Crypto group loses bid to buy US Constitution copy
theblockcrypto.com
theblockcrypto.com
Your Twitter feed lights up. It’s some guy asking you to send money to a Delaware corporation's account “to buy the Constitution.”
These DAO tokens give no actual claim to anything. If the bid had succeeded, this museum piece would be owned by a private corporation. Not even a proper non-profit, just a guy who took advantage of the zeitgeist.
Now that the bid failed, they're refunding the money, but donors have already lost millions on gas and exchange fees. The DAO creators were even bragging about how many of these donors were brand new wallets. So in all, a very typical crypto outcome: nothing actually happened in the real world, but the top of the pyramid extracted some more money from thousands of retail newcomers.
Also there are broader issues with crypto beyond its environmental impact and some issues with proof of stake specifically.
EDIT: Holy smokes, it is absolutely exhausting to say anything even neutral about a cryptocurrency on Hacker News. I'm gonna take a break. I wanna get back to talking about all the other interesting things out there.
That was the only point I was trying to make. It's okay to agree with me, instead of carrying the goal posts off into the distance. :D
Not likely. Other chains do not have the economic incentives to support these ex-Ethereum miners. Mostly it will just cease.
With the coming proof-of-stake it won't even be true (at least for ETH).
Sure, it failed, and it sucks that everyone loses a lot of gas fees. But these guys did a lot to lay tracks for the next attempt. I bet with more time to plan they would’ve pulled it off.
I think Spacex’s early failed landing attempts are a good analogy - lots of time and money spent, but lots of learning to improve the next ones.
I know, the answer is "but crypto is just intrinsically amazing and we'll sort out these little legal deficiencies later, hopefully when we're rich enough to buy out all the politicians."
You can have the DAO as a legal structure where the granted governance tokens do have power, in that case the 10k internet strangers do have a say in what happens.
I'm not saying that was the case here (it happened quickly and I don't know), but it definitely seems likely we'll see stuff like this in the future and I think it's pretty cool.
I.e. voting shares in a corporation.
And then you need to register your security offering and know who your investors are. You can't just take money into a Delaware corporation and let anonymous wallets vote on what the company does with its assets.
I understand that crypto enthusiasts want to blow up American securities laws. I don't understand why they think it's going to happen if they just persistently keep doing things which are either illegal or just scammy with no legal protections to those whose money is at stake.
Anonymous holding companies would like to have a word with you.
> I understand that crypto enthusiasts want to blow up American securities laws. I don't understand why they think it's going to happen if they just persistently keep doing things which are either illegal or just scammy with no legal protections to those whose money is at stake.
I guess you must have also really hated Airbnb when it first came out? Or Uber and Lyft?
The web3 and crypto space is moving very quickly and you are right that regulatory bodies are struggling to keep up. What is welcome is that many people are now iterating and experimenting with these structures and some will fail miserably, while others might create completely new opportunities.
This is how innovation works.
Each person putting $ in should decide whether that's good enough for them. Totally fair. But I wouldn't wish for failure of the whole approach. We had a group of young ambitious people getting folks excited and organized, raising lots of money for collective action to achieve something. They raised > 2x as much as the biggest kickstarter ever.
The shift in the balance of power towards individuals is empowering. That empowerment can be used for good or bad, but on balance I'd rather live in a world where people are more empowered.
I'm completely unsure how you structure legal ownership of an LLC vs crypto ownership of a DAO, but I do know that an LLC's bylaws can bind the officers to the decisions of a voting body, and that's what the DAO would do.
I’m not a lawyer and not aware of any precedent here, but I imagine if it’s a total gray area the judge would say they are entitled to the same rights as one might find being a member of a corporation since that was the shared belief system at the time.
This stock gives you no actual claim to anything. The company doesn't even make a profit. Even when it did, it's unlikely to pay a dividend.
Now that the IPO has failed to launch, you're being refunded your money, but you lost a lot of time and effort evaluating the deal and the startup lost a lot on banker fees. The start up CEO even bragged about how many people interested were first time investors.
Whats your point in all this? Something people were enthusiastic about that didn't work out. Not everything always works out. Why do you care?
And it all came crashing down so bad that most Americans still can't invest in companies until after the IPO is concluded.
Is the point of crypto just to retrace the catastrophic steps leading up to post-Depression security laws?
I don't think securities laws do what you think they do. I'd rather people wade into the unregulated world where its buyer beware than to get the stamp of approval by regulators. These people are basically crowd sourcing buying a cultural artifact and it didn't work out. Who was harmed?
[0] https://edition.cnn.com/2021/11/16/cars/rivian-value-tesla-t...
But no, all that competence goes out of the window when crypto-bro wakes up one day and comes up with the idea of buying a museum piece with donation money.
What feels missed, however, in these critiques is the recognition of the pure, unadulterated "product market fit" that is being signaled by crypto, DAOs, etc.
Nearly 18,000 people, over a week, were hell bent on participating in this DAO and found a way to put up $$$.
Users struggled through broken ass alpha-release-level tools available to them to participate, forewent concerns about taxation, ownership, environment etc
Reacting with satisfaction about this failed outcome misses the opportunity to discuss and understand the pent-up demand and desire to rewrite the rules around ownership & sovereignty that critics dismiss as secondary to pyramiding / exit scamming / etc.
Crypto is as much, if not more, a social movement than a pure technology solution at this stage. Whether or not the blockchain, tokens, DAOs, etc. are the "right" approach to things, the fact that there are millions of users and many who are coming up with ideas, building products, etc. is something that is hard to ignore.
I was in the Discord group for Constitution DAO and it was really interesting to observe how excited, hopeful, and positive about the future people were. I think the world needs that, especially post-COVID.
I've heard similar arguments about movies and video games in the past, and it's never that clear cut.
I think most people's interest in crypto begins and ends at "you can get insane returns". It's gambling or FOMO for most people.
The excited builders are very more sparse (try to find anyone building on or even talking about Dfinity for evidence).
I'm not saying it'll never change, but right now there's no ecosystem for blockchain outside of NFTs and coins.
you mean the HODL crowd that's constantly pumping alt-coins? there are huge communities around that; nothing in crypto seems to be about the technology as of late
Making people feel good on the short term is not a justification for anything. We need to focus on solving the real problems, not selling crypto opium to those who have lost hope.
There are entire industries designed to make people feel good and do nothing else.
If you're equating crypto with QAnon then I don't think there's much room for debate here.
Crypto is not QAnon (although they do share general cultish traits). I was using Q as an extreme example of another online movement that also gave hope to people hanging out in forums.
Can you expand on this? I've never seen these things as anything new just the same old get rich quick stuff we've seen forever but this has me curious.
1. Gaming. There are a lot of interesting games now where people own assets (sort of like trading cards), characters in the games, and get compensated for how they contribute to the games. This is a very interesting model, and some of the games have millions of DAUs... And that's millions of DAUs while the tools to buy the tokens to play the games are still very difficult to obtain for some people.
2. DAOs. The level of interaction and excitement around people discussing how to govern their communities in a healthy, scalable way is something I've never seen in social media... This doesn't even involve money/crypto changing hands -- it's about using voting tokens, bots, and creative rule making to make organizations and communities grow and scale inclusively and in a way that doesn't have a centralized authority making decisions (in contrast to say, Facebook).
If you're interested in learning more, I highly recommend joining a few Discord channels for DAOs.
As for the broader ideas, I don't think the incentives line up. What incentive does a video game developer, especially a large one, have to support any of this? And how would it actually work beyond gimmicky pyramid scheme games like Axie?
Most web 2.0 companies don't support web3, and most web3 community members would argue that this is because web3 directly threatens the web 2.0 business model.
I could spend all day on Facebook making stupid posts, or play Axie Infinity and maybe make some money. Which one is worse?
And the concept of a DAO has gotten massive exposure, which is great.
But without the messy administration woes a win would have entailed, and which no doubt would have led to disagreements and bitterness.
And which, frankly, DAOs are not yet ready to handle. The frameworks just aren't there for it. DAOs are fine for experimental use with cryptofolk who are used to the chaos, but it's not time for the normies yet. It's too early for a particularly adhoc dao to deal with the masses.
As long as the funds are returned promptly, this was the ideal outcome from my view.
Nobody had the heart to tell him that the constitution was not the declaration of independence.
But it turns out the "inner circle" running this Twitter space, who all had very official looking Lions and Apes as their avatars, was so far removed from the actual inner circle that they had no idea what really happened at the auction and instead were just LARPing as being insiders.
I am not anti-crypto, but most of the crypto culture should probably be burnt to the ground.
For example:
* Axie Infinity (https://www.notboring.co/p/infinity-revenue-infinity-possibi...)
But there are many.
"Scores of people in the Philippines and Vietnam have quit their jobs and make a better living playing Axie for hours every day. They earn Smooth Love Potion (SLP), a token earned through Axie gameplay that can be exchanged for fiat, which in turn can be used to pay for food, shelter, medical bills, and all of the other things needed to survive. Some people who were previously making $5 per day now make $20."
Something is fishy. Where do people making $5/day get $600 to buy into dumb game? This is nearly half a year worth of income to gamble on this thing. If this is actually happening, it’s sad.
Lots of games have had grinding farms in developing nations and in that respect, this seems no different except that is branded with “crypto” and “nft” and somehow that’s supposed to make it different, while in reality it just seems to make it more complex. But mostly it seems insane that the buy in is $600. I look forward to hearing the stories of indentured servants in developing nations being forced to play this game to pay back their buy-in debt.
Fuck no. I would not allocate half a year’s salary on a gamble.
Indeed since this article was written, Axie tokens tanked.
From their Discord announcement:
> @everyone Lots of questions coming up about why we stopped the bidding where we did. The proper care and maintenance of the Constitution requires a reserve that is needed to insure, store, and transport the document, and we calculated the absolute max we could go to while still meeting these requirements. The opposing bidder passed that max, and we were unable to go any higher while still ensuring that we could properly care for the document. Additionally Sotheby's takes a cut of every auction sale with their fees, and this amount had to be accounted for as well.
They talked about this in the discord.
Ultimately they went as high as they could go given these costs.
Downvoters: It's true. Otherwise, they would already be celebrating that they have won the auction and covered all the fees.
Well I was quite surprised by this outcome and was actually expecting for them to win. [0] Looks like the problem always points to Ethereum (and its gas fees) which ruined it for them.
You're claiming there's no advantage to knowing your opponent's max bid?
I wish all my eBay competitors agreed with you.
If there is, why don't you state what it is, rather than asking me?
Especially in auctions with multiple known bidders, collusion opportunities can arise to allow bidders to control the price, too. Look at GSA natural resource auctions for examples.
But don't you have a limited budget? If your budget is $40M, and you know that the DAO is going to bid all the way up to $50M, how does that help you? You will still lose the bid. Conversely, if your budget is $50M, and you know that the DAO will only bid to $40M, how does that help you? During open bidding (ie. non-sealed bid), the bids go up incrementally, so after the DAO placed its bid, all you need to do is increase your bid by the minimum increment and you'll win. Using the strategy of "increment the minimum amount until you reach your budget" gets the same result.
If you were short by $1M, you could probably convince someone to loan you that amount quite easily.
The GP already mentioned colluding - you could for eg, merge funds with another potential bidder (or donor) to "just cross the amount" in exchange for something (say a yearly showing of the constitution at a museum of their choice)
Knowing your opponents maximum amount makes your riskier bets (loaning money, striking deals) much less risky - atleast in a two-way auction(?)
It's the fact that the second bidder was willing to go above $48 that killed then.
This is pretty classic "Dutch Auction" dynamics, where the winning bidder gets the item at the reserve/max price of the second highest bidder.
1. I didn't know something like the US would allow the original US constitution to be privately held. But I guess it makes sense. The value is in the law it establishes and all of it's copies. The original is largely sentimental and doesn't need to be held by the govt. 2. I'm sure this is just naivete, but it made me think that going forward in digital media there aren't any originals to own. What even is an original? I'm sure this is all deeply obvious in NFT land.
Ethereum mainnet has incredibly high demand for block space right now because there's hundreds of billions of dollars worth of value trading on top of it. And at that scale $10 is peanuts.
And your statement isn't even true. On layer 2s like Polygon you can send $0.50 anywhere in the world for less than a penny in fees. Think of Ethereum like the New York Times. You want to place an ad--so do many other people, and page space is limited. It's a pretty ridiculous critique of the entire advertising industry to say it's only for the rich because placing an ad in the New York Times is expensive. You can post your ad on craigslist for free.
I'd love to see some numbers to that effect.
Bitcoin in 2008 was as good for remittances as it is today - it's just easier to acquire and costlier to move (lightning being the exception). However, it manages by ignoring all regulations (Indian examples: [0], [1]). Whether these laws are just or proportional in a world where information moves at the speed of light is a question for democratic processes, not multinational corporations to answer.
Payments via SWIFT are slow not because the bits transferring money over SWIFT are much slower, but because international remittance regulations are genuinely complicated.
[0]: https://en.wikipedia.org/wiki/Foreign_Exchange_Management_Ac...
[1]: https://fcraonline.nic.in/home/PDF_Doc/FC-RegulationAct-2010...
This is the problem.
Ethereum is for those who can afford the astronomical gas fees even on a slow transaction speed which is quite worse than card payment at this point.
Basically it is useless for anyone that pays for their groceries given that the gas fee itself will be more expensive than the food you are paying for.
Other blockchains already exist to avoid these issues from the start without relying on, fixing / patching, building on top of Ethereum.
Your imagination is wrong in its estimate of absurdity: Western Union charges $60 to transfer $999 to the US:
https://www.westernunion.com/us/en/send-money/app/price-esti...
Up to $158 depending on what option you use, which is somehow even more than the claimed gas fees.
And prices, in USD,were higher when I posted my statement earlier.
You are better off using a different cryptocurrency that can scale and handle payments with extremely low fees better than Ethereum or failing that use something like Apple Pay.
Even if you did all of those suggestions, you still need to pay the gas fees to put it on a layer 2 solution, or that rollup solution / zkSync contraption the web3 guys speak of in order to have 'less' transaction fees in the first place.
After all of those steps, the gas fee will still cost more than paying for your groceries in the supermarket. Making it totally useless for paying for your food.
One more thing:
You better have enough to cover the gas fees for approving and transferring otherwise the transaction can 'fail' and is non refundable.
Not necessarily. Exchanges are starting to support some of these so you can skip the Ethereum mainnet completely.
This was an interesting ordeal. One comment on Twitter suggested we may have seen the start of a new phenomenon, “money swarms” [1], in which groups of Internet people can raise really large sums quickly for some goal. Bit of chaos energy to be sure.
FWIW I think at least some of the people involved in this feel a very genuine connection to what they were doing. People who get excited about DAOs right now differ a bit from the earlier extreme-libertarian crypto; they’re into the idea of active participation in government rather than no government at all. It’s not much different than the 2010 conversations that Occupy folks were having on Reddit, when that seemed like a big novelty.
1. https://twitter.com/co_eq/status/1459987329511145477?s=21
I can imagine similar efforts for crowdfunding projects where those that pool their money together don't actually have anything but the interest to lose. Maybe built on top of Alchemix platform? This will certainly be more likely once the transactions fees are lower and people are using layer-2s.
Individuals behind bid to buy Constitution copy have disappeared, and the money is gone.