Main Street Bets
Cities of Ghosts Await Their DAO Revival
Written by Jarrod Dicker, Jonathan Glick, Brian Flynn and Tal Shachar
If you walk the streets of any American neighborhood or town more than, say, 100 years-old, you’ll see ghosts.
Not the ghosts of previous inhabitants, although that’s also possible. But the ghosts of the civic and religious organizations that were once the core organizing principle of American communal life. You can see them in the fading signs for men’s fraternities and women’s leagues that no longer meet, the labor halls renovated for restaurants and condos, and the community centers for ethnic and immigrant groups that have long since decamped for the suburbs. You can see those ghosts in the statues of beloved (often dubious) heroes that were erected by the regiments (or descendants) of veterans of various wars, the money painstakingly raised through membership subscription. Most of all, you can see them in the old churches, each for a subtly different but vigorous denomination, once the pride of their parishioners, now usually empty.
In his famous 1995 essay, “Bowling Alone: America's Declining Social Capital,” Robert Putnam chronicled the remarkable depth and diversity of the communal groups of the United States. Tracing the trajectory from the earliest colonists, he showed how Tocqueville’s observation that, “Americans of all ages, all conditions, and all minds” were “constantly joining together in groups,” was even more true following the waves of immigration of the late 19th and early 20th centuries. These newcomers, faced with difficult circumstances and often hostile neighbors, banded together for mutual support and status. They paid their dues, sat on committees, went to banquets, and advocated for collective causes. And because even long-settled Americans were migrants as they moved West, similar ‘joining behaviors’ spread to the newer cities and towns.
But beginning with the end of World War II, this trend began to sharply reverse. Secularization, smaller families, the automobile and new housing patterns, changing professional expectations, the rising equality of women and the impact of television are all likely causes. The Baby Boomers drove massive social movements, but they didn’t join voluntary membership associations, organizations and churches like their parents and grandparents did. And their kids even less.
The effects have been profound.
American communities founded on intense associational activity now have a civic participation vacuum. Associations once mobilized their constituents for specific improvements. Now only local governments -- often elected by tiny numbers of voters, or self-appointed small business groups -- serve as public custodians. While there have always been good reasons for certain groups of Americans to fear and distrust the government, the lack of faith or even interest in our local institutions is now universal. It’s so endemic we don’t notice it. It’s hard to imagine how it might be different.
Against this backdrop, we hear reminders concerning the importance of local newspapers and media. Opinion pieces shout about how communities facing political corruption or economic collapse are helpless without journalistic watch-dogs. But this is asking far too much from a newspaper. The problem is vastly deeper. Even when enterprising reporters uncover local scandals or promote essential reforms, it is clear that without well-organized, funded and representative citizen groups, there’s almost no effect. Financial support for local media without a revolution in civic engagement is probably pointless.
But is a revolution in civic engagement, even a small one, possible? We think so. Especially if we start small and focus on issues of relevance to people’s daily lives. And we think smart contracts and token ownership will ultimately play a decisive enabling function, block by block.
A New DAO: Local Services
Let’s imagine something much smaller than a city, smaller than a neighborhood. An activity whose purpose is to bring the community together in a participatory manner in order to drive value, civic engagement and trust: the street fair.
In this scenario, a Decentralized Autonomous Organization (DAO) is formed for a particular street or business district. All participants in the fair ‘zone’ are awarded tokens by proving that they’re residents of the community (ie. a real address, or some other verification, a certain number per adult, a certain number per kid). Everybody automatically gets more every week. And like many DAOs, residents also earn more tokens for doing listed service actions.
Merchants would rent booths from the DAO on a competitively auctioned basis. Community members would be rewarded in cash or tokens for helping out the Fair, like setting up and taking down booths, picking up trash or providing entertainment. But community members would also receive tokens for DAO management tasks. These tasks are differentiated in that they are focused on influential decisions for community decision-making like screening and voting on proposals (mainly, which services are needed and what the payment is, what merchants are approved, etc.).
As the street fair (hopefully) becomes nicer and better attended, booth prices will rise -- after all, more visitors, more value to the merchants. Tokens could also be bought from other owners, but voting is proportioned using the quadratic governance model - where additional tokens only provide decreasingly additional incremental voting power. If the model worked, more neighborhoods could adopt it. When there are enough street fair DAOs, an index fund could be created allowing investors to own a diverse basket of neighborhood fairs and generating more liquidity for token owners. Essentially, street fair DAOs turn streets into a community’s economic asset.
But why do we need tokens or a DAO to do any of this?
These are all things that local non-profits already manage. At least in some places, it’s true that in some ‘healthy’ communities, existing institutions can run and grow successful events. But the management and organizational ‘overhead’ of traditional associations often exceed the will and ability of potential participants. If you’ve ever been part of a community or school group, you understand the often prohibitive burden. It’s not only the time commitment of planning meetings — it’s the social dynamics where a few very active members dominate and others are ignored and relegated to less important tasks. But by moving to a DAO model, these issues become easier.
One way to think about on-chain governance is that it combines many of the best aspects of online communities with those of more traditional organizations. Unlike local associations, local message boards, chat rooms and Nextdoor or Facebook Groups allow citizens to share their opinions. People can do this at any time without leaving their homes, and with the comfort of anonymity if they choose. And unlike an in-person meeting, users can be involved in only the specific issue they find motivating, instead of having to sit through an entire meeting on a variety of topics (including the always delightful adoption of the minutes of the previous meeting.)
Despite these advantages, the drawbacks of online communities for local organizing are significant and familiar. The low barrier to entry, the anonymity, the ease of interaction all lead to trolling and flame-wars, often over the smallest of disagreements. The lack of organizational structure leads to talk without action. Even when an online community does sprout real-world activity, the manifestation tends to be disorganized, diffuse and difficult to sustain.
DAOs have strong answers to both sets of problems:
traditional, in-person organizations: smart contracts motivate participation by rewarding broader engagement, utilize online asynchronous interaction modes, and automate much of the drudgery of group decision-making. (You don’t need to approve the minutes for a blockchain-based entity.)
online communities: DAOs add the structure necessary for determining real-world action and the real money, the practical means of aggregating and allocating it, to fund that action in the real world. (Chat rooms don’t have bank accounts.)
So let’s now zoom one step out. In addition to something like a street fair, other local entities might also issue tokens, from loyalty programs for small businesses and restaurants, to support systems for parks and schools, to membership NFTs for performance spaces, to neighborhood traffic safety projects, to community-led solar installations, to well-funded anti-corruption campaigns. An active citizen might own tokens in dozens of these local efforts, some in which they are a major participant, others in which they are more a casual observer. We can see how owners would work to market their projects to each other. We can imagine an entire ‘stock market’ for a city — not r/wallstreetbets but ‘Main Street Bets’ — asset prices reflecting the growth and success (or failure) of different communal projects and efforts. We can envision how such liquidity dynamics would dramatically reduce the ‘cost of capital’ for any local ‘social’ entrepreneur and venture, unlocking essential investments and loans.
In this context, the mission of local news and information takes on an entirely new dimension. Instead of holding it responsible for all civic failures, the local news site becomes a portal to projects. Here could be hosted reviews of their progress, and perhaps even the marketplace where the tokens are promoted, tracked, bought, sold and traded. And of course, that local news site would itself be collectively owned, organized as a DAO and managed via tokens.
Consider how significant this change would be. The newspaper emerged in the context of intensely active civic associations and local enterprises. It both reported on those organizations, including their many disputes, and acted as one itself. Small towns and immigrant communities alike supported thriving news concerns. Their pages were filled with advertisements and articles about community events and causes. Every dot on the railroad map had a local paper. At one point in the early 20th Century, New York City had six competing Yidddish dailies. The Statue of Liberty itself was a newspaper fundraising campaign. But as civic engagement declined, and as a response to the media's most dominant business models, the newspaper departed from its natural focus and pushed towards scale. It had to compete with television. More scale meant a broader focus on the content itself (outside of the community) and a larger opportunity to monetize through advertising or subscriptions. But it backfired.
Why? Because scale is the antonym of local. It’s the opposite. A scaled approach means removing community needs and participation from the forefront of value, which means an emphasis of reporting on communities versus reporting of those communities. Business models drive product strategy, and while we can’t retroactively return to how the local newspapers used to be structured, we can introduce new models that will drive its evolution into the next phase of value, moving from news broadcaster to civic engagement funnel.
As a platform that was incentivized to drive healthy ownership and engagement in local efforts, the local news DAO would be constantly innovating new ways to drive awareness of the best projects and caution of the risky ones. As members of the DAO, token holders (community residents) of the news site would be empowered to make influential decisions as to what gets covered, where assets are attributed to and what information would best service the community at large. In this way, the news site and the underlying civic associations become a virtuous circle, interest driving ownership and thus more engagement.
But are these innovations enough to reverse the decades-long decline of local civic associations?
Your answer to that question depends on what you believe to be the source of that decline. We look back with amazement at the sheer number of local associational relationships our grandparents and great-grandparents had, their involvement with churches and synagogues, with charities, lodges and clubs, commitments that occupied vast amounts of their time and lasted their whole lives. But this actually understates how differently earlier generations saw their place in the world. For them, especially if they were immigrants, there was no ‘choosing’ to be part of these communities. Their belonging was an unchanging fact of reality as they understood it. They couldn’t opt-out. The only question was how selflessly and successfully they would participate.
For most Americans today, this worldview is unimaginable. In their 2010 paper, The Weirdest people in the world?, Joseph Henrich, Ara Norenzayan and Steven J. Heine described how Western social scientists have routinely under-estimated how unusual modern American psychology is compared to the rest of the world. Using the acronym ‘WEIRD’ (Western, educated, industrial, rich and democratic), they noted how a whole corpus of psychology tests once believed to reveal universal human traits, having used American college students as their test subjects, were actually unique to specific Western populations. Now seen in contrast to tests done with Asians or Africans, it became evident how contemporary Westerners ground their worldviews in the radical notion of the individual. Subsequent experiments revealed how immigrants to the West transition from the ‘traditional’ communal or tribal perspectives to this WEIRD psychology within one or two generations. From these discoveries, it seems clear that our great-grandparents brought their communal orientation with them, from their home countries, and the great flourishing of ‘joining’ that Tocqueville described and that Putnam documents was their adaptation of belonging within the relative freedom of American society. We see the same behavior, that expectation of community commitment, among many new immigrants today.
Unlike them, however, most of us are truly WEIRD. We cannot go back to a time when our families and our neighbors assumed evenings and weekends would be spent on communal efforts. For good or bad, we begin with the primacy of the person. And any clear-eyed revival of civic life needs to be based in that reality. DAOs do that. You aren’t presumed to be obligated to engage -- you’re paid to. You aren’t a parishioner or adherent -- you’re an owner. You have an emotional connection to a collective mission -- but it’s framed in explicit economic self-interest. You don’t belong to a DAO — it belongs to you.
Inspired by the potential of these concepts, crypto-dreamers are envisioning, in their WEIRD way like the pioneers of earlier centuries, entirely new cities based on smart contracts and tokens. Some talk about designing their new towns ‘in the Metaverse first,’ then raising money to build them in the real world, usually in some state or country hospitable to libertarian ideals. These visions are thrilling and important, but there’s just as much relevance for blockchain in the cities and towns that exist today. It’s possible the often disastrous record of new cities based on utopian ideals recommends we seek to solve the pernicious problems we already have rather than create new ones from scratch. It’s very likely that the totally new and the rebooted city will inform each other, like a testnet and a mainnet. In any case and in any setting, these crypto-local concepts -- and the tools to support them -- will take a long time to perfect. It will take a lot of failures before we begin to make progress, so we should begin right away. Just as the civic associations of our grandparents took centuries to rise and fall, blockchain-based organizing will require generations to evolve into a perfected and stable form. All those ghosts peer at us from the past, waiting for us to get started, remaking our cities.