The biggest crossover crypto story of the past few weeks is probably ConstitutionDAO â€“ a ragtag group of crypto believers who raised more than $40 million in ETH to purchase an original copy of the U.S. constitution at auction.
Much has been made of the ways in which the group failed. They didnâ€™t actually buy the constitution; their organizational structure spiraled into chaos; and they bungled the refund mechanism, leaving thousands of contributors in the lurch. But what they did accomplish is almost as staggering as the extent of their failures: ConstitutionDAO got tens of thousands of addresses to donate $40 million over the course of about a week, without a marketing team or dedicated growth director.
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Some of that is owed to the broader phenomenon of meme-based populism â€“ the same energy that galvanized Redditâ€™s day traders to pump GameStop stock in January. Itâ€™s the thrill of collective progress, with an ideological twist in the form of an identifiable enemy: â€œBanks are bad.â€
But the massive raise is also a testament to the fast and furious nature of crypto itself. Kickstarter, one of the most recognized crowdfunding platforms, doesnâ€™t actually take money out of your bank account until a project is fully funded. And in the U.S., Kickstarter operates through the U.S. Securities and Exchange Commissionâ€™s legal carve-outs for regulated crowdfunds, which incorporate certain consumer protections â€“ thereâ€™s all sorts of things a project canâ€™t do. If a project runs off with your money, or doesnâ€™t actually build what they plan to build, it can be held liable.
Not so with crypto crowdfunds, or at least not yet. With ConstitutionDAO, the strategy was to raise the money first and figure out the logistics after the fact. Donations came with zero guarantees beyond a set of tokens, apportioned pro rata according to what you put in.
Thatâ€™s also the logic behind ConstitutionDAOâ€™s copycats. Spice DAO (formerly known as Dune DAO), which now counts the musician Grimes among its members, raised $11 million for a copy of Alejandro Jodorowskyâ€™s â€œDuneâ€ storyboards. But it did so only after its initial failure to meet the requisite $4 million high bid for the manuscript â€“ the new, multi-part raise was an attempt to reimburse the one group member who purchased the manuscript personally.
The major incentive is that if things donâ€™t work out, youâ€™ve still got your tokens, which could potentially be worth something on the secondary market. $PEOPLE, the token for ConstitutionDAO, has a market cap of $271 million on the strength of donations worth far less. It was trading at around $0.16 per token late last month. $SPICE tokens have so far had less success, but theyâ€™re certainly trading.
The whiplash nature of the crypto market is uniquely suited to these sorts of impulsive, communal gestures. Itâ€™s the logic of â€œaping in,â€ the frisson of excitement that comes from risking it all, with an added ideological component. And it doesnâ€™t hurt that the hype around â€œWeb 3.0â€³ â€“ that increasingly nebulous buzzword â€“ is a shiny hook for wealthy investors to latch onto.
See also: Money for Everything: A Future Where Every Inch of Culture Is Monetized
Of course, this isnâ€™t really a new phenomenon. The crypto-backed publishing platform Mirror, which began as an alternative to Substack, has evolved into a tool for crowdfunding crypto projects through non-fungible tokens and token distribution models in the vein of ConstitutionDAO. Early adopters have used it to crowdfund art projects, essays, music collectives and other amorphous crypto-powered endeavors.
With all these projects, thereâ€™s an implicit sense that youâ€™re not owed anything. It hinges on trust: Where donating to a Kickstarter is an expression of goodwill, putting money in a crypto crowdfund is like helping bootstrap an early-stage company.
The recent crowdfunding gold rush is playing off that gamblerâ€™s ethos. Sure, you might lose it all. But isnâ€™t that the point?