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DAO-Cooperative Convergence

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DAO-Cooperative Convergence

Created: 250427 Saturday, 27 April Tags: dao cooperative governance blockchain distributed-organizing cosmo-localism leverage-points

What is the DAO-Cooperative Convergence?

The DAO-Cooperative Convergence refers to the emerging intersection between Decentralized Autonomous Organizations (DAOs) and cooperative models, bringing together blockchain-based governance with long-established cooperative principles. This convergence represents an attempt to combine the technological innovations of Web3 with the democratic and solidarity-based tradition of cooperatives, creating hybrid organizational forms that leverage the strengths of both approaches.

As Nathan Schneider explains, “DAOs have much to learn from a century and a half of cooperative economics, and cooperatives have much to learn from the innovations of DAOs” (Schneider, 2021). These hybrid models offer powerful organizational infrastructures for cosmo-local systems, enabling both localized governance and global coordination.

Core Elements and Principles

From Traditional Cooperatives

  1. Democratic Member Control: One member, one vote (or equitable voting structures)
  2. Member Economic Participation: Members contribute equitably to, and democratically control, the capital
  3. Concern for Community: Working for sustainable community development
  4. Voluntary and Open Membership: Open to all willing to accept responsibilities
  5. Education, Training, and Information: For members and the broader community
  6. Cooperation Among Cooperatives: Working together through local, national, and international structures

From DAOs

  1. Blockchain-Based Transparency: Immutable records of decisions and transactions
  2. Smart Contract Automation: Algorithmic enforcement of rules and distributions
  3. Token-Based Incentives: Alignment of individual and collective interests
  4. Global, Borderless Participation: Reducing geographic barriers to participation
  5. Permissionless Innovation: Open infrastructure enabling experimentation
  6. Cryptoeconomic Design: Mechanisms to incentivize desired behaviors

Hybrid Models Emerging at the Intersection

DisCOs (Distributed Cooperative Organizations)

DisCOs represent a cooperative-centered approach to DAOs, emphasizing:

  • Multi-stakeholder governance (workers, users, investors, community)
  • Value-oriented tracking systems that acknowledge both market and commons value creation
  • Care work and reproductive labor as foundational elements
  • Feminist economics principles applied to digital organization
  • Real-world connection with specific attention to physical locations and face-to-face relationships

Cooperatively-Owned DAOs

Traditional cooperatives adopting DAO tooling while maintaining cooperative legal structure:

  • Cooperative legal entities that use blockchain for some operations
  • Platform cooperatives leveraging token systems for governance or rewards
  • DAO treasury management following cooperative principles

DAOs seeking legal recognition through cooperative structures:

  • DAOs incorporated as cooperatives for legal protection
  • Adopting cooperative governance while maintaining core DAO operations
  • Using cooperative structures to interface with traditional legal and financial systems

Governance Models at the Intersection

The convergence of DAOs and cooperatives has spawned innovative governance approaches that represent potential leverage points for systemic change:

1. Commons-Based Governance

Systems that manage shared resources through participatory governance:

  • Commons Stack’s conviction voting and continuous funding mechanisms
  • Community-governed treasury management with cooperative principles
  • Ostrom’s design principles implemented through smart contracts

2. Multi-Stakeholder Governance

Recognizing and balancing diverse interests in decision-making:

  • Mechanisms for representing different stakeholder groups (workers, users, investors, community)
  • Dynamically adjusting voting power based on stake and contribution
  • Nested decision-making structures for different types of decisions

3. Reputation-Based Systems

Moving beyond simple token voting to acknowledge qualitative contributions:

  • SourceCred and similar algorithms measuring contribution across dimensions
  • Non-transferable reputation affecting governance weight
  • Skills and contribution tracking across cooperative networks

4. Fractal Governance

Nested decision-making structures mirroring natural systems:

  • Local nodes with autonomy within federated structures
  • Subsidiarity principle (decisions made at most appropriate level) implemented through code
  • Interoperable governance across different scales (local to global)

Applications within Cosmo-Local Systems

The DAO-Cooperative convergence offers particularly valuable opportunities for implementing cosmo-local systems where “design is global, manufacturing is local” through several key mechanisms:

1. Knowledge Commons Infrastructure

  • Open design repositories with cooperative governance
  • Token incentives for contributing knowledge, designs, and documentation
  • Blockchain verification of design provenance and attribution

2. Distributed Supply Chain Coordination

  • Tokenized representation of local production capacity
  • Smart contract coordination of distributed manufacturing
  • Cooperative governance of shared production standards

3. Community-Owned Digital Infrastructure

  • Locally governed but globally connected digital platforms
  • Interoperable protocols with shared standards but local adaptation
  • Data sovereignties maintained through decentralized storage and access rules

4. Mutual Aid and Resource Pooling

  • Cross-community resource sharing with transparent accounting
  • Risk pooling across localities with similar challenges
  • Crisis response coordination that respects local autonomy

Leverage Points for Systemic Change

The DAO-Cooperative convergence offers particularly powerful leverage points (referencing Donella Meadows’ framework) for transforming systems:

Deep Leverage Points

  1. Paradigm Shifts: Challenging the ownership paradigm by demonstrating viable alternatives to both state and corporate control
  2. System Goals: Reorienting organizational purpose toward member benefit and community well-being rather than profit maximization
  3. Self-Organization: Creating systems that can evolve, adapt, and generate novel structures without central control

Intermediate Leverage Points

  1. Information Flows: Radical transparency through blockchain combined with cooperative information sharing
  2. Rules: Smart contracts creating new possibilities for encoding cooperative principles into organizational DNA
  3. Feedback Loops: Reputation systems and contribution tracking creating virtuous cycles of participation

Notable Implementers and Case Studies

  1. Breadchain Cooperative: Creating Web3 infrastructure for the solidarity economy while structured as a cooperative

    • Key innovation: Building DAO tools explicitly for cooperative and mutual aid networks
    • Website: breadchain.xyz

  2. Eva Coop: Ride-sharing platform cooperative with blockchain elements

    • Key innovation: Cooperative ownership structure for drivers with blockchain for some operations
    • Website: eva.coop

  3. RChain Cooperative: Blockchain cooperative structured as a formal cooperative entity

    • Key innovation: Legal cooperative structure for a blockchain platform
    • Website: rchain.coop

  4. DisCO.coop: Framework for distributed cooperative organizations

    • Key innovation: Value accounting systems that recognize care work and commons-building
    • Website: disco.coop

  5. Commons Stack: Building tools for managing shared resources

    • Key innovation: Conviction voting and continuous funding for commons governance
    • Website: commonsstack.org

Tensions and Challenges

Several important tensions exist at the DAO-Cooperative intersection:

1. Plutocratic vs. Democratic Tendencies

  • Tension between token-based voting (can lead to plutocracy) and cooperative one-member-one-vote principles
  • Challenge of balancing capital contribution with democratic participation
  • Risk of recreating inequality through token distribution

2. Technical vs. Social Barriers to Participation

  • High technical barriers to participation in DAOs vs. cooperative focus on accessibility
  • Challenge of ensuring equitable access to governance despite digital divides
  • Balancing efficiency of automated systems with human needs and capacities

3. Global vs. Local Orientation

  • Tension between borderless digital organization and place-based community development
  • Challenge of creating meaningful connection in primarily digital spaces
  • Balancing global coordination with local autonomy and cultural context
  • Unclear legal status of DAOs in many jurisdictions
  • Difficulty aligning blockchain operations with cooperative legal requirements
  • Regulatory compliance challenges for cross-border cooperation

Theoretical Frameworks and Academic Perspectives

Exit to Community (E2C)

Developed by Nathan Schneider and others, E2C proposes pathways for ventures to transition from investor ownership to community ownership, often using cooperative structures. DAOs provide potential technical infrastructure for implementing such transitions. Resource: e2c.how

Distributed Cooperative Organizations (DisCOs)

Theoretical framework developed by Stacco Troncoso, Ann Marie Utratel, and others at the DisCO.coop project, emphasizing feminist economics, care work, and commons-building within digital cooperatives. Resource: DisCO Elements

Crypto-Commoning

Research direction exploring how blockchain technologies can support commons governance and resource sharing while avoiding capture by capital. Key researchers: Primavera De Filippi, Samer Hassan

Open Cooperativism

Framework developed by Michel Bauwens and the P2P Foundation advocating for cooperatives that produce commons and are oriented toward the common good beyond their membership. Resource: P2P Foundation Wiki

Relevance to Cosmo-Local Systems

The DAO-Cooperative convergence provides essential infrastructure for implementing cosmo-local production and governance systems:

  1. Design Global, Manufacture Local: These models enable global knowledge sharing with local production control
  2. Appropriate Scale Governance: Fractal decision-making structures that operate at appropriate scales
  3. Coordination Without Centralization: Enabling complex coordination without centralized control
  4. Commons-Based Peer Production: Infrastructure for creating and managing knowledge commons
  5. Bioregional Adaptation: Enabling local customization while maintaining global connection

Future Directions

Emerging trends at the DAO-Cooperative intersection include:

  1. Legal Innovation: Developing specific legal frameworks for DAO-cooperative hybrids
  2. Standards Development: Creating interoperable standards for governance across different platforms
  3. User Experience Improvement: Making these systems accessible to non-technical participants
  4. Real-World Asset Integration: Connecting digital governance to physical assets and production
  5. Policy Advocacy: Promoting supportive policy environments for community-owned digital infrastructure

References

  • Bauwens, M., Kostakis, V., & Pazaitis, A. (2019). Peer to Peer: The Commons Manifesto. University of Westminster Press.
  • Mannan, M. (2022). Distributed Cooperative Organizations: Conceptualization, Formalization, and Implementation. Harvard Business Law Review, 12(1).
  • Robey, A. (2021). DAO-Cooperative hybrids and the problems they can solve. Medium.
  • Schneider, N. (2021). Web3 needs a cooperative governance layer. Media Enterprise Design Lab.
  • Scholz, T., & Schneider, N. (Eds.). (2017). Ours to Hack and to Own: The Rise of Platform Cooperativism, a New Vision for the Future of Work and a Fairer Internet. OR Books.
  • Troncoso, S., & Utratel, A. M. (2020). If I Only Had a Heart: A DisCO Manifesto. DisCO.coop
  • Voshmgir, S. (2021). Token Economy: How the Web3 reinvents the Internet. Token Kitchen.

Annotated Bibliography: Key Resources on DAO-Cooperative Convergence

Academic Papers & Research

  1. Mannan, M. (2022). “Distributed Cooperative Organizations: Conceptualization, Formalization, and Implementation.” Harvard Business Law Review, 12(1).
    This pioneering academic paper provides a legal and theoretical framework for hybrid DAO-Cooperative entities, detailing potential legal structures and governance mechanisms.

  2. Rozas, D., Tenorio-Fornés, A., Díaz-Molina, S., & Hassan, S. (2021). “When Ostrom Meets Blockchain: Exploring the Potentials of Blockchain for Commons Governance.” SAGE Open.
    Analyzes how blockchain technologies can implement and enhance Ostrom’s design principles for commons governance in digital and physical commons management.

  3. Faqir-Rhazoui, Y., Arroyo, J., & Hassan, S. (2021). “A Comparative Analysis of the Platforms for Decentralized Autonomous Organizations in the Ethereum Blockchain.” Journal of Internet Services and Applications.
    Comprehensive comparison of different DAO platforms, evaluating their governance mechanisms and potential applications for cooperative principles.

  4. Schneider, N. (2018). “An Internet of Ownership: Democratic Design for the Online Economy.” The Sociological Review, 66(2).
    Explores platform cooperativism and its relationship to emerging blockchain technologies, laying groundwork for thinking about democratic ownership in digital spaces.

  5. De Filippi, P., & Wright, A. (2018). “Blockchain and the Law: The Rule of Code.” Harvard University Press.
    While not exclusively about cooperatives, this book examines the legal implications of blockchain governance that are crucial for DAO-Cooperative hybrid models.

Practitioner Articles & Reports

  1. Troncoso, S., & Utratel, A. M. (2020). “If I Only Had a Heart: A DisCO Manifesto.” DisCO.coop
    https://disco.coop/manifesto/
    Comprehensive framework for Distributed Cooperative Organizations (DisCOs), integrating feminist economics, care work, and commons-based principles with blockchain technologies.

  2. Schneider, N. (2021). “Web3 needs a cooperative governance layer.” Media Enterprise Design Lab.
    https://medium.com/media-enterprise-design/web3-needs-a-cooperative-governance-layer-fbae7ba39b0b
    Argues that cooperative principles should guide the development of Web3 governance, identifying gaps in current DAO implementations.

  3. Robey, A. (2021). “DAO-Cooperative hybrids and the problems they can solve.” Medium.
    https://medium.com/@austin_48503/dao-cooperative-hybrids-and-the-problems-they-can-solve-74e82f5d6b5a
    Practical examination of how DAO-Cooperative hybrids can address specific organizational challenges, with case studies and implementation suggestions.

  4. Brekke, J. K. (2021). “Hacker-engineers and Their Economies: The Political Economy of Decentralised Networks and ‘Cryptoeconomics’.” New Political Economy.
    Examines the political economy of DAOs and their relationship to broader economic systems, relevant for understanding how DAOs might adopt cooperative principles.

  5. Lander, L., & Cooper, N. (2022). “Decentralized Autonomous Organizations and Cooperative Principles.” Metagov Research.
    https://metagov.org/research/
    Research comparing the governance structures of DAOs with traditional cooperative principles, identifying convergences and tensions.

Books & Edited Volumes

  1. Scholz, T., & Schneider, N. (Eds.). (2017). “Ours to Hack and to Own: The Rise of Platform Cooperativism, a New Vision for the Future of Work and a Fairer Internet.” OR Books.
    Foundational text on platform cooperativism that lays groundwork for thinking about cooperative ownership in digital contexts.

  2. Bauwens, M., Kostakis, V., & Pazaitis, A. (2019). “Peer to Peer: The Commons Manifesto.” University of Westminster Press.
    Explores P2P production and commons-based approaches that inform the theoretical basis of many DAO-Cooperative models.

  3. Voshmgir, S. (2021). “Token Economy: How the Web3 reinvents the Internet.” Token Kitchen.
    Comprehensive overview of tokenized economic systems that underpin many DAO structures, providing technical foundation for understanding DAO-Cooperative implementations.

  4. Bollier, D., & Helfrich, S. (2019). “Free, Fair, and Alive: The Insurgent Power of the Commons.” New Society Publishers.
    While not specifically about DAOs, provides essential framing for commons-based governance that informs many DAO-Cooperative hybrids.

Case Studies & Practical Resources

  1. DisCO.coop. (2021). “DisCO Elements.” Distributed Cooperative Organizations.
    https://elements.disco.coop
    Practical guide to implementing Distributed Cooperative Organizations with detailed explanations of governance models and value accounting systems.

  2. Exit to Community (E2C) Project. (2020). “Exit to Community: A Community Primer.” Media Enterprise Design Lab.
    https://e2c.how
    Framework for transitioning startups and platforms to community ownership, with considerations for using DAO structures.

  3. Breadchain Cooperative. (2022). “Our Way Out: Dual Power and the Future of Organizing.”
    https://breadchain.mirror.xyz/boFKBZL9B2OS9lqKJ1a9BZPZgE7RhCpu1RQ0LQPJP1I
    Case study on building cooperative infrastructure for the solidarity economy using Web3 technologies.

  4. Commons Stack. (2021). “Conviction Voting: A Novel Decision Process for Decentralized Organizations.”
    https://medium.com/commonsstack/conviction-voting-a-novel-continuous-decision-making-alternative-to-governance-62e215ad2b3d
    Detailed explanation of innovative governance mechanisms designed for community-managed resources.

  5. Mendes, G. S., & Gloerich, I. (2022). “ReFi DAO: Regenerative Finance and the Expansion of DAO Mechanisms.” Institute of Network Cultures.
    Case study on how ReFi DAOs integrate regenerative economics principles with cooperative and commons-based governance.

  6. Siri, S. (2021). “DAOs, Legal Wrappers, and the Path to Mass Adoption.” Democracy Earth Foundation.
    https://medium.com/democracy-earth/daos-legal-wrappers-and-the-path-to-mass-adoption-bb0042dc3bc
    Analysis of legal structures for DAOs, including cooperative legal wrappers and their implementation challenges.

Technical Specifications & White Papers

  1. Aragon Cooperative. (2020). “Technical Whitepaper: Aragon Cooperative Framework.”
    https://github.com/aragon/whitepaper
    Technical specification for implementing cooperative governance through the Aragon DAO platform.

  2. Colony. (2022). “Colony: Technical White Paper.”
    https://colony.io/whitepaper.pdf
    Technical details of the Colony protocol for decentralized organizations, with relevance for reputation-based governance applicable to cooperatives.

  3. SourceCred. (2021). “SourceCred: A Protocol for Attribution.”
    https://sourcecred.io/documentation/
    Specification for reputation and contribution tracking systems that can implement non-monetary value recognition in cooperative DAOs.

Ongoing Research Projects & Communities

  1. Metagov Research Collective
    https://metagov.org
    Research collective studying governance across digital communities, including significant work on DAO governance and cooperative principles.

  2. Platform Cooperativism Consortium
    https://platform.coop
    Research network exploring cooperative ownership models for digital platforms, with increasing attention to blockchain and DAO implementations.

  3. P2P Foundation
    https://p2pfoundation.net
    Extensive wiki and research community focused on peer production and commons-based approaches, including significant resources on blockchain cooperativism.

  4. DisCO.coop Community
    https://disco.coop
    Community of practice implementing and documenting Distributed Cooperative Organization models across various contexts.

  5. Commons Stack Community
    https://commonsstack.org
    Engineering economic and governance systems for community-owned and operated infrastructure using DAO technologies.

Blogs & Ongoing Commentary

  1. Nathan Schneider’s Blog
    https://nathanschneider.info/articles
    Regular writings from a leading scholar on cooperative digital economy and its relationship to blockchain technologies.

  2. DisCO.beat Newsletter
    https://disco.coop/newsletters/
    Regular updates on the evolution of Distributed Cooperative Organizations and related governance innovations.

  3. Breadchain Blog
    https://breadchain.mirror.xyz
    Case studies and reflections on building cooperative Web3 infrastructure for solidarity economics.

  4. Commons Stack Blog
    https://medium.com/commonsstack
    Ongoing developments in creating cryptoeconomic infrastructures for commons-based organizations.