Decentralized Autonomous Organizations (DAOs) will be Africa’s great equalizer!
Imagine a Coffee industry without any of the big players such as Nestle, JDE Peets, Keurig, Strauss, Starbucks, etc. It seems impossible to imagine, doesn’t it? Well, this is what the future holds, not just for coffee, but also for hundreds of other value chains of mass-consumed products in the western world whose raw materials originate from less developed countries.
The emergence of blockchain technology has birthed a movement that upholds community and humanity first. One of the most promising applications of blockchain technology is Decentralized Autonomous Organisations (DAOs) which in their simplest form are community-led entities with no central authority. Using smart contracts (programs or transaction protocols that execute when predetermined conditions are met), DAOs are run by their members who vote on proposals to achieve some predefined level of consensus as a means of making decisions.
To many people, this might sound outlandish, but it is the future of organizations as we know them. For us to better understand the practicality of DAOs, consider a Coffee DAO that I am in the early stages of convening. This DAO is reimagining the global retail coffee shop business by building an empowered community of farmers, purchasers, processors, distributors, roasters, coffee shop owners, and coffee lovers. By taking a high-level look at how the key stages of the coffee industry will evolve, we shall appreciate why DAOs are not only the future of organizations but also how they are a driver of equitable growth and development across the globe.
Growing (The incentive, quality, and quantity problem)
DAOs are run on smart contracts that lay out their rules and procedures. These contracts are made up of protocols that determine what is considered to be a complete task along the work chain. Stipulated growing and post-harvest handling protocols help to ensure that low-quality coffee is overtime eradicated from the market. Abiding by these protocols is incentivized by the fact that the farmers have substantial ownership stakes in this DAO (also upheld within the smart contracts that run the DAO). The characteristics of strong incentive and decentralization make for great assurances towards increasing quality and quantity (e.g. Uganda’s goal of producing 20 million bags of coffee annually).
Exporting (The middleman and cartel problem)
Only a fraction of the $400 million worth of annual coffee exports ends up in the pockets of Ugandans. The ratio between what a coffee farmer earned in the 70s versus what the retailer received was roughly 1:3. Today it’s about 1:10. This inequality in earnings has been perpetuated by a few huge corporations which influence every aspect of the value chain. The transparency and decentralization that DAOs offer will ensure that the local entities under the huge corporations’ firm grip are freed up to become independent hi-tech purchasing, grading, and processing units. This will annually redistribute tens of millions of dollars from traditional large trading houses to local entities run by communities of purchasers, middlemen, processors, and exporters.
Roasting & Distribution (The logistics and processing problem)
As is with all other stages, decentralization and incentive are key to running an efficient logistics and processing network. Individuals and small businesses can make use of their vehicles and a free room, garage, or warehouse space to earn extra income as the DAO’s logistics arm (following set standards). This is in line with the growing shared economy that has seen ride-hailing and delivery tech businesses grow exponentially. These in turn feed into our network of either already existing or newly formed community-owned roasteries. A collaboration between Starbucks’ roasting unit and a large logistics company, say in Washington, would sooner than later be overtaken by a distributed network of community-owned and run transportation, storage, roasting, and distribution units.
Retail (The market entry and final consumer problem)
Hundreds of millions of advertising dollars are spent fighting for coffee drinkers’ attention and loyalty every year. Organizations that view the market as customers rather than partners are probably seeing their final 10 to 20 years of relevance. I believe that customer loyalty in this Coffee DAO will be earned through a redefined commodities market and offering consumers the opportunity to jointly invest in various stages of the DAO, especially the network of coffee shops. There is no better way to reward consumption, in my view, than by making it beneficial. In this case, financially beneficial.
Much as some governance and regulatory questions remain unanswered in the DAO space, so much work had been done in answering the key questions of decentralization, democracy, level of effort, and reward for work. I am confident that within the next 20 years we shall see some old value chains (e.g. coffee and cocoa) completely run by DAOs. Decentralized Autonomous Organizations are not a one-entity game. They are consensus; they are community; they are us!
