How do we manage the money? What deserves treasury spending and what doesn’t? How should we diversify the treasury’s assets? Should we borrow capital? Most DAOs are still figuring this out. The best practices are being written. We’re all exploring this new frontier together. But there’s one thing for sure: DAO treasuries are massive. So how should DAOs approach treasury management?
- $DAI, $USDC, $USDT
- Yield-generating variants like aTokens, cTokens, yTokens, ptTokens,...
- LP pairs where both assets are correlated stablecoins ($OHM/$FRAX)
- Indices like $SYI (@indexcoop) and $DPI
- Credit risk of the issuer (e.g. insufficient collateral)
- Smart contract failure (e.g. bugs/exploits)
- Legal/Regulatory (e.g. government intervention)
- Purchasing power risk (e.g. return less than inflation)
While recent asset price falls have taken some of the shine off of the defi bull market, the trend towards treasury diversification continues unabated.
"With price inflation front of mind particularly among crypto enthusiasts, it can be hard to see the appeal of holding a fiat linked asset. On the other hand, stablecoins offer a few key benefits that crypto native assets generally lack."
SushiSwap’s community has approved a proposal to build sushiHOUSE, a fully-customized treasury management solution built by the Yam Finance team. SushiSwap continues its role as a groundbreaker in DeFi by electing to diversify its treasury using the First Treasury Management Solution Designed Just for DAOs — by DAO House, a division of Yam.
Now, what about a real-life example?
The BED index is meant to track crypto’s top 3 investable assets. The index is a full portfolio solution brought to life by Index Coop. BED and Bankless have great brand recognition and Bankless will use its media platform spanning video, podcasts, and articles to educate newcomers on the assets in the BED index. Additionally, the BED index could become a tool to diversify the treasury of the Bankless DAO? The Bankless $BED Index passed through @indexcoop decision gate #2. Equally weighted between BTC, ETH, & DPI, BanklessDAO will receive 0.125% fees streamed directly to its Treasury. (snapshot vote)
Last but not least, a fresh tool to explore:
Imagine earning interest on your treasury. Imagine custom strategies for treasury diversification and token buybacks.
"Crypto treasuries offer the promise of transparency and community empowerment. But to realize this promise, we need to build tools and frameworks to organize treasury data, produce real-time financial statements, audit those statements, and rate the treasury’s financial health." - Shreyas
- v1: Grants programs: similar to UNI, COMP, AAVE programs
- v2: Committees and DAOs make treasury allocations within their mandate
- v3: Decentralized treasury spending (@coordinape)
- v1: Diversification into stablecoins & yield optimization (@indexcoop)
- v2: Token buybacks at discount, incentives, liquidity provision
- v3: M&A, early-stage investments from grants programs, insurance
- Deposit collateral into @AlchemixFi, or @MakerDAO & borrow against it.
- Unsecured loans for highly rated treasuries, bond issuance, ...
- Fund ops, acquisitions, or yield farming with debt (h/t @niemerg)
- v1: @iearnfinance's report is an excellent example
- v2: @MakerDAO's real-time income statement & balance sheet
- The recruitment process for DAO treasuries should be streamlined
- A treasury DAO to onboard & train the best ppl to work at treasuries & curate the best opportunities for these ppl (cc @llamacommunity_)
- DM if you're looking for opportunities to work with DAO treasuries!
Creator & curator DAO treasuries will be different from Protocol DAO's:
- Distribute tokens to tastemakers, e.g. cryptopunk holders
- Recruit new creators by buying their NFTs
- Swap tokens w similarly aligned communities
- Airdrops to active members
This is a strategy that fits our UnbanksyTV DAO like a glove! Can't wait to play around with all these tools and discover the most efficient way to make treasury management transparent, automated, and simplified.