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Non-Fungible Tokens (NFT) Newsroom

Decentralized Dogg- Snoop Dogg’s Very First NFT

Decentralized Dogg- Snoop Dogg’s Very First NFT

Snoop Dogg, in collaboration with the crypto artist Coldie, has released his first NFT collection “Decentralized Dogg” for an auction held on SuperRare (a NFT marketplace known for attracting NFT collectors who are “willing to pay up for exclusive pieces”) from November 29 to December 3.

According to the news, the “Decentralized Dogg” NFT features 10 images of Snoop Dogg’s face drawn from different stages of his life combined as a 3D collage and underscored by a soundtrack personally composed by Snoop Dogg, himself. Snoop Dogg’s innovation and investment partner indicated that Snoop Dogg plans to “evolve this NFT” by using it for other future works and maintaining an ongoing relationship with the (individual) collector or a “DAO”. The “Decentralized Dogg” NFT was sold on December 3 for 188 ETH (or US$778,381 as of this writing) upon the conclusion of the auction.

While it is exciting for Snoop Dogg’s fans to own the very first NFT minted by the artist, what is equally exciting, from legal perspective, is that Snoop Dogg’s plan might have rolled out the possibilities of what a “DAO” can do in the NFT world.

The term “DAO” is the abbreviation of “decentralized autonomous organization”, which refers to a group of people that come together as a “collective community” for the purpose of deciding and achieving any goals shared by such people in the blockchain world. The most common example of what a DAO can achieve is the collective purchase of a specific item, such as a NFT, a NBA team or even a rare print of the U.S. Constitution. Essentially, a DAO is based on smart contracts, which establish the foundational rules for the members of a DAO to abide by when the members plan to make a proposal, vote on such proposal and execute the result of the voting uniformly. Because a DAO is smart-contract-based and involves (almost) no centralized human intervention, the governance structure of a DAO is bottom-up, meaning that each of the members gets to express his/her/its position towards every matter by voting with the token he/she/it holds. To put it simply, a DAO is just like "a group chat with a bank account” that, as shown in the case of bidding for a print of the U.S. Constitution, could amass enormous amount of funds that allows the DAO to bid against a hedge fund C.E.O. in less than 72 hours.

Although a DAO could be a power player in the NFT world with its crowdfunding nature, issues might still arise from the nature of a DAO’s governance structure. For instance, if a DAO named “Doge DAO” wins the bid of the Decentralized Dogg NFT and Snoop Dogg seeks the Doge DAO’s permission to use the NFT in his subsequent works. Under such assumption, with whom should Snoop Dogg negotiate if the majority of the Doge DAO members decide that the permission should be conditional on the term that Snoop Dogg names his next song “Snoop Catt”, while no member is willing to step up as the primary contact of Doge DAO to hear Snoop Dogg’s counteroffer? Also, from the Doge DAO members’ perspective, if only half of the members vote for the grant of the permission, could any half of the Doge DAO members seek to buy out the other half’s interests in Doge DAO if the voting becomes a stalemate? Or could a member seek to have his/her/its contribution to Doge DAO be returned just because he/she/it does not want to be involved in the stalemate? What if all the Doge DAO’s funds have been used to bid the Decentralized Dogg NFT and nothing is left for refund?

The answers to all these questions would largely depend on the foundational rules laid by the smart contracts underlying the Doge DAO. However, if the rules were not specific on such issues, the involved parties will have to figure out a dispute resolution mechanism that is not algorithmically driven, such as adjudication by a court. Accordingly, it is worth observing the development and the issues that might arise from DAOs being a NFT owner and collector.

If you have any questions concerning dispute resolution as it relates to NFTs, please contact us.