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project screenshot
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project screenshot

DAO Risk

DAO Risk analyzes the risk a DAO is able to service its debts in the future. This enables on-chain DAO bonds.

DAO Risk

Created At

ETHMexico

Project Description

By analyzing DAO cash flows and treasury balances, we can enable uncollateralized, trust-based bonds. These bonds will be necessary during bear markets, where collateralized bonds and sale of equity (tokens) is inadvisable. We show an MVP variant of such a risk model which utilizes a random walk analysis (Monte Carlo simulation). If a DAOs equity value falls below its outstanding debt, it is considered insolvent.

How it's Made

We use Anyblock Analytics indeces, including traces, events, and balances on the Ethereum blockchain. These are analyzed using python and a jupyter notebook. Post-MPV, we would set it up to adjust live to incoming transactions and new data points. A lot of backtesting and more DAOs would have to be analyzed for this to become a reliable and trustworthy metric for issuing bonds.

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