Towards Cooperative Ledger Governance Models

Discussion

Nathan Schneider:

"Cooperatives are businesses that practice democratic ownership and gover-nance among active participants, rather than serving profit-seeking outsideinvestors (Schneider, 2018). They blend person-centric governance (onemember, one vote) with market-based incentives (patronage dividends inproportion to participation). Cooperatives have historically served as a socialand legal framework for activities that DAOs and other distributed-ledgerprojects seek to enable, such as accepting small, early-stage investmentfrom participants and distributing financial rewards. The cooperative princi-ples of autonomy and member control resemble the certain cryptoeconomicaspirations (Davila, 2021; Walden, 2019), while “concern for community”encourages internalizing social externalities (International Co-operative Al-liance, n.d.). Cooperativism provides a framework for democratic governancethat can help counteract the plutocratic tendencies. For these reasons, agrowing number of blockchain projects are incorporating legal entities ascooperatives. For instance, Kleros operates through a cooperative legalstructure in France. The US entrepreneur John Paller has taken advantage of flexible cooperative statutes in the state of Colorado to form the legal basisof two tokenized projects: Opolis, an employment platform, and ETHDenver,a conference that attracts international Ethereum developers and investors(Ahonen, 2021).Cooperative structures could reside primarily at the legal layer, or theycould guide the design of distributed ledgers themselves, such as throughdecision-making based on egalitarian membership rather than token hold-ings. The largely abandoned cryptocurrency FairCoin implemented a novelconsensus mechanism called “proof-of-cooperation” that sought to ground itscryptoeconomics in cooperative membership among participant organizationsthat served as network nodes (König et al., 2018). More recently, a series ofmanifestos have called for “distributed cooperative organizations,” or DisCOs,integrating distributed ledgers and cooperative values, as well as feministcommitments to reward the care work and public goods that markets oftenfail to recognize (Troncoso & Utratel, 2020). Distributed ledgers could alsoenable cooperatives that self-govern by methods not found among offlinecooperatives, from Kleros-like random juries (Fan & Zhang, 2020) to “liquid”delegation of representatives in real time (Blum & Zuber, 2016). In a callfor “moving beyond coin governance,” Buterin (2021d) points to “proof ofpersonhood” and “proof of participation” systems that could tie governanceto the logics of human persons and contribution—using cryptoeconomics toreinvent democratic strategies that offline cooperatives have employed forgenerations.A cooperative ledger could govern a particular application, as in the case ofOpolis or Kleros, or span a larger ecosystem, akin to the role of the Ethereumblockchain in setting ground-rules for the diverse contracts built on top ofit. Whereas democracy through state regulation would likely come fromoutside the network, cooperative democracy depends on network participantsto invest in egalitarian spaces—as those in some cryptoeconomic projectsalready have."

(https://osf.io/wzf85/?view_only=a10581ae9a804aa197ac39ebbba05766)