Evaluating DAO Sustainability and Longevity Through On-Chain Governance Metrics (2504.11341v2)

Abstract: Decentralised Autonomous Organisations (DAOs) automate governance and resource allocation through smart contracts, aiming to shift decision-making to distributed token holders. However, many DAOs face sustainability challenges linked to limited user participation, concentrated voting power, and technical design constraints. This paper addresses these issues by identifying research gaps in DAO evaluation and introducing a framework of Key Performance Indicators (KPIs) that capture governance efficiency, financial robustness, decentralisation, and community engagement. We apply the framework to a custom-built dataset of real-world DAOs constructed from on-chain data and analysed using non-parametric methods. The results reveal recurring governance patterns, including low participation rates and high proposer concentration, which may undermine long-term viability. The proposed KPIs offer a replicable, data-driven method for assessing DAO governance structures and identifying potential areas for improvement. These findings support a multidimensional approach to evaluating decentralised systems and provide practical tools for researchers and practitioners working to improve the resilience and effectiveness of DAO-based governance models.