What Co-ops and DAOs Can Learn From Each Other

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Some of you may have already seen this, but I just wanted to drop this insightful article by @austin in the forum for anyone who’s interested.

I am still new to the co-op model, and even newer to the idea of DAOs, but one of the main takeaways I had from the article was the idea of co-ops being able to adapt a better system for “Rapid Experimentation”.

In my previous & current experience in trying to start companies organically (no VC funding, big tech hype, etc.), being able to quickly take ideas to market, acquire consumer feedback, and make improvements based on this feedback is one of the only ways that a startup can survive. With little capital available, having a lean cost structured and growing through revenue is a must, and it definitely helps if you can land a few big accounts at the start, if you don’t already have the community around you to scale through quantity.

Even if you do all of this, it is still really hard to create something great, but hopefully by leveraging the community that Resonate has been able to build, we can work toward providing more value as a service, learning from this feedback, and then growing from there.

Just some thoughts I had here, but interested to hear more from others as well. Thanks!

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DAOs tend to be better at enabling collective ownership at scale, even if their cultural understanding of the rights, responsibilities, and accountability associated with ownership is comparatively underdeveloped

This is dramatically underselling it. There is not a single DAO anybody can point to as a good model of collective ownership at scale.

First, DAOs are too new- the first one ever was 2016. Anybody who claims to be able to draw trends out of the poorly-defined, turbulent, fraud-ridden, brand-new space we call “DAOs” sounds to me like they are making a sales pitch and have nothing substantive to offer.

Second, participation in DAOs is overwhelmingly driven by unreglated speculation on the value of the instrument of participation (typically a coin or token.) Any co-op that joins the DAO model is openly welcoming manipulation by those speculators, who have practically no incentive to see the co-op actually succeed as long as they can pump the value of their holding and then get out while the getting’s good.

PartyDAO came together, raised $100k, then quickly built and shipped an impressive product that allows for collective bidding and fractionalized ownership

A casino. PartyDAO gathered a bunch of people’s poker chips and created their own third-rate unregulated casino. Their model is to take a 2.5% rake of people’s auction winnings. All the auction “goods” are digital tokens (poker chips.)

Cooperatives, by contrast, often spend a lot of time hand-wringing with lawyers over bylaws and the process of incorporation, making them considerably more difficult to set up than a traditional company.

…because cooperatives are usually not attempting to establish an unregulated casino. Which the lawyers would dutifully inform them would expose them to terrific risk.

Without [$HNT, the Helium] token, and clever economic incentives, it’s hard to conceive how a decentralized network on [the scale of Helium] could take shape.

It’s called “open WiFi” and it’s far greater in scale than Helium is or ever will be. I can access three open WiFi networks from my couch in my living room. The nearest Helium link is a quarter mile away and, because the Helium Blockchain is open to all for inspection, I can see that it’s “earned” $2.22, less than the bakery with open WiFi earned when I went in for fresh rolls today.

And of course, that $2.22 is based on the going rate for Helium tokens, which is artificially inflated because the speculators who mine $HNT are hodling their WiFi tokens, not using them to pay bills. Would you believe it? Another unregulated casino.

I hope Resonate stays out of the gambling business and that co-ops learn the obvious lesson from DAOs: finance bros do not have your interests at heart, and if you’re thinking about taking their money, you should definitely have your boring lawyers and bylaws in order.

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Thank you for the additional insight here @ryanprior. I haven’t invested much of my time into learning about DAOs because it seems like things that co-ops can already do, without the involvement of blockchain, (which I am still a bit skeptical of), and I also don’t see how tokenizing ownership is much different than the current capitalist system of stock shares and the monetary system that is being used in capitalist society, so interesting to hear your thoughts on everything as well.

I feel like there are even a lot of gaps and ignorance in what I just mentioned above as there is still so much to learn, and also so much that is still unknown, but anything we can do to continue progressing toward a better future, I am all for!

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The main diffrence right now (and the reason why it’s so “good for experimenting”) is it’s wildly unregulated which means no legal protection if anything goes wrong (and things go wrong all. the. time.)

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So in that case, would the current capitalist system be “better” than what DAOs are working on right now?

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They’re both “current” capitalism.

DAOs just assume that retail investors naturally don’t operate by the same “profit maximization” logic as venture funds and “typical shareholders” while proposing absolutely no evidence, conceputal or empirical, as to why they wouldn’t. And the fact is it’s been proven times and times again that, provided with same incentive and structures, they do tend to act exactly the same (if not worse).

All the article does, more or less, is marvel at the fact DAOs are getting money and coop don’t. But it never explains how implementing coop logic (and by logic I mean the laws that make coop worthwhile to being with) into DAOs could avoid making those DAOs… Just as uninteresting to fund as coop for exactly the same reason.

The problem here is this is telling us both models are capable to “blend” but it never tells us the most crucial point, which it briefly mentions and then ditch :

How do you go from one token one vote to one person one vote without making your structure unattractive to investors? Similarly, how would retail investors who put in a lot of money in a DAO would feel about a proposition to make their investment worthless in terms of voting power, and worth a lot less in terms of potential future revenues for the biggest shareholders? It just asks us to believe that it would happen because these are good project funded by good people, basically. So these kind of expectations are typically current capitalism.

It’s not the first person to get excited looking at the money flowing into cryptocurrency/DAO/NFTs and basically trying to shoehorn it into a co-op without acknowledging the basic reasons why both don’t coexist so well.

The reason for that is definitely not that no one thought about it.

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