Update: Citadel CEO outbids The ConstitutionDAO in US Constitution Auction
A decentralized autonomous organization — The ConstitutionDAO — raised roughly $49 million from 17,000 individual contributors in a bid to secure the last privately held copy of the US Constitution at auction.
US Constitition; Source: Shutterstock
key takeaways
- At 6:30 pm ET, one of the 11 surviving copies of the Official Edition from the Constitutional Convention was auctioned by Sotheby’s
- The concept of using a DAO to purchase one of the oldest governing documents in the world marks a historic moment in the digital asset industry, but also raises questions
The ConstitutionDAO, an aspiring decentralized autonomous organization (DAO), raised roughly $48.9 million worth of ether to place a bid on the last privately held copy of the US Constitution, auctioned by Sotheby’s on Thursday at 6:30 pm ET. The auction house sold the document for $41 million, but the DAO did not secure the winning bid.
According to the Wall Street Journal, the winning bid came from Citadel CEO Ken Griffin, who intends to display the artifact in an Arkansas museum:
DAOs are a new governance structure made possible through the internet and cryptocurrencies. After Sotheby’s announced the auction last Friday, a small group of individuals quickly assembled a Discord, Twitter account and website, and partnered with Juicebox to facilitate the pooling of ether for the purpose of bidding.
The ConstitutionDAO has seen remarkable support throughout the Web3 community, currently boasting over 18,000 Discord members, 30,000 Twitter followers, and nearly 17,000 ether contributors.
The funds collected are being held in a multi-signature wallet controlled by 13 core contributors to the ConstitutionDAO — mirroring the 13 colonies at the time of the nation’s founding. Just as nine of the new US states were required to ratify the Constitution, nine of the 13 multisig signers — many of whom are publically identified —are required to sign a transaction in order to move the funds.
What happens if The ConstitutionDAO wins or loses?
If the group is ultimately outbid, funds will be returned to donors less transaction fees spent on the Ethereum network, according to the group’s website. The Juicebox platform ordinarily takes a 5% fee of funds raised by projects — which in this case would amount to almost $2.5 million in ETH — however, according to multisig member Miguel Piedrafita, the platform is waiving its usual fee for ConstitutionDAO. Juicebox’s author, who goes by the pseudonym “mejango” is also one of the 13 multisig signers.
The common enterprise is not yet decentralized, although according to the Juicebox campaign website, donors receive a governance token, $PEOPLE, in exchange for their contributions to the cause. This token will convey no ownership rights over the copy of the Constitution, or the Delaware LLC organized to participate in the Sotheby’s auction. Instead, should the group prevail, the plan is that the new DAO’s members will be able to create proposals and vote on the organization’s future direction and management of assets. Fractionalized ownership of the artifact would almost certainly infringe on US securities laws, and is explicitly not contemplated.
It is worth noting that the amount of PEOPLE donors can expect to receive is tied to the size of their contributions. This begs the question of who will own the largest portion of the voting rights. The bulk of donors are contributing small amounts. Only 187 of the nearly 17,000 donors have made contributions greater than 5 ETH, or roughly $21,000. Another interesting detail is that 2,827 ETH came from wallets that made their first-ever Ethereum transaction. That could imply that the DAO is onboarding new users into crypto — a video embedded on the group’s website targets newcomers to the digital asset space — or that participants are creating new wallets to preserve their privacy, for the sole purpose of sending ether to the cause.
Who owns what now?
According to the DAOs FAQ’s, the LLC is legally owned by community members Alica Ma and Julian Weisser. The organization tapped Endaoment, a tax-exempt Community Foundation built for decentralized finance and focused on social impact, who passed KYC requirements with Sotheby’s to make the formal bid on behalf of the DAO.
As it currently stands, Ma and Weisser will have legal ownership over the document if the auction is won. The FAQ promises that DAO members will be advisors to the LLC owners on all actions taken. The LLC aims to change the structure to become fully decentralized over time, but for now DAO contributors are placing a great deal of trust in these two individuals.
The group also raises the question of whether its core members will be compensated for their efforts, but they do not answer it, instead opaquely mentioning they “intend to submit a proposal to be voted on by the community.”
Due to the short timeline, the core contributors to the DAO are prioritizing the logistics behind purchasing the Constitution over the details of the DAO’s structure, as they write in the DAO’s FAQ:
“We recognize that much more detail is required here! Due to the unusual and extremely short timeline of needing to rally around obtaining the Constitution during the auction window, we have not been able to focus on giving the technical aspects of DAO governance mechanics the careful consideration and community deliberation this topic requires.”
While the movement to purchase a copy of the US Constitution is a historical moment in the Web3 space, this plane — to use an aviation metaphor — is being assembled while it’s flying. From the nascent history of DAOs, there are scant examples of a group purchasing real-world assets and effectively managing them — the ConstitutionDAO is a true trailblazer.
The group is currently vetting reputable institutions with the expertise to properly house, store, and maintain the artifact if the auction is won. The final home for the Constitution will be left up to vote by PEOPLE token holders. The idea of a DAO buying one of the most important documents in the world is highly experimental, and only time will tell if a group of internet strangers can effectively manage such an undertaking through decentralized governance.
Macauley Peterson contributed reporting for this story.
This story was updated on November 19, 2021, at 3:17 pm ET, to include the winner of the auction.
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