The Solana NFT ecosystem is just as vibrant as Ethereum these days, many new projects come and go on this chain and some stay. Some of these projects even create DAOs that continue the project long after the minting of the art. A lot of these DAOs unfortunately don’t make a successful go at it and it seems another DAO is about to go the way of many of the failed ones before it.
Solana Monkey Business has been a successful project on the Solana blockchain much like Ethereum’s Cryptopunks and Bored Ape Yacht Club. The project has seen many celebrities such as Steve Aoki, Alexis Ohanian , and Steve Harvey adopt and promote it, things would seem to be going very well for the Solana based NFT project….things are always different from what they seem.
Currently the creators of the DAO and the community of collectors are at each other’s throats, and some holders are considering drastic measures like a hard fork that could change the project and its future.
What’s The Issue?
The issue with any relationship is of course financial discorse as the dispute is over the royalty funds from secondary market sales. As of this writing Solana Monkey Business (or SMB) has created more than $150m worth of profit from secondary trading alone. The sales were meant to provide a small percentage to fund efforts or other projects made by the community as a whole.
The MonkeDAO was established by the SMB NFT holders to further create opportunities for holders. Recently the DAO tried for new initiatives that would do just that , but upon asking for further funding were denied by the developers of SMB. This has created a rather large riff with characteristics of a bitter divorce. The rift has spilled out onto social media, spread across various retweets, blog posts and even twitter spaces Members of the MonkeDAO and SMB co-founder speak on how the gloves are off and anything can happen. One potential outcome is forking the project. For the uninitiated “forking” the project would mean that the memberes would wrap their NFTs to circumvent the current royalty model.
Solana Monkey Business launched in the summer of 2021 around June and sold only 205 collectibles. Those that had 4 or more of the Gen1 NFT were promised a bigger piece of the royalty pie of the Gen2, around 2.5% more to be exact. Gen2 had 5000 NFT created and released in August of 2021.The Gen2 are what most of the public recognize to be SMB NFT. The project was even in the news for one Gen2 selling for over $2m.
Shortly after the launch came the DAO. Since then the DAO has sought to pursue many new ventures and intitiatives such as a validator , community staking , online events and even investment in startups such as Portals (which is very expensive at the moment). There are talks even of creating their own MonkeDAO token. It wouldn’t be wrong to say that the value of SMB has risen directly in correlation with the efforts put forth by the DAO.
The problem is the same with many projects- the lack of communication between the developers and the community they create. Other projects such as Cryptopunks and Boneworld have also seen DAOs created which quickly faced communication issues with the founding team; such issues can put pressure on the collection floor price.” MonkeDAO is very clear that they want to be the leader in changing that narrative, though there is no formal relationship between the creators and the DAO. The two entitites are fighthing over how to fund the efforts made by the DAO and who should really benefit from said efforts.
SMB has a huge profit margin and the value of the NFT continues to rise. After a while negotiating the developers did send $135k to the DAO in order for them to pursue some of their goals, after the creation of a multi-sig wallet created by the DAO. So then what’s the issue? There seems to still be disagreement as to how the remaining funds are handled, the existing royalty system, and whether or not that royalty system shold be used to benefit the community DAO. The initial promise was for far more than they have recieved, as of now the DAO has only recieved 20% of the promised funds.
The creators want the DAO to go fully decentralized and have on-chain governance before any more funds are sent to the DAO but this will require the the metadata to be updated by the creators themselves, which is a huge undertaking in itself. There seems to be a stalling in communications with some stating “conflicting” information being shared between the two parties. The DAO has stated that all efforts to communicate with SMB are being exhausted but still insist they are working with the creators to discuss full decentralization and the methods needed for that to come to fruition. The SMB team maintains that the desire for decentralized governance has always been there and just want the remove the potential for any individual to act dishonestly.
There are still issues at hand with the royalties with some holders believing that Gen1 holders recieve too much and that those funds should go to the community instead.The creators of SMB believe that would betray the promise they first made to the original holders , especially those that spent a large amount just to even qualify for said royalties. Regardless of the % shared the MonkeDAO feels that the creators should share a stronger bond with the holders and the DAO and that each holder should have a voice in the project.
Get the cutlery
A broader issue at the moment is one that could split the community in two. The other idea that is being thrown out is one of “entanglement” this the proposed process of wrapping the existing NFTs as brand new assets giving the holders power to circumvent the original royalty terms created by the developers. This is considered a “nuclear option” in that the potential to split the entire community is there. Entanglement essentially creates a new smart contract that ties to the original NFT,it was created by Jordan Prince who is a developer for Solana Labs.
17. So if they can't come to a deal, what can the @MonkeDAO do?— JPEG Lord (@thejpeglord) February 13, 2022
Have you heard people talk about a "hard fork" or "entanglement" and had no idea what they were talking about?
Entanglement is just a way of "wrapping" your SMB so that they can re-direct the royalties. pic.twitter.com/JnK8I9IP2I
There is another question as to why someone who works at Solana Labs would even create such a tool in the first place, it would seem it may give the impression that the engineer has taken sides in the matter. The entanglement idea has proven to be a rather strong if not toxic bargaining chip but the debate still rages on.
By the way, I'm sorry for inadvertently starting a vicious debate using the Entangler. I just want people to see what is possible in the NFT space with a little elbow grease and innovation when the options seem limited. Ultimately it is your choice whether or not to use it.— jprince.sol (@redacted_j) February 13, 2022
Either way as stated before the value of the NFT is in direct correlation with the community and the DAO that was created by the community. The MonkeDAO believes that because of this fact the current royalty system just will not do, and has stated the entanglement process is a viable solution that will be based on individual decision. SMB has stated that any individual that chooses to leave the SMB collective is free to do so but will not be supported by the offical NFT anymore.
The very social nature of this dispute is what makes many believe a compromise is still on the table. With all of the disputes and ideas laid out clearly for everyone to see it would be a bad look for any side to just choose a selfish way out. The opportunity for change and fairness is still very close and a project as big as SMB could benefit from ending this is a positive way. The road is laid out it just takes a step in the right direction.
This all has implications for the future of Solana based projects as compromises must be made and clarity should be at the forefront of evey project from now on. Maybe not every project needs a DAO and if one were to be created perhaps the rules of engagement need to be laid out much clearer. Transparency ,honesty,and utility are all major tenements to a successful project. heres hoping SMB and the MonkeyDAO can find a successful medium.