Ethereum project Nouns created a new kind of on-chain organization, using a daily NFT auction to cultivate community and open-source IP—and has raised tens of millions of dollars worth of ETH to date.
Now, NFT platform Zora is expanding that model, empowering almost anyone to create an NFT-driven DAO for nearly any project.
Nouns Builder is Zora’s new tool to create a Nouns-like Web3 organization, using auctions of NFT artwork, collectibles, and access passes to raise money for a treasury that buyers control. It’s a no-code, turnkey solution that is open source and free to use, with the intent of making it easy for Ethereum DAOs to launch and hit the ground running.
The development of Nouns Builder is very much in line with Web3’s decentralized ethos: Nouns itself started as a fork of Zora’s auction house system, Zora co-founder Jacob Horne told Decrypt. Now Zora has taken the Nouns model and made it more accessible to creators without needing an engineer to fork and modify existing code (which other projects have done).
Nouns launched in August 2021 as the NFT market reached new heights, auctioning off a single pixel profile picture (PFP) character each day. Initially, what was intriguing about the platform was the novel one-a-day cadence and eye-popping auction prices, with some of the NFTs selling for hundreds of thousands of dollars in ETH as collectors bought in.
Buying an NFT gave each owner membership into the DAO—or decentralized autonomous organization, essentially a tokenized community with a shared treasury. Over time, Nouns has cemented its larger focus of furthering an open-source intellectual property and has used its ample funding to put Nouns imagery in a Bud Light commercial and indie movie, for example, among other community-approved initiatives.
Nouns proved the NFT-driven model at a high level, which Horne credits to being “very tightly incentive-aligned.” Owners are responsible for working to further the Nouns brand to build and maintain value. Horne cited the “devs do something” meme that has proliferated on Twitter; in the Nouns model, members can’t rely on an external development team to put in the work.
Horne believes that the model “answers a lot of structural issues” with large-scale profile picture projects—such as Bored Ape Yacht Club, CryptoPunks, and Doodles—which each span 10,000 NFTs. He also suggested that gradual expansion and NFT-based memberships enable steadier growth and increased activity than a typical token-driven DAO model.
“I've seen a lot of tokens. I do not see a lot of organizations,” Horne said of the DAO landscape, noting low on-chain participation in proposals with many such communities. “We've seen the DAO term used a lot, but in practice, I don't know if we've really seen any.”
“My hot take,” he added, “is maybe Nouns is actually the first working DAO in the truest sense.”
Most DAOs probably won’t raise tens of millions of dollars selling NFTs, as Nouns has, but Zora thinks that the model still makes sense for a wide range of organizations—including social groups, DAOs that collect artwork or other assets, communities supporting a protocol or platform, and Nouns-esque DAOs focused on spreading a meme.
testing out @nounsbuilder and might fuck around and launch fuckDAO.
one fuck? every day? forever? pic.twitter.com/SbMOmXujTN
— ripe (@ripe0x) October 27, 2022
Nouns Builder takes flight
Nouns Builder launched on the Ethereum mainnet last week and has already drawn some new creators. One example, Purple DAO, is a community focused on furthering Farcaster, a decentralized social media protocol. Each day, Purple DAO auctions a simple, identical purple block as an access pass to that community.
It’s not about the art in that case, of course: buyers are raising funds for community proposals that are meant to further the Farcaster ecosystem in the process. Horne said that Nouns Builder is widely customizable to accommodate different types of projects with varying auction cadences and incentive tweaks so that it’s suitable for potentially any purpose.
Zora has also launched Builder DAO, which not only uses Nouns Builder but will also let members govern the tool’s protocol going forward. The team launched a proposal to the Nouns DAO today for financial support, with the hopes of yielding a 1,000 ETH ($1.57 million) grant to seed Builder DAO and enable further development and support of Nouns Builder.
Zora was founded in 2020 by a trio of Coinbase veterans and recently raised $50 million in May at a $600 million valuation. The platform’s protocol has been used to mint more than 1.1 million NFTs to date, and the startup has long focused on helping creators build community through Web3. Nouns Builder is the latest evolution of that.
“We want to help bring as much creativity on-chain as possible,” said Horne. “This helps communities themselves come on-chain in ways that we've never really seen before.”