Using Community Crypto Tokens To Finance Platform Cooperatives
Discussion
Austin Robey, co-founder at Ampled:
"Not only is it more difficult to find traditional investment for cooperative platforms, it’s difficult to achieve liquidity for their members. While founders and investors of venture-backed startups can achieve some liquidity in the case of an IPO, acquisition, or secondary sales of equity — financial interest in co-ops is mostly limited to revenue-sharing or dividends from positive cash flows.
This is where community tokens can provide unique benefit for co-ops.
Instead of representing legal equity, or governance power, a community token for a cooperative can represent a piece of its intangible value like its community, brand, and reputation (which undoubtedly have value).
Community tokens can be issued to members and stakeholders to reward behavior and actions that help build and grow the network. And, these tokens can have a market deterministic $ value through decentralized exchanges — allowing members to either acquire, hold, trade, or even liquidate their holdings of a cooperative’s community token.
This is the unique value of a blockchain-based token. Tokens can create a dynamic where a cooperative community can better align growth incentives, capture more value, and achieve liquidity through a tradable, composable, provably scarce asset.
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There aren’t many examples of community tokens in practice, but some existing precedents give reason to be encouraged.
Musician RAC launched a community token, $RAC in October 2020. There are a total of 10M tokens minted, and a portion of them were retroactively distributed to his fans that bought his music, supported him on Patreon, or purchased merch.
Today, as of writing, $RAC tokens have a market value of about ~$4 each, which you could purchase through a decentralized exchange like Uniswap using ETH. Holders of more than 10 $RAC tokens are able to access a private Discord server, as well as receive early access and discounts for merch. For RAC, holders of his community token do not receive access to revenue sharing or publishing rights. Instead, the $RAC token symbolizes the mutually beneficial relationship between creator and community and is a genesis for a unique alternative economy.
It’s easy to imagine then, instead of one musician launching a token for his community — a cooperative or collective of musicians doing the same. This roadmap could allow cooperatives to unlock real value and capitalize the collective efforts of contributors while maintaining the integrity of co-op ownership and governance model.
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I believe that community tokens have the potential to become a new roadmap for launching cooperative businesses, allowing communities to capture the value they create and shift emphasis from financial capital to community and labor capital. Although many of the recent narratives and headlines in the crypto space have focused on auction prices and financial speculation, if the cooperative community can start to embrace community tokens it may be a real way for us to build systems of regenerative value, remove reliance on traditional investors, and resource our own networks and platforms with even greater autonomy. Ultimately, the goal is to create more user-owned platforms, not investor-owned platforms. I think community tokens, in combination with the cooperative model, could be a promising path forward."
(https://forefront.news/blog/how-community-tokens-can-power-cooperatives)
Community Tokens Are Consistent With Cooperative Principles
Austin Robey:
"One of the primary characteristics of cooperatives is that they operate on a one-member, one-vote basis. This is at odds with how many crypto projects govern, often defaulting to token-weighted power distributions. This token-weighted approach could allow individuals to buy or acquire disproportionate governance power — which isn’t very different from stake-weighted ownership of traditional corporations. To contrast, cooperatives allow people to have power, not dollars. As long as varying holdings of community tokens among members do not give outsized governance or decision making power within the co-op, they can be entirely consistent with cooperative principles. Additionally, there should be mechanisms that allow for a collectively managed treasury with transparency and accountability.
By acting as a layer of sovereign social money that sits on top of/ parallel to the cooperative, community tokens could allow for grassroots community financial buy-in, while maintaining the spirit of the co-op’s ownership and governance structure.
Often, cooperatives are considered part of a larger mutually supportive ecosystem and economic framework called the "solidarity economy", which support the idea of working together in ways that share and regenerate value with concern for community.
The introduction of sovereign money may also unlock opportunities to support each other in unique ways. For instance, community tokens within a cooperative community could not only help resource collective labor, but it could also help support other initiatives and ideas like solidarity exchanges, community financing, lending circles-- all consistent with a grassroots DIY ethos and economic justice lens. There’s enormous power in the ability to creatively leverage a community-owned asset to meet the needs of members."
(https://forefront.news/blog/how-community-tokens-can-power-cooperatives)