We created a new indicator to measure the financial vulnerability of DAOs.
It's called "EXPLOITABILITY".
And tracks how lucrative it is to pillage a common treasury.
SPOILER: one of the major DAOs seems particularly "exploitable" 👀
Here's how the metric is calculated 👇🧵
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"Exploitability" means: how much does it cost to buy 1 dollar from a DAO's treasury?
DAOs (mostly) use liquid tokens for voting. Thus votes have a price.
The ratio between
"COST of votes to approve a proposal"
and
"VALUE the proposal disburses"
is what we're looking for 🎯
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If a DAO has an "average exploitability" of >1.0, its lucrative to buy votes and "play protocol politics" to outright direct money towards one's preferred goals.
An "average exploitability" of 2.0, for example, suggests that EACH 1 DOLLAR in votes "BUYS" 2 DOLLARS from the DAO.
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We screened 400+ proposals across 10 DAOs to find out a few things.
First: exploitability for individual proposals is mostly between 0.1 and 1.0 👇
@UniswapFND
@CeloOrg
@nounsdao
@optimismFND
@FingerprintsDAO
@VENTURE_DAO
@BitDAO_Official
@creatorcabins
@BanklessHQ
@FWBtweets
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Second: seasonality doesn't seem to influence exploitability.
With the exception maybe of
@creatorcabins
, whose exploitability appears to be consistently increasing over time 📈
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Third: it seems like bigger DAOs (>100k tokenholders) will display lower exploitability levels.
Our sample also suggests that DeFi DAOs (versus "NFT DAOs" or "Social DAOs") are less exploitable.
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TL;DR: a *high exploitability* increases the chance of a “slow rug” - when the treasury of the DAO is drained by mercenary contributors.
We hope this metric helps DAOooors better assess the vulnerability of their orgs…
… and inspires more quantitative research on governance.
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