Lil Nouns is a generative non-fungible token (NFT) project on the Ethereum blockchain which has been forked from Nouns. Each Lil Nouns NFT is a 32x32 pixel character with various traits. Every 15 minutes, a Lil Noun is generated, forever. After a new Lil Noun spawns into the world, an auction will take place to sell that NFT. The main interface for participating in the Lil Nouns auctions is Lil Nouns official website maintained by the founders of the project.

Lil Nouns DAO

The Lil Nouns decentralized autonomous organization (DAO) treasury receives 100% of ETH proceeds from daily noun auctions. The Lil Nouns DAO treasury has 1,071 ETH at the time of writing. Lil Nouns DAO is the main governing body of the Lil Nouns ecosystem. Each Lil Noun is entitled to one vote in all governance matters. Lil Nouns Holders can utilize their voting power (1 Lil Noun = 1 vote) to direct the treasury. They can propose new ideas or vote on the existing ones which will be executed on the Ethereum blockchain when they are approved. A minimum of 3 Lil Nouns is required for a holder to submit proposals. The voting power of Lil Nouns can also be delegated to a third party.

Rewards

Lil Nounders is the term attributed to the group of builders that initiated Lil Nouns. As 100% of Lil Noun auction earnings are sent to the DAO, they have chosen to compensate themselves with one every 10th Lil Noun, starting from #0, for the first five years. These Lil Nouns will be automatically sent to a multi-signature address shared among the founding members.

Lil Nounders have also chosen to compensate the Nouns DAO with Lil Nouns. Every 10th Lil Noun starting from #1 for the first five years will be sent to the Nouns DAO treasury shared among the members of the project.

The required data for analyzing the voting activity were collected from the fact_event_logs table of the core schema of the ethereum database. By evaluating the proposals on the DAO's website, three main contract addresses, one from Nouns DAO Proxy and two from Gnosis Safe Proxy, were selected to be able to filter the proposals.

>Nouns DAO Proxy (Proposals 1, 2, 3, 4, 6, 7, 8, 9, 10, 11, 12, 14, 15, 16, 18, 19, 20): 0x5d2c31ce16924c2a71d317e5bbfd5ce387854039 > >Gnosis Safe Proxy (Proposal 5): 0x3cf6a7f06015acad49f76044d3c63d7fe477d945 > >Gnosis Safe Proxy (Proposals 13, 17): 0x4c5816d9a83ddd60c6ef8d1bef23bd0fb920d8c5

The votes were filtered using the VotingCast event from the fact_event_logs table. The voting data for each vote were stored in the event_inputs column which had a JSON datatype with multiple key-value pairs.

>The proposalId key: the ID of the proposal proposed on the DAO > >The support key with 3 values: 0 = against, 1 = for, and 2 = abstain > >The votes key: the voting power of voter equal to the number of Lil Nouns it holds

The gas fees of voting transactions were calculated by joining the tx_hash of the fact_event_logs table with the fact_transactions table.

The Lil Noun holders were selected from various sources. The first two Lil Nouns (#0 and #1) act similar to a genesis NFTs and were sent from an initiating address to the address of Lil Nounders and Nouns DAO treasury, respectively. After that, the Lil Nouns #10, #11, #20, #21, and so on were sent from the Nouns DAO Executer address.

>Lil Nouns NFT address: 0x4b10701bfd7bfedc47d50562b76b436fbb5bdb3b > >Lil Nounders multi-sig address: 0x3cf6a7f06015acad49f76044d3c63d7fe477d945 > >Nouns DAO Treasury address: 0x0bc3807ec262cb779b38d65b38158acc3bfede10 > >Lil Nouns initiator address: 0xa6ef22a84521ddd11c1282ec8f8a9255dbac04a0 > >Nouns DAO Executer address: 0xd5f279ff9eb21c6d40c8f345a66f2751c4eea1fb

All the other Lil Nouns have sold to the community through an auction process. The winner of the auction will receive its Lil Noun from the Nouns Auction House Proxy address. Any sales after the auction were solely dependent on the holder. To be able to find the last holder of all the Lil Nouns, the results of Lil Nouns distribution to founders, DAO, and auction winners were joined with the fact_nft_sales table, and if any of the Lil Nouns was sold after the auction, the buyer was selected as the current holder of that particular Lil Noun.

>Nouns Auction House Proxy address: 0x55e0f7a3bb39a28bd7bcc458e04b3cf00ad3219e

Ultimately, the holders were joined with the proposals' voters to be able to analyze their voting activity. For this matter, the holders were categorized into seven different groups based on the number of Lil Nouns they hold.

Voting Activity

The distribution of voters for each Lil Nouns DAO proposal has been demonstrated in the first chart. There have been 20 proposals since the launch of Lil Nouns four of which were canceled entirely - proposals number 1, 9, 11, and 12. The majority of voters who participated in each proposal were compliant with the proposals and voted for them. However, the voting power of voters was not equal since their Lil Nouns holding were different from each other. As it has been shown in the second chart, for proposals number 7 and 14 specifically, although the number of voters for the proposal was greater than the number of voters against it, the voting power of those that were against it was higher which led to the proposals being rejected at the end.

Votes vs Voters

As it is demonstrated in the following chart, although the number of votes has increased overall from the first proposal to the last, the number of voters has decreased. This opposite trend between the votes and the voters indicates that either the Lil Noun holders bought more NFTs to get more voting power, or they try to win the auctions of freshly minted Lil Nouns. The second chart below demonstrates the average number of votes per voter which shows an overall upside trend. Either way, this data indicates that instead of DAO becoming more decentralized, fewer holders gain more power over its governance.

Voting Fees

The number of voters for each proposal has been plotted against the average transaction fees for each vote in the following chart. As it can be seen, the recent proposals have had a higher average transaction fee which resulted in fewer voters voting compared to the first ten proposals. The change in the number of voters has not been drastic but the transaction fees might be a catalyst for that matter. The changes in total transaction fees over the number of votes have indicated that throughout various proposals, the total voting fees stayed almost in a similar range while the number of votes increased. Combing the increasing number of votes with the decreasing number of voters indicates that those few with higher voting power, i.e. more Lil Nouns, can afford the high transaction fees and are willing to pay them to be able to use their voting power. In other words, there are currently fewer and more powerful players in terms of capital compared to the start of the DAO.

Lil Noun Holders

The analysis of Lil Noun holders has indicated there is a total of 932 unique holders holding a total of 2,304 Lil Nouns, at the time of writing. These holders were categorized into different groups based on the number of Lil Nouns they held. As it is plotted on the charts below, the majority of holders with a share of 70% have only 1 Lil Noun. As the number of Lil Nouns holding increases, the number of wallets decreases.

Although less than 1% of the wallets hold more than 50 Lil Nouns, they have almost the same voting power as those who hold only one Lil Noun by controlling more than 550 Lil Nouns. In other words, the voting power of only 3 wallets is almost equal to the voting power of around 650 wallets that hold only 1 Lil Nouns.

Holders Voting

The number of voters over the DAO proposals has been completely different from the number of holders. Overall, only 143 holders (slightly above 15% of the total) have voted on the proposals. The total number of votes has been 16% higher than the total number of Lil Nouns accounting for 2,676 votes.

Voters Over Holders

Last but not least, the participation rate of Lil Noun holders through voting on different proposals has indicated that the percentage of voters increases as their number of Lil Nouns, i.e. their voting power, increases. Only 10% of around 650 holders of one Lil Noun have voted on at least one of the proposals. On the contrary, more than 50% of those with more than 10 Lil Nouns participated in the voting.

As one might expect, the Lil Nounders multi-sig address and the Nouns DAO treasury have had the most number of Lil Nouns under their possession with more than 230 each. Apart from these two addresses, there has been only one address that aggressively acquires Lil Nouns and currently has more than 100 Lil Nouns. besides these wallets which one might call whales, there are various holders with multiple Lil Nouns under their control. However, overall it can be said that the Lil Nouns are well distributed.

The analysis of vote distribution among the voters has demonstrated that those 3 wallet addresses with more than 50 Lil Nouns have accounted for around 57% of the total votes on the proposals. Overall, it can be seen that those who have more Lil Nouns are more engaged with the voting of proposals. On other hand, it has been indicated that the absence of votes by smaller holders especially those with less than 3 Lil Nouns, greatly increased the voting power of those with larger holdings. Addresses with more than 10 Lil Nouns have had nearly 60% of the total voting power combined on the submitted proposals.

The analysis of the number of votes conducted by each wallet address has shown that the Lil Nounders address as well as the other major holder of Lil Nouns have accounted for a substantial share of total votes and has utilized their voting power perfectly throughout multiple proposals. On the other hand, the number of voters who participated only in a few of the voting has been quite low compared to their holdings.

In conclusion, the voting activity of the Lil Noun holders has demonstrated that not only do those few with larger holdings of Lil Nouns have more voting power compared to smaller holders, but also, as more Lil Nouns are minted, the DAO becomes more centralized instead of living up to its principles. The founders of the project, also known as Lil Nounders, get a free Lil Noun around every 2 hours which gives them a huge voting power on the proposals. Although smaller holders with less than 5 Lil Nouns accounted for 95% of the total holders, their participation rate in the voting has been insignificant compared to the other 5%. From the transaction fees perspective of the votings, one might argue that the increase in the gas fees caused those smaller holders to stop participating in the voting. However, the author believes that as the transaction fees increased the U.S. dollar cost of the voting has remained in a similar range considering the current downtrend in the crypto industry. The exclusion of smaller holders from the voting is largely attributed to them being overpowered by those few large holders since they can singlehandedly determine the outcome of a proposal. Contrary to its name as a decentralized autonomous organization, the Nouns DAO become more centralized as its whales continue to increase their voting power and their share of Lil Nouns.