Refunds for cryptocurrency US constitution bidders are being hit by high fees
The people behind a botched attempt to buy a rare original copy of the United States constitution are facing a deluge of refunds, totaling up to $40 million for 17,000 donors.
The people behind a botched attempt to buy a rare original copy of the United States constitution are facing a deluge of refunds, totaling up to $40 million for 17,000 donors.
To amass the fortune, the Constitution DAO team used a “decentralized” approach – largely unregulated and utilizing cryptocurrency.
Large fees for those crypto-transactions, on the other hand, are eating up large sums of money during the refund process.
Refunds are the organization’s top priority, according to them.
Constitution DAO – short for “decentralized autonomous organization” – raised massive sums of money in the Ethereum cryptocurrency to bid on an extremely rare privately-owned copy of the US constitution’s original printing.
The organization had pledged to keep the historic document “for the people.” However, A Private Investor Outbid Them, And The Document Sold For More Than Twice The Auction House’s Initial Estimate. Some Investors In The Scheme Are Now Reporting That They Are Required To Pay Fees That Can Amount To Up To Half Of Their Refund.
Gas Money
That’s Because The Ethereum Network Uses The Blockchain To Record Its Transactions, Which Is The Same Technology That Powers Other Cryptocurrencies Like Bitcoin. It, Too, Requires Computational Power To Run, Just Like Bitcoin Mining. The Fee Paid To Those Who Run The Computer Systems To Facilitate Transactions Is Referred To As “Gas.” It Also Adjusts The Price Based On Supply And Demand. That Means That, Depending On How Busy The Ethereum Network Is, Any Type Of Transaction Can Be Much More Expensive At Times. And The Network Has Recently Seen Increased Usage – As Well As Increased Gas Prices.
Buying A Pink NFT Cat Was A Nightmare
The Group Said It Had 17,437 Donors With A Median Donation Of $206.26 On Its Official Discord – A Chat App That Allows Anyone To Create Rooms And Discussion Channels For Enthusiasts On Almost Any Topic. Due To The High Cost Of Gas, “Small” Donations May Be Severely Impacted By The Transaction Fee. One Discord User Stated That In Order To Receive A $400 Refund, They Would Need To Pay $168 In Gas. Others Complained That The Fees Were Higher Than Their Refund, Which Was Relatively Small. “Wow, Lessons Learned, [Ethereum] Is No Good. Gas Too High,” Wrote Another In The Support Channel. A Different Contributor Lamented That The Experience Might Sour Cryptocurrency For Those Who Were Not Already Investors, But Got Caught Up In The Drama Of “Buying The Constitution”. “Almost A Third Of People That Contributed Are New To [Ethereum] And Their First Experience Is This. Not Only That, They’ll Have To Know The Pain Of Paying $200+ In Gas For Literally Nothing,” They Said.
The future
Senior figures in the Discord- known as delegates – said there was no clear solution.
“We looked at and did everything in our power to come up with a gas-free refund option. However, there was nothing that could be set up in a timely manner,” wrote one.
“Providing a safe refund process as soon as possible was the primary goal.”
Another admin on the server told users: “This was a very, very hard call and we’ve all been at our computers for the last several days for every waking hour trying to find the least bad option. There was no solution that was going to please everyone.”
Despite the disorganized refund process following the group’s initial reason for its existence failing, its organizers have promised that this is not the end.
Source: Reuters
