Programmed decentralised
commons production

cDPOs (commons-oriented decentralised programmed organisations) as frameworks to bootstrap, develop & sustain commons projects

Designing a business model for a commercial service offer is fairly simple. One has to have a business plan that produces profit. There are tools like the business model canvas that help with designing a product-market fit as well as thousands existing businesses that can act as inspiration when pricing the value offer. In comparison, when designing a commons-oriented project, things can get muddy. What is the use value of the project and why would one participate in the production? Peer participation is a crucial element in a commons-oriented project, since many of the projects are run by non-commercial organisations and therefore donations, charity and voluntary work are essential to enable production. These altruistic inputs are great, but they do not create a self-sustainable ecosystem for individuals to participate in. As Michel Bauwens has noted already a decade ago, many commons-oriented projects are sustainable as projects, but not for the individuals participating in the projects. Basing organisations on charity is creating an environment with no autonomy. While commons projects are unlike commercial businesses they are still economic spaces with values, missions, goals, inputs, outputs, interaction models and so on. These organisational mechanics are present in commons organisations as well as in their commercial counterparts, even if they might not be equally well mapped.

Offers

Common economics

One reason for the lacking articulation of economic structures in commons projects may be simply the small amount of financial flows in them, so that notions like “cost efficiency”, stakeholdership or other elements of economic logics have not been carved. Also the absence of private ownership can be a conceptual wall between received economic thinking and commons. Commons projects are also likely to emerge from the innovation or passion of individuals or small group’s and can be difficult to force into an given economic model from the get-go. Yet some of the business models utilised in the commercial side can certainly be rethought as economic interaction “protocols” for commons projects. For instance, businesses have abstracted value production into “jobs” that people can take on and produce value for a company that translates also into value (salary) to the workers. Yet this model offers precarious conditions for people taking this offer called wage labour. Commercial companies have also ways to offer shared stakes (stocks) to people or companies who believe in their mission or financial productivity so that the holders of these stakes share the risk and upside of businesses. Businesses have also financial tools such as loans, commitments to provide or buy commodities from each other at a certain price and certain date (futures), and so on. These and other financial and economic instruments are used as ecological/systemic relations through which organisations co-operate with other organisations and networks. With the emergence of new decentralised technologies these instruments and relations become design questions for cyber-organisations and can be leveraged in commons production.

Offering the production

Some of the starting points for thinking about commons-oriented production could be the following:

  1. A vision/ideal of the commons to be produced/contributed to
  2. An idea of the p2p interaction that produces that common

The design of the economic space around the production can start from building an organisation around the production by offering the value of the production. This basically means that rather than going for the“outcome” (the produced commons) as the value offered, the project offers shared stakes in the organisation creating that value — much like offering people to join in a fishing trip instead of offering the fishes already caught. The offer is to join the production rather than only using or consuming the product. This type of logic is, of course, not applicable to all productions, but surely many productions are ultimately valued by both people utilising the product and by the producers. “Producer” and “user” can be different roles held by the same individual.

For instance, Wikipedia would have no value if people would not read and trust it, or if there was no content at all, only an empty interaction framework for producing the writing. If recognising the value of the product is linked to the distribution of the product, then both acts, production and use, are valuable. This way of linking emerging value to the organisation-building around the value might be interesting for businesses that are a) commonly owned and b) non-commercial. These models are being designed by horizontal organisations that works as platforms for production. These organisations can also be described in terms of decentralised business models, where the value of peer-driven production is distributed as stakes in the organisation. Approaching projects as organisations which have their own economic models (economic spaces) opens up new possibilities for finance, production and use — all based on sustained relations instead of donations, whether voluntary or transactional (buy & sell).

Equity-like currency

The generated value is recognised via an interaction process. An organisation facilitates the peer interaction by issuing tokens for project stakeholders (peers) as representations of the value they generated. These tokens resemble both a) a currency (within the organisation and its larger network) and an b) equity on the project. The tokens are not payments for services or company stock, but rather sovereign notions of value produced in the interaction with and within the organisation. The value can be anything from use/access rights and voting/curating rights to liquidity. Further on, the liquidity may be generated through the value offered by other organisations/networks or by the FIAT value generated by the project. As noted by Fred Ehrsam, value recognition through tokens issued and distributed is one method in which economic spaces can be built. This allows social values like free information or education an organisational form that individuals and institutions can rally around (give value). For instance, if Wikipedia would organise this way it could use the “wiki” interaction process where open knowledge is produced, curated and received, and recognise the value in all of them and produce incentives for collaboration via shared stakes. These stakes could be shares in the value that other organisations or individuals give to Wikipedia and/or curatorial rights for content. Such a currency system could also expand, so that the wiki currency could be also used to “fund” new articles by investing it in production proposals of new articles. This gives the self-issued token two functions

  1. Governance value in the project itself
  2. Liquidity through 3rd party value recognition

Value creation

For self-issued tokens to become valuable there has to be a 3rd party that recognizes their value. The 3rd party can be anyone (person or organisation) that offers some non-native (externally produced) value for the organisation. This can happen in 2 different ways:

  1. Pre-issuance of value (bootstrapping)
  2. Emerging valuation (production)

The bootstrapping model is useful in the case that a significant amount of assets are needed to get the organisation up and running before it can be interacted with. In the pre-issuance, the organisation simply sells tokens to third parties with the expectation that the investment/liquidity that the 3rd parties give will be reciprocated by the use value and/or appreciation in the value of the issued token. Bootstrapping can be used, for instance, to acquire a shared car (sharing economy), to acquire an interaction platform (#buytwitter) or to fund a production of a smart contract platform (Ethereum).

On the other hand, an organisation can jump straight into the production, if no initial assets are needed. In this case the value emerges over time and is based on the value of contributions. For instance, a project like Ethereum could have been bootstrapped as a Github project that would have issued Ether to developers for their contributions. Also if Twitter would have been a commons project that had issued tokens for coders of the platform and to the people tweeting content, then those people would now share the value that Twitter produces.

Value giving

Pre-issuance or bootstrapping can be done by a p2p network or institution. In taking the offer the emerging network provides initial liquidity for the token. The development/initiation efforts can be rewarded by pre-issued tokens that have an initial value based on pre-sold tokens. A party makes an initial market for the DPO token, with a market price for the token, thus providing liquidity for first producers. This is before the project is operational and therefore shifts most of the speculation to the bootstrapping network. The bootstrapping network can consist of speculators, developers and other agents who see value in the operational organisation, but most likely the bootstrappers are people who want to enable the production based on its value promise and gain liquidity for some or all of the investments in the future. Token holders who decide not to liquidate their assets remain organisational stakeholders as long as they have tokens. This means that they also share the possible upside of the appreciation of the organisations value.

Bootstrapping

Bootstrapping liquidity

  1. Project designs and initiates DPO
  2. Project makes a pre-sale for a partnership in the project
  3. Partners commit money or resources into an escrow pool
  4. Financing partners become stakeholders of project
  5. Escrow provides initial liquidity (market) for the project token
  6. Tokens are issued to peers participating in production
  7. Participants become stakeholders of project
  8. Stakeholders can:

— a. Liquidate tokens (on the market backed by the escrow)

— b. Hold tokens

Emerging liquidity

  1. Project designs and initiates DPO
  2. Tokens are issued to peers participating in production
  3. Participants become stakeholders of project
  4. Stakeholders can:

— Hold tokens

Liquidity

Giving liquidity to a commons project is different from project to project, but some likely options are the following. The token can gain liquidity through:

1.Organisation(s) or individual(s) giving a donation, grant or pledge (with an altruistic intention) into the common liquidity pool that is shared among all token holders. This model can be a significant tool for retrospective valuation given by public institutions who appreciate the transparent ownership structure and can be sure that the contributors are recognised and stakeholding is valid. The role of donations, grants, and pledges can be significant, since the use of the project’s results is likely to be free/non commercial. Most commons project will start small and take shape over time when their adaptation grows which makes bootstrapping any specific project difficult, but enables retrospective value recognition.

2. FIAT money generated by 3rd party commercial use or remixing of the project’s results (commercial intention). Optional commercial licensing (for instance, via the peer production licence) can create an interface for different economics to collaborate.

3. Liquidity given by another organisation in form of their own value offer. For instance, project A´s value can be recognised by project B by by accepting project A’s token in exchange for the value offer of project B. This model is well explored by Primavera De Filippi & Samer Hassan in moneylab reader #10 (p.84 “measuring value in commons based ecosystem”). The model is particularly interesting for NGO´s, and public and private institutions which are looking for funding commons production. It gives a way to interact with commons by making a counteroffer. For instance, cities can accept (provide liquidity) a cDPO’s tokens by accepting them as public transportation tickets.