The people behind a failed bid to purchase a rare original copy of the United States Constitution are facing an avalanche of reimbursements – up to $ 40 million for 17,000 donors.
The ConstitutionDAO team used a “decentralized” approach – largely unregulated and using cryptocurrency – to amass fortune.
But the large fees for those cryptocurrencies are consuming huge sums of money in the repayment process.
The group said issuing refunds was its top priority.
He later announced on his website that the project was closing, despite initially promising to continue.
“We know everyone is eager to know what the next steps are for ConstitutionDAO and we have thoroughly explored several options,” he said.
“While we would very much like to be able to do this, we have determined that building and maintaining the ongoing project is not something we as the core team can support, given the technical and administrative requirements to do it properly.”
But the group also encouraged investors in the scheme to request their repayments, saying there was “no time limit”.
ConstitutionDAO – short for “decentralized autonomous organization” – has raised large sums of money in the cryptocurrency Ethereum to bid on an extremely rare privately owned copy of the original print of the US constitution.
The group had promised to keep the historic document “for the people”.
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But they were overtaken by a private investor and the document sold for more than double the auction house’s original estimate.
Now, some investors in the scheme are reporting that they have to pay commissions up to half of their redemption.
This is because the Ethereum network records its transactions on the blockchain, the same underlying technology idea that powers other cryptocurrencies such as Bitcoin.
And like Bitcoin mining, it requires computing power to work.
“Gas” is the consideration paid to those who manage the IT systems to facilitate transactions. And it changes the price based on supply and demand.
This means that it can sometimes be much more expensive to carry out any type of transaction, depending on how busy the Ethereum network is.
And the network has seen high usage and high gas prices recently.
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On its official Discord – the chat app that allows anyone to create enthusiast discussion rooms and channels on almost any topic – the group claimed to have 17,437 donors with an average donation of $ 206.26.
The high gas fees mean that “small” donations could be severely affected by the transaction burden.
A user on Discord claimed that to get a $ 400 refund, he would have to pay $ 168 for gasoline. Others complained that the fees were higher than the relatively small amount of their refund.
“Wow, lessons learned, [Ethereum] that’s no good. Gas too high, “wrote another in the support channel.
Another co-worker complained that the experience could sour cryptocurrency for those who weren’t already investors, but got caught up in the “constitution purchase” drama.
“Nearly a third of the people who contributed are new to [Ethereum] and their first experience is this. Not only that, they will have to know the pain of paying over $ 200 in gasoline for literally nothing, “they said.
Prominent Discord figures, known as delegates, have said there is no clear-cut solution.
“We have looked into and done everything possible to find a no-gas refund option. However, there was nothing that could be set in a timely fashion,” one wrote.
“Providing a secure refund process as soon as possible was the main goal.”
Another server administrator told users: “This was a very, very difficult call and we’ve all been at our computer for the past few days for every waking hour trying to find the least harmful option. There was no solution. who was going to please everyone. “
The group was formed just a few days before the auction of the historic document at Sotheby’s, and therefore had little time to set up its desired decentralized structure. Instead, a core group of insiders – the delegates – took care of managing the project, writing and rewriting the rules and FAQs as they went along.
The group originally planned to use digital token ownership as a way to assign voting power over the care and display of the constituent document, and briefly proposed a new type of token to decide its future.
Concluding, the group said: “The project was a momentous event that showed the world that a group of Internet friends can use the power of Web3 to tackle a seemingly insurmountable goal and achieve incredible results on an impossible timeline.” .
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