Distributed Autonomous Organizations

Distributed Autonomous Organizations

Distributed Autonomous Organizations are cooperatives that have been cryptomonetized. Everything else that a DAO does has been done for at least two hundred years.

There are long-standing cooperative business models to learn from and build upon. Most importantly, if you believe you want to build or get involved in a DAO, then you should understand the seven internationally recognized cooperative principles.

Seven Cooperative Principles (inset)

The International Cooperative Alliance (“ICA”)  defines the seven cooperative principles listed but not detailed here.

1. Voluntary and Open Membership

2. Democratic Member Control

3. Member Economic Participation

4. Autonomy and Independence

5. Education, Training, and Information

6. Cooperation among Cooperatives

7. Concern for Community

Cryptomonetization of the Cooperative, being DAO

Cryptomonetization is the application of a cryptocurrency in a cooperative organization as a means of exchange, store of value, and unit of account. These three functions or the functions of money.

A complementary currency is not necessarily a cryptocurrency. And, a DAO is not truly a DAO unless it is cryptomonetized. Its native currency must be fungible with other cryptocurrencies and fiat currencies to be fully functional in the global economy.

This interoperability or fungibility is achieved through the listing of cryptocurrency tokens on global exchanges of the centralized and decentralized varieties. This listing process allows any cooperative’s native currency to operate on the global playing field with nation-backed fiat currencies and many other cryptocurrencies. This is a relatively new innovation. It is this innovation that marks the clear difference between a cooperative which might leverage its nation’s fiat currency or some other cryptocurrency.

A DAO that has its own cryptocurrency trading on global exchanges is cryptomonetized. This means that the ultimate utility of their cryptocurrency is the underlying goods and services provided and traded by the members of the DAO both amongst themselves and with others outside the DAO’s membership.

https://youtu.be/gX2xYRvQKyw

Since the cryptocurrency is a digital asset listed and operating on global exchanges, it has the possibility of growth in value driven by market dynamics. It goes up in value and creates a new form of digital wealth for its holders, as has happened for holders of cryptocurrency such as Bitcoin or Ethereum. Or, it can go down. Ultimately, however, the value floor is set by the willingness of the cooperative’s members themselves to trade amongst themselves. The upside potential is driven by the outside-in-demand pressure.

So, when a cooperative manages to cryptomonetize itself and becomes a DAO it creates an opportunity for long-term wealth generation for its members in a way that has not existed before the advent of Bitcoin in 2007. In only 14 years we have seen the rise of an entirely new class of economic assets.

Visit economy.openexo.com

Read the article here: https://economy.openexo.com/daos-are-novel-but-not-new/

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