Network-Driven Valuation of Decentralized Organizations: Theoretical Models and Empirical Perspectives

Andrea Cesaretti ()

Chapter 5 in DAO Governance in Theory and Practice, 2025, pp 95-130 from Springer

Abstract: Abstract This chapter tackles the challenge of measuring DAO value beyond superficial metrics such as token price or treasury size. Drawing on network theory, it proposes a multidimensional valuation framework built around three dimensions: network vitality, governance health, and economic outputs. Traditional indicators, market capitalization, total value locked, and token holder counts are shown to overlook participatory quality, institutional resilience, and real-world impact. To address these gaps, the chapter adapts Metcalfe’s, Reed’s, and Beckstrom’s Laws to decentralized governance, focusing on weighted participation, subgroup formation, and efficiency gains. On this basis, it introduces original Key Performance Indicators aggregated into three composite scores: the Composite Network Value Score (CNVS), the Governance Health Score (GHS), and the Economic Output Score (EOS). These converge in a unified DAO Valuation Score (DVS). An empirical illustration with a grant DAO demonstrates how the framework captures strengths and vulnerabilities often hidden by conventional metrics. The chapter concludes that structured, network-driven valuation offers a more reliable foundation for assessing DAO sustainabilitySustainability and supporting informed decisions by investors, developers, and communities.

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-032-09675-3_5

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DOI: 10.1007/978-3-032-09675-3_5

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