Hey ENS community,
My name is Ann and I’m the Governance Researcher on the StableLab team, and we recently launched DAOmeter, a maturity rating system for DAOs.
The goal of DAOmeter is to serve as a public good by providing an effective method of evaluating and benchmarking the maturity levels of various protocols. This is achieved through a scoring system that encompasses key categories within protocols, such as Community, Voting, Documentation, Security, and more.
Based on our evaluation, we have assigned ENS DAO a maturity score of 68%.
We identified several areas of improvement. First of all, we noticed that ENS’s native token is above 90%. We also noticed that there is no assigned team to the treasury who reports on it. Are there any specific tools you use to assist in your treasury management?
I’d like to clarify that DAO maturity doesn’t equal “decentralization”. We provide a 40 page report on the breakdown of the score as well as the research methods behind DAOmeter, which you can find here.
As we’re committed to the continuous improvement and development of this tool, we’d love to hear from the broader community. Please feel free to share your thoughts, suggestions, and insights with us as we work to improve the DAOmeter scoring system.
If you want to try it, visit here.
Cheers,
StableLab
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Nice effort!
90% of what?
See the Endowment management threads here on the forum - Karpatkey manages a large part of the treasury, though not the entirety of it.
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Thanks nick.eth, just to clarify, we were looking at ENS DAO treasury on deepDAO and noticed that the native token makes up more than 90% of the total treasury composition.
Ah. We don’t consider ENS tokens as a financial asset.
Interesting. What do you refer them as?
$ENS is a governance token.
The ENS DAO doesn’t use $ENS as a substitute for money in the same way that other DAOs use their native tokens — rather, it confers voting rights on holders which are activated when tokens are delegated. From a treasury diversification perspective, it is not relevant that the token makes up 90% of the DAO’s token holdings, when it is not used for spending.
Whether a DAO’s treasury is sufficiently diversified is a little bit more complicated than just looking at token holdings — you need to consider the spending rate of the DAO, income sources, token liquidity, and whether token prices move in unison. For instance, a DAO with a treasury that consists of ten stable coins might look good on paper from a diversification perspective, but if each of those tokens de-peg at the same time, it is not effective diversification from a risk perspective. ENS DAO is adequately diversified based on the way the protocol generates revenue and the DAO’s operating expenses.
These sorts of direct comparisons don’t tend to be overly useful as there are fundamental differences between DAOs and what each DAO is trying to achieve. The questions seem to have been deliberately chosen to show Maker as the benchmark for perfection. It would be very easy to design another set of questions where Maker doesn’t perform as well and other DAOs do much better.
Is the purpose of this exercise just to see how similar DAOs are to Maker?
One improvement that could be made, however, is adjusting the weighting system used. You have given each question the same weighting, without factoring in the importance of a given area. For instance, a DAO having zero income and zero diversification away from its native token is far more important than whether a DAO does onboarding and offboarding. Yet, with your questions, onboarding and offboarding are apparently twice as important as treasury diversification. Moreover, the onboarding/offboarding narrative doesn’t make sense for a protocol DAO in a way that it might make sense for a social DAO.
A few other things that stood out to me:
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Why is delegate compensation good?
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The DAO does not have active admin keys. The DAO (tokenholders who vote) control the DAO as it relates to ENS. The root has not yet been transferred to the DAO. Therefore, it is not accurate to say that the DAO has active admin keys when you are referring to something that is not part of the DAO and therefore not controlled by the DAO.
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A large part of the DAO’s treasury is being managed by Karpatkey in the endowment.
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Why is “custom” treasury software good?
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There is no contributor payroll because the DAO doesn’t have any employees. Working groups may pay contributors, but there does not need to be a “payroll” to do this.
8 Likes
Great work! 
I agree with Nick and Alisha’s comments. Just wanted to let you know that the treasury section needs some fixing - points 2, 3, and 4 are off.
Regarding the consideration of native tokens as a treasury asset, it might lead to some misleading conclusions. It could be better to assess treasury diversification in other ways rather than solely focusing on native vs non-native tokens.
In my opinion, a one-size-fits-all grading system for comparing every DAO in the industry doesn’t make sense. It would be more suitable to have slightly different approaches for different categories. It’s not fair to compare a DAO that’s all about public goods to one that’s focused on financial products, for example.
Overall, your approach is interesting! 
Keep it up!
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Thank you for the valuable feedback, especially on the treasury management and the weighting system used. We will take this feedback into consideration to improve the model.
In response to your questions:
1) Why is delegate compensation good?
Our justification is that compensation incentivizes delegates to actively participate in the governance process and represent their delegators’ interests. Without compensation, there may be little motivation for delegates to devote time and resources to governance activities, which could lead to a lack of participation and potentially detrimental decisions for the protocol. Also, as protocols begin to scale, this requires delegates to invest more of their time to stay updated on the changes. So delegates who receive a portion of the rewards associated with governance activities are incentivized to make decisions that benefit the protocol’s overall health and growth, rather than short-term gains that may not be sustainable for the protocol in the long-term.
2) DAO admin keys:
We will ensure to correct this in the review.
3) Treasury Management:
We will ensure to make the change in the review.
4) We will revisit this point - thanks for pointing this out!
5) The category “contributor payroll” takes into consideration working groups that pay contributors.
Thank again for your feedback and please let us know if you have any additional thoughts!
How can you be sure that compensation would drive meaningful participation, and is there currently a DAO doing this (and well) that you would choose to model?
I am asking because:
- Compensating of participation sets the stage for a cobra effect… People will drum up involvement and voting records without actually delivering the intended outcome of informed and involved representation/voting.
- Since $ENS won’t be used as compensation. I don’t know how you would propose to accomplish this.
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