NounsDAO is heading toward a treasury split in one week’s time after a critical mass of owners of the cutesy, colorful digital collectibles moved to conduct crypto’s latest “rage quit.”
Holders with 25% of all Nouns NFTs are thumbing their nose at the project. Rather than trying to sell their NFTs on the open market – where NFTs are taking a bear market beating – they are rushing to get a better price directly from its trove of ether tokens.
Under the crypto club’s newly enacted rage quit rules, if 20% of Nouns NFTs call for a “fork” they can split from the main group and take their share of the project’s 30,620 ether tokens (worth about $50 million at press time) with them. Each Nouns NFT is worth about 36.5 ETH ($59,600) in book value, giving the current fork a treasury of 7,598 ETH (about $12.4 million).
Nouns are now trading near that level for the first time since last December, their price pushed up by traders looking to make easy money on the arbitrage. Some of them are well-known figures in the cryptomarket’s “risk free value” trading subculture, including the pseudonymous DCFGod, who owns 28 Nouns.
The situation is the latest in a series of “rage quits” that are showcasing how decentralized autonomous organizations (DAOs) deal with factions of investors who lose faith in their vision and demand their money back. Projects whose assets price below their book value are particularly appealing to activist traders that want to unlock those assets’ value
In the case of NounsDAO, the mechanism for unlocking that value is relatively new. Last month the DAO approved a broad upgrade called v3 that enabled forking to give disaffected investors a way to peacefully rage quit.
“Every DAO needs a minority protection mechanism.” DAO contributor Elad said in a recent YouTube video describing the process.