The author compares the similarities and differences between the two through his personal experience in participating in DAO and cooperatives, and summarizes the parts that can be learned from each other between the two, such as one person, one vote vs one token, one vote, and the difficulty and ease of obtaining and using funds. Strengths and weaknesses, the driving force and vision for the creation of the organization. And pointed out that the best framework for an organization may not be a choice between a cooperative model or a DAO model, but a combination of the two.
The best framework for coordinating and functioning may not be one or the other, but a combination of the two.
In 2014, a year before ethereum launched, academic activist and professor Trebor Scholz at the New School in New York coined a new term: “platform cooperativism.” In a blog post, Scholz outlines a bold alternative to the extractive Web 2.0 sharing economy: platforms operate as cooperatives, jointly owned and controlled by their workers and users. The goal is to find ways to usher in a future where ride-sharing apps will be owned by drivers, grocery delivery platforms will be owned by shoppers, and sites like Patreon will be owned by creators.
Since 2014, platform cooperativism has become a growing subculture in the global tech world. At conferences in New York, Hong Kong and Berlin, scrappy community organizers and social entrepreneurs come together every year to support each other, share stories, and console each other in the struggles of finding funding.
A few years ago, I started a digital co-op called Ampled, an artist- and crew-owned Patreon alternative built for musicians. Recently, I’ve also been involved in several DAOs, including Forefront, Seed Club, and Friends With Benefits. Having one foot in the platform corporatism movement and the other in the DAO space has inspired me a lot, and I’ve come to realize that both fields have had valuable implications for human organization, collective ownership, and cultural creation. new tool. While these innovations sometimes appear to be taking place in parallel isolation, I believe the two communities have a lot to learn from each other and even open the door to a meaningful union between the two.
A cooperative is a business that is jointly owned by staff, customers, or both, and operates on a one-person, one-vote basis for each member. While this ownership structure forms the basis of the cooperative model, its applications and cultures are diverse. There are agricultural cooperatives, and there are cooperatives such as digital cooperative technology platforms. This article will focus primarily on staff and platform co-ops, but other co-ops include:
- consumer cooperative
- Purchasing Cooperative
- Multi-stakeholder cooperatives
- housing cooperative
- Marketing Cooperative
- producer cooperative
The DAO is an Internet-native organization coordinated by tokens based on blockchain technology, and it also comes in various forms, including:
- Protocol/Platform DAO
- Creator DAO
- Service DAO
- Curating DAOs
- Invest in DAOs
- Social DAO
While both cooperatives and DAOs are organized in the form of collective ownership and shared decision-making, there are some key differences. Mainly, cooperatives are governed by one person, one vote per member, which means people vote, not dollars, and no one member of the cooperative can buy more power than the others.
While DAOs can emulate the governance model of a cooperative, the more common token-one-vote governance model is easier to implement, as verifying one’s identity is still an emerging field in the blockchain world.
Differences aside, there is an increasing overlap in the conceptual space in which DAOs and platform cooperatives operate. Both forms seek to expand collective ownership and governance of digital infrastructure. Both have a culture that prioritizes collective control and the creation of shared products.
From my experience in both areas, I’ve noticed that DAOs tend to be better at enabling large-scale collective ownership, even if they have a relatively low-level cultural understanding of the rights, responsibilities, and accountability associated with ownership. And while cooperatives tend to be less successful in securing funding, they are also more likely to address inequality at its root by soberly rejecting capitalist realism. Below, I’ll share some of the points I’ve gathered about what DAOs and cooperatives can learn from each other.
Ampled contributors, 2021
What DAOs can learn from cooperatives
People in the DAO field would be wrong to think that the collective work and organization model is a technology-related invention. In fact, throughout history, in almost every corner of the world, communities have practiced mutual aid and democratic ownership.
In the United States, the cooperative tradition has a history of neglect, with marginalized groups forced to form solidarity networks to survive and self-sufficiency. Jessica Gordon-Nembhard, professor at John Jay College, in her book Collective Courage: A History of African American Cooperative Economic Thought and Practice (Collective Courage: A History of African American Cooperative Economic Thought and Practice) outlines examples of economic coordination involving free and enslaved African Americans hundreds of years ago, including raising funds to redeem freedom for individuals, forming Autonomous communities and mutual aid associations. The subway itself is a solidarity network. These forms of cooperation predate the Rochdale Society of Equitable Pioneers, a British consumer cooperative founded in 1844 to expand access to quality food and other The opportunity to provide is widely considered to be the beginning of the modern cooperative movement.
During the Great Depression, Americans established alternative networks of barter and value exchange, such as The Unemployed Exchange Association of Oakland. Most rural areas in the United States were powered by electric cooperatives, as the power companies of the time considered certain areas unprofitable. The United States also has a long history of community and local currencies, including Ithaca Hours and BerkShares.
DAOs can learn a lot from these historical cases, especially when it comes to non-hierarchical work patterns and collective decision-making. Researching failed co-ops is also instructive to avoid mistakes. By examining past cooperatives and solidarity networks, I think DAOs are particularly instructive in three areas: uniting people around struggles for racial and economic justice; fostering a strong sense of shared ownership; and building community based on shared principles.
Economic and Racial Justice
Cooperatives often emerge in response to market failures and exploitative economic systems. They are designed to bring benefits to their members: good jobs, dignity and collective strength. Because cooperatives are motivated by serving member needs, not profit, they are often guided by a mission of racial and economic justice. Cooperatives can focus more effectively on propositions like social justice than DAOs, not because of any particular structural mechanism, but more importantly because of founding motivation.
In the cryptocurrency space, by contrast, some of the most well-known collective economic organizations were born out of meme culture, or as an exercise in commodification and speculation. The value of cases like PleasrDAO splitting up Doge, and ConstitutionDAO raising more than $40 million to buy a copy of the U.S. Constitution, is that they provide a template for a new model of global economic collaboration. However, so far, these DAO-based funding groups seem to have little focus on goals that involve helping underserved individuals and communities with their basic needs.
There are some encouraging exchanges taking place around Decentralized Impact Organizations, which may form a useful framework for allocating resources to outcomes that have a lasting impact on society. Mutual aid and mission-driven DAOs (including PleasrDAO’s Free Ross DAO) are growing rapidly, but these projects have not yet generated the same amount of collective passion, support, or resources. Still, for those who want to make a difference with Web3, the stories of co-ops like Cooperation Jackson and 40 Acre Co-op have a lot of wisdom in uniting people in pursuit of common goals and building organizations that reflect their values. worth learning.
The grand definition of ownership
Crypto networks and DAOs often use the concept of “ownership economy”. Venture capitalist Jesse Walden first articulated the concept as a guiding philosophical infrastructure.
“The economy of ownership isn’t always literally what tokens, stock options, or equity means,” Walden wrote in a post laying out the idea. “Instead, ownership can become a new cornerstone of the user experience, which may manifest as New economic incentives, platform governance or new forms of social capital. There is a lot of room for exploration in the design of the ownership economic system.”
But defining ownership in this way is too broad and risks diluting the concept of ownership to mean only “upside risk” or “feeling of ownership”. As Cory Rosen, director of the National Center for Employee Ownership, puts it, “the feeling of ownership is the feeling of eating.” However, the concept of an “economy of ownership” ignores some of the key tenets of true ownership, such as making investments and agreements transparent to members, having a voice in hiring and other important decisions, and the ability to hold leadership accountable.
In this regard, cooperatives have a long-standing professional record and a proven portfolio of tools to establish strong shared ownership through legal means: bylaws, operating agreements and knowledge, in addition to clearly defined rights, responsibilities and accountability property rights, etc.
As the DAO continues to develop new models of collective governance, it can be helpful to find inspiration from smaller or earlier cooperative models: the charter of the East Bay Permanent Real Estate Cooperative, Stocksy’s proposal flow chart, and Ampled’s decision matrix, among others.
Co-ops also have one thing in common: they tend to come together around a common set of principles. The Rochdale Principles are a set of collaborative philosophies developed by the Rochdale Equity Pioneers. Nearly two centuries later, cooperatives around the world are still based on these principles.
The first three principles outline how cooperatives should operate:
- voluntary open membership
- democratic member control
- Member’s Economic Participation
Four other principles outline shared virtues and values:
- autonomy and independence
- Education, Training and Information
- cooperation between cooperatives
- Follow the community
Not all DAOs will be interested in adopting a common set of principles. But for those of us who aim to foster collaboration and influence, to create alliances around common social or technological goals, it’s important to ask ourselves the right questions: What are our shared values? Are we going to prioritize transparency, participation and collaboration like the open source movement? If we reflect enough, we may discover that we share many principles with the cooperative movement, including Principle 6: DAOs should seek to cooperate with other DAOs.
As new entrants pour into the Web3 ecosystem to form DAOs, we may need to develop a set of common principles to guide us in building Web3. The value of these principles may be: helping us avoid repeating the mistakes of the Web2 dark mode, or it may become a The basis for cooperation between like-minded DAOs. The DWeb Principles are a set of values that emphasize human nature and distribute benefits over “autonomous organizations,” and although not comprehensive when applied to worker organizations, are a good source of inspiration. Combining the DWeb Principles with the Rochdale Principles might be a good starting point.
What cooperatives can learn from DAOs
In April 2021, Mirror founder Denis Nazarov pitched an idea on Twitter to make a tool called PartyBid that would allow a group of people to bid and buy NFTs. PartyDAO joined shortly thereafter, raised $100,000, and quickly built and delivered an impressive product that allowed for collective bidding and decentralized ownership. In just a few months, the distributed team created a collectively owned platform that has since facilitated multi-million dollar auctions.
Since DAOs are blockchain-based organizations and are generally not tied to corporate entities, they leave a lot of room for rapid experimentation with organization and incentive design. Members can collectively pitch an idea, steer collectively managed resources toward a common goal, iterate, and release at a rapid pace.
Co-ops, by contrast, typically spend a lot of time wrangling with attorneys about the bylaws and registration process, making them more difficult to start than traditional corporations. Rather than being bogged down by the complex process of formalizing traditional cooperatives, look into DAOs like PartyDAO, which have the ability to deliver products quickly and scale up impact—provide an initial proof of concept on which to build an organization.
Helium network icon
Start the network with Tokens
Co-ops have long been plagued by capital conundrums. Because they are for-profit in nature, it is difficult to qualify for funding. And because they revolve around collective ownership and democratic collective control, they are functionally ineligible for traditional equity-based venture capital, which would require selling a majority of the ownership to investors.
In addition to being a powerful tool for coordination and voting, tokens can make it easier for co-ops to start when funds are running low. Helium, a distributed network of wireless Internet infrastructure called “LongFi”, is a good example. To power the network, people around the world set up routers in their homes and offices as network nodes. Nodes are compensated with $HNT, a Helium native token that represents governance rights and holds value. Without this token and clever economic incentives, it’s hard to imagine how a decentralized network of this scale could have come into being.
Members of the tokenized community also get something tangible from their contributions. Tokens can be coded to automatically receive sponsorship bonuses when there is an income stream. This enables cooperating members or contributors to capture the value they create, unlike the time banking system used by the offline solidarity network.
A new way to quit the community
If you think of a co-op as a working public or shared good, distributing tokens to early adopters of that good can be thought of as a loyalty reward: granting people automatic membership, voting rights based on past spending or support or ownership in the project.
An example is the recent token airdrop of the Ethereum Name Service (ENS), a public tool that allows you to register a Web3 username ending in “.eth” associated with your Ethereum address. This makes it easier for people to send and receive ether without having to remember long public keys.
ENS has been in development for over 4 years and was initially controlled by a small group of people. But they wanted to distribute control and stewardship to their community, so they evaluated users who had previously registered .eth domains and came up with an algorithm that would fairly distribute 25% of the ENS supply to those users. After the initial distribution, these users end up with more control and power than the core contributors, who collectively receive 18.96% of the token supply.
While cooperatives may want to stick to a one-person-one-vote decision-making model, token airdrops can serve as a way to distribute rewards across loose and large networks and attract more decision-making members to the organization.
For those who have been advocating for exiting the community, or as a way for startups to transition ownership to employees and stakeholders as an alternative to an IPO or acquisition, DAO airdrops can be a powerful tool for distributing community control.
new hybrid model
Not surprisingly, there are many organizations trying to combine the DAO concept with the cooperative model. Disco (Distributed Cooperative) is a framework that starts from feminist economics to reorient our thinking about how DAOs can function more like traditional cooperatives. Some other examples are:
- ETHDenver, a conference and legal cooperative, recently launched a token
- Opolis, a digital employment cooperative, launches DAO and its own $WORK token
- Common Lands, a “decentralized self-owned housing cooperative,” aims to help one million families become first-time home buyers through community-owned, affordable co-op housing
- SongADAO, a DAO formed around daily song releases by musician Jonathan Mann, recently became a legal co-op
At the end of the day, the best framework for an organization may not be a choice between a cooperative model or a DAO model, but a combination of the two. Incorporating cooperative value into a crypto network can take the traditional cooperative model and start the network by tokenizing contributions on-chain. Alternatively, the DAO could decide to adopt a cooperative one-person-one-vote governance in some cases.
By learning from the past and looking to the future, we can create communities that embody the best of both worlds: effective, principled, and well-resourced organizations striving to build a more equitable, democratic, and collectively owned future.
Thanks to Stellar Magnet for generously co-authoring this article and for providing valuable supplemental reports and research. Also, thanks to The Blockchain Socialist and Scott Moore for their feedback during the writing of this article.
Austin Robey is a founding member of Metalabel, Amled, Unnamed Fund and Dinner DAO. He also teaches music and platform collaborationism at the New School in New York City.
Image by SIDNĒ and Fiona Carty.
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