Beyond the Blockchain: Full DAO Value Discovery by DeepDAO

Beyond the Blockchain: Full DAO Value Discovery by DeepDAO

There is no doubt that DAOs have proven their usefulness in the marketplace. Their phenomenal rise in popularity is shown by a rapid growth in newly established DAOs, increasing DAO membership, and rising cryptoasset holdings over the last year. In fact, the total amount of simple cryptoassets under management that our DeepDAO analytics engine tracks has recently reached over USD 500M, up from a fraction of that amount earlier this year.

As DAOs continue to provide governance for novel purposes such as community goods and decentralized finance systems, the scope of their assets is moving outside of what you see directly in their Ethereum contract, and traditional crypto oriented products. DAO holdings have become significantly varied and complex to the point that tracking assets on the blockchain no longer suffices to provide the full picture. Because of this, there is an emergent need to create tracking methods that can account for the various real-world holdings that DAOs maintain in order to fully and comparatively value them.

From the perspective of tracking asset changes over time, understanding the past, current, and aspirational holdings of any given DAO is paramount to capturing present value and forecasting the range of potential future valuation. As an investor, a DAO member, or a researcher into DAOs, making these valuation insights visible and enumerated continues the important transparency role that the blockchain has wholly stewarded in the past.

As the DAO ecosystem has rapidly developed, it is currently unclear how difficult discovery, tracking, and accurate valuation of both off-chain and “indirect asset”(*) tracking actually is. We believe developing consistent methods for defining assets and valuing them is a much needed service for interested parties to have transparent insight that helps DAOs flourish.

** “Indirect assets” refers in this document to assets that a DAO has some governance rights or outright ownership over within another DAO or organization, but that is not simply represented by a fungible, market-valued token. This represents an “implied” or “potential” (soft) monetary value versus a specific market defined monetary value.*

Grant Purpose

The purpose of this grant is to fund the initial research efforts into modeling and intelligently valuing the various types of off-chain and indirect assets. Additionally we will research automated or other methods for continuously tracking and updating DAO assets in order to improve their transparency. In order to accomplish this task, we will employ our own in-house research expertise and subject knowledge as well as engaging the services of several types of professionals as-needed, including those proficient in accounting and economics.

In short: As the industry matures it is becoming important to have quantifiably accurate evaluation of DAO assets beyond what’s visible on-chain on a DAO’s “wallet”.

You want to know how much each DAO is worth and we do too. This grant helps us collectively achieve that goal.

Deliverable

The focus of this research is on creating methods to model off-chain and indirect assets held by DAOs in order to obtain more accurate and complete DAO valuations. Specifically, we will center on the Aragon DAOs Curve and Mellon Council as initial subjects to determine their real total value, with others to follow. We will publish a report on the valuations as well as our methods, caveats, and confidence in accuracy of values. We believe this work to be essential to improving public understanding of the DAO ecosystem and its many facets, particularly as it matures and experiences a myriad of new applications for decentralized autonomous governance.

Deliverable Steps for Aragon Grant

Grant Phases

Phase 1: Discovery or “What Exists?”

In the initial phase, we will deep dive into the Curve and Mellon Council DAOs and determine all of their current and potential near-term assets. We will determine how they generated (or will generate) these assets and how they have grown or decayed over time and why. We will investigate the methods and opportunities the governance structure can interact or influence these assets and what actions have been performed on the assets via governance so far. Finally we will interview members of the DAO to better understand how assets are utilized and developed within their respective DAOs.

As with all Phases, a summary report will be provided regarding processes, findings, and caveats.

Phase 2: Valuation or “What is it Worth?”

In the second phase, we will take what we learned in Phase 1 and employ the help of various professionals in order to create a sound valuation methodology. We anticipate at a minimum the need to consult with an economist familiar with cryptocurrencies and an accountant with similar knowledge. There may be additional need for an expert in game theory in order to understand the breadth any given valuation forecast may take. We will follow up with DAO members and engage in independent research in order to provide support to the consultants regarding any additional information they require.

As with all Phases, a summary report will be provided regarding processes, findings, and caveats.

Phase 3: Collection/Automation and Summary or “How Do We Track It and What We Learned”

The third phase finishes up the project by taking what we know about the types of current and potential future assets DAOs manage (Phase 1) along with how these assets are valued (Phase 2), and uses that knowledge to develop collection and automation methods for this data. Doing so will allow for establishment and ongoing maintenance of a reasonable snapshot of DAO AUM that extends beyond what can be found directly in their main Ethereum contract, and the blockchain in general. We may discover that several methods are necessary depending upon what class a particular asset falls into. As such, we may develop a hybrid approach to our gestalt asset understanding.

As with all Phases, a summary report will be provided regarding processes, findings, and caveats. This report will be larger than those prior, merging findings from the previous reports into a standalone research paper.

Time required for delivery

3 months from proposal acceptance. 1 month for phase 1.

About DeepDAO

The DeepDAO (https://deepdao.io) team is a collective of DAO enthusiasts (who initially met in a DAO, of course!) who have created a discovery engine centered on analytics and information gathering regarding DAOs and their adjacent ecosystems. Our current products include set of comprehensive dashboards, quantitative reasearching indexes and proprietary data that allows us to provide various services, APIs (still in development) enumerates and ranks DAOs on several key metrics such as membership and assets under management (AUM). We are constantly expanding both coverage of DAOs and the metrics that describe them. We currently report both financial and governance data on 70+ Top DAOs across the five major platforms - Aragon, Moloch, DAOstack, OpenLaw and Colony. Our Data is being used by major research firms (Delphi Digital, Messari), journalists, VCs, and DAOists across the ecosystem.

Grant Principals

Eyal Eithcowich; Founder of DeepDAO

Entrepreneur with background in software and product creation, writing and filmmaking. Worked at Apple Computer, other Fortune 500 companies and startups.

Ivan Sucharski, PhD.; Head of Research for DeepDAO

Ivan has published several peer-reviewed research papers, performed grant research for the National Park Service, and has advised on data collection methodologies for analytics products for over 15 years.

Funding Information

Amount of ANT requested: 2100
Amount of ANT for phase 1: 700

Ethereum address where funds shall be transferred: 0x2189F1D9fc5EEf0D69abA0BAd981e125A98ABaeC

Link to google doc with proposal information.

1 Like

I really like this proposal and would support it, however, at the current level of funding it will be impossible to pass it as part of the conviction pilot. Perhaps this could be broken up into a smaller proposal, getting through the first monthly check-in, so the request amount could be smaller and therefore have a lower threshold required to pass?

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Hey @lkngtn, thanks for commenting and your support. Would it make sense to simply break it into 3 parts, 700ANT X 3, and we’ll report after each month with our progress and create the next proposal?

@lkngtn I edited the proposal text to have 3 phases of the deliverable, and resubmitted for phase 1 at 700 ANT. The new link is here, https://conviction.aragon.org/#/proposal/29