What can cooperatives and DAOs learn from each other?

The best framework for coordination and functioning may not be a choice between the two modes, but a combination of the two.

In 2014, a year before ethereum launched, academic activist and professor Trebor Scholz of 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 that operate as cooperatives, jointly owned and controlled by their workers and users. The goal is to find ways to create a future where ride-hailing apps will be owned by drivers, grocery delivery platforms will be owned by personal shoppers, and sites like Patreon (a platform for art creators) will be owned by creators.

Since 2014, platform cooperativism has become a growing global tech subculture. At conferences in New York, Hong Kong and Berlin, scrappy community organizers and social entrepreneurs gather each year to support each other, share stories and sympathize with the struggles of finding funding.

A few years ago, I started a digital co-op called Ampled, an artist- and worker-owned alternative to Patreon for musicians. Recently, I’ve also participated in several DAOs, including Forefront, Seed Club, and Friends With Benefits. Having one foot in the platform cooperativism movement and the other in the DAO space has been instructive, and I’ve come to believe that when it comes to humans Both fields generate valuable new tools for organization, collective ownership, and cultural production. While sometimes these innovations seem to happen in parallel and in isolation, I believe the two communities can learn a lot from each other – and even open the door to a meaningful hybrid approach between the two.

What can cooperatives and DAOs learn from each other?

A cooperative or “cooperative” is a business in which ownership is shared by workers, customers, or both, and operates on a one-member, one-vote basis. Although this ownership structure forms the basis of the collaborative model, its applications and cultures are diverse. There are agricultural cooperatives, just as there are digital cooperative technology platforms. This article will focus primarily on worker and platform cooperatives, but other examples include:


consumer cooperative

Purchasing Cooperative

Multi-stakeholder cooperatives

housing cooperative

Marketing Cooperative

producer cooperative

DAOs, blockchain-based token-coordinated internet-native organizations, also take many forms. These include:


Protocol/Platform DAO

Creator DAO

Service DAO

Designing DAOs

Invest in DAOs

Social DAO

Although both cooperatives and DAOS are collectively owned and jointly defined forms of organization, there are some key differences. First, cooperatives implement one-member-one-vote governance. That means people vote, not dollars. No one member of the co-op can buy more electricity than anyone else.

While DAOs can simulate cooperative governance, the more common one-coin-one-vote governance model is easier to implement, as verifying one’s identity is still an emerging field in the blockchain world.

What can cooperatives and DAOs learn from each other?

Differences aside, the conceptual spaces in which DAOs and platform cooperatives are located are increasingly overlapping. 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 goods.

From my experience in both fields, I’ve noticed that DAOs tend to be better at enabling large-scale collective ownership, even if they have a relatively underdeveloped cultural understanding of rights, responsibilities, and accountability associated with ownership. While cooperatives are often less successful in securing funding, they are also more likely to properly address the root causes of inequality through a sober rejection of capitalist realism. Below, I’ll share some of the points I’ve gathered about what DAOs and cooperatives can learn from each other.

What can cooperatives and DAOs learn from each other?

Lots of contributors in 2021

What DAOs can learn from cooperatives

History background

People in the DAO field will mistakenly think that the collective work and organization model is a technology-related invention. In fact, throughout history, communities have practiced mutual aid and democratic ownership in nearly every corner of the world.

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. In her book, Collective Courage: A History of African American Cooperative Economic Thought and Practice, Jessica Gordon-Nembhard is a professor at John Jay College , he outlines examples of economic coordination involving free and enslaved African Americans hundreds of years ago, including pooling funds to buy freedom for individuals and building conscious communities and mutual aid societies. The Underground Railroad is itself 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 supplies for skilled workers displaced by mechanization, and is widely regarded as the modern cooperative. base movement.

During the Great Depression, Americans opened up alternative networks of barter and exchange of value, such as the Oakland Unemployment Trades Association. Much of rural America is powered by electric cooperatives because incumbent power companies consider certain areas too unprofitable. The U.S. also has a rich history of community and local currencies, including Ithaca Hour (Ithaca Hour was the local currency formerly used in Ithaca, New York) and Berk Shares (BerkShares, a local currency in the Berkshire, Massachusetts region) local currency in circulation).

DAOs can learn a lot from these historical cases, especially regarding non-hierarchical work patterns and collective decision-making. Researching failed co-ops is also instructive to avoid mistakes. However, I think there are three areas where researching past cooperatives and solidarity networks is particularly instructive for DAOs: bringing people together, fighting for racial and economic justice, fostering a strong sense of shared ownership, and building on shared principles basic community.

Economic and Racial Justice

Cooperatives often emerge as an attempt to deal with market failures and exploitative economic systems. They are designed to bring benefits to their members: good work, dignity and collective agency. Because co-ops are motivated by the needs of their members, not profit, they are often guided by racial and economic justice missions. There is no specific structural mechanism that would allow co-ops to focus more effectively on social justice than DAOs; it’s more a question of establishing motivation.

In the crypto space, by contrast, some of the most prominent examples of collective economic organizations have formed into memes, or as exercises in commodification and speculation. Examples such as PleasrDAO’s breakdown of the Doge meme, or the ConstitutionDAO raising over $40 million to buy a copy of the US Constitution, are valuable in that they propose a template for a new model of global economic coordination. However, so far, few of these DAO-ized funding groups seem to have coalesced around goals that involve helping underserved individuals and communities meet their basic needs.

There have been some encouraging conversations around the impact of decentralized organizations, which could be a useful framework for allocating resources for long-term social impact outcomes. Despite the growing number of mutual aid and mission-driven DAOs (including PleaserDAO’s Free Ross DAO), these projects have not generated the same amount of collective excitement, support, or resources. But for those who want to use Web3 to make a difference, stories of co-ops like Co-op Jackson (Co-op in Jackson, Mississippi) and 40 Acre Co-op (a 40-acre agricultural cooperative) are uniting in pursuit of common goals and building organizations reflect these values.

Ambitious definition of ownership

Crypto networks and DAOs often use the concept of an “ economy of ownership ,” a concept first coined by venture capitalist Jesse Walden, as a guiding philosophical infrastructure.

“The economy of ownership does not always mean a literal distribution of tokens, stock options or equity,” Walden wrote in a post outlining the idea. “Instead, this means that ownership—perhaps in the form of new economic rewards, platform governance, or new forms of social capital—can become a new cornerstone of user experience, with plenty of design space to explore.”

By defining ownership so broadly, this argument could dilute the notion of ownership to simply mean “upside risk” or “feeling of ownership.” As Cory Rosen, director of the National Center for Employee Ownership, puts it, “Ownership is like the feeling of dinner.” But the “ownership economy” concept ignores some of the key principles of true ownership, such as having members contribute to investments and agreements Aspects of transparency, 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 toolbox for building strong shared ownership through legal means: in addition to clearly defined rights, responsibilities and areas of responsibility, including bylaws, operating agreements and intellectual property ownership .

As the DAO continues to evolve new forms of collective governance, from the charter of the East Bay permanent real estate cooperative, to the proposal flow chart for Stocksy (a platform collaboration for freelance artists), to an enlarged decision matrix that incorporates smaller or older cooperative models as Inspiration is useful.

common principles

Co-ops also have one thing in common: they tend to unite around a common set of principles. The Rochdale Principles are a set of cooperative philosophies developed by the Rochdale Equity Pioneers Association. Nearly two centuries later, cooperatives around the world are still based on them.

The first three principles outline how cooperatives should operate:

1. Voluntary Open Membership

2. Democratic Member Control

3. Member Economic Participation

Four other principles outline shared virtues and values:

1. Autonomy and independence

2. Education, training and information

3. Cooperation between cooperatives

4. Caring for the community

Not all DAOs will be interested in adopting a shared set of principles. But for those of us who are driven by cooperation, influence, and combined forces around common social or technological goals, it’s important to ask ourselves the right questions: What are our shared values? Do we want to prioritize transparency, participation and collaboration like the open source movement? If we do enough introspection, 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, it may be useful to develop a set of general principles that can guide us in building Web3 – values ​​that help us avoid recreating the dark patterns of Web2, which may form like-minded The basis for cooperation between DAOs. The DWeb Principles, a set of values ​​that emphasize human nature and distribute benefits over “autonomous organizations,” are not comprehensive when applied to workers’ organizations, but are a good source of inspiration. Combining DWeb principles with Rochdale principles might be a good starting point.

What can cooperatives learn from DAOs?

quick experiment

In April 2021, Mirror founder Denis Nazarov took to Twitter to pitch the idea for a tool called PartyBid that would enable a group of people to bid and buy NFTs. Shortly thereafter, PartyDAO came together, 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 bids.

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 come up with an idea together, pool co-managed resources into a common goal, iterate, and release quickly.

Co-ops, by contrast, typically spend a lot of time arguing with lawyers about the bylaws and registration process, making them more difficult to set up than traditional corporations. Rather than being slowed down by the complex process formalized by traditional co-ops, check out DAOs like PartyDAO, which are able to deliver products quickly and scale up impact—providing an initial proof of concept to build upon as an organization.

Image showing the distribution of Helium network nodes

Bootstrap the network with tokens

Co-ops have long faced funding challenges. Since they are for-profit in nature, it is difficult to qualify for grants. And because they revolve around group ownership and democratic collective control, they are functionally ineligible for traditional equity-based venture capital, which requires selling a majority of ownership to investors.

In addition to being a powerful tool for coordination and voting, tokens allow co-ops to more easily bootstrap when cash is low. Helium, a distributed network for “LongFi” wireless internet infrastructure, is one example. To power the network, people around the world set up routers in their homes and offices as nodes in the network. Nodes are compensated with $HNT, a native Helium token that represents governance and holds value. Without this token and clever economic incentives, it’s hard to imagine how a decentralized network of this scale could have formed.

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, in contrast to the time banks used by the offline solidarity network (a time bank is a service bartering system where people trade services for credit based on labor time, not money) Systems are different.

A new way to get out of the community

If a co-op maintains a common or shared good, distributing tokens to early adopters of that good can be seen as a loyalty reward: granting people automatic membership, voting or ownership in the project based on past spending or support .

An example is the recent token airdrop of the Ethereum Name Service (ENS), a public utility 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 decentralize control and governance to their community, so they evaluated users who had previously registered for the .eth domain and came up with an algorithm that would fairly distribute 25% of the ENS supply to these users. After the initial distribution, users end up with more control and power than core contributors, who in total 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 be 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 a way for startups to transfer 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, many organizations are currently trying to combine the DAO concept with a collaborative model. DisCo (Distributed Cooperative) is a framework that uses feminist economics to reposition our ideas of how DAOs can function more like traditional cooperatives. Some other examples:

ETHDenver, a conference and legal cooperative that recently launched a token.

Opolis, a digital employment cooperative, launched a DAO and its own $WORK token.

Common Lands, a “decentralized self-governing 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 musician Jonathan Mann’s daily song releases, recently merged into a legal cooperative

At the end of the day, the best framework for an organization may not be a choice between a partnership model or a DAO model, but a combination of the two. Incorporating cooperative value into a crypto network can take the form of traditional cooperation, bootstrapping its network through on-chain tokenized contributions, or DAOs can decide to adopt cooperative 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 committed to building a more equitable, democratic, and collectively owned future.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/what-can-cooperatives-and-daos-learn-from-each-other/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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