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Concentration of
Piconwer Index
in DAOs
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Tracking and analyzing the distribution of influence within decentralized governance structures

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Personalize HCC Influence and Visualize CPI Trends

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Start by clicking 'Start Simulation' to explore the CPI Simulator page.

Add Influence

Assign influence percentages to each HCC in the fields provided.

Ensure the total equals 100%.

Generate Graph

Press 'Simulate' to create a CPI graph and compare it with baseline data.

What is CPI?
The Concentration of Power Index (CPI) is a metric designed to measure the concentration of power within decentralized governance structures. Unlike traditional concentration indices that solely account for the distribution of voting power, the CPI takes into consideration the influence exerted by different governance bodies, such as houses, councils and committees. This makes it a more comprehensive and accurate measure of power distribution in the context of a DAO.
Methodology
CPI formula for Optimism Collective:
∑i ∈ DVi 2where Vi=∑j ∈ HCC(Vj∗Ij)\sum_{i \ \in \ D} V_{i} \ ^2 \quad{ where } \ V_{i} = \sum_{j \ \in \ HCC} (V_{j} * I_{j})
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Where
  • start icon for list𝑉j is the voting power of delegate 𝑖 in HCC j.
  • start icon for list𝐼j is the influence factor of 𝐻CC j in the overall Optimism Collective.
  • start icon for list𝑉i is the weighted voting power of delegate i.
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Set Definitions
  • start icon for listD is the set of Delegates. D = {d₁, d₂, d₃, … , dₙ}
  • start icon for listHCC represents the set of Houses, Councils & Committees which includes HCC = {Th, Ch, Gc, Sc, CoC, DAB}
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Explanation
  • start icon for listThe CPI is the sum of the squares of the weighted voting power of each delegate.
  • start icon for listThe weighted voting power 𝑉𝑖 for each delegate 𝑖 is calculated by summing the products of the voting power 𝑉j and the influence 𝐼j for each house and council in the Optimism Collective.

Expert Analysis

The Concentration of Power Index (CPI) offers crucial insights into the governance health of decentralized autonomous organizations (DAOs) by revealing how power is distributed. High CPI values often signal centralization, leading to potential governance issues and reduced diversity. Conversely, lower CPI values reflect a more balanced and representative structure.
In DAOs with multiple councils and committees, such as those with extensive governance structures, CPI trends generally indicate a more decentralized system. This contrasts with other DAOs where power may be more concentrated among a few key participants. By effectively distributing influence across various councils and houses, these multi-faceted DAOs enhance inclusivity, resilience, and innovation. Monitoring CPI trends in such DAOs ensures that governance remains equitable and adaptable.

CPI Resources

Research Report

A comprehensive report detailing the analysis, findings, and insights on council and committee influence within the Optimism ecosystem.

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Observation File

Detailed observations and notes relevant to the analysis and calculations for council and committee influence.

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Behind the Scenes Documentation

In-depth look at the underlying processes and methodologies used in the calculations, offering additional context and technical insights.

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Github Repo

The official GitHub repository containing the source code, scripts, and other resources used in the calculation and visualization of the Concentration of Power Index (CoP) within the Optimism ecosystem.

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Influence Calculator

A tool for evaluating the influence of Houses, Councils, and Committees (HCCs) within the Optimism Collective, based on six key parameters. Community members can assign weights and scores to help identify power concentration within the ecosystem.

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Presentation Link

A brief presentation highlighting the differences between the Concentration of Power Index (CPI) and the Herfindahl-Hirschman Index (HHI), along with an overview of the CPI calculation methodology within the Optimism ecosystem.

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