CIP 8: Land sale mechanism

The soft consensus in the CityDAO community is currently around selling 1000 individual sub-parcels, that each represent an easement or lease over a section of the property.

After visiting the property, I want to emphasize that many sections of the property have rough, mountainous terrain and cannot be easily developed.

The core team proposes the following mechanism:

  • Instead of selling sub-parcels that represent claim to a specific piece of the land, selling 1,000 NFTs that represent a governance vote over the entire property.
  • Selling 1,000 NFTs for $1,000 USD each, valuing the land at 1m
  • Owners can vote on how the land may be used. For example, they may enact a Camping policy that says each holder may camp up to 30 days per year.

Note this mechanism is subject to conversations with land / securities lawyers

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I think this is a good idea if we want to fractionalize the entire land and use it for a single thing.

I might be beating a dead horse here, but I’m feeling like the token purposes might be a little mixed up. ERC-721 tokens are non-fungible, but this sounds like you’re proposing we use them in a fungible way. If that’s the case, why not use an ERC-20 token instead? That way, we can do exactly what you’re proposing but also:

  • We would be able to buy/sell liquidity in our positions without a complex and gas-intensive NFT fractionalization flow.
  • We could use this token to effectively reward contributors as proposed in CIP 7.
  • We could leverage advanced defi primitives to supercharge the treasury and governing accounts.

This would obviously get into securities filing requirements, but this proposal is already in the gray area.

I’d vote we either go 100% governance token, that has nothing to do with a “parcel sale” (ie. CityDAO owns 100% of the land, and we’re all just allowed to show up and participate based on our ownership of an access/governance NFT), or go 100% equity token relating to “purchasing” a part of the land (ie. I buy a piece of actual land as an NFT or a part of the overall land as an ERC-20, and I don’t even need to show up, it’s just land ownership on the blockchain).

The middle leaves most the value on the table, and still toes the line with the SEC, which doesn’t seem worth it to me personally.

A $1,000,000 valuation is very realistic considering:

  1. Operating costs to bringing land on chain

  2. Development costs of land

  3. Support of project: Paying contributors etc.

  4. Novelty aspect of owning first land on chain in US

The discussion around and ERC-20 token is very sensitive and has been had a few times, due to securities law. If it is stipulated that this is 100% governance only and sold in a regulated manner, then this could work.

I think the idea of using a 721 in a fungible manner is that we can use it as a “governance” token in the same fashion as an ERC-20 but its a much “greyer” area.

I think that we shouldn’t be selling land that is bounded and should instead do the method of having an overall governance mechanism over the whole parcel of land instead.

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The point to having ERC-721 instead of ERC-20 is also the purpose of only being able to buy a fixed amount for a fixed price, and not having a supply of 1,000,000 ERC-20 tokens to allow users to buy 1-1,000,000. It looks much less security like imo.

You could release a supply of 1000 ERC-20 fungible tokens and sell them for 1,000$ each but again, 1,000 ERC-721 is much more attractive

Another method we could structure things is using an ERC-20 token to purely raise funds for land and have it 100% governance over a Sub-DAO of CityDAO.

This would be: release ERC-20, then use funds to obtain 10 parcels. That ERC-20 represents governance over 10 parcels and any other parcels acquired. But the issue is that looks hella like a security token too.

In future, im a big advocate of having multiple investment vehicles through cityDAO and one of these should definitely be by adding a regulated security token to our portfolio that would govern things like actual property with 100% of earning going back into the token holders.

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Good points, and I see what you’re saying regarding the securities requirements. If we truly want it to represent a non fungible governance token, ERC-721 could serve that purpose in the way you’re describing.

I’d be on-board with that if we can fix one major issue:

Creating an artificial valuation of $1,000,000 (or any number for that matter) on a governance token, puts a price tag on a hostile takeover at 51% of the value of the offering (51% attack). If we’re going to do this, I think we need a mechanism that guarantees enough voter diversity, at least to start with. It’s far easier to do this through earning reputation than it is by selling the privilege to vote.

I don’t think anyone here will want to purchase a land NFT for $1,000 if one or two whale’s own > 51% of the remaining tokens. It’s just too risky.

Some ideas:

  • X% of NFTs are awarded as retroactive airdrops to a guaranteed diverse audience based on contributions, attendance/participation (meeting POAPs), current Citizen NFT holders, etc. such that people who want to buy-in will only represent a minority.

  • Reserve 51% of NFTs to the CityDAO treasury for now, since it’s currently a fairly diverse group of voters.

  • Gate purchasing on a proof-of-personhood basis and limit purchase quantity (I think this has already been talked about at some point)

I know I’m jumping into some of these conversations very late, so I appreciate patience around anything that’s already been discussed. I’ve been super busy w/ IndieDAO the past couple months so I’m just now catching up and weighing in my 2gwei.


With respect to the hostile takeover concerns, based on my understanding, this parcel will still be under the umbrella of the DAO’s overall governance. So as long as the DAO LLC is resistant to a hostile takeover, an individual parcel can be properly regulated to prevent governance harming 49% in favor of a few whales.

That being said, I think there were plans to put a limit on the number of parcels purchased per account (on the initial sale) to allow for diversity of owners. It’s not proof-of-personhood, and someone who is very committed could still take control by using multiple accounts, but as I said above the DAO as a whole can step in for extreme circumstances.

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Yes, I think Greg is correct here.

Due to the fact that the parcel is overall managed by the DAO and the parcel NFTs represent only governance rights to what happens on the land, etc. then i think a 51% attack is not a risk. However, that being said, i believe that we should still try to have a distributed buyer audience and would still be in favor of ensuring no party has in excess of 20-30% of a parcels governance NFTs. @nicovalencia


Regarding a takeover, I think the gated release based on first, founding, citizen nfts most likely does a really good job of distributing governance well. This is how I saw it happening in the original scheme.

I’m not sure where the valuation of $1MM came from or why we would artificially inflate the parcel value. That could actually be very troublesome from a securities perspective, but also from a community one, CityDAO has introduced too much rent seeking. Are the governance rights of a piece of property that can’t generate any revenue worth 10x the property value?

Trying to think of analogies, an apartment rental agreement is a use rights agreement. A mortgage is a governance and use rights and ownership agreement. This proposes a governance and use rights agreement.

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There’s been a ton of criticism around parcel 0 being in the middle of nowhere with little to no utility. If we want to have the ability to buy a much more desirable parcel for parcel 1 without taking on debt, we need to make a reasonable amount of income on this parcel (maybe that number is less than $900k, but it needs to be something). I don’t think income from citizen NFTs alone can help us grow at the rate we’re capable of.

Agree finding a revenue stream is going to be important, but I’m not sure if just selling land for a giant premium is the best way we can think of. Sure land on chain that’s easily bought and sold might have a 10% premium let’s say because of the work that’s made it fluid.

Thinking on the other end of the extreme, let’s say the land is sold to a third party on the traditional market. Where do the proceeds go? Do governance rights give the right to these proceeds, if they do are they just governance rights? Are there precedents for something similar? Does where these proceeds go determine the true owner?

Based on feedback, I propose this updated mechanism:

Establish two zones on our property: Conservation Zone and CityDAO Commons.

  • Sell 1,000 Conservation NFTs that represent a pieces of land in the conservation zone.
  • Land owners can vote on how the CityDAO Commons can be used.

As this parcel is our first small experiment with the Wyoming DAO law, conservation is a low risk, safe use that may be a great proof of concept.

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Has this discussion been concluded. I’m just catching up on stuff here. My immediate impressions of this are -

  1. $1M (800% premium) of valuation for this land is not justifiable for the fact that the land is owned on blockchain. I understand it’s a way to raise cash but if we are selling it to our own community, we should really make sure we are providing them good long-term value, instead of leaving them with an expensive asset they regret buying.

  2. If part of the land is broken up, what can owners actually do with the 200sqft parcel they own? Build on it? No. Generate income from some commercial activity? No. Resell it ever again for real world use, in its fragmented form? No. Camp there for a week each year? Sure but that doesn’t justify paying $1k, and 98% of people will never do that.

I kind of understand if this is just a POC. What I envision to happen is that most of the land will never be used, in the best case the tokens will be re-sellable to people that are interested in owning one of the first plots of land on the blockchain because it’s cool, kind of like owning one of the first PUNKs. Even though it’s a useless plot of land (there is a reason they normally don’t come this small). Just trying to understand here - is that our aim? Do our community members interested in buying understand this? Or do they expect some other form of economic return on this purchase? We should be very deliberate about that.

I think there could be an alternative of collectively developing the whole parcel as a DAO for an actual use - of course that would be a longer term play though and not an immediate flip.

Good point! If I understood you correctly, this could be solved through a governance model that supports chain transactions: proceeds from traditional transactions could automatically fund the next voted NFT projects /acquisitions and rights are given to previous NFT owners through a predefined algo, aso…

I like the idea of using the land for conservation, but if so, why sell tokens for it at all? Why not govern it using the normal DAO mechanisms?

Is it purely as a revenue generation idea? If so, then perhaps there are better options for that.

Also, at a fundamental level (this may be off track), has renting rather than selling land been discussed as a better mechanism for the DAO? Renting could provide higher revenue, and more sustainable revenue, and could lead to a better allocation of land over time.

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