In our current market, there are clear examples of this — with Uniswap, SushiSwap, and MonkeDAO being the most notable.

This variation is healthy — and important as DAOs gain traction in popularity, TVL, and mainstream adoption. With a range of participants and goals, we will see a world where DAOs exist in centralized and decentralized forms.

How do we best represent this cycle of DAOs? A bell curve comes to mind…

Well first, what’s a bell curve? I dunno — my math teacher told me about it once.

JK, it’s a normal distribution, and in this case a representation of the growth trajectory of different DAOs. Imagine decentralization on the x-axis and growth on the y-xis.

What’s interesting is that this framing provides insights into how DAOs evolve along their growth path and how it impacts decentralization

To illustrate further, let’s take a look at the lifecycle of a DAO and how its decentralization progresses along a bell curve.

As a DAO is born, it begins centralized. It is a few core team members with a shared vision executing decisions — it defies the “D” in DAOs (decentralized autonomous organizations).

This is serious underperformance. Left-side of the bell.

Quickly, a DAO starts adding outside users and stakeholders — introducing mechanisms such as a token or NFTs to facilitate governance. Tools such as Snapshot allow for free and frequent voting.

It has reached its 30–40% where it has *met expectations *in its level of decentralization — the middle left of side the bell. There is still growth to be done, but it is better than it started.

Next is replacing the core team as decision-makers and forming working groups or committees.

Not all DAOs follow the same journey, however, many look like this:

As a DAO grows and meets product-market fit, it nears the peak of decentralization. The X-axis is reflective of participants & level of decentralization, while the Y conveys maturation.

As working groups are established and power is distributed among a larger group of participants and stakeholders, it reaches its peak decentralization.

It meets expectations, but maybe more.

Finally, the DAO sets its eyes on a higher goal; more users, better product / UX, or a larger treasury. Achieving this often comes at the expense of decentralization.

Legal needs to be constructed, KYC is added for regulation protection, and decision-making becomes fierce and debated, resulting in a stalemate. This is the DAO’s return toward centralization.

It is not necessarily a bad thing. As it gets better and appeals to more users, it edges near centralization — and sometimes greater efficiency.

Now that we’ve established how DAOs evolve overtime, it’s time for some real-world examples.

Remember centralization comes in different forms: voting power, organizational structure, messaging, liquidity, and leadership.

How and when do DAOs reach these different levels? Let’s take a look at examples below:

MakerDAO:

Maker is a unique DAO as it was a luminary for lending and borrowing markets and as it grows has made decentralization a core value. Many of the top contributors are anonymous, focusing on policies to enable the widest group of participants. While there have been discussions of KYC it has vehemently been struck down.

Despite its notoriety in the space and emphasis on decentralization, I would argue that MakerDAO is actually quite centralized.

With 13 recognized delegates, the top delegate controls 19.7% of the vote:

Distribution among 13 Recognized MakerDAO Delegates

And as an aggregate, these 13 control 54% of the voting power:

This distribution has improved as more recognized delegates enter and participate, however, the centralization comes in the form of the delegated voting power.

Rune Christensen, a co-founder of Maker, is responsible for delegating 76% of the current voting power. This supply, 41% of total MKR used for voting, is dominated by one individual…

More graphs because we love graphs. On average there are 17 unique voters a month, with sporadic changes in participation. As a reminder, these voters help guide $10B worth of value.

As Maker continues to grow — voters must increase and the number of delegators to achieve this goal of decentralization. On average, there are 5 delegators per recognized delegate.

SushiSwap:

Oh, dear Sushi, where do we begin? We love you, you love me?

SushiSwap a popular AMM has danced the line between centralization and decentralization. On an average vote, Sushi garners ~100 voters.

This voting power has remained relatively constant despite internal turmoil:

Whales stay whales, and retail slowly grows over time. This is true for most crypto projects.

As Sushi grew, it approached a clash between retail and institutional investors. Votes did not pass — or if they did, it was unclear the ability or timeline for implementation.

Sushi and the future of its protocol have been decided by the core team and a few investors

As it looks to empower product development and insulate devs from liability, it comes at the sacrifice of legal formation and greater DAO costs.

Organizational structure is needed and calls for a leader are intensifying.

Applying it to our bell curve, it is nearing the peak and re-approaching centralization.

Paladin:

Paladin is a newly formed DAO that enables users to borrow voting power and participate in key ETH events such as the Curve wars.

Started by a group of French developers, Paladin existed in a very centralized state.

Delegations were created and a token contract existed however lacked value or a price feed. As it grows, small committees have been introduced:

• Transferability Committee (creating liquidity & demand for $PAL)

• Community MultiSig Committee (multi-sig control & execution)

While both these teams have some remnants and participation from the core team, it is a clear positive step.

Paladin is maturing from centralized to decentralized and doing so with poise & thoughtfulness.

It is on the left side of the curve.

Well, that’s up to you to decide. If it was me — the author, Fig — it’s merely an added benefit. Some of the best products we know and use are incredibly centralized.

Centralization will create a stronger UX and onboard more users into crypto. To me, this is the paramount goal in the next two-three years.

As crypto grows, DAOs will face critical directional decisions. Where does your DAO lie on this bell curve? How do users evaluate them?

Well guess what? I just gave you a toolbox — a Craftsman’s worth of ways to measure and look at DAOs.

And not just a portable one — the jumbo one on wheels.

When in doubt, look to the curve.

In our current market, there are clear examples of this — with Uniswap, SushiSwap, and MonkeDAO being the most notable.

This variation is healthy — and important as DAOs gain traction in popularity, TVL, and mainstream adoption. With a range of participants and goals, we will see a world where DAOs exist in centralized and decentralized forms.

How do we best represent this cycle of DAOs? A bell curve comes to mind…

Well first, what’s a bell curve? I dunno — my math teacher told me about it once.

JK, it’s a normal distribution, and in this case a representation of the growth trajectory of different DAOs. Imagine decentralization on the x-axis and growth on the y-xis.

What’s interesting is that this framing provides insights into how DAOs evolve along their growth path and how it impacts decentralization

To illustrate further, let’s take a look at the lifecycle of a DAO and how its decentralization progresses along a bell curve.

As a DAO is born, it begins centralized. It is a few core team members with a shared vision executing decisions — it defies the “D” in DAOs (decentralized autonomous organizations).

This is serious underperformance. Left-side of the bell.

Quickly, a DAO starts adding outside users and stakeholders — introducing mechanisms such as a token or NFTs to facilitate governance. Tools such as Snapshot allow for free and frequent voting.

It has reached its 30–40% where it has *met expectations *in its level of decentralization — the middle left of side the bell. There is still growth to be done, but it is better than it started.

Next is replacing the core team as decision-makers and forming working groups or committees.

Not all DAOs follow the same journey, however, many look like this:

As a DAO grows and meets product-market fit, it nears the peak of decentralization. The X-axis is reflective of participants & level of decentralization, while the Y conveys maturation.

As working groups are established and power is distributed among a larger group of participants and stakeholders, it reaches its peak decentralization.

It meets expectations, but maybe more.

Finally, the DAO sets its eyes on a higher goal; more users, better product / UX, or a larger treasury. Achieving this often comes at the expense of decentralization.

Legal needs to be constructed, KYC is added for regulation protection, and decision-making becomes fierce and debated, resulting in a stalemate. This is the DAO’s return toward centralization.

It is not necessarily a bad thing. As it gets better and appeals to more users, it edges near centralization — and sometimes greater efficiency.

Now that we’ve established how DAOs evolve overtime, it’s time for some real-world examples.

Remember centralization comes in different forms: voting power, organizational structure, messaging, liquidity, and leadership.

How and when do DAOs reach these different levels? Let’s take a look at examples below:

MakerDAO:

Maker is a unique DAO as it was a luminary for lending and borrowing markets and as it grows has made decentralization a core value. Many of the top contributors are anonymous, focusing on policies to enable the widest group of participants. While there have been discussions of KYC it has vehemently been struck down.

Despite its notoriety in the space and emphasis on decentralization, I would argue that MakerDAO is actually quite centralized.

With 13 recognized delegates, the top delegate controls 19.7% of the vote:

Distribution among 13 Recognized MakerDAO Delegates

And as an aggregate, these 13 control 54% of the voting power:

This distribution has improved as more recognized delegates enter and participate, however, the centralization comes in the form of the delegated voting power.

Rune Christensen, a co-founder of Maker, is responsible for delegating 76% of the current voting power. This supply, 41% of total MKR used for voting, is dominated by one individual…

More graphs because we love graphs. On average there are 17 unique voters a month, with sporadic changes in participation. As a reminder, these voters help guide $10B worth of value.

As Maker continues to grow — voters must increase and the number of delegators to achieve this goal of decentralization. On average, there are 5 delegators per recognized delegate.

SushiSwap:

Oh, dear Sushi, where do we begin? We love you, you love me?

SushiSwap a popular AMM has danced the line between centralization and decentralization. On an average vote, Sushi garners ~100 voters.

This voting power has remained relatively constant despite internal turmoil:

Whales stay whales, and retail slowly grows over time. This is true for most crypto projects.

As Sushi grew, it approached a clash between retail and institutional investors. Votes did not pass — or if they did, it was unclear the ability or timeline for implementation.

Sushi and the future of its protocol have been decided by the core team and a few investors

As it looks to empower product development and insulate devs from liability, it comes at the sacrifice of legal formation and greater DAO costs.

Organizational structure is needed and calls for a leader are intensifying.

Applying it to our bell curve, it is nearing the peak and re-approaching centralization.

Paladin:

Paladin is a newly formed DAO that enables users to borrow voting power and participate in key ETH events such as the Curve wars.

Started by a group of French developers, Paladin existed in a very centralized state.

Delegations were created and a token contract existed however lacked value or a price feed. As it grows, small committees have been introduced:

• Transferability Committee (creating liquidity & demand for $PAL)

• Community MultiSig Committee (multi-sig control & execution)

While both these teams have some remnants and participation from the core team, it is a clear positive step.

Paladin is maturing from centralized to decentralized and doing so with poise & thoughtfulness.

It is on the left side of the curve.

Well, that’s up to you to decide. If it was me — the author, Fig — it’s merely an added benefit. Some of the best products we know and use are incredibly centralized.

Centralization will create a stronger UX and onboard more users into crypto. To me, this is the paramount goal in the next two-three years.

As crypto grows, DAOs will face critical directional decisions. Where does your DAO lie on this bell curve? How do users evaluate them?

Well guess what? I just gave you a toolbox — a Craftsman’s worth of ways to measure and look at DAOs.

And not just a portable one — the jumbo one on wheels.

When in doubt, look to the curve.