Notes

High Fees Cause Crypto uS Constitution Bidder Returns

Auctions with high fees force bidders get refunds for their crypto US constitutions



24 November 2021



The people who failed to win a bid for an original copy of the US constitution are facing a flood in refunds. Up to $40m for 17,000 donors.



To accumulate the wealth to accumulate the money, the ConstitutionDAO team employed an "decentralised", largely unregulated, crypto-based method.



However, huge fees for crypto-transactions have been consuming huge sums of money in the process of refunds.



According to the group, refunds were their top priority.



It announced that the project was ending on its website, despite initially promising to continue.



"We are aware that everyone is eagerly awaiting what the next steps for ConstitutionDAO are. And we've been looking at a variety of possibilities," it said.



"While we would very much wish to have been in a position to do this, we have determined that building and maintaining on ongoing project is not something that we as a core team are capable of supporting, given the technical and administrative requirements for doing it correctly."



But the group also encouraged investors to claim refunds noting that there was "no time limit".



ConstitutionDAO - short for "decentralised autonomous organisation" was able to raise huge sums of money in the Ethereum cryptocurrency to purchase a rare privately owned copy of the original printing of the US constitution.



The group had previously pledged to preserve the document "for people".



They were outbid by private investors and the auction house sold the document for more than double the amount that was originally estimated by the auction house.



Some participants in the scheme are reporting that they will have to pay fees up to half of their refund.



Gas money



This is because the Ethereum network records transactions on the blockchain which is the same technology that powers Bitcoin and other cryptocurrencies.



It requires computing power, much like Bitcoin mining.



Gas is the fee that is paid to the people who oversee the computer systems used to facilitate transactions. The price fluctuates based on supply and demand.



This means that in certain instances it could be more expensive to make any type of transaction dependent on how busy the Ethereum network is.



The network has seen a surge in usage in recent years, as well as high gas prices.



On its official Discord chat application that lets anyone create discussion channels and rooms for those who are interested in almost any topic The group claimed it had 17,437 contributors with the median contribution of $206.26.



High gas costs means that "small" donations could be significantly impacted by transaction charges.



One user on the Discord stated that to receive a refund of $400, they would have to pay $168 for gas. Others complained that the costs were higher than the amount they received in their refund.



"Wow the lessons learned. [Ethereum] is not good. Another support channel member wrote, "Gas too high."



Another participant complained that the experience might sour cryptocurrency for people who weren't already investors but were involved in the drama of "buying the constitution".



"Almost one third of those who contributed Ethereum and their first experience is this. Not just that, they'll also have to experience the pain of paying more than $200 in gas for literally nothing," they said.



The future



Senior figures in the Discord- also known as delegates have said that there is no definitive solution.



"We considered and tried all we could to come up with the possibility of a gas-free refund. But nothing could be set up in an efficient manner," wrote one.



"Providing a secure refund process as quickly as possible was the primary goal."



Another admin on the server advised users: "This was a very difficult call, and we've been at our computers for the past few days every hour of the day trying to find the most acceptable option. There was no solution that would please everyone.



The group was established just days prior to auction of the historical document by Sotheby's. It had little time to create the decentralised structure that it wanted. Instead, a small group of insiders - the delegated - were responsible for managing the project, writing and revising the rules and FAQs as they moved.



The group initially planned to make use of the digital token to allocate the power to vote on the care and display of the constitution document. However, they have proposed a new type token that would determine its future.
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In closing, the group stated: "The project was a significant event that demonstrated to the world that a group of online friends can harness the power of Web3 to tackle an insurmountable goal and achieve incredible results on an impossible timeline."



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