DAO Health Framework: Designing Indicators for Long-Term Institutional Sustainability

This chapter introduces the concept of institutional health as a lens to evaluate the long-term sustainabilitySustainability of decentralized autonomous organizations (DAOs). Moving beyond superficial activity metrics such as proposal counts or treasury size, it argues that resilient DAOs are those capable of sustaining participation, distributing power, executing decisions effectively, and learning adaptively over time. To operationalize this perspective, the chapter proposes a multi-dimensional framework organized along three core dimensions: organizational integrity, social cohesion, and cognitive capacity. From these foundations, the DAO Health IndexDAO Health Index (DHI) is developed as a composite diagnostic tool, integrating predictive indicators across participation continuity, power distribution, execution capacity, adaptabilityAdaptabilitygovernance flexibility, and transparencyTransparency. Rather than functioning as a competitive ranking, the DHI serves as a heuristic for internal reflection and longitudinal tracking. Applied to three emblematic DAOs, Nouns, Optimism Collective, and Gitcoin, the framework reveals how different governance architectures display distinct strengths and vulnerabilities. Comparative analysis highlights the importance of adaptabilityAdaptabilitygovernance flexibility and institutional memory, showing that financial reserves or technical sophistication alone cannot ensure resilience. The chapter concludes by emphasizing that designing sustainable DAOs requires embedding reflexive governance practices, continuous legitimation, and mechanisms of institutional learning.