A decentralized autonomous organization (DAO) called TheCafeDAO opened a coffee stand in Seattle last weekend, a test of what it hopes to be the first brick-and-mortar business run entirely through a DAO structure.
The humble coffee stand was located outside Seattle’s NFT Museum, with a menu consisting of a single product: lattes for $5 a cup.
— theCafeDAO (@TheCafeDAO) April 30, 2022
The DAO markets itself as “the coffee shop that everyone owns,” and customers and employees receive “coffee tokens” that grant governance rights and discounts with every purchase. The tokens themselves are still in alpha stage and have not yet been connected to any blockchain, and the DAO used last weekend’s pop-up as a test of tokenomics.
It’s the latest in a series of DAO experiments seemingly kicked off by the spectacular but ultimately failed debut of ConstitutionDAO last November, which demonstrated to many the potential and difficulty of DAOs to do things in real life.
The idea for TheCafeDAO first surfaced in a Reddit post made last August by Dan Car, one of the DAO’s founding members. His question, “What if we made a decentralized Starbucks?”
The idea quickly gained traction, and the other five core members of the organization saw the post and volunteered to take on leadership roles to bring the concept to life.
Although in recent months the group has focused on the Seattle store, the DAO founders hope that over time it can become a larger, self-sustaining entity.
Because the DAO is still in its early stages, the founders also acknowledge that decisions are not yet as decentralized, though that will likely change as the community continues to grow.
“Our goal is for Discord to grow enough that we don’t have to make decisions about the future of the DAO ourselves,” said Dustin Tong, another DAO founder, in an interview. “Just yesterday someone brought up the idea of setting up a hot dog stand with the DAO. That would be awesome.”
— theCafeDAO (@TheCafeDAO) April 20, 2022
Coffee with a side of government
On the back end of the DAO coffee token is a more complex configuration than your average reward coin.
The value of each token is $5, pegged to the price of a 12-ounce cup of coffee. Each time a coffee is purchased from the stall, a new token is minted.
A portion of that token, about $3.50, is burned to cover operating costs. The rest is divided among the customer, employees and the DAO treasury. Token holders can redeem their tokens for fiat money or hold them for governance rights, as one cup of coffee equals one vote on any proposal made by DAO members.
The tokens are backed by loans, and the parties making the loans receive a promise of future token allocation. (Tong says the group has been in close contact with legal experts to avoid any regulatory concerns.)
In its two days of activity last weekend, the DAO minted 61 of its coffee imitation coins, of which 12.2 were burned for operating costs, 6.1 were given to customers and 36.6 were reallocated to treasury.
For customers, tokenomics essentially works like a decentralized punch card, where each purchase brings them closer to having a full coffee token.
“In terms of governance, we want to create a list of standard operating procedures and have those be voted on by our members,” Tong explains, “We don’t want someone to spill coffee and have all the DAO members vote on who cleans it up-that’s not efficient.”
Although the pop-up store was only open for two days, DAO members are trying to raise funds to create a permanent store somewhere in the Seattle area.
TheCafeDAO is not the first DAO to seek physical locations as an extension of the online community. Non-fungible token-based projects such as LinksDAO and PizzaDAO have similar plans, using the DAO structure to raise funds and operate in real life.