Split can be signaled on proposals. To successfully split, the following conditions must be met:
Assuming these conditions are met, a DAO split can be executed at the end of the proposal lifecycle:
What happens with Nouns that signal a DAO split?
A successful split creates a new NFT DAO; including a new NFT, auction house, DAO logic, DAO treasury. The fair share of all split Nouns is sent to the new DAO's treasury. For example, if 20% of all Nouns split, then 20% of Nouns DAO treasury assets are sent to the new DAO.
New DAO starting configuration:
Nouns DAO can configure which tokens are distributed upon a DAO split, while other tokens remain entirely with Nouns DAO.
The tokens configured to be distributed are sent pro rata, so for example if 20% of Nouns split, then 20% of the configured assets are sent to new DAO.
In the case of NFTs it can get tricky as they don't have decimals. The current solution is to round down in favor for Nouns DAO. For example, say 20% of Nouns split, and Nouns DAO holds 197 tokens of a certain NFT; that comes out to 39.4 NFTs, in which case we would send 39 NFTs to new DAO and the rest will remain with Nouns DAO.
We can randomize which IDs get sent to new DAO, using Chainlink VRF or new developments in on-chain randomization that leverage ETH2 RANDAO.
Another approach is to run a lottery of which DAO gets which NFTs. We can use random numbers to determine if a given NFT should stay with the original DAO or go to the new DAO. For example, say 30% of Nouns choose to split, we can generate a random number between 1 and 10; if the number is 1-3, it goes to the new DAO, and if it's 4-10 it goes to the original DAO.
TL;DR: it gives the original DAO more options, including the option to burn them.
If the split is due to a malicious proposal (aka a 51% attack), where honest Nouners are escaping to the new DAO, most likely the Nouns left behind in the hands of the attacker won't be very valuable, so it seems fine to leave them in their hands.
If the split leaves honest Nouners in the original DAO, they remain valuable, and we then think it's good to give the DAO more optionality; they can choose to burn these Nouns, or put them on auction again, or grant them to strategic partners, or any other creative idea they may agree upon.
Important to note that these Nouns are excluded from DAO quorum and split threshold calculations; they are counted again if and when they are transferred from the treasury.
An idea we like is "split delegation", where an account can say they will split if these other accounts or Nouns choose to split.
We think it's best to have zero penalty in order to not leave anything behind for an attacker.
We can include an adjustable penalty parameter which can be changed via DAO proposals should the DAO decide to have it > 0.
By default it would only be the Noun holder. We don't think delegates should have this kind of power.
If needed, for hot wallet kind of convenience, we can design a separate delegation system for this, but that would also add some layer of complexity