One of the key innovations that blockchain technology enables is the ability to easily create ventures that are fully owned (and operated) by their communities, through a community token. In most cases, ownership of the community token doesn’t just provide access to the economic upside of the venture but is also the primary mechanism to influence the most critical decisions: on-chain governance decisions assign a community member a certain number of votes that’s proportional to the number of community tokens that they hold.
Therefore, as I’ve argued before, understanding the patterns of community ownership and how it evolves over time is critical to maintaining the health of the community in the long run. Which brings us to today’s question - how?
As I initially suggested, a good starting point might be the Gini coefficient, a measure of wealth inequality in a nation or social group. The Gini coefficient is relatively easy to calculate, and relatively easy to understand - its values vary between 0 and 1, where 0 is the most equal distribution - all community members hold exactly the same number of community tokens; 1 is the most unequal distribution - a single community member holds all the tokens. Since it’s a normalized coefficient, it’s also easy to compare across different points in time and across different communities.
However, the Gini coefficient is not without its flaws, and Vitalik being Vitalik wrote a wonderful piece highlighting a key challenge with the Gini coefficient - its actionability.
He argued that it mashes together two separate community challenges:
Both Dystopia A and Dystopia B will have the same Gini coefficient of 0.5…
Vitalik went deeper than this, reminding us that since a community token is only a portion of a person’s wealth, the number of tokens they own is not just a measure of the resources that are available to them, but also a measure of their interest in that particular community. Which certainly invites a deeper reflection on the moralistic implications of community token inequality, and perhaps an area for future research exploring how different funding sources (DAO treasuries, DEX, etc.) affect token ownership distribution. Measuring token ownership distribution is a dimension of community health, but looking at community health just through that lens is rather myopic.
Nonetheless, we want to overcome the bundling of dystopia A and dystopia B challenge and Vitalik proposed a few indices that do just that:
So I went ahead and did just that. I’ve built a Dune Analytics dashboard that calculates the various indices for a given ERC-20 community token. You can find it here.
Here’s how the different indices look like for the Bankless DAO community token (BANK):
And for the Braintrust community token (BTRST):
Along the way, I’ve come across some unique challenges in measuring these indices for community tokens. Some I was able to overcome. The rest are areas for further research:
About talentDAO: talentDAO is a community of organizational scientists, strategists, and researchers with a shared mission to unlock human potential in the decentralized, digital economy. We conduct scientific research that helps DAOs thrive while educating the public on the greater decency and agency offered from this decentralized future of work.