Today’s update is nominally about something crypto related; what I think is far more interesting, though, is the implication for the power of memes.
On to the update:
Sotheby’s is auctioning off an extremely rare and historic first-edition printing of the U.S. Constitution, and crypto investors are pooling millions of dollars worth of ether to buy it. An organization known as ConstitutionDAO is raising the money using a digital crypto wallet with the aim of crowdsourcing enough funds to make the winning bid when the document hits the auction block on Thursday night.
The foundational text is valued at $15 million to $20 million. Since launching five days ago, the group has thus far raised 967 ether, or $4.3 million. The exercise offers some of the first practical insight into how crypto infrastructure can be used to facilitate fractional ownership of a physical artifact.
ConstitutionDAO is a decentralized autonomous organization, or DAO, formed for the sole purpose of putting an original copy of the Constitution back in the hands of the people…If ConstitutionDAO secures the winning bid with this consortium of crypto bidders, each contributor will fractionally own part of the text.
It’s a lovely story that has taken the crypto world by storm, and is being hailed as a demonstration of the power of Decentralized Autonomous Organizations (DAOs) to bring together people who don’t know each other for a common purpose: chip in some ether, and if ConstitutionDAO wins the auction, you own (a fractional part of) an original copy of the U.S. Constitution; moreover, you get to vote based on your share of ConstitutionDAO tokens on what you want to do with said copy.
It’s a story, however, that isn’t exactly true.
The Need for Trust
The FAQ on the ConstitutionDAO website (the definitive FAQ is this Google Doc) states the following:
Am I receiving ownership of the Constitution in exchange for my donation?
No. You are receiving a governance token, not fractionalized ownership. Governance includes the ability to advise on (for illustrative purposes) where the Constitution should be displayed, how it should be exhibited, and the mission and values of ConstitutionDAO. ConstitutionDAO is taking donations and donors are receiving governance tokens with no expectation of profit. These donations are not tax deductible at this point in time.
The most obvious reason for this limitation is regulatory: issuing ownership tokens with the expectation of a return would make ConstitutionDAO a security; moreover, a DAO is digital, and the Constitution copy is physical, and it is not well established in most jurisdictions how or if a DAO can own physical property. Then there is the fact that Sotheby’s has to follow Know Your Customer (KYC) laws: if the DAO is simply a bunch of anonymous Ethereum addresses how can the auction house satisfy its legal requirements around limiting money laundering?
Instead, according to the project’s Purchase Process Details, it appears that the actual bidder for the Constitution will be a just-formed LLC with two members/beneficiaries who may sign a letter of intent to be bound by DAO decisions, but still TBD. It’s also not clear whether or not the founders of the project will take money off of the table; again from the FAQ:
Will the core team receive any of the raised funds for themselves or get compensated in any way from this?
The core team has not received or pre-minted any tokens. Following the purchase of the Constitution, we intend to submit a proposal to be voted on by the community. While this is unusual, we believe that it establishes a precedence of mutual trust between the core team and the backers of the ConstitutionDAO.
There’s a funny word in there: trust. It sure is striking that a memetic moment meant to demonstrate the power of trustless technologies is utterly and completely dependent on trust: trust that the LLC owners won’t take the funds and run — or the Constitution copy, for that matter; trust that the money will be refunded if the bid fails; and trust that the actual DAO, when it is finally formed, doesn’t enrich the core team along the way.
This isn’t a criticism of the entire project; as I noted, for both regulatory and time reasons it’s not clear how the core team could do better, and the existence of the Google Docs I drew my information from makes it clear that the team is trying to be transparent (and said transparency has increased over the last 24 hours, including revealing who controls the wallet that holds the funds). It is interesting, though.
Memes and Reality
The part of this project that is very much rooted in the crypto world is the means by which ConstitutionDAO is collecting money: via a listing on a project called Juicebox. Juicebox gives out newly created $PEOPLE tokens in proportion to the amount of Ether contributed to the purchase; those tokens will be the basis of participation in the DAO should the bid be successful. All of this happens on the Ethereum blockchain via smart contracts.
Notice, then, the juxtaposition that is happening: believing in ConstitutionDAO requires a lot of trust, but once you are willing to act on that trust it really is far easier and faster to commit funds in a binding way than it could ever be with fiat currency. This has powerful implications for the concepts I wrote about earlier this year in Mistakes and Memes:
The Internet, meanwhile, isn’t just about demand — my first mistake — nor is it just about supply — my second mistake. It’s about both happening at the same time, and feeding off of each other. It turns out that the literal meaning of “going viral” was, in fact, more accurate than its initial meaning of having an article or image or video spread far-and-wide. An actual virus mutates as it spreads, much as how over time the initial article or image or video that goes viral becomes nearly unrecognizable; it is now a meme.
This is why, in the end, the best way to describe what happened to Gamestop is that it was a meme: its meaning was anything, and everything, evolving like oral traditions of old, but doing so at the speed of light. The real world impact, though, was very real, at least for those that made and/or lost money on Wall Street. That’s the thing with memes: on their own they are fleeting; like a virus, they primarily have an impact if they infiltrate and take over infrastructure that already exists.
The overarching idea in that Article is how the Internet is increasingly impacting the real world, and that is one takeaway from this bid: a bunch of crypto fans may actually (donate their money to two people with an LLC who will) buy a copy of the Constitution in the real world. What is more profound, though, is the way that crypto is starting to give the tools for memes to make themselves tangible without needing any real world infrastructure. Wall Street Bets needed an actual stock to exist to attract meme money; ConstitutionDAO created a stock (token) out of thin air to accomplish the exact same thing.
What is particularly interesting is that the crypto community generally has learned the exact same lesson, but from the opposite direction; Packy McCormick wrote about how ConstitutionDAO came about on Not Boring and had a very matter-of-fact section on the project’s meme strategy:
A DAO needs to walk a delicate line between building up a shared language that the in-group appreciates and understands while remaining welcoming to new members. Since ConstitutionDAO needs to raise enough money to buy the Constitution in seven days, memes are crucial to spreading the message far and wide and to creating cohesion.
In this case, there were three core pieces.
Nicholas Cage. We discussed this briefly, but I want to express just how many Nic Cage memes there are flying around…Nic Cage has become the face of this faceless movement. No Nic Cage memes, no Constitution.
(📜,📜)…Putting the (📜,📜) in your Twitter name tells other people that you’re part of this movement. It’s permissionless, anyone can do it. You can go do it right now (hint hint).
wagbtc. A spin-off of the popular wagmi, which stands for “we’re all gonna make it,” wagbtc means “we’re all gonna buy the Constitution.” It’s a short, 6-letter rallying cry.
These memes, acronyms, and symbols create cohesiveness within the group, a bridge to other communities, and a way for members to identify themselves to each other across the internet and reinforce each others’ enthusiasm.
Memes are how crypto projects go-to-market; crypto may very well be how memes go-to-reality (again, with the caveat that, as this project itself demonstrates, there is still a big gap between crypto and the real world). And, if you consider the extent to which ConstitutionDAO requires a lot more trust than you might think, it arguably is better categorized as a meme that is seeking to become reality than a crypto project spread through memes. I doubt it will be the last.
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