Measuring the Value of Traditional Org vs. a DAO

For a Distributed Autonomous Organisation (DAO/ Community / Coop) to be more efficient than the current hierarchically structured orgs the Metrics have to be more Stringent, Transparent, and holistic.

We look at the Traditional Financial Metrics (ratios) and the Missing ratios to measure the health of a DAO.

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How to measure the health of a Traditional (Web2) Publicly Trading Organisation.

Fundamental research - source: Corporate Finance Institute - Financial Ratios eBook

Profitability Ratios

Profitability ratios are financial metrics used by analysts and investors to
measure and evaluate the ability of a company to generate income (profit)
relative to revenue, balance sheet assets, operating costs, and shareholders’
equity during a specific period of time. They show how well a company
utilizes its assets to produce profit and value to shareholders.Return RatiosMargin Ratios

Leverage Ratios

Leverage ratios represent the extent to which a business is utilizing borrowed money. It also evaluates company solvency and capital structure. Having high leverage in a firm’s capital structure can be risky, but it also provides benefits.

Efficiency Ratios

Efficiency ratios are used to measure how well a company is utilizing its assets and resources. These ratios generally examine how many times a business
can accomplish a metric within a certain period, or how long it takes for a business to fulfill segments of its operations.

Liquidity Ratios

Liquidity ratios are used by financial analysts to evaluate the financial soundness of a company. These ratios measure a company’s ability to repay
both short-term and long-term debt obligations. Liquidity ratios are often used to determine the riskiness of a firm to decide whether to extend credit to the firm.

Multiple Valuation Ratios

Multiples valuation ratios are used by financial analysts to calculate the value of a company. These ratios can be used to determine the share price of a company going public, a target price for an equity research report, or if a company is under- or over-valued relative to its peers.

None of the above metrics care for the wellbeing of an individual so how can future DAOs be more holsitic?

A quick overview of the DAOcommons Protocol is below.

DAOcommons TTP protocol.png

DAO - Absolute Parameters

With the above Protocol, we can start with babysteps of listing down all the absolute parameters we can measure within a well functioning DAO

Skilling System

  • Identities with baseline completed (onboarding)
  • Number of people on each level
  • Number of facilitators (for eg: skill level 5 & above)
  • Per Hour rates of each level
  • Number of Creations (doc, video, audio, pic, etc)
  • Number of Courses / Handbooks / Workshops
  • Number of Learning Circles completed (with output / NFT)
  • Number of fellowships completed (quizzes and project completed)
  • Time spent in Learning

Growth System

  • Cost of member acquisition
  • Cost of member uplevelling
  • Cost of member retention
  • Cost of member Referral programs
  • Payout and Dividend(quarterly on DAO performance)
  • Revenue through Jobs
  • Revenue through Projects (gigs including)
  • Revenue through Workshops
  • Revenue through Community Subscription
  • Revenue through Course (live, recorded)
  • Revenue through staking NFTs / licensing creations
  • Time spent in Performing / Executing

Operations System

  • Number of Processes Setup
  • Number of Processes executed
  • POW validation / signature / transactions to blockchain
  • Time spent in communitybuilding

DAO Health Ratios

Simple two or 3 parameter Ratios to measure the health of a DAO with the wellbeing of an individual at its core

Supply / Labour / SkillingSystem

  • Upskilling Rate For a given time = Number of people leveled up / Number of people enrolled
  • NFT creation rate
  • NFT monetization Rate
  • LearningCirlce Efficiency Rate
  • Fellowship / Course Efficiency Rate
  • Onboarding to Baselining Rate
  • ValueCaptureProtocol logging Rate

Demand / Money /GrowthSystem

  • Return on NFT
  • Return on Workshops
  • Return on Courses
  • Return on Learning Circles

Operating System

  • POW validation rate (Transactions per Second / month ) ?
  • Project Closure Rate = Number of projects completed /Number of projects started
  • Project Efficiency Rate = Number of projects finished within end date /Number of projects completed