Having lost the auction for the purchase of the first edition of the US Constitution, the ConstitutionDAO group of crypto investors found themselves in a situation in which they, having a capital of $ 49.8 million, could not spend it. The organizers had permission to send them to only one product, and since they were unable to buy it, they decided to start the procedure for refunding funds to the project participants. And this is where the problems began.
Refunding such a large amount is a complex process. Investors must independently request their funds, but even a week later, tens of millions of dollars remain at the disposal of the ConstitutionDAO. And since all funds were collected in Ethereum cryptocurrency, sending them back through the blockchain entails high transaction costs. And for many investors, this procedure turned out to be expensive. According to the latest data, $ 27 million was sent to investors, or about 54% of the total, which means that about $ 23 million is still awaiting a return. Fortunately, ConstitutionDAO stated that shareholders can get their funds back without time limits.
The high level of transaction fees turned out to be a problem even at the stage of fundraising, but now the situation has developed in such a way that for some investors, refunds do not make sense at all. These fees, known as “gas,” do not decrease very much as the volume of funds sent decreases, so small investors had to pay relatively high fees just in order to transfer their contributions. For example, engineer Alex Kroeger had to pay about $ 50 for gas to send $ 170 to the project. According to him, when collecting the entire amount, investors had to pay a total of more than $ 1 million.
Anyone looking to get their money back will have to pay again for the gas, and over $ 200,000 has already been spent on that. This is not a problem for large investors, since getting $ 100,000 in commission of $ 50 does not seem catastrophic. However, the median contribution to the project is $ 217 – that is, almost half of this amount has to be paid for gas. And this is also an “optimistic” assessment: one of the participants said in “Twitter“that his commission “one way” was $ 70, which is $ 140 in net loss with a $ 200 deposit. In some cases, the commission turned out to be higher than the amount of the deposit, and for such investors, the return of funds is simply meaningless.
However, the situation is complicated not only by the Ethereum commission. Many project participants hoped the ConstitutionDAO would shift the focus and channel the money raised towards the purchase of another valuable item. For a while, the organizers really decided to restart the project, but soon changed course and announced plans to close. This was a disappointment to many on the group’s Discord channel, where the members needed to be able to make decisions together. The group failed to achieve its goal, not only in purchasing the first edition of the US Constitution, but also in the desire to become a Decentralized Autonomous Organization, whose activities are controlled by all members, not just initiators.
The result of the project demonstrates both the prospects and the challenges of the DAO and other cryptocurrency communities. In just a week, we managed to collect an impressive amount. However, high commissions made it difficult for small investors to participate in the project, and instead of the promised decentralization, the project was in fact controlled by a small group of participants. And those who made the least contribution suffered the most.