The fine people at @chainalysis studied 197 DAOs and created a report exposing how most DAOs are not actually very decentralized.

"Dissecting the DAO: Web3 Ownership is Surprisingly Concentrated"

We read through it and summarized some key insights 🧵 👇
@chainalysis What we'll cover in this summary:

• Concentration of governance token holdings
• Impact of high concentration on DAO governance
• What kind of DAOs are most common and well-funded?
• Treasury management: What assets do DAOs hold?
• Who contributes to DAOs?
@chainalysis First a high-level overview of how DAOs function:

• Founders create a governance token.

• They distribute these tokens to users, backers, and other stakeholders. These tokens can be traded in secondary markets.

• Each token corresponds to a set amount of voting power.
@chainalysis This governance process decides the future path for the DAO.
@chainalysis 1. Concentration of governance token holdings

Data from analyzing 10 major DAOs shows that less than 1% of all token holders have 90% of the voting power. Image
@chainalysis This has serious implications: if the top 1% form an alliance, they can outvote the remaining 99% on any decision.
@chainalysis 2. Impact of high concentration on DAO governance

There are three key governance actions:

(1) Voting - any holder can vote

(2) Creating Governance proposals:

A user must hold between 0.1% and 1% of the outstanding token supply to create a proposal.
@chainalysis Based on top 10 DAO proposal requirements:

From the @chainalysis blog post: "Between 1 in 1,000 and 1 in 10,000 of these ten DAOs’ holders have enough tokens to create a proposal." Image
@chainalysis (3) Passing a proposal:

A user must hold between 1% and 4% to pass it.

"When it comes to single-handedly passing a proposal, between 1 in 10,000 and 1 in 30,000 holders have enough tokens to do so."
@chainalysis Implications: Overly concentrated voting power in DAOs can result in decision-making that contradicts the principles of decentralization.


This proposal passed with 1.1 million “yes” vs 30k “no” votes.

But more than 1 million of those votes came from a single user.
@chainalysis 3. What kind of DAOs most common and well-funded?

In terms of raw numbers and treasury sizes, DeFi-related DAOs have a giant lead.

They account for 83% of all DAO treasury value held, and 33% of all DAOs by count. Image
@chainalysis 4. Treasury management: What assets do DAOs hold?

Most of the DAOs vary in size, but most of their treasuries hold similar cryptocurrencies.

More than 50% of the DAOs hold USDC in their treasury Image
@chainalysis 85% of DAOs’ on-chain treasuries are stored in a single asset.

And that asset is a stablecoin in only 23% of the 197 DAOs. Image
@chainalysis 5. Who contributes to DAOs?

DAO users are more savvy DeFi users, as you might expect.

From on-chain data of DAO contributors:

• 17.9% of DAO treasury funds came from centralized services
• 82.1% of the funds originated from decentralized services. Image
@chainalysis This is just a summary: We recommend reading the full blog post on @chainalysis's website here:…
@chainalysis The @chainalysis team also prepared a report about the "State of Web3".

You can find the full PDF here:…
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