What Is $NOUNS? The Nouns Token Idea Explained

My favorite NFT project? Nouns.

It’s a decentralized collective, a grasroots brand, a software movement, and an open public art series all wrapped in one. They’re also a big backer of public goods and privacy efforts in crypto, so long story short, it’s a tribe I love and have long planned to join. 

To join today though, the going rate for a Noun is currently ~5-6 ETH, and that’s a nice chunk of gwei to pay all at once.  

That’s why I’m stoked about the possibility of $NOUNS, an ERC-20 token being considered by the Nouns community that you could stack up over time until ready to redeem for a full NFT and your spot in the DAO. 

It’s up in the air right now, but let’s break down what we know about the tentative $NOUNS token so far.

What Is $NOUNS Token?

First introduced in March 2024 by the Verbs dev team within Nouns DAO, $NOUNS is a proposed fungible token designed to make Nouns ownership more accessible and to grow the Nouns brand. 

The token would be created and backed by Nouns NFTs, allowing more people to get direct stakes in the Nouns ecosystem without purchasing a full Noun NFT first. 

The big idea? Foster wider participation around Nouns, which in turn would lead to more Nounish supporters and Nounish projects, and thus the DAO’s flywheel turning ‘round and ‘round. 

How Would $NOUNS Work?

If approved by the collective, $NOUNS would be tailored to the peculiarities of the Nouns. The Verbs team has planned the main pillars as follows:

• 🪙 Minting and Redeeming: Any Noun can deposit their Noun NFT into the fungible token contract and receive one million $NOUNS tokens. Conversely, anyone holding 1M $NOUNS can redeem them for a Noun NFT by sending the tokens and the Noun ID to the contract.
• 🔁 ERC-20 Compatibility: The $NOUNS token will have standard ERC-20 functionalities, including transfers and balance readings. The token's ticker is NOUNS, and it has 18 decimals.
• ✅ DAO Governance: The token's contract, initially assigned to the Verbs multi-sig account, will be upgradeable by the Nouns to allow for future improvements and feature additions. 
• 🍴 Fork Mechanism Integration: The $NOUNS token will integrate with the DAO's novel Fork mechanism, ensuring that $NOUNS in the treasury are treated similarly to Nouns NFTs during any future forks. 
• 🌉 Bridging and Deployment: Initially deployed on Ethereum mainnet, $NOUNS will be bridgeable to L2 networks like Optimism, Base, and Zora for broader accessibility.

What Are the $NOUNS Use Cases?

First and foremost, the Nouns themselves can use $NOUNS to incentivize engagement around its ecosystem. Think $NOUNS distributions to reward onchain proposal creators, rounds.wtf participants, Nouns protocol frontend devs, Nouns Farcaster client builders, etc. 

For people who are huge fans of Nouns like myself, there’s also a savings utility, as you could steadily accumulate $NOUNS tokens to save up for a full Noun NFT redemption. In other words, gradually work your way into the collective on your own schedule without needing to pay the full price upfront.

Lastly, there’s a speculation angle. Investors who want to gain exposure to the value of Nouns without owning an NFT could buy and trade $NOUNS, provide liquidity and earn fees on decentralized exchanges like Uniswap, and so forth. 

Will $NOUNS Launch Soon?

Currently, the $NOUNS token is in governance limbo, as a recent proposal to audit the planned implementation was voted down in Nouns DAO. 

Reasons cited by “Against” voters included doubts over pressing forward on a token that may not ultimately be needed, the reigning hostile crypto regulatory environment, a desire for more studies and community discussion on the token’s spec, and more. 

However, this doesn’t mean $NOUNS is at a dead end. More research and more favorable regulatory tailwinds could put it on a path toward launching in the next year or so if governance warms up around it. 

At the end of the day, there’s clearly considerable interest around a fungible token in the collective. Nouns DAO recently approved funding 14 ETH for the development of $⌐◧-◧, an alternative fractional ERC-20 token concept that would offer direct voting power and associated fractional NFTs. 

“I’m FOR competing versions of what fungible Nouns might look like,” the Nounder Seneca has noted. “At a reasonable cost, it makes sense to support [another] well intentioned effort to explore the form factor.”

That said, in time both $NOUNS and $⌐◧-◧, along with other Nounish tokens, may come to live side by side in the Nouns ecosystem. Skeptics in the DAO are the main hurdle here for now—and that’s a good thing, there’s no need to rush work like this—yet, of course, skeptics won't necessarily prove to be an everlasting obstacle. 

The concerns may eventually be allayed, but only time will tell how the arc and pace of any such thawing would pan out. In the meantime, be sure to keep an eye on Nouns governance and resources like Nounsletter to track any updates around a Nouns token. I’m personally watching the developments and debates here with great interest!