The group backed by 17,000 donors failed the bid to buy a rare original copy of the US constitution facing a mammoth refund of up to $40m, The Constitution DAO amassed a fortune for the bid in the form of cryptocurrency, which is a largely unregulated decentralized approach.
But the crypto-transaction fees are eating up a massive sum of cash within the refund process. The group said that its top priority is to issue refunds to the donors who had participated in the project aimed to bid for a rare original copy of the US constitution. The Constitution DAO has announced that the project will be closing down despite initially promising to keep it alive.
It said on its website that Constitution DAO is exploring all the possible options and that everyone is eagerly awaiting its next step. The website further explained that the core team could not build and maintain ongoing projects as they could not provide support given the technical and administrative requirements. However, the group stated that since there is no deadline, the investors are encouraged to claim their refunds.
Constitution DAO Acronym for Decentralized Autonomous Organization recently raised a vast sum of money in Ethereum cryptocurrency to bid on an extremely rare copy of the original printing of the US constitution. However, it was sold for more than double the original estimate of the auction house to a private investor who outbid the ConstitutionDAO. Currently, some investors have reported that they will pay up to half their refund in fees.
Paying up the Gas money.
Ethereum network transactions use blockchain technology. Therefore, it utilizes the same technology used by other cryptocurrencies like Bitcoin. Similarly, it requires power to run the computation, the same amount of energy needed for mining.
This energy fee is called Gas, which runs the computer systems to facilitate transactions. These Gas prices change based on demand and supply. Depending upon how busy the network is, these transaction fees vary. In other words, depending upon how the Ethereum Network is, the transaction fees will vary. The busier the network, the more expensive is the transaction fees.
On its chat app, official Discord, anyone can create a room and discuss various topics. The group said it had 17,437 donors, with an average donation of about $206.26. High gas fees mean that it would hurt the donors who had donated small amounts.
According to one of the Discord users, they would have to burn $168 in Gas to refund $400. Others complain about paying huge gas fees in return for the small amount of refund. Another user in the support channel was disgruntled and complained about Ethereum being no good due to high gas prices.
Another contributor lamented that the experience might scare the prospective crypto investor who might have caught up in this drama of buying the constitution. Since one-third of the contributors were new to Ethereum, bidding in an auction using a cryptocurrency was their first experience. The prospect of burning more than $200 for nothing is a horrible experience for anyone.
Peering into the future.
Senior users in the Discord called delegates said that there is no clear solution to approach this situation. They have considered and looked for all the viable options for the gas-free refund options, but there are none as far as they can see. He added that their primary goal was to provide a safe refund process. Another admin on the servers told the users that they were trying very hard to search for a solution. Still, unfortunately, there is none, and even the existing options will not be pleasant for everyone.
The group had little time to set up its desired decentralization structure as it was established only a few days before the auction of the historical document by Sotheby. So, alternatively, the delegates took the task upon themselves to manage the project, writing and rewriting the rules and the FAQs as they went along.
The group initially had planned to allocate voting powers regarding the care and display of the constitution by using the digital token as ownership. The group said in their closing remark that the project was a landmark and showed the world that a group of internet friends could come together to perform and achieve incredible results in a short time.