Tokenized Communities have the potential to revolutionize the way people work, coordinate, and create value. However, we are in the very early days, with any different experiments being run daily.
At Forefront, one of our primary goals is to help distribute the necessary context to help community members make informed decisions that can benefit their community. However, individual community metrics are only so valuable on their own. What is needed is context on the broader ecosystem. This is why we’ve introduced Community Scores.
It’s exciting to hear that one’s Token Holders have grown by 4% month-over-month, until you realize the industry average is 8%.
This sort of relative analysis is especially important in a bear market.
We have developed a tool that allows anyone to determine a weighting formula that reflects their values and compare communities against one another.
Our methodology consists of aggregating metrics across communities, calculating standard deviations and z-scores per metric, and multiplying by the metric weighting ascribed by the user.
This allows anyone to see the relative performance of DAOs against themselves.
Bell Curve’s have been used widely over the decades in business and academia. Perhaps most famously, Jack Welch introduced a similar methodology to rank employees at General Electric.
It’s a particularly apt tool in the context of tokenized communities in that neither Forefront, nor anyone else, has to develop an arbitrary points or ratings system. Every community is simply compared against its peers on various metrics.
The community scores are currently based on the weightings applied to four major categories of metrics: Social, Treasury, Tokenomics, and Governance. Initially, the focus is largely on comparing on-chain data, though the astute observer will notice a few additional metrics such as Twitter followers.
The following provides a snapshot of some of the metrics contributing to the overall scores. Forefront will continue to add to this list;
Social: Twitter followers, Twitter growth, member growth (if applicable), number of token holders, token holder growth, active members, age of DAO;
Governance: Proposals per month, average number of token holders voting per proposal, % of token holders voting per proposal;
Treasury: Total treasury value, stablecoin value, ETH/BTC value, runway;
Tokenomics: Gini score, 2% liquidity trade depth.
We have developed 3 weighting templates for the sake of simplicity and are working with industry leaders to introduce additional templates.
For starters, users can compare communities across the following categories:
General Community Score: This is Forefront’s assessment on what a fair and balanced score weighting system looks like given the metrics currently at our disposal.
Social 50%, Treasury 25%, Governance 15%, Tokenomics 10%.
Stability Score: These weightings are shifted to emphasize the size of token holders, number of followers, age of DAO, size of treasury and percent of stable coins.
Social 38%, Treasury 40%, Tokenomics 12%, Governance 10%.
Growth Score: These weightings are shifted to favor faster-growing communities with a greater emphasis on growth of token holdings, Twitter followers, and members.
Social 60%, Treasury 25%, Governance 10%, Tokenomics 5%.
The Way Forward
Forefront will continue to add metrics and communities to Terminal, and community scores will continue to evolve as a result.
We want to emphasize that the communities listed are all industry leaders – while your favorite community might have a relatively low score, that is only in comparison to other powerhouse DAOs such as ENS and Gitcoin. Moreover, different organizations are optimizing for different goals and no single score can capture the essence, strength, and vitality of a community.
In the coming months, Forefront will be introducing some additional weighting metrics, experimenting with off-chain data, and building an interface that allows the user to input their own weightings. This last feature would force the user to make their own value judgments on what constitutes a strong and healthy DAO.
Forefront will continue building tooling that bring transparency and context to tokenized communities and their members.
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