Web 3 IRL: Seattle’s CafeDAO Tests Brick-and-Mortar DAO Model

A decentralized autonomous organization (DAO) called TheCafeDAO opened a pop-up coffee stand in Seattle last weekend, a test run for what it hopes will be the first brick-and-mortar business run entirely through a DAO structure.

The humble coffee stand was located outside the Seattle NFT Museum, with a menu that consisted of just one item – pour-over coffee for $5 a cup.

The DAO markets itself as “the cafe everyone owns,” with customers and employees being given “coffee tokens” that grant governance rights and discounts with each purchase. The tokens themselves are still in an alpha stage and have yet to be connected to any blockchain, with the DAO using last weekend’s pop-up as a trial run for the tokenomics.

It's the latest in a string of DAO experiments seemingly kickstarted by the splashy but ultimately failed debut of the ConstitutionDAO last November, proving to many the potential and difficulty of DAOs doing real-life things.

Read more: LinksDAO NFT Sale Books First $10M Toward Buying an Actual Golf Course

The idea for TheCafeDAO first came about 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, with the organization’s five other core members all seeing the post and volunteering to take leadership roles to bring the concept to life.

While the group’s focus in recent months has been on the Seattle pop-up, the DAO’s founders hope it can eventually become its own larger, self-sustaining entity.

With the DAO still in its early stages, the founders also recognize that decisions aren’t yet all that decentralized, though that will likely change as the community continues to grow.

“Our goal is for the Discord to grow enough where we no longer have to make decisions ourselves about the future of the DAO,” Dustin Tong, another founder of the DAO, said in an interview. “Just yesterday someone posed the idea of running a hot dog stand with the DAO. That would be awesome.”

Coffee with a side of governance

On the back end of the DAO’s coffee token is a setup more complex than your average reward coin.

The value of each token is $5, pegged to the price of a 12-ounce cup of coffee. Every time a coffee from the stand is purchased, a new token is minted.

A chunk of that token, roughly $3.50 worth, is then burned to account for operating costs. The remaining portion is then split among the customer, employees and DAO treasury. Token holders can either redeem their coins for fiat or hold them for governance rights, with one cup of coffee equaling one vote in whatever proposals are made by the DAOs members.

The tokens are backed by loans, with the parties making the loans being given a promise of future token allocation down the line. (Tong says the group has been in close contact with legal experts to avoid any regulatory concerns.)

In its two days of business last weekend, the DAO minted 61 of its imitation coffee coins, with 12.2 being burned for operating costs, 6.1 being given to customers and 36.6 reallocated to the treasury.

For customers, the tokenomics essentially function as a decentralized punch card, where every purchase brings them closer to holding one full coffee token.

“In terms of governance, we want to create a list of standard operating procedures and then have those be the things our members are voting on,” Tong said. “We don’t want for someone to spill coffee and have all the DAO members vote for who cleans it up, that’s just not efficient.”

While the pop-up was open for only two days, members of the DAO are now looking to fundraise to create a permanent storefront somewhere in the Seattle area.

TheCafeDAO isn’t the first DAO eyeing physical locations as an extension of online community. NFT (non-fungible token)-based projects like LinksDAO and PizzaDAO have similar plans in the works, using the DAO structure to both fundraise and operate fully fledged, real-life operations.