A decentralized autonomous organization (DAO) formed only a week ago has lost its bid to purchase the last privately owned, first-edition copy of the U.S. Constitution at the Sotheby’s auction on Thursday as it failed to match the US$41 million price tag plus sales fees offered by an unnamed bidder.
While there was some confusion immediately following the auction, with some members within ConstitutionDAO initially believing they had won, the news broke on the group’s official Discord server shortly afterward. “While this was not the outcome we hoped for we still made history tonight,” the post read.
The DAO — which was largely operated by computer code on the Ethereum blockchain — had managed to raise over US$40 million in ETH donations from 17,437 members of the group, according to the same Discord statement. While the amount raised exceeded the final auction price for the document, ConstitutionalDAO participants suggested that, after adding in the high gas fees on Ethereum, taxes and auction fees that the auction winner would have to pay, the amount the DAO raised was actually not enough to be the winning bid. All those who contributed will be entitled to a refund, minus gas fees.
Originally, the DAO had hoped to fractionalize ownership of the 234-year-old document through the issuance of governance tokens called PEOPLE. But due to securities laws that might have deemed this a sale of securities, this was not legally advisable. So, had the DAO successfully purchased the document, the ConstitutionDAO tokens would only have conferred voting power for members on matters relating to what to do with the document.
This particular copy of the Constitution is just one of 13 remaining original copies from the 1787 Constitutional Convention and was last purchased from Sotheby’s at auction in 1988 for US$165,000 — or about US$372,428 in today’s money, according to USDInflation.com. The owner of the document, Dorothy Goldman, pledged to donate the proceeds of the auction to the Dorothy Tapper Goldman Foundation.
In the heady moments after the auction’s end, members of the DAO prematurely celebrated on a live Twitter Space and reflected on the significance of the occasion. Those celebrating included musician DJ 3LAU, who was an investor in ConstitutionDAO.
“It just shows how much power exists when you can align incentives within a community and really easily raise money to do something like this. In the legacy fiat banking world, it would be almost impossible to gather thousands of people together to buy a piece of history,” DJ 3LAU said, prior to learning that ConstitutionDAO did not produce the winning bid after all. “This is crazy, a bunch of people bought the constitution in Eth. That’s wild; I never would have expected to see that happen in all of my time in the space.”
But despite its purchase falling through, ConstitutionDAO did succeed in catapulting DAOs — still an obscure form of business and non-profit organization, with only 181 in the world so far — and their possibilities into the public consciousness. One observer called the ConstitutionDAO a “financial flash mob,” a characterization now echoed by the New York Times.
“There are a lot of tools now getting built for decentralized autonomous organizations, or DAOs, said Erik Voorhees, CEO of ShapeShift — a company that is turning itself into a DAO — in a recent interview with Forkast.News. “It’s definitely a very new type of economic organization, and I think it is going to be increasingly utilized by global digital companies that want a model that is more open and in which their users can become part of the economic engine.”