What can cooperatives and Dao learn from each other? The combination of the two is the best framework of the organization

Published on 1/16/2022   630 views   0 Comments  

In 2014, the year before the launch of Ethereum, TREBOR Scholz, a scholar activist and professor of New York College, created a new term: "platform corporatism". In a blog post, Scholz outlined a bold alternative to the extractive Web 2.0 sharing economy: a platform operating in the form of cooperatives, jointly owned and controlled by its workers and users. The goal is to find ways to create a future in which taxi applications will be owned by drivers, grocery distribution platforms will be owned by individual shoppers, and websites such as patreon (Art creator platform) will be owned by creators.

Since 2014, platform corporatism has become a growing global science and technology subculture. At conferences in New York, Hong Kong and Berlin, high spirited community organizers and social entrepreneurs gather every year to support each other, exchange stories and sympathize with the difficulties of finding funds.

A few years ago, I founded a digital cooperative called amplified, a musician patreon alternative owned by artists and workers. Recently, I also participated in several Daos, including forefront, seed club and friends with benefits It has always been enlightening for one foot to get involved in the platform cooperative movement and the other foot in the Dao space. I began to believe that when it comes to human organization, collective ownership and cultural production, these two fields have produced valuable new tools. Although sometimes these innovations seem to occur in parallel and in isolation, I believe that the two communities can learn a lot from each other - even opening the door to a meaningful hybrid approach between the two.

Cooperative or "cooperative" refers to an enterprise whose ownership is shared by workers, customers or both, and operates on the basis of one member and one vote. Although this ownership structure forms the basis of the cooperation model, its application and culture are diverse. There are agricultural cooperatives, just like there are digital cooperation technology platforms. This article will focus on workers and platform cooperatives, but other examples include:


·Consumer cooperatives

·Purchasing cooperative

·Multi stakeholder cooperative

·Housing cooperatives

·Marketing Cooperative

·Producer cooperatives

Dao, an Internet native organization coordinated by token based on blockchain, also takes many forms. These include:


·Protocol / platform Dao

·Creator Dao

·Service Dao

·Design Dao

·Investing in Dao

·Social Dao

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

Although Dao can simulate cooperative governance, the more common is the more easily implemented one currency one vote governance mode, because verifying a person's identity is still an emerging field in the blockchain world.

Despite the differences, the conceptual space of Dao and platform cooperatives is increasingly overlapping. Both forms seek to expand collective ownership and governance of digital infrastructure. Both have a culture that gives priority to collective control and the creation of shared goods.

Based on my experience in these two areas, I note that Daos are often better at achieving large-scale collective ownership, even if their cultural understanding of rights, responsibilities and accountability related to ownership is relatively underdeveloped. Although cooperatives are often less successful in obtaining funds, they are also more likely to correctly address the root causes of inequality through a clear rejection of capitalist realism. Next, I will share some of the points I have collected about how Dao and cooperatives can learn from each other.

Significant contributors in 2021

What can Daos learn from cooperatives

historical background

People in the Dao field mistakenly believe that the collective work and organization model is a technology related invention. In fact, throughout history, communities have practiced mutual assistance and democratic ownership in almost every corner of the world.

In the United States, the tradition of cooperation has a neglected history, and marginalized groups are forced to establish solidarity networks in order to survive and be self-sufficient. In her book, collective courage: a history of African American cooperative economic thought and practice, Jessica Gordon nembhard, a professor at John Jay College, outlines examples of economic coordination involving free and enslaved African Americans hundreds of years ago, including pooling funds to buy freedom for individuals, And the establishment of conscious communities and mutual aid societies. The underground railway itself is a united network. These forms of cooperation were earlier than Rochdale society of equal pioneers, a British consumer cooperative established in 1844. It aims to expand the opportunities for skilled workers forced to lose their jobs due to mechanization to obtain high-quality food and supply. It is widely regarded as the foundation of modern cooperatives.

During the great depression, Americans opened up alternative networks of barter and value exchange, such as the Auckland unemployment Trading Association. Since existing power companies consider some areas too unprofitable, most parts of rural America are powered by power cooperatives. The United States also has a rich community and local currency history, including Ithaca hours (Ithaca hours is the local currency previously used in Ithaca, New York) and berkshares (berkshares is a local currency circulating in Berkshire, Massachusetts).

Dao can learn a lot from these historical cases, especially in non hierarchical working mode and collective decision-making. The study of failed cooperatives is also of great guiding significance and can avoid mistakes. However, I believe that studying past cooperatives and solidarity networks is particularly enlightening for Dao in three areas: uniting people to fight for racial and economic justice, cultivating a strong sense of shared ownership, and building communities based on common principles.

Economic and racial justice

Cooperatives often emerge as attempts to respond to market failures and exploitative economic systems. They aim to bring benefits to their members: good work, dignity and collective representation. Because cooperatives are motivated by meeting the needs of their members rather than profits, they are usually guided by the mission of racial and economic justice. No specific structural mechanism can make cooperatives pay more attention to social justice than Dao; This is more about building motivation.

In contrast, in the field of encryption, some of the most famous examples of collective economic organizations have formed memes, or as an exercise in commercialization and speculation. Examples such as pleasrdao's subdivision of the doge meme, or the constitution Dao's raising more than $40 million to buy a copy of the U.S. Constitution, are valuable in that they provide a template for a new model of global economic coordination. However, so far, these Dao based funding groups seem to be rarely combined around the goal of helping underserved individuals and communities meet their basic needs.

There has been some encouraging dialogue on the impact of decentralized organizations, which may be a useful framework for allocating resources for long-term social impact results. Although there are more and more mutual aid and task driven Daos (including pleaserdao's free Ross Dao), these projects do not generate the same amount of collective excitement, support or resources. However, for those who want to make a difference with Web3, the stories of cooperatives such as Jackson City, Mississippi, and 40 acre co OP reflect these values by uniting to pursue common goals and building organizations.

Ambitious definition of ownership

Encrypted networks and Dao often use the concept of "ownership economy", which is first proposed by venture capitalist Jesse Walden as a guiding philosophical infrastructure.

"The ownership economy does not always mean the literal distribution of tokens, stock options or equity," Walden wrote in a post outlining the idea. "On the contrary, this means that ownership - which may be manifested in new economic incentives, platform governance or new forms of social capital - can become a new cornerstone of the user experience, and there is a lot of design space to explore."

By defining ownership so broadly, this argument may dilute the concept of ownership so that it only means "facing upward risk" or "feeling of ownership". As Cory Rosen, director of the National Center for employee ownership, said, "ownership is like dinner." However, the concept of "ownership economy" ignores some key principles of real ownership, such as transparency in investment and agreements, voice in recruitment and other important decisions, and the ability to hold leaders accountable.

In this regard, cooperatives have a long-term professional record and a proven toolbox, and can establish strong shared ownership in a legal way: in addition to clearly defined rights, responsibilities and scope of responsibilities, they also include articles of association, operation agreement and intellectual property ownership.

With the continuous development of Dao, new forms of collective governance, from the articles of association of Dongwan permanent real estate cooperative to the proposal flow chart of stocksy (platform cooperation of free artists), and then to the enlarged decision matrix, it is useful to use smaller or older cooperation models as inspiration.

Common principles

Cooperatives also have one thing in common: they tend to unite around a common set of principles. Rochdale principle is a set of cooperation concept formulated by Rochdale fair pioneer 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 public membership

2. Democratic member control

3. Member economic participation

The other four principles outline common virtues and values:

1. Autonomy and independence

2. Education, training and information

3. Cooperation among cooperatives

4. Caring for the community

Not all Daos are interested in adopting a set of shared principles. But for those of us who are motivated by cooperation, influence and joint forces around common social or technological goals, it is important to ask ourselves the right question: what are our common values? Do we want to prioritize transparency, participation and collaboration like the open source movement? If we do enough reflection, we may find that we share many principles with the cooperative movement, including principle 6: Dao should seek to cooperate with other Dao.

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 - these values can help us avoid recreating the dark model of web2, which may form the basis for cooperation between like-minded Daos. Dweb principle is a set of values that emphasize human nature and distribute interests in "autonomous organizations". Although it is not comprehensive when applied to workers' organizations, it is a good inspiration. Combining the dweb principle with the Rochdale principle may be a good starting point.

What can cooperatives learn from Dao?

Rapid experiment

In April 2021, Denis Nazarov, founder of mirror, put forward the idea of a tool called partybid on twitter, which will enable a group of people to bid and buy NFT. Shortly thereafter, partydao gathered to raise $100000, and then quickly built and delivered an impressive product that allowed collective bidding and decentralized ownership. In just a few months, the distributed team created a collectively owned platform, which has since led to millions of dollars in bids.

Because Daos are blockchain based organizations and are usually not bound to enterprise entities, they leave a lot of room for rapid experiments in organization and incentive design. Members can jointly put forward an idea, gather jointly managed resources into common goals, iterate and release quickly.

In contrast, cooperatives usually spend a lot of time arguing with lawyers about the Constitution and registration process, which makes them more difficult to establish than traditional companies. Instead of slowing down because of the complex process of formalizing traditional cooperatives, it is better to examine Daos such as partydao, which can quickly deliver products and expand their impact - provide a preliminary proof of concept to build on this as an organization.

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Use token to boot the network

Cooperatives have long faced financial difficulties. Because they are essentially for-profit organizations, it is difficult to qualify for grants. Moreover, because they focus on group ownership and democratic collective control, they are functionally ineligible to accept traditional equity based venture capital, which requires the sale of most of their ownership to investors.

In addition to being a powerful tool for coordination and voting, token can also make it easier for cooperatives to guide in case of lack of cash. Helium, a distributed network for "longfi" wireless Internet infrastructure, is an example. In order to power the network, people all over the world set up routers as nodes in the network at home and in their offices. Nodes are compensated with $hNT, which is a native helium token representing governance capability and holding value. Without this token and smart economic incentives, it is hard to imagine how a decentralized network of such scale could be formed.

Members of the tokenized community can also get tangible things from their contributions. Tokens can be encoded to automatically receive sponsorship bonuses when there is a revenue stream. This enables cooperative members or contributors to obtain the value they create, which is different from the time bank system used by the offline Solidarity Network (time bank is a service barter system, and people exchange services for credit based on working time, not money).

New ways to exit the community

If cooperatives maintain public or shared goods, distributing tokens to early adopters of the goods can be regarded as a loyalty reward: granting people automatic membership, voting rights or ownership in the project based on past consumption or support.

An example is the recent token airdrop of Ethereum name service (ENS), a public utility that allows you to register a Web3 user name ending with ". Eth" associated with your Ethereum address. This makes it easier for people to send and receive Ethereum without having to remember long public keys.

Ens has been developed for more than 4 years and was initially controlled by a small number of people. But they wanted to decentralize control and management to their community, so they evaluated the previous registration An algorithm is proposed to fairly allocate 25% of the ENS supply to these users. After the initial allocation, users eventually have more control and power than core contributors, and they have obtained a total of 18.96% token supply.

Although cooperatives may want to adhere to the one person, one vote decision-making model, token airdrop can be a way to distribute rewards in loose and large networks and attract more decision-making members to join the organization.

For those who have been advocating to withdraw from the community, or the way for start-ups to transfer ownership to employees and stakeholders instead of IPO or acquisition, Dao airdrop can become a powerful tool for allocating control of the community.

New hybrid model

Not surprisingly, many organizations are trying to combine the concept of Dao with the cooperation model. Disco (distributed cooperative) is a framework that uses feminist economics to reposition our ideas on how Dao can operate more like traditional cooperatives. Other examples:

·Ethdenver, a conference and legal cooperative that recently launched token.

·Opolis, a digital employment cooperative, launched Dao and its own work token.

·Common lands, a "decentralized autonomous housing cooperative", aims to help one million families become first-time buyers through community owned and affordable cooperative housing.

·Songadao, a Dao formed around the daily song release of musician Jonathan Mann, was recently merged into a legal cooperative

In the final analysis, the best framework for an organization may not be a choice between cooperation model or Dao model, but a combination of the two. Bringing the cooperative value into the encrypted network can take the form of traditional cooperation and guide its network through token contribution on the chain, or Dao 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.

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