TLDR
This proposal is for a NounsDAO investment in Verse, a new protocol for autonomous NFTs on Ethereum.
Who is behind this proposal?
hey everyone! My name’s Kiran. I’m the founder of Verse, an autonomous NFT protocol on Ethereum. Previously, I worked on product design for PartyDAO, and in my web2 life I was a product engineer in the biotech space.
What is Verse?
Verse is a protocol for autonomous NFTs on Ethereum. What does that mean? Verse enables the creation of NFTs with an embedded market that operates autonomously without the need for a central marketplace. Here’s a quick overview of how the protocol mechanism works:
Through the protocol, a creator deploys a contract Pair consisting of an ERC-20 Exchange contract and an ERC-721 Hyperobject contract. The dynamic price and supply of the ERC-20 token is managed by a bonding curve acting as an AMM. Simply, this means that anyone can buy and sell the token at any time with instant liquidity, and the contract will programmatically adjust the price based on the circulating supply. Holders of at least 1 atomic unit of the ERC-20 token can then redeem their token. Redeeming a token transfers the holder’s ERC-20 to the paired Hyperobject contract, which mints a new NFT and transfers it to the redeemer in exchange.
What is the status of Verse?
The contracts for Verse V1 are live on mainnet, and the public beta interface to interact with the protocol is live at verse.xyz. Verse V2 is currently in development, with significant UX improvements and nounish mechanisms built into the core protocol.
What can be built on Verse?
The Verse protocol represents a new medium for NFTs, and enables the creation of digital objects that have their own embedded market. Although the NFT space is still in its early infancy, we can observe some fundamental truths about the medium. Most notably, NFTs aren’t just assets or static files or jpegs. NFTs are programmable objects built to take advantage of the internet as a meme proliferation machine. In the long-term, skeuomorphic token representations like 1/1s will diminish in the market, and NFTs with programmable supply & pricing mechanisms will dominate. A significant sector of the NFT market will be represented by these types of objects, and are best suited to be exchanged via programmable markets powered by Verse. Think about it this way. Does it really make sense for a meme to exist as a static 1/1? Or does it make sense for its supply and value to dynamically change based on its demand in the market and its mindshare on the internet?
NounsDAO investment in the Verse Protocol
Verse is a new NFT protocol designed to catalyze the future development of programmable internet objects. Nouns is the prototype for meme proliferation and how to build a CC0 brand that permeates the internet. Ultimately, both entities are designed to build a more composable internet in which individuals build, own, and use digital objects that accrue value as they’re integrated across the web.
Specifically, Verse V2 is incorporating mechanisms into the core protocol which seek to standardize the meme-proliferation system (programmable supply, programmable treasury controlled by NFT holders) that Nouns has pioneered. Details of the exact mechanisms will be shared closer to V2’s testnet launch.
We’re closing a funding round for Verse, and firmly believe that the protocol shouldn’t only be owned by traditional venture or finance institutions - it should have ownership from decentralized groups actively advancing and building progressive technologies in the NFT ecosystem.
Thus, we’d like to propose an investment from NounsDAO in the Verse protocol. We think that an investment/long-term partnership would be far more powerful than a grant in that an investment incentivizes both parties (NounsDAO & Verse) to ensure that the protocol builds for long-term success, and uses the Nouns brand as a playground for innovating on new NFT mechanisms.
There’s tremendous synergy between the goals of Nouns and Verse, and a long-term partnership would entail close collaborations to build future Nouns-related NFT projects on Verse, and the ability for the DAO to have a real hand in how the protocol evolves over time.
Investment Specifics
NounsDAO invests 175 ETH in exchange for 0.4-0.5% equity into Verse Labs (the incorporated company building the Verse protocol) with an optional token warrant. These equity figures are consistent with the current terms we have with our lead investors for our most recent funding round.
A portion of the funding would go directly toward purchasing a Noun, either via the daily auction (preferred), or purchasing from an existing Nouner on secondary. I want to align the interests of Nouns x Verse as long-term as possible, and believe that by essentially exchanging ownership in the Verse protocol for representation in NounsDAO, we’d create a truly symbiotic relationship. I like to think that Nouns is building the closest thing we’ve seen to an internet city, with a distinct community, culture, and economy. Much like the way tech companies in the past decade set up shop in the bay area and saw the valley as a playground for innovation, I want Verse to have a “campus” set up in the Nouns universe, and build with the Nouns brand as a launchpad for new types of NFT distribution & exchange experiments that help proliferate the meme. The key difference, though, is that while SF never received ownership and experienced upside in the success of major silicon valley companies, Nouns would directly have ownership in Verse.
Logistically, there’s a couple ways the investment could work from a compliance & regulatory perspective. For starters, I’ve created an investment DAO through syndicate.io, which allows contributions in crypto (USDC or ETH). In exchange for the investment, NounsDAO would receive a proportional amount of tokens which represent ownership in this DAO. The associated legal entity for this DAO (an LLC acting as an investment SPV) would then be part of the cap table for Verse Labs, the legal entity building the Verse protocol. The SPV would in turn own the equity. Of course, this is just one option for formalizing the investment structure, and I’m happy to work with the nounders on any alternative structure that makes sense.
Overall, I’m excited to share this proposal with the Nouns community, and even more excited for the possibility to partner with the DAO on building fundamentally valuable NFT infrastructure with the Verse protocol.