A simple framework to evaluate DAOs

Let’s talk about a framework to evaluate DAOs.

DAOs are everywhere. Using a standard framework to evaluate DAOs will help cut out the noise and let you focus.

Find your mission

If you want to contribute to a DAO actively, it's important that the DAO's mission resonates with you. Otherwise, you'll become passive and this is fine if you are only looking for financial upside.

Early, but growing fast.

The best measure for growth is daily active users, monthly active users and their ratio.

These metrics are hard to find unless you are on the inside. Joining the DAO's community and paying attention to activity is your best bet. Another option is to look at the number of wallets with token ownership - but beware that many wallets will be lazy (i.e. buy into the project without contributing actively).

Self-sustaining in the long-term

A DAO needs to generate enough money to cover its costs.

It doesn’t need to make money from day 0, but it should have a path to do so in the future. Look for active discussions or proposals on monetisation, and evaluate them. This only applies if financial upside is a motivation for you.

Token distribution

Tokens should be distributed amongst the community.

The more concentrated the distribution of a DAO, the more risky it is. Founders, core contributors and investors should have token ownership. These tokens should allow members to govern the DAO, or delegate their governance to other members. Websites like Etherscan allow you to understand the token distribution for any DAO (example here for MakerDAO).