What are nouns? Ethereum NFT DAO Building Open-Source IP

Pixel art NFTs is nothing new – one of the first NFT collections, CryptoPunks, pioneered the blocky 8-bit design style.

But Substantives are shaking things up with a new distribution method and open source IP that has seen the collection’s signature pixelated specs pop up everywhere from beer cans to movies.

Here’s how Substantive works, and how it’s built a multimillion-dollar decentralized brand.

What are nouns?

First and foremost, Substantive is an NFT collection, whose owners are part of Substantive DAO, a decentralized autonomous organization.

Non-fungible tokens (NFTs) are cryptographically unique crypto-tokens often used to represent a piece of digital art. Noun is an example of a profile picture collection (PFP), a set of NFTs commonly used as a user’s profile picture on social media platforms.

Noun is also a creative experiment on Ethereum developed to improve how chain communities interact. The noun DAO does this by using its treasury to build and support public goods.

A little over a year has passed since the first Substantiv NFT (a pixel art character with a fox head and pink glasses) was auctioned on Ethereum. In that time, the noun DAO has grown steadily and now has over 29,000 ETH (about $45 million) in its treasury – a war chest used to fund a variety of initiatives from charitable donations to naming a new species of frog.

Who invented the nouns?

The noun concept was inspired by a Twitter request from an anonymous founding member, Punk 4156. After interest grew in the idea, he followed it up with one series of tweets which outlines the framework that will always become nouns.

Shortly after, a group of ten Nounders (what Substantive calls the co-founders), including Vine founder Dom Hofmann, began working through a shared Discord and created The DAO, using Punk 4156’s outline as a guide to solidify the concept.

What is so special about nouns?

Each noun NFT is a small image of a humanoid that is algorithmically generated to order, and then stored as a 32-pixel by 32-pixel directly on Ethereum blockchain.

The fact that nouns are stored directly on Ethereum’s scarce block space, rather than containing a link to an image hosted elsewhere (for example, on decentralized web hosting IPFS), is a notable difference between nouns and many other NFT projects.

The algorithm underlying the Noun protocol fakes these NFTs from a random combination of backgrounds, body types, and clothing. Some of these nouns have flipbook calendars for heads. Others sport jumpers with geometric shapes.

You can play with potential nouns in the noun playground, a tool that allows you to combine different properties stored in the protocol.

Unlike the limited supply and exclusive nature of PFP NFTs like CryptoPunks or Bored Ape Yacht Club, a new noun is randomly generated every 24 hours and put up for auction. When each auction ends, another unique noun is coined (based on a series of pre-defined characteristics) and the process repeats forever. The Noun’s smart contract automatically sends 100% of revenue directly to the DAO Treasury.

What are the nouns DAO?

Each noun owner can join the noun DAO to help shape and govern the project by voting on proposals funded by the Treasury. The DAO, which uses part of Compound Governance, gives all members one vote per noun NFT. Although these votes are not transferable, as with the use of proxies for board meetings, members of the DAO may delegate other persons to vote on their behalf if the person or entity delegating still owns the noun used to vote.

Although there is no limit to the number of nouns a single entity or person can possess, a minimum of two nouns is required to submit a proposal. And the founding members receive rewards in the form of nouns (10% of the supply, or every tenth noun, for the first five years).

Each noun holder can sponsor and vote on proposals to be financed by the state treasury. The idea is that the more unique and interesting the projects are, the more brand recognition the nouns get, and the more people will want to join.

To date, substantive DAOs have funded proposals including:

• 🏈 Features of nouns in a Super Bowl commercial – The proposal involved offering one noun NFT from the DAO to a company that would feature the iconic noun glasses in a 2022 Super Bowl commercial; NFT eventually went to Bud Light, which duly aired the ad under the coveted ad spot. As part of the deal, Bud Light also changed its Twitter profile picture to a Noun NFT.
• 🎥 Documentary about nouns around the city – The proposal and project was proposed by the creators of Robot Chicken, secured 609 ETH in funding and centers around making a comedy film about Noun DAO’s attempt to get Nouns into the Rose Parade.
• ☕ Noun coffee – Created by a team with a background in the global coffee industry, the Nouns coffee proposition secured 105 ETH in funding to create the first-ever Nounish consumable and place it in cafes and grocery stores.

How to buy a noun NFT

Nouns are offered for auction on the Nouns website, with a new Noun generated and offered for sale every 24 hours. They are also available on secondary markets such as OpenSea and Rarible.

As of October 30, 2022, the base price for nouns above 60 ETH (approximately $93,000). One reason for the large sticker price is that the supply of nouns is very limited, because only one noun NFT is released per day. Where NFT collections like Bored Ape Yacht Club and CryptoPunks typically count in the thousands of units, there are only 491 nouns at the time of writing.

Noun and open source IP

Noun is open source and released under a Creative Commons CC0 “No Rights Reserved” license. This means that anyone can use the names of the nouns and images to create anything, as it is in the public domain.

Even if you don’t own a Noun NFT, you can make Noun items, and people have created derivative NFT collections like Noundles, Lil’ Nouns, 3D Nouns, and NounPunks.

You are also free to add new properties for future nouns. The only caveat is that the noun codebase, including the art within it, is primarily controlled by the noun DAO, which votes on which properties are included in the collection. The DAO receives all the ETH used to buy nouns.

As of this writing, the Treasury has about $45 million. This money is used for “the long-term growth and prosperity of the Noun Project”. Noun Holders can vote on proposals submitted by other Noun Holders.

Discussion for nouns takes place on Discord and the Discourse forum page. The latter is where intense discussion around protocol management takes place.

Successful votes on the governance protocol, which is modeled after Compound Governance, include a proposal to establish a brand presence in Brazil (expect merch) and design and distribute a monthly Noun comic for distribution across the US (expect anthropomorphic nouns). Noun DAO is also one of the crowdfunding backers of the feature film “Calladita”, in what is believed to be the first on-chain proposal for a DAO to fund a feature film; the agreement will see a noun NFT shown on the screen in the film.

The future of nouns

Despite the name, the nouns DAO is not fully decentralized – yet. The Nouns Foundation, an “ownerless” Cayman Foundation Company created by Nounders, has the ability to veto proposals it does not like, such as those that “introduce non-trivial legal or existential risks to the Nouns DAO or the Nouns Foundation.” This refers to treasury raids, bribes, unwanted updates of the nouns smart contractsor attempt to control the auction process for nouns to obtain a majority vote.

It remains to be seen whether handing over intellectual property rights to a community right away, and focusing on the management of a brand, makes a significant difference to the value.

But so far, noun NFTs have become a recognizable part of the NFT ecosystem, and the governance structure for nouns has worked impressively well, taking the project beyond little pixelated blobs of tacos and airplanes for heads.