Original author: Jacob
Original compilation: Luffy, Foresight News
In 2016, I wrote about Ethereum’s The DAO forkarticle, the purpose of that article is mainly to help myself understand forks. Today, the first Nouns fork has just been executed, and I happened to have a quiet Saturday morning. I thought I should write something to summarize my understanding of the fork and its changes. I remember when Ethereum forked, I was very angry; when Nouns forked, I was very excited.
A fork, also known as a hard fork, is the creation of a complete copy and another instance of an existing thing. Forks can also introduce new changes and improvements of their own. But in some cases, they are the exact same version. An important distinction is that the people and communities that are part of it are different, and the reasons for forks are usually because of fundamental differences in the community. In the cryptocurrency world, forks are more common because the protocol and network are completely public. Cryptocurrency forks are not only more popular, they are also significantly riskier than non-cryptocurrency open source code bases. This is because they often have token ownership and governance rights for crypto protocols and therefore have tradable value.
Nouns, which has more than 28,000 ETH, has just undergone its first fork (Translators Note: NounsDAO completed the fork on September 15, and more than half of NFT holders chose to join the new DAO). This fork is very different from Ethereum and Ethereum Classic, as well as any other fork we have seen so far.
Why do you say that? I will describe it from several aspects.
Nouns now have multiple forks competing for the same meme
Unique features of Nouns fork
Nouns forks are a deliberate feature
This is where the most critical detail lies, and is the most important thing to understand: Nouns’ forking is a purpose-built feature, and a well-designed one at that. It has a simple and intuitive user interface that allows any Nouns holder to easily exit and allows the entire community to track all developments in real time.
Ethereum forks were certainly designed to handle large-scale hacks, but it was not a long-lived network-level feature built in to allow for easy forks again in the future. But here at Nouns, this is by design, and the forking functionality is part of the protocol.
The user interface has a standing action button that any Nouns holder can press at any time. The button triggers a series of elegant and complex protocol operations designed and built by the Verbs team, which is funded by Nouns to provide technical support.
Noun holders can only choose one fork version, you can’t have both.
Noun holders must choose the forked version of their Noun. You have to actually choose a fork to go into, rather than everyone having multiple forks. In an Ethereum fork, everyone owns the same amount of ETH and ETC. But in Nouns, you either hold the original Noun or map the original Noun to a new forked version, which is a required choice.
Forkers can take away their prorated portion of the treasury funds
The Nouns vault holds a huge fortune of approximately 28,000 ETH. Anyone can fork the github repository and deploy their own DAO, but doing so will not magically increase the amount of ETH in the treasury, which means that prior to this the fork would have to obtain new funding if it wanted to be organized. , which is usually not easy. With built-in forks, each forker brings its share of the original Noun to the new forks treasury. This is a fair way to exit, as each Noun has approximately 36.6 ETH of assets behind it at the time of the fork. As a result, the forked DAO has over 14,000 ETH in its vault.
Forking DAO allows complete exit
The Nouns fork has a peaceful exit function. You can hand over the forked Noun to the forked DAO and receive the assets that support the Noun. In this case, that’s the aforementioned asset worth approximately 36.6 ETH.
This gives on-chain rights to those holders who truly need or want to exit.
Both forked versions have equal ownership of the meme (art)
The artwork behind Noun belongs to the public domain, and there are no traditional intellectual property rights or ownership rights in the off-chain world. This means that both DAOs have as much ownership of the meme as the other, but appear to have no ownership.
The original DAO and its Nouns have original origin, but holders of the fork receive the same Nouns and token IDs in the fork.
The forked DAO has its own complete and fully functional on-chain Noun art instance, and the on-chain name and other contents are the same as the original Noun.
further thoughts
All of the above is novel, and what I’ve outlined barely scratches the surface, and some of it deserves its own entire article to introduce and analyze (and there are quite a few already). But instead of doing that, I thought of something different and interesting:
Noun is now a multi-party system unified under one meme
Because memes (art) are in the public domain, and both DAOs currently own the same art - they are essentially competing (or even collaborating) to further the same meme.
They can be fiercely competitive, just like political parties. But just like how parties at the highest levels work to push local states forward, in the end these nouns are still working together on the same project.
meme competition
Both the original DAO and the forked DAO have their own fully functional on-chain art contracts. They can add new functionality at the end of the corresponding DAO iteration.
Currently, the only major difference is that they have different block tags and membership bases. The images are the same, but the tags are different. What if the image starts to look off?
What would happen if the forked DAO decided to create a new, ideal image? Or what if the original DAO introduced new images? All else being equal, this may affect future demand for a DAO.
More interestingly, what would happen if a forked DAO completely changed the art it holds?
protocol competition
Interestingly, the forked DAO has a superset of the protocols functionality and is configured slightly differently than the original DAO. Right now:
no veto
No Nounders rewards
Peace out built in (aka Ragequit)
These are very compelling features for many existing Noun holders, and are at least part of the reason why the fork happened.
Given that Noun and DAO are both extremely early technologies, the progress and functionality of the protocol will also become a dimension of competition between various forks. All else being equal, a given DAOs protocol feature set may affect its future demand for another DAO.
Maybe this is how subDAO was born
There are already many subDAOs in the Nouns ecosystem, which are essentially DAOs that are funded or organized and work in the Nouns ecosystem. Nouns Builder is a tool built specifically to make this precise behavior as easy as possible.
Forking can be a novel collaborative and friendly option for new subDAOs to start with a specific goal/meme without having to go through the parent DAOs governance system, and also introduce some extras into the game skin because you need to return the original Noun to the DAO.
arbitrageur
Nouns are a meme, but in general it has two very high-level schools of thought: meme value and book value. Without writing a complete article, it would be difficult for me to explain the definitions and differences between the two. The meme value crowd wants to spend all their capital to maximize diffusion, and is willing to make trade-offs that could drain their treasury reserves. The book value crowd wants to spend all capital to maximize financial value and is willing to make tradeoffs in meme value.
As with most things in life, both are actually right, and the opposition of the two seems to lead to some good decision-making outcomes. It may have been inevitable for these two camps to fork to form their own DAOs, but it was a group of private equity-style arbitrageurs that accelerated and drove the issue. Nouns became meme-negative (which can be understood as Nouns selling below book value), and arbitrageurs discovered that if they bought enough funds, they could eventually push the DAO to distribute these funds to Nooun holders for a profit.
In the final analysis, this is a flaw in system design. The market is the market, and there are bound to be arbitrageurs in the market. Arguably, the same thing still exists in the earliest DAOs, either a positive meme needs to be acquired as quickly as possible (Nouns selling for more than book value), or another arbitrage-induced fork may occur again.
Nouns as governance standards
The Nouns governance contract is based on Compound Bravo. With the introduction of forks, Nouns itself began to become a unique governance system and model.
What will it mean for other existing DAOs and new DAOs to adopt the Nouns governance feature set?
Split ends are wonderful
In a public and permissionless environment like Ethereum, forking is a mechanism that allows for transparent and open competition between competing versions of a similar vision. This is a good thing for everyone because it means a potentially faster rate of evolution, with which we should see more innovation and progress.
To date, forking has become an implicit part of most governance systems because anyone can redeploy the same version of open source code. What Nouns create makes it a defining feature of its governance and makes it accessible, fair, and open for any Noun holder to call upon when needed.
This was clearly a breakthrough moment for Nouns and how we view the DAO as a whole, and a year later we will have much more and a deeper understanding of the DAO as a result. The activity of Nouns has reached a new level, with internal competition now pushing itself towards the best - something that would not have been possible without this mechanism. I have no doubt that we will also see forks implemented in more novel ways, and that this will at least be seen as a valuable lesson in governance. In a successful case, it could eventually become a proven standard that is considered the standard by every DAO. As always, exciting times are ahead.
