All Centralized Firms Are Alike—But Every DAO Is Decentralized in Its Own Way

Simply as DAOs discover extra traction within the business, so too have a sequence of various instruments to measure how decentralized autonomous organizations stack up alongside each other.

Now the query emerges: What makes one DAO higher than one other?

Certain, you should use the dimensions of their treasury as a metric, but it surely’s additionally essential that an autonomous group can be decentralized, one thing one could crudely measure by figuring out the variety of token holders.

Then there’s voter apathy and the myriad methods one measures how lively these token holders truly are.

Even the variety of token holders is a splotchy metric. Pockets addresses don’t equal the variety of customers one for one; oftentimes one consumer can have a number of wallets, every of which can be holding tokens for a similar undertaking.

If one individual, with 150 totally different wallets, holds 60% of a token’s provide throughout all these wallets, is a undertaking actually decentralized?

It’s kind of like measuring the standard of varied democracies all over the world; it’s tremendous messy and there’s clearly nobody proper reply.

“Some DAOs maximize for decentralization, trustlessness and transparency. Others will deal with effectivity, with a deal with a ample decentralization to keep away from seize or management,” Snapshot’s head of progress Nathan van der Heyden advised Decrypt. “Worst than that, some begin off as the primary, after which turn into the second, and vice-versa.”

DAO-to-DAO comparisons

To make clearer how tough it’s to rank DAOs, let us take a look at a number of examples.

Based on OpenOrgs, Uniswap at present has a treasury of $2.5 billion. A lot farther down the listing is Decentraland, with a treasury of $88,666. If we flip over to DeepDAO, a handy knowledge dashboard for DAO knowledge, Uniswap’s neighborhood has posted simply 124 proposals. Conversely, Decentraland’s neighborhood has made roughly 2,000 totally different governance proposals.

A excessive variety of proposals actually looks like proof {that a} neighborhood is highly-active in stewarding the undertaking’s route. But when these proposals fall exterior the scope of what a DAO can truly do to affect a undertaking, then it doesn’t actually matter.

The Web2 equal could be one thing like spam mail; simply since you’re firing off emails doesn’t imply you are truly being productive.

Lastly, past measuring how lively or massive a DAO is, one want even be aware of whether or not the neighborhood’s votes are literally being effectuated.

Final Summer time, for instance, TribeDAO took some flak on crypto Twitter after it introduced it might be doing a revote on a really delicate topic after its neighborhood had already voiced their needs. This can be a surefire path to kill voter enthusiasm.

Arbitrum’s newly-formed DAO has thus carried out self-executing votes, which signifies that as quickly as a change is voted on, it is going to be pushed instantly on-chain.

In the end, it’s fairly the spectrum. DAOs are available all sizes and styles, some optimizing for one metric whereas others optimize for an additional.

And a few initiatives could solely care about one factor.

“For some DAOs, the worth of the token generally is a good illustration of how nicely they’re reaching their mission,” Snapshot’s van der Heyden advised Decrypt.

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