# Lower Fork Threshold to 10%

# TL;DR

This proposal seeks to lower the fork threshold to 10% in response to the proposed Nouns DUNA, which is fundamentally misaligned with some DAO members' values and vision for Nouns. The current threshold fails to provide adequate minority protection for active voters.

# Nouns DUNA

The Nouns Foundation plans to [change the legal framework of Nouns DAO to the Wyoming DUNA](https://foundation.nouns.wtf/). 

While DUNA offers benefits such as limited liability protection for DAO members, tax clarity, and legitimacy, these come with significant trade-offs: 

- **Permissionlessness**
  - **KYC Requirement**: Nouns DUNA requires all proposers to complete a KYC process before receiving funding. This could result in restrictions on who can receive funding depending on geographical location (e.g., OFAC-sanctioned countries). 
  - **Compliance Restrictions**: Proposals that do not comply with DUNA's rules and regulations may be vetoed, limiting the scope of ideas that can be explored within the DAO (e.g., mechanisms like forks are prohibited).  
- **Minority protection**: Nouns DUNA will remove the fork as it's not DUNA compliant. Instead, a [vesting refund mechanism](https://mirror.xyz/verbsteam.eth/jFi5T0aehwZws7Q6jdRn8xZmORu25TiyWz4G5LAHuaU) will be implemented, which offers weaker minority protection that diminishes over time.  
- **Cash flows**: Nouns DUNA will have a 4-year vesting period for all auction revenue to accommodate the refund mechanism. This will significantly reduce the DAOs cash flows during this period. 
- **Costs**: 
  - **Legal and Administrative**: Although specific figures have not yet been disclosed, it is anticipated that the legal, administrative, and maintenance costs for Nouns DUNA will be substantial (for reference, the [Cayman Foundation cost ~$1.4M](https://www.nouns.camp/proposals/39)).  
  - **Tax liability**: The tax implications under DUNA are also yet to be disclosed but could be significant.  

Each DAO member must weigh the costs and benefits of DUNA based on their values and priorities. If the decision is made to accept the DUNA, DAO members who are fundamentally opposed may be left with forking as their only viable option.

# Grassroots Nouns Fork

Many DAO members were initially drawn to Nouns due to the grassroots approach--a group of strangers from around the world coming together on the internet to coordinate capital for public good funding. Nouns still embodies the magic of what a DAO was originally proposed to be, however, there are concerns this might be lost with the adoption of Nouns DUNA. 

One of the biggest benefits of DUNA is DAO member liability protection. There are crypto-native alternatives that could be explored to achieve similar protection without adopting DUNA, such as:

- **Protocolization**: By protocolizing Nouns, active governance participation can be minimized, reducing legal exposure. 
- **SubDAOs**: Various flavors of SubDAOs could be established and wrapped in legal structures (like DUNA). Members who are highly concerned about liability could participate in Nouns through a SubDAO. This approach allows members to opt into a legal structure without it being imposed upon everyone. 

A Nouns fork would allow exploring these possibilities.

# Minority Protection

The current fork threshold is 30% (\~211 Nouns). Over the past year, the average voter turnout for non-canceled proposals has been \~100 votes, with a maximum turnout of 168 votes.

![image](https://hackmd.io/_uploads/ByUx039aC.png)

This means the current fork threshold is \~2.1 times the average number of active voters. As a result, this fork does not provide adequate minority protection for active voters today.

We propose lowering the fork threshold to 10% (\~71 Nouns), which is still around 71% of the average active voter turnout over the past year. This adjustment would enhance minority protection and make it more feasible for Nounders who are fundamentally misaligned with Nouns DUNA to fork.

# What about "Arbers"?

It is highly likely that some DAO members purchased and are holding Nouns purely for potential financial gain, with the intent to fork and "rage quit".

However, the current book value is near an all-time low. If an "arber" bought every Noun since the previous fork and decided to fork today, they would face losses of \~77 ETH.

![image](https://hackmd.io/_uploads/HJF4q65aR.png)

Providing minority protection for active DAO members fundamentally misaligned with the current direction of the DAO is likely more important than preventing potential "arber" exits. Moreover, with Nouns DUNA removing the fork option, this "arbitrage" vector will no longer exist. It may be better for both Nouns DUNA and a fork to allow the "arbers" to exit one last time, likely at a loss.

Outcome: DEFEATED