Hey there. We're glad you're interested in learning more about how the Flow State Cooperative's Patronage System works. This guide will walk you through the details in a friendly and easy-to-understand way. If you’re interested in joining the coop, let us know with this interest form.

Let's get started!

• What is the Flow State Cooperative?
• Understanding Coop Patronage
• 1. Recognition: Earning Public Goods Cred
• How You Earn Public Goods Cred
• Key Features of Public Goods Cred
• 2. Redemption: Converting Cred to Flow State Distribution Units
• How Redemption Works
• Why Redeem?
• An Example to Illustrate the Recognition + Redemption Process
• Scenario
• Members
• Calculating Distribution Units
• Dividend Distribution
• Membership Classes and Activities
• Summary Table
• Technical and Legal Considerations
• Key Points to Remember
• Your Input Matters!

What is the Flow State Cooperative?

Before diving into the patronage system, let's briefly recap:

The Flow State Cooperative is a community-driven organization that supports the development and growth of the Flow State ecosystem. By becoming a member, you can earn rewards for your contributions to public goods and the Flow State platform.

Understanding Coop Patronage

At its core, the patronage system is designed to recognize and reward members for their valuable activities within the cooperative. It operates in two main steps:

1. Recognition
2. Redemption

Let's explore each step in detail.

1. Recognition: Earning Public Goods Cred

Public Goods Creds are tokens awarded to members in recognition of their contributions. Think of them as a way the cooperative says, "Thank you for your efforts!"

How You Earn Public Goods Cred

There are different classes of coop membership, each with specific activities that we can trace impact to the public good:

Key Features of Public Goods Cred

• Real-Time Recognition: Creds can be earned continuously as you contribute.
• Transparency: Implemented as blockchain-based tokens for openness and accessibility.
• Transferable: These points can be transferred between members.

Important: While Public Goods Creds recognize your contributions, they do not directly entitle you to patronage dividends (i.e. coop profit distributions). For that, you need to redeem them!

2. Redemption: Converting Cred to Flow State Distribution Units

To participate in patronage dividends (actual cash returns), you need to redeem your Public Goods Cred for Flow State Distribution Units.

How Redemption Works

• Eligibility: Only members of the cooperative can redeem Cred.
• Process:
1. Redeem Coop Points: Exchange your Creds for Distribution Units at a ratio determined by the cooperative's policies.
2. Non-Transferable Units: Distribution Units are recorded on the blockchain but cannot be transferred to others.
• The exchange rate between Cred and Distribution Units may be updated time to time by the cooperative's board.

Why Redeem?

• Access to Dividends: Only Distribution Units (not Cred) count towards the apportionment of patronage dividends.
• Participation: Engage more deeply with the cooperative's success.

An Example to Illustrate the Recognition + Redemption Process

Let's make this concrete with an example:

Scenario

• The cooperative has $10,000 in net margins to distribute as patronage dividends.
• The board has set the redemption ratios:
• Funder Cred: Redeem at 2:1 (2 Creds for 1 Distribution Unit).
• Builder Cred: Redeem at 1:1.

Members

Calculating Distribution Units

• Member A:
• Funder: 10 Cred ÷ 2 = 5 Units
• Builder: 70 Cred ÷ 1 = 70 Units
• Total Units: 5 + 70 = 75 Units
• Member B:
• Funder: 50 Cred ÷ 2 = 25 Units
• Total: 25 Units

Dividend Distribution

• Total Units Redeemed: 75 (Member A) + 25 (Member B) = 100 units
• Dividend Per Unit: $10,000 ÷ 100 units = $100 per unit

Key Takeaways:

• Only redeemed Creds count towards dividends.
• Non-members, even if they have Creds, do not receive dividends.
• The amount of money you receive is proportional to your Distribution Units.

Membership Classes and Activities

Here's a summary of the membership classes and how they participate:

Summary Table

Technical and Legal Considerations

• Two-Tier System: Separating recognition (earning Cred) from redemption (converting Cred to Distribution Units) helps maintain flexibility and ensures compliance with legal requirements.
• Blockchain Integration: Using blockchain technology for tokens and units promotes transparency and efficiency.
• Governance: The cooperative's board sets policies, including redemption ratios and eligibility criteria.
• Membership Changes:
• Inactive Members: If a member becomes inactive or leaves, their Patronage Units are removed from the active ledger (after distributing any pending dividends).
• Returning Members: If they return, their units can be reinstated.

Key Points to Remember

• Membership Matters: Only cooperative members can redeem Cred and receive dividends.
• Active Participation: Stay engaged to maximize your benefits.
• Redeeming Points: Don't forget to redeem your Public Goods Cred if you want to participate in dividend distributions.
• Governance Participation: As a member, you may have a say in cooperative decisions, including how points are allocated and redeemed.

Your Input Matters!

Since the cooperative is planned to launch in Q4 2024, we welcome your ideas and feedback. Your participation can help shape:

• Policies and Procedures: How should Cred be allocated? What activities should be rewarded?
• Governance Structures: How can we ensure fair and inclusive decision-making?
• Community Building: How can we foster a strong and supportive community?

Please share your thoughts with us by joining this Telegram group. Together, we can build a cooperative that truly reflects our shared values and goals.

Visit flowstate.network to learn more and join the Flow State Coop.