Written by Austin Green (@AustinGreen)
Nouns is an Ethereum-based NFT project with an innovative structure. Rather than having a fixed supply of ERC-721 tokens that are distributed upfront, 1 Noun is generated every day and auctioned off to the highest bidder. The proceeds from the auction go to a treasury that is governed by the holders.
This interplay between the Nouns auction, treasury, and governance is one of the most exciting DAO experiments. It's a great example of how properly designed mechanisms can cause capital and labor to form around taking real-world action, like commissioning custom artwork to be displayed around NYC or bootstrapping a luxury eyewear brand.
There is a vast design space of treasury distribution strategies, artwork generation algorithms, auction mechanics, and more. It is expected that nounish forks will rapidly iterate and some of these adaptations will make their way into Nouns.
Each noun has a seed consisting of five traits: a background, body, accessory, head, and glasses. There are currently 2 backgrounds, 30 bodies, 137 accessories, 234 heads, and 21 glasses that can be combined together to create over 40M unique pieces of artwork. The contracts use Ethereum block hashes as a source of pseudorandomness to pick each trait number. For example, Noun #1 has background: 1, body: 20, accessory: 95, head: 88, glasses: 14. You can visit the playground to see all the different artwork. The Nouns DAO can add new trait parts through governance.
The most common NFT distribution mechanism has been the 10K PFP collection. In this model, a fixed supply of tokens are available to be minted by the public. The artwork of these NFTs are usually variations of an animal or anthropomorphized object. The minter does not know which token they’ll receive, making the process similar to a lottery. Certain traits appear less often which means they have increased value due to rarity. For the most durable collections such as CryptoPunks and BAYC, we’ve seen rare NFTs assigned a large premium over the floor.
Although Nouns don't have a concept of rarity like typical 10K PFP collections, certain tokens are deemed more culturally valuable than others and have fetched premiums above the average auction price. Noun 1 went for ~6x above the average settlement price in ETH terms, Noun 69 was ~3x, and Noun 316 went for ~2x because of its clean aesthetic.
Rather than solely relying on the token ID number or aesthetics, another way to increase the auction frequency of premium nouns is by introducing invisible trait parts that can be updated once at the owner’s discretion. Invisible trait parts would preserve how artwork is generated, but add a new body, accessory, and head that the market would likely value.
Nouns or a fork could accomplish this by adding new artwork for the body, accessory, and head traits. Rather than containing a visible trait, this “artwork” would just be empty bytes. This means that if a Noun seed includes the number that corresponds to this invisible artwork, the NFT will appear to be missing a trait. Potential examples shown below:
This mechanism is compatible with the existing smart contracts and could be added via a governance proposal.
Although purely invisible traits might have some novelty, this feature could also include the ability for owners to update invisible traits once. Introducing the concept of editable traits to the protocol could have some interesting behavior.
Nouns with invisible traits could be sold on secondary marketplaces while preserving the option to update later. They can be customized by the owner by using a playground-like UI. The owner can also preserve the invisibility of the trait and lock the ability to update forever.
We are all collectively writing the playbook for CC0 and exploring how nounish communities should try new mechanisms. The Nouns community should encourage forks to experiment and see which features are most useful for growing the treasury and spreading the meme.
Llama is looking for ideas to grow the Nouns ecosystem. We are ramping up our working group and are looking to add contributors. Fill out our form and we’ll get back to you.
Artwork credit: 0xEFRA.