Introducing Deep DAO — Analytics for Decentralized Organizations

Our mission is to explore, rank and analyze all DAOs * Data driven insights about DAOs, neutral and objective information to help you make your DAO decisions

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DAOs are officially happening. There are over 2000 of them in operation currently, comprised of thousands of members and managing increasingly larger pools of assets. The graph describing their growth and participation is pointing steeply upwards. From where we sit this looks like a massive hockey stick in the making.

The cryptocurrency financial systems (DeFi) are brimming with DAOs. In terms of capital, DeFi is now locking the equivalent of over 1B USD and growing. DAOs are managing over half of this capital. Classifying Maker as a DAO, it’s clear that DAO managed DeFi is here to stay.

Beyond DeFi, DAOs are being applied to many more use cases including such disparate arenas as open source software development, gaming, democracy, energy, freelance work, sports, healthcare, and insurance. More and more communities everywhere are learning how to manage themselves through DAOs.

With this rate of growth, inflow of capital, and variety of applications, it can be extremely difficult for even a seasoned DAO enthusiast to keep up with what is happening in the space. Furthermore, there is a huge challenge to those newly curious to participate, experiment, or invest in DAOs to know where to start. There is no common source for comparative metrics around things like DAO performance, funding, legal status, or community involvement. There exists now a real need for tools to help with sensemaking in the DAO ecosystem.

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DAO managed DeFi is growing fast

Deep DAO’s mission is to explore, rank and analyze all DAOs in several dimensions. This includes DAOs created on one of the four major platforms (DAOstack, Aragon, 👹 Moloch, and Colony), as well as those created for specific needs such as The LAOMakerDAO, and Nexus Mutual. In simple terms, Deep DAO is to DAOs what CoinMarketCap is to tokens: a place to check rankings, as well as financial and governance analysis about each one.

Beyond the Basics

While rankings are cool and attractive, it is not enough for properly understanding DAOs. DAOs are far more complex creatures than tokens and as such, Deep DAO goes beyond those basics. Deep DAO explores nuanced interactions involving whole communities and a large range of behaviors, economic and otherwise.

We are developing a system for evaluating DAOs in terms of financial stability and responsibility, internal participation rates in total and over time, and how they correlate with other factors. Since DAOs can make investments, we are developing ways of tracking the performance of these investments as part of the DAOs metrics. Thus, businesses and individuals using our data would be better able to choose a DAO suitable to their needs.

Here are some of the types of questions we’re asking about DAOs:

  • How much money, or other assets does a DAO manage?

  • How many members does it have?

  • How active are members in creating proposals and voting on them?

  • Are members voting for, or against proposals in general?

  • How much money does the DAO spend and on how many projects? What is the flow of assets into the DAO and back out?

  • What are the patterns of involvement of the top percentage of members? Of everyone else? How often do they ragequit (in Moloch type DAOs), or have their reputation slashed (In DAOstack Alchemy type DAOs)?

  • What is the distribution of power?

  • Beyond the platform (usually Ethereum) how decentralized is the DAO? Is power concentrated in the hands of a few, or evenly distributed?

There are many, many more questions that need to be answered in order for us to understand DAOs. These types of questions are not new. Corporations, societies, democracies and others have been asking them for centuries. The difference is that now, thanks to blockchains we have full access to the data, and we can answer them in ways that were not possible in the past.

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Making DAO Decisions

We’re still at the beginning. The DAO platforms are just now becoming friendlier for a larger audience. The UX is finally improving, and the idea of pooling resources together in a decentralized fashion is gaining traction. DAO analytics will play a large role in this trustless culture, because when you don’t know the people you’re working with the only way to understand the community is to understand its patterns over time. Deep DAO aggregates and presents these patterns.

Current State

Deep DAO is currently featuring DAOstack, Moloch type DAOs, and The LAO. The other platforms and DAO types are coming up soon. We believe that our service is valuable both to the Ethereum ecosystem, and the DAO and DeFi ecosystems in particular. Our product is becoming a go to for an increasing number of people who need quantifiable data in the DAO space. It is also getting quite a bit of attention from industry influencers and our rankings reports are getting many shares, and continuously generate discussion about the whole DAO space and its governance.

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Since DAOs are so new, and so varied in their methods and proposals, it might not be obvious how you could use Deep DAO for decision making.

A Concrete Example

Let’s say you’re looking to invest and you want your money to be part of an investors DAO. This is already happening, with DAOs like Moloch, MetaCartel Ventures, DX_DAO, TheLAO, and others. Dozens of people are investing in these DAOs and several million USD are already pooled together. It’s hard to know in which DAO to invest even when there are only a handful of opportunities. Imagine trying to make a decision when there are not four, but 400 separate options.

If you want to make an informed decision, you go to Deep DAO. You look, among other factors, at the various DAOs financial and decentralization metrics. With the Deep DAO dashboard and API you are able to compare according to your preferences, and see that DAO A has several millions in its coffers and it owns several products. It has a high Decentralization Score based on number of members, and their level of participation. DAO A has been giving investors 7% over ETH for 3 years running (the numbers, DAO A and DAO B are fictional).

DAO B on the other hand is providing 9.2% over ETH in the past 2 years, so you can make more money, right? But when you look deeper you see potential red flags. DAO B has a lower Decentralization Score based on low number of members, and voting coalitions as small as 1% of membership with unusual Banzhaf power of 32% combined. Its Gini index is also high, indicating that power is concentrated at the top.

Perhaps if you’re interested in higher risk, and want to leave your money in the hands of the top decision makers, DAO B is the one for you. Or maybe if you’re a working person who wants to save long term, DAO A may be better. The choice is ultimately up to you, but you can make it with the support of analytics that go as deep as you want them to.

Just the Beginning

As mentioned above this is only one use case example. Choosing a game, or an insurance company, even a safe neighborhood for raising your kids may soon prove to be a decision related to DAOs. We believe that this is the future. Today we call it a separate ecosystem, and within a few years it could simply be normal life.

Information is power, and the more opportunities people have to incorporate data into their decision making, the higher quality and more satisfying those decisions will be. Deep DAO is devoted to clear, critical, and accurate data-centric metrics that help you research, invest, consume, and participate in the DAO phenomenon. Welcome aboard, how might we help you?

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Many thanks to the great Genesis Alpha community, especially Pat and EylonDaniel Bar from Bitfwd and Ivan Sucharski for their review, insights, and excellent editing. Special thanks to Wong Joon Lan for our first ever shoutout and comparison to CoinMarketCap.