Forward the Original Title‘What Insights Do DAOs Hide?’

I’ve spent a lot of time digging into DAO treasuries, governance structures, and voting patterns. The numbers look impressive at first glance:

• 50,845 DAOs,
• $24.3B in total treasuries,
• and 11.8M governance token holders.

Some DAOs are getting it right. Others are learning the hard way that a big treasury alone doesn’t guarantee long-term success.

But beyond the surface, the data reveals key insights about how DAOs function, where they excel, and where challenges remain – crucial data for making solid investment decisions. So, you understand, where DAOs go from here depends on how they adapt to these structural inefficiencies.

The full version of this article which includes a checklist of key factors to consider when exploring DAOs, is exclusively available on my Substack.

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Treasury Size vs. Treasury Efficiency

I see people flexing DAO treasury balances all the time. Uniswap has $3.9B, Mantle $3.6B, and Optimism $2.2B. But a large treasury isn’t the same as effective capital allocation.

$21.4B in DAO funds are liquid, but $2.9B is locked in vesting, meaning it can’t be actively used.

According to statistics by DeepDAO, Protocol funds ($4.6B) heavily outweigh project funds ($1.1B) which tells us that most capital is focused on infrastructure rather than direct ecosystem growth.

While DAOs collectively manage billions in treasury funds, the real challenge lies in deploying these resources efficiently. A significant portion of treasury funds is categorized into protocol funds and project funds, each serving distinct purposes.

Protocol funds, which typically dominate treasury allocations, are reserved for maintaining and improving the core infrastructure, security, and governance upgrades of a network. For example, @Polkadot directs part of its treasury toward parachain security, interoperability enhancements like XCM, and governance tooling improvements, all of which strengthen the protocol’s foundation.

On the other hand, project funds are focused on ecosystem growth, grants, partnerships, and community initiatives. These funds fuel adoption and incentivize participation. Programs like @Optimism‘s Retroactive Public Goods Funding (RetroPGF) exemplify this category, distributing millions in grants to developers and researchers who contribute to the network’s growth.

The Reality of DAO Governance

DAO governance was supposed to put power in the hands of the many. Instead, in a lot of cases, a small subset of wallets still controls most major decisions.

G-Score metric by DeepDAO ranks DAO participants based on their voting, proposal-making, and governance activity across multiple DAOs. It tracks over 10 million blockchain addresses, weighing recent activity more heavily to reflect current influence.

The G-Score ranking reveals that a small group of wallets consistently ranks at the top in terms of voting influence across multiple DAOs.

Key observations:

• The top-ranked wallet (alex-4135.eth) is part of 48 DAOs, has cast 3,560 votes, but has not made a single proposal, suggesting influence is centralized among repeat voters rather than active governance participants.
• The top 10 wallets collectively have over 20,000 votes, yet most have zero proposals, indicating that power lies with a few active voting entities rather than broad community-driven governance.
• A majority of these top wallets (99.99% relative G-score) suggests that a tiny fraction of participants hold disproportionate voting influence across multiple DAOs.
• Some wallets participate in over 100 DAOs, signaling that governance is not necessarily community-driven but often dominated by repeat delegates or governance whales.

While DAOs promise decentralized decision-making, holding a governance token does not guarantee active participation.

In the past month, 124.6K new governance tokens were acquired, yet only 6K new voters and proposal makers engaged in governance. This translates to a governance participation rate of just 4.82%, highlighting a major gap between token ownership and actual involvement in decision-making.

So, having a governance token doesn’t mean having influence. Many token holders don’t vote because:

• They don’t believe their vote will matter.
• They don’t have time to track every proposal.
• They’d rather delegate decision-making to a few key players.

Delegation is useful, but it also concentrates power. This is where DAOs need to adapt, whether through reputation-based voting, quadratic models, or other mechanisms that balance engagement with efficiency.

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