historical moment in the Web3 space, this plane — to use an aviation metaphor — is being assembled while it&#8217;s flying. From the nascent history of DAOs, there are scant examples of a group purchasing real-world assets and effectively managing them — the ConstitutionDAO is a true trailblazer.</p>



<p>The group is currently vetting reputable institutions with the expertise to properly house, store, and maintain the artifact if the auction is won. The final home for the Constitution will be left up to vote by PEOPLE token holders. The idea of a DAO buying one of the most important documents in the world is highly experimental, and only time will tell if a group of internet strangers can effectively manage such an undertaking through decentralized governance.</p>



<p><em>Macauley Peterson contributed reporting for this story.</em></p>



<p><em>This story was updated on November 19, 2021, at 3:17 pm ET, to include the winner of the auction.</em></p>



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