That means the total cost of the donations and the refunds, all processed in ether, could easily surpass $1.5 million.

Shane Molidor, head of business development at the crypto trading platform AscendEX, said that if ConstitutionDAO had been successful, the high gas fees likely would not have raised eyebrows. But with an average donation of about $200, he said, claiming a refund could cost half of the original donation. (Gas fees are not proportional to the amount transacted, rather set by miners based on supply, demand, and other factors.)

“It is clear the ecosystem needs to develop an alternative solution, as asking a user to forfeit half their initial principle does not make logical sense in a fundraising scenario,” Molidor said.

An imperfect crowdfunding project

ConstitutionDAO demonstrated the power of cryptocurrency crowdfunding. But the millions of dollars in transaction fees alone could undermine the efficacy of crypto as a fundraising method.

Ethereum’s transition to a proof-of-stake model—an alternative to the high-cost, high-energy proof-of-work model first introduced with Bitcoin—could lower gas fees for users. In proof of work, miners use energy-intensive computer power to validate complex calculations of transactions on the blockchain to create more coins. In proof of stake, miners only have to validate the percentage of coins held by each miner, a less energy-intensive process.

Ethereum’s transition will “lower the energy and power required for processing transactions, increase the [transactions per second], and make the network more secure,” said Anthony Georgiades, president and COO of the NFT marketplace Pastel.

But until then Ethereum’s high fees will continue to attract competition from other blockchains such as Solana that offer faster transaction speeds and lower fees. “Ethereum’s high token price indicates it currently remains the dominant chain, but the question is, how long will that dominance last?” Molidor asked.

ConstitutionDAO’s 17,000 donors will have their donations returned to them in the coming days with a big chunk missing and, while they were essentially buying voting rights and not a financial stake in the document, they will truly have nothing to show for the effort.

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