With a floor price of almost 100 ETH, it’s also tied with Bored Ape Yacht Club as the most valuable avatar project. The two projects aren’t really comparable, as you’ll see throughout this article, but the price level does give you a sense of the significance of Nouns DAO.

And yet, it doesn’t get nearly the same level of attention and media coverage as BAYC and other high-profile NFT projects, which I truly believe it deserves.

I’ll cover all the essential components of Nouns DAO and why you should care about it — even if you have no intention of spending $100k on a pixelated NFT avatar. There’s a lot to the project though, so you’ll need to continue your exploration beyond what I can cover here.

As always, none of this is financial advice. I’m not promoting Nouns DAO as an investment but rather as a fascinating Web3 case study. I hope you’ll come to share at least some of my passion for the project.

One Noun, every day, forever

There are already countless NFT avatar projects on the market and new ones launching every day. They’re all trying to stand out from the rest, primarily through their artwork and ideas for added utility.

But there’s one aspect that almost all projects have in common and don’t seem to question or innovate on: The one-time launch of a pre-defined number of NFTs.

New avatar projects launch with a set number of NFTs, e.g., 5,000 or 10,000, which will be available to mint at a specific time. They may differ a bit in their pricing models and how they organize the sale in stages, but the launch model is by and large the same: Sell all the NFTs now.

When the Nouns DAO launched on August 8, 2021, the team decided to do things differently. Technically speaking, I guess they’re still “launching”.

Live auction of Noun #348 (ref: nouns.wtf)

Every single day, a new Noun is minted via the Nouns DAO website. This happens through a 24-hour public auction. You can always see the current highest bid and bidder. Whoever has the highest bid once the auction is over gets the new Noun.

Before a new auction begins, however, the previous auction has to be settled. This requires a transaction on the Ethereum blockchain which can be done by anyone on the Nouns DAO website.

Settled auction of Noun #347 (ref: nouns.wtf)

The auction settlement transaction does three things: 1. it sends the newly minted Noun to the winner of the auction, 2. it generates the next Noun, and 3. it begins the next 24-hour Noun auction.

This mechanic means that the Nouns DAO community will grow slowly over time, in contrast to most NFT avatar projects. The Nouns model comes with its own set of pros and cons, but it’s certainly an interesting experiment.

It also creates excitement around the project every single day. Community members are curious to see the new Noun, some try to impact the outcome, and prospective buyers get into bidding wars.

As of June 20, 2022, 348 Nouns have been auctioned off. Minting a Noun has lately required between 80 and 140 ETH. Certain ones, like Noun #316, trade at a significant premium though. More on this below.

The Nouns artwork

All Nouns are unique 32×32 pixel characters based on people, places, and things — aka nouns. The idea behind it is that you can be whatever you want online, whether that’s a horse, a pizza, or a watermelon.

The artwork is very distinct from other avatar projects out there and easily recognizable as Nouns. It’s fun, playful, quirky, and with a strong vibe of OG crypto pixel art. And it’s fully on-chain.

Nouns #314, #316, and #346, minted for 80, 215, and 150 ETH respectively

In addition to the aesthetics and the unique style itself, what makes the artwork even more interesting is that no explicit rules exist for attribute scarcity. In other words, all Nouns are equally rare. This differentiates it from almost all other avatar projects on the market.

That being said, certain Nouns are clearly “more valuable” than others as defined by the prices they fetch at auction and on the secondary market. How the different Nouns are valued is interesting to analyze.

I believe that many buyers, especially the ones who are willing to pay a premium, are considering at least three things.

1 The lower the number, the better

It’s common in the collectibles world that low edition numbers and early release dates trade for higher prices. I know that some Nouns collectors value this as well, whether they prefer two-digit Nouns, Nouns released in the first month, or some other metric.

2 Aesthetics matter

Whether it’s Nouns or another project, many collectors are simply willing to pay more for the NFTs they find visually appealing. Iconic traits or avatars that stand out from the rest in a collection also tend to be more popular.

Some collectors pay a premium for avatars with monochrome or simple color palettes

3 Rarity is established over time

Lastly, even though no explicit rules exist for attribute scarcity, rarity levels will randomly emerge over time. A new Noun may have a certain trait that’s completely novel, thus demanding a higher price. If it’s rare and good-looking, you’ll definitely need to pay up!

If you’re in the market for a Noun, or one of the more affordable extension projects which we’ll get to shortly, I recommend simply making a decision based on what matters to you. Everything else is pure speculation.

The founders and their role

Nouns DAO was founded by 10 experienced crypto- and NFT creators. These include the highly successful NFT artist known as Gremplin, Timpers.eth who also founded Chimpers, and Punk4156 who’s an early and well-respected crypto investor and NFT collector.

The experience, status, and networks of these founders (aka the ‘Nounders’) have undoubtedly had a massive impact on Nouns DAO’s success so far. They continue to play an important role in the development and promotion of the project.

Chimpers and CrypToadz are created by two of the Nouns DAO founders

That being said, the founding team isn’t ruling over the project in the way we’re used to from other projects. Rather, they’ve created the foundation and set up the project to be truly community-led.

Everything is in the public domain and free for you, me, and everyone else to build on. In fact, you’re encouraged to expand the Nouns ecosystem whether it be with derivative collections, useful websites, or whatever you can think of.

The community is in charge

The Nouns brand and artwork are in the public domain or “CC0″. This essentially means that you can do whatever you want with it without worrying about any kind of copyright infringement.

Not only does the Nouns DAO allow you to repurpose the artwork and brand, but it actually encourages you do to so — and may even pay you for it!

All the money generated from the Nouns auctions goes directly to the DAO treasury. The treasury currently holds more than 26,000 ETH ($27 million). The treasury exists for Nouns DAO participants to allocate resources for the long-term growth and prosperity of the Nouns ecosystem.

You have three different funding tiers to choose from for your Nouns extension project

If you have an idea for a cool “Nounish” project, you can apply for funding from the treasury. You have three levels to choose from: Small Grants, Prop House, and Proposals.

Furthermore, being the DAO (decentralized autonomous organization) that it is, it’s up to the Nouns community to decide who and what gets funded!

The Small Grants Committee, which came out of Nouns proposal #13, is run by a group of Nouners to be a “flexible pool of capital” that can be deployed quickly and even retroactively. It’s used when the ask is too small for an official proposal.

The Prop House runs weekly funding rounds with a specified amount of ETH. Anyone can submit an idea to the Prop House which will then be voted on by owners of Nouns and/or any of the Nouns extension projects.

Proposals are a little more formal and for projects that require between 10 and 600 ETH in funding. This is also where the Nouns DAO really comes into play as the main governing body of the Nouns ecosystem.

Early proposal discussions happen on Discourse before they’re made official on the Nouns website

Only Nouns owners can make and vote on new Proposals. One Noun equals one vote. Early discussions happen on Discourse before official proposals are handled on the Nouns website where you can see all new and old proposals.

Note that since the project founders don’t get any of the auction money, they’re instead rewarded with every 10th Noun (#0, #10, #20, etc.) for the first 5 years. Thus, they act as Nouns DAO members in much the same way as all other Nouns holders.

The growing Nouns ecosystem

It’s truly amazing to see the level of creativity and engagement in the Nouns community. A total of 144 Nouns extension projects have already been created so far and many have become integral parts of the Nouns project and the daily experience of being a community member.

The Nouns DAO community has already created 145 extension projects

Lil Nouns is arguably the most successful of the derivative projects so far. It’s just like Nouns in many ways but distinct in two key ways: The Nouns are lil’ and a new one is minted every 15 minutes rather than every 24 hours!

More than 2,200 Lil Nouns have been minted so far and typically sell for between 0.3 and 0.5 ETH. I own two of them myself and plan on covering the project in depth in an upcoming post.

Lil Nouns is arguably the most successful Nouns derivative project so far

In addition to all the cool derivative projects, community members have also created some useful resources and other fun sites. Check out the rarity and governance stats by pbrianandj.eth, the Nouns DAO stats on DUNE, the Nouns DAO newsletter, and the FOMO Nouns site mentioned earlier, for instance.

FOMO Nouns is another popular extension project that lets you vote on the next Noun to be minted

What’s arguably even more exciting is how the Nouns brand is evolving beyond the NFT space. Just check out some of the most recent proposals that the DAO has decided to fund:

• Nouns Coffee (proposal #84). “… the first ever Nounish consumable brand. With hopes of being on the shelves of your favorite cafe, local market, or frequented grocery store.”
• Nouns Children’s Book (proposal #83). With the goal to “… introduce the fun, positive energy of Nouns to a young audience (and their parents).”
• Nouns x MadHappy Apparel (proposal #75). A proposal to “… fund the design, production, content, marketing and release of a collaborative Nouns x Madhappy apparel capsule.”
• ‘Nouns Around Town’ — a documentary film (proposal #73). Creating a “… comedic documentary film about the groundbreaking nature of the Nouns DAO and the web3 community and our weird journey of getting the Nouns featured in the Rose Parade.”

The founders themselves have said that Nouns could potentially turn into the Web3 version of Disney, owned and defined by the community and whatever they decide to create with the IP. I’m personally super excited to follow this development in the coming months and would love to contribute as well.

Closing thoughts and additional resources

Nouns DAO is already one of the most iconic projects in the NFT space and I believe it will only grow bigger and better with time. And while most of us are obviously priced out of the original Nouns, part of the allure of Nouns DAO is that it enables everyone to participate in one way or another.

If you want to get involved and stay on top of what’s going on in the Nouns ecosystem, you’ve got plenty of places to go. Check out the links I’ve provided throughout this post and a few more resources below. And most importantly if you do decide to dive into the beautiful world of Nouns, have fun with it!

• Nouns Discord server
• The official Nouns.blog
• Official Nouns DAO docs
• Noun O’ Talk (weekly podcast)
• Punk 4156 on the Digitally Rare podcast
• Punk 4156 on the PROOF podcast