Notes

High Fees Cause Crypto uS Constitution Bidder Returns

Crypto US constitution bidder refunds hit by high fees



24 November 2021



People who have failed to bid for an original copy of the US constitution could be hit with an avalanche in refunds. The amount could reach $40 million for 17,000 donors.



To amass the fortune, the ConstitutionDAO team used to build up their wealth, the team employed a "decentralised" and largely unregulated, crypto-based method.



However, large fees for crypto-transactions can lead to huge refund costs.



According to the group, refunds were their top priority.



It announced that the project was coming to an end on its website despite initially promising to continue.



"We are aware that everyone is eagerly awaiting what the next steps for ConstitutionDAO are. We've been thoroughly examining a number of possibilities," it said.



"While we would certainly would like to be in a position to do this but we have decided that building and maintaining on ongoing project is not something we as a core team are capable of supporting, given the administrative and technical requirements for doing it correctly."



But the group also encouraged participants in the scheme to claim refunds saying there was "no time limitation".



ConstitutionDAO which stands for "decentralised autonomous organisation" was able to raise huge amounts of money through the Ethereum cryptocurrency to bid for a rare privately-owned copy of the original printing of the US Constitution.



The group had previously pledged to keep the historic document "for people".
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They were outbid by private investors, and the document sold at more than double the estimate originally made by the auction house.



Many participants in the scheme have reported that they are required to pay fees that can be as high as half of their refunds.



Gas money



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



Similar to Bitcoin mining, it also requires computational power to run.



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



This means that transactions may occasionally be more expensive based on how busy the Ethereum network.



The network has seen high use in recent years, as well as high gas prices.



On its official Discord chat application which allows anyone to create chat rooms and discussion channels for people who are interested in any topic - the group said it had 17,437 donors with a median donation of $206.26.



The transaction fee for small donations could be extremely expensive due to the high gas costs.



One Discord user stated that to receive $400 back they would need to pay $168 for gas. Others complained of the fees being higher than the relatively small amount of their refund.



"Wow the lessons learned. Ethereum isn't good. Gas too high," wrote another in the support channel.



Another contributor remarked that the experience could sour cryptocurrency for those who weren't already investors, but got involved in the drama of "buying the constitution".



"Almost one third of those that contributed are new to Ethereum and their first experience is this. They'll also have to endure the burden of paying $200plus for gas, which is literally nothing," they said.



The future



Senior figures in the Discord- known as delegates - said there was no definitive solution.



"We considered and tried all we could to create an option to refund gas free. One person wrote that there was no way to get it done in a hurry.



"Providing an efficient and secure process for refunds as quickly as possible was the primary goal."



Another administrator on the server told users: "This was a very difficult call, and we've all been working on our computers for the past few days every single moment trying to find the least bad solution. There was no solution that would please everyone."



The group was only established days before the auction of the historic document by Sotheby's and therefore was not able to put in the time to establish its desired decentralised structure. Instead, an initial group, the delegates, was established to oversee the project and write and rewrite the rules and FAQs as they were required.



The group had originally planned to use the ownership of digital tokens as a way of allocating the right to vote on the care and display of the constitution document, and had briefly suggested a new kind of token that could decide its future.



The group formally signed off saying that the project was a significant event that demonstrated to the world that an internet group can use the power and speed of Web3 to achieve seemingly impossible goals and achieve amazing results in a short time span.



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