What is DGSF?

An open and participatory framework to enable organizations to measure their alignment with Decentralized Autonomous Organizations (DAO) through a set of organizing principles and shared language.

Problem

As interest in DAOs continues to rise, two critical gaps have become increasingly apparent — a gap in transparency and conceptual clarity. This issue, which we term "Transparency Poverty," poses a significant threat to the credibility and operational effectiveness of DAOs. The primary challenges contributing to this gap are:

1. Insufficient Tools for Transparency: There is a noticeable lack of comprehensive tools capable of providing clear, transparent operations within DAOs. This void hinders both the internal efficiency of DAOs and the public's ability to fully comprehend their mechanisms.
2. Lack of Comprehensive DAO Practices Repository: The DAO ecosystem is currently missing a centralized, well-curated repository that documents the spectrum of practices — both exemplary and suboptimal — within various DAOs. Such a resource is essential for learning, adaptation, and the avoidance of past pitfalls.
3. Conceptual Misunderstandings: Across various sectors, including academia, industry, and society at large, there exists a significant gap in the fundamental understanding of what DAOs are and how they function. This lack of understanding stifles informed discussion, research, and development in the field.
4. The Imaginary-Reality Gap: There is a stark contrast between the idealized vision of what DAOs promise to be and what they are in practice. This gap between theory and reality — the "imaginary-reality gap" — leads to misconceptions about the capabilities and limitations of DAOs, affecting stakeholder expectations and trust.

Addressing these challenges is vital for the advancement and sustainability of DAOs. By acknowledging and tackling these issues, we aim to contribute to the maturation and legitimization of the DAOs.

Solution

To address these issues, we introduce the DAO Index, a set of organizing principles (eight as of Version 0.9), operationalized through a questionnaire, to revolutionize how Decentralized Autonomous Organizations (DAOs) are evaluated and benchmarked.

The current organizing principles are:

1. Cross-border Coordination,
2. Broad Stakeholder Participation,
3. Practicing DAO Cooperativism,
4. Cultural Patterns and Brand,
5. Organizational Technology,
6. Human-centered Algorithmic Governance,
7. Information and Data Transparency, and
8. DAO-2-DAO.

Through the DAO Index, we create a score expressing an organization's alignment with the DAO conceptualization, culminated in an easy-to-understand score and rating label.

Work-to-Date

Our current work includes:

1. Preliminary Analysis of Uniswap: A write-up on our draft assessment of Uniswap with the DAO Index Questionnaire, available at: https://ledgerback.pubpub.org/pub/dxcy2zjr/release/1;
2. DAO Index Dashboard: A dashboard providing ratings and assessments of various DAOs with the DAO Index questionnaire, available at https://joan816.softr.app/;
3. DAO Index Scorecard Toolkit: An Airtable base enabling comprehensive assessments of organizations with the DAO Index Questionnaire, available at https://airtable.com/appLWHWSN0Tf81C3V/shr7bQ5LcORabzm85;
4. DAO Index Analysis Notebook: A Jupyter Notebook providing a basic and in-depth analysis of DAO Index data (scores and assessments), available at https://github.com/Ledgerback/DGSF/blob/main/DGSF_DAO_Index_Analysis_Toolkit_2023_09_14_V03_Public.ipynb;
5. DAO Index Background Knowledge Quiz: A quiz designed to enhance understanding of DAOs, facilitating better engagement with the DAO Index assessments, available at https://airtable.com/appD5ab5jcYsnDLeI/shrmBlxqbiGusPSYG;
6. DAO Index User Guide: A guide for using the DAO Index Questionnaire to assess an organization, available at https://medium.com/p/dao-index-user-guide-cf44f5998f40; and
7. Computing the Banzhaf Power Index for voters in the GR16 Round Structure Gitcoin Proposal: A short publication on calculating the Banzhaf Power Index scores for voters in a Gitcoin round, available at: https://ledgerback.pubpub.org/pub/vvb6n3nd/release/2.

Note: our outputs are a work-in-progress.

DAO Index Assessment Process

The DAO Index assessment is a meticulous six-step procedure designed to ensure accuracy, transparency, and active participation from the DAO community. The process unfolds as follows:

1. Initial Draft Assessment: Utilizing the DAO Index Questionnaire, we conduct an initial assessment based on publicly available information about a DAO. This stage forms the foundation of our analysis.
2. Draft Publication: The initial assessment findings are then published on the DAO Index Dashboard. Additionally, a comprehensive write-up detailing this preliminary evaluation is made available for public viewing and feedback.
3. Community Engagement: In this critical phase, we actively engage with representatives from the DAO under review. Their insights and feedback on both the DAO Index and the draft assessment are solicited to ensure a well-rounded evaluation.
4. Final Assessment Compilation: The final assessment integrates feedback received in the previous step. It also considers any new information or developments that have emerged since the initial assessment, ensuring the final report is up-to-date and reflective of the latest DAO dynamics.
5. Final Assessment Dissemination: Similar to the draft stage, the final assessment is published on the DAO Index Dashboard for transparency. A detailed write-up, encompassing all the insights and conclusions from the entire assessment process, is also made publicly available.
6. Ongoing Review Cycle: Recognizing the dynamic nature of DAOs, this step involves revisiting and reassessing DAOs periodically. This iterative approach ensures that the DAO Index remains relevant and accurately reflects the evolving landscape of DAO governance.

Use-cases

Three possible use-cases for the DAO Index include:

1. research and analysis of DAOs with the DAO Index data repository,
2. rating labels and badges as easily understandable indicators of DAO Index scores, and
3. highlighting and sharing DAO (good and bad) practices with DAO operators and the public

Target Audience

1. Researchers: The DAO Index is an invaluable tool for academic and industry research, providing a comprehensive blend of data-driven insights and qualitative analysis. This rich resource aids in exploring the intricacies of DAO governance and operational dynamics beyond mere on-chain data.
2. The Public: For those seeking clarity in the complex world of DAOs, the DAO Index offers an accessible platform. It employs visual labels and badges to represent DAO Index ratings, simplifying the comparison and understanding of different DAOs for the layperson.
3. Businesses and Investors: The Index serves as a crucial reference for businesses and investors interested in the DAO sector, providing a holistic view of governance practices. By combining qualitative assessments with quantitative data, it offers a robust foundation for informed decision-making and strategic investments.
4. DAOs: DAOs can use the Index to benchmark their governance and organizational structures against broader industry practices. The Index's comprehensive approach, spotlighting best practices and case studies, showcases exemplary governance models and guides DAOs in refining their practices for better transparency and efficiency.

Mentions

Our Preliminary Analysis of Uniswap, a write-up on our draft assessment of Uniswap with the DAO Index Questionnaire was mentioned in This Week in Governance - Apr 21 by Kevin Nielsen, available at https://governance.substack.com/p/this-week-in-governance-april-21.

Goals

Through the DGSF, we hope to:

1. enable experiments in digital self-governance for fostering community-like organizations,
2. drive a change in norms (expectation of transparency, use of deliberative methods for governance, etc.) for DAOs,
3. increase shared understanding of DAOs across academia, industry, and society, and
4. make DAOs more transparent, especially regarding off-chain data and information.