Nouns NFTs can be a little confusing at first, but once you wrap your head around them, you may find it's one of the most exciting projects in the NFT/Web3 world.
Nouns launched a year ago (August 2021) and continue to be one of the most unique and fascinating projects in the crowded NFT space.

Nouns NFTs currently hold a floor price of 100 ETH (~$180K) on OpenSea. These NFTs have been selling for 80 ETH ($140K) daily, even in a bear market!

Its unique distribution model, iconic artwork, and growing ecosystem of community-led initiatives stand out from the crowd.

In this story, I'll cover the essential elements of Nouns DAO and why you should care about it. As always, this is not financial advice.

Also, this TL;DR is for someone who doesn't have 10min or so to read the whole article.

  1. Nouns is a generative NFT project on the Ethereum blockchain. One Nouns is generated per day, forever.
  2. Bidding for a new Nouns is around 80 ETH, floor price is sitting at 100 ETH.
  3. It a CC0 project.
  4. Nouns have no roadmap. Instead their roadmap is decide by the community, through DAO.
  5. The founders of Nouns are well known in the NFT space, most notably the founder of CyrpToadz @gremplin, @punk4156, and Vine co-founder Dom Hofmann (@dhof).

What are Nouns?

Nouns is a generative NFT project on the Ethereum blockchain. And from the very beginning, the team has built a trustless and decentralized Web3 environment.

Art

First of all, Nouns is an NFT collection, and the aesthetic is one of the essential aspects of NFT. But views of beauty are relative to differences in perception and consideration and, intrinsically, have no absolute truth or validity. The aesthetic value of Nouns comes mostly from others' perspectives. Nouns NFTs are pretty pleasing to my eye, but who am I to judge?

Nouns are colorful pictures of pixelated (similar to CryptoPunks), block-like figures and a big chunks of glasses.

Each Nouns NFT is a 32x32 pixel avatar based on people, places, and things (aka nouns). A Nouns NFT could be a unicorn, a burger, or even a planet. People can easily recognize these NFTs by their iconic big, square Nouns glasses.

Each image is a combination of 234 different heads, 137 accessories, 30 bodies, 21 glasses, and 2 backgrounds. There are no 2 Nouns NFT that looks alike. Fun fact, the mixture of traits is completely random with no code that specifies any one trait to be rarer than another. This makes each trait equally rare.

CC0

Nouns is a CC0 project. It means that there is no copyright to Nouns NFT at all (aka anyone can use Nouns without asking for permission or permissionless).

Why do you need that? The whole point of NFTs is that you own and monetize the NFT yourself, right?

Well, that is one way to view it, but the opposite side is with CC0, you are letting people do the building and marketing for you.

An excellent example is Jack Butcher (founder of Visualize Value twitter), who made a Nouns hat without anyone's permission and sold 167 of them in 69 minutes. The Nouns did nothing but still got a few hundred new eyes on their project. And since we are in an attention economy, this transfer to the value of the NFT itself.

"One Noun, every day, forever."

Their motto seems a bit confusing, but when you understand it, it's pretty interesting.

Dislike other big hits in the NFT industry, Nouns do not release the whole collection at once. You can easily come across a typical NFT drop, where a fixed number (usually 10,000) is minted all at once. Nouns DAO is different - every 24 hours, a new Noun NFT is generated and auctioned to the public. Their smart contract takes care of this.

In the words of the Nounders (the Nouns Founders), the Nouns protocol is a "self-sufficient Noun generation and distribution mechanism, auctioning one Noun every 24 hours, forever."

The Nouns NFT is a protocol and open source project. The programming that generates Nouns, and the art, is open-source. The creators of Nouns placed it in the public domain so that anybody may build on it, just as they can on the codebase.

The auction settlement transaction does three things:

  1. It sends the newly minted Noun to the winner of the auction.
  2. It generates the next Noun.
  3. It begins the next 24-hour Noun auction.

This mechanic means that the Nouns DAO community will grow slowly over time, in contrast to most NFT avatar projects. The Nouns model comes with its own set of pros and cons, but it's certainly an interesting experiment.

It also creates excitement around the project every single day. Community members are curious to see the new Noun, some try to impact the outcome, and prospective buyers get into bidding wars.

Here is the best part, once an auction ends, the money is sent to the nouns DAO treasury, not the founders. These Nounders will receive 10% of the NFT for the first five years. Meaning that every 10th generated Noun will go directly to their multi-sig wallet. This mechanism heavily incentivizes the team to keep working on the project to bring more value to the NFT.

As the time of writing, more than 400 Nouns NFT have been generated. And the bid price sits between 80 and 140 ETH ($100k - $200k).

You will be questioning why someone would want to buy an NFT with no roadmap. My answer is because they are joining a DAO full of elite people. That leads us to...

Nouns DAO - The spirit of Nouns

At the heart of the Nouns' ecosystem is the Nouns DAO.

The Nouns DAO is the main governing body of Nouns and runs on a fork of Compound Governance. The Nouns DAO treasury receives all ETH proceeds from the daily Noun auctions. Nouns can vote on proposals or delegate their voting power to a third party. One must hold a minimum of 2 Nouns to submit proposals.

Owning a Noun allows you to create and vote on governance proposals, executing transactions on the Ethereum blockchain once approved.

The core utility of Nouns DAO is that every Noun holder can sponsor and vote on proposals for the Nouns treasury to fund. That 26K eth ($50M) treasury has been used to fund all types of projects, hosting Nouns Party, staking the treasury, making Nouns Documentary, or sponsoring a Dota 2 Team. The treasury exists for Nouns DAO participants to allocate resources for the long-term growth and prosperity of the Nouns ecosystem.

The core loop for Nouns is: Fund great projects, grow Nouns brand, and create more demand for Nouns NFTs. This is a different approach from typical NFT collections, in which projects set up a roadmap to follow. The roadmap of the Nouns DAO will depend entirely on what the DAO members propose and vote for. This comes with both pros and cons:

Pros

  1. Massive treasury (aka Marketing Budget): 26K eth ($50M)
  2. Decentralized governance: Any holder can sponsor and vote for a proposal.
  3. Innovation cradle: The treasury exists for Nouns DAO participants to allocate resources for the long-term growth and prosperity of the Nouns project, which means that any innovation can be made.

Cons

  1. Cost of entry is high: Since it costs 80 ETH ($100K+) to buy a Noun, the cynical view is that Nouns is an investment club for 400+ rich people.
  2. ROI is unclear: There is no way to measure ROI precisely for the projects that Nouns DAO funds. Also, projects have no commitment to return money to the treasury.
  3. Supply is unlimited: "one noun every day, forever" will put downward pressure on the price or dilute the voting power of early investors.

The importance of the Nouns DAO stems from its original mission to eventually attract builders who can take the raw materials of the Nouns protocol and convert them into apps fit for consumption by the rest of the world. If they succeed, the DAO will attract additional funds and higher-quality members, completing the positive cycle.

One example of a high-quality member who joined the Nouns DAO is Budlight. Noun 179 was acquired by the largest beer company in the world on January 18, 2022, for 127 ETH.

The Nouns project is wide open, a symbolic blank canvas for its community to create upon, through, and around. A genuinely decentralized fashion.

Is it worth buying?

There's a saying in horse racing, "Buy the jockey, not the horse."

First off, the founders of Nouns are well known in the NFT space, most notably the founder of CyrpToadz @gremplin, @punk4156, and Vine co-founder Dom Hofmann (@dhof).

These are the ten builders that initiated the project, including:

The experience, status, and networks of these founders (aka the 'Nounders') have undoubtedly impacted Nouns DAO's success so far. And yes, with a 10% incentive, they continue to play an essential role in the development and promotion of the project.

Secondly, buying a Nouns means you are a part of the DAO. You will have your voting power over the big chunks of the treasury.

Your voice will be heard. You are the one who decide the roadmap of Nouns.

And thirdly, Nouns is a growing project. It is evolving daily, meaning its value will go up over time.

Quick math, the average bidding price is 80 ETH, and the floor price is 100 ETH, so that means 20 ETH profit right away.

It's ok if you are still not convincing. We can stand aside and observe one of the most interesting NFT projects that existed. Here is the statics on Nouns:

https://dune.com/aaaaaaaaaa/NounsDAO

Closing Thought

There is no lack of innovation in the web3 space. The Nouns DAO is a perfect example of new and innovative ideas being tested in the realms of this technological boom we are experiencing.

Nouns DAO is already one of the most iconic projects in the NFT space. It is one of the few NFT projects that feels truly decentralized.

I believe it will only grow bigger and better with time. And if you do decide to dive into the beautiful world of Nouns, have fun with it!