DAO Treasury Management Insights

DAO Treasury Management Insights

DAO Treasury Management is an important topic, but I will talk about this topic in general.
What is the best system for managing it?

There is no definitive answer to this because it varies from one organization to another.

There are many points and questions we should think about before building any treasury management system for any DAO.

In fact, building a system and policy for treasury management is completely different from one organization to another. It does not have a fixed form but is determined according to the different goals and circumstances of each organization.

But by thinking about and answering the following points, the correct system for treasury management can be drawn.

Risks and Questions

1.The cryptocurrency market is sometimes not fixed, which means that the price of cryptocurrencies is not stable, whether it is the native token or any other tokens that may be in the treasury.

2.Inflation and depreciation of major currencies such as the dollar and the euro, even stable coins, are not currently secured.

3.The current global economic crises affect all markets and industries, not just the crypto industry.

4.The Treasury can be hacked through any security weak point.

5.Losing access to the Treasury is a low probability, but it can happen.

6.A multiple signature system should be used so that not only one person can control the Treasury individually.

7.Will DAO leave cryptocurrencies in the Treasury without any investment?
or part of it will be invested?

8.Will we look for a completely safe investment only, or will there be a part that can be invested in things that have higher profits and risks?

9.Is it possible to invest in NFT? or in currencies and tokens for other promising and emerging crypto projects?

10.Is there an intention to buy large quantities of a cryptocurrency for another project?
to control this project, control the decisions in it, and make this project integrate with or serve the original project?

11.Holding native tokens in the treasury is logical, but should only native tokens be held? or does the Treasury need to diversify?

-DAO needs stablecoins (DAI, USDC, etc.) for operating expenses.

Native tokens may drop suddenly at some times, especially during crises.

Diversifying the treasury may save the organization from decline, help it correct the situation, and make native tokens protected.

Keeping stablecoins and cryptocurrencies such as Ethereum and Bitcoin in the Treasury can be a good thing.

-ETH is until now so important to crypto and to the future of the crypto industry.

-BTC is, until now, the most important and most famous in the crypto industry, and it is also an industry indicator.

Most of the stablecoins are linked to the US dollar, although there is always the possibility that it will decrease or disappear. It is not completely safe, but it is a good guarantee.

Therefore, the best distribution is between native tokens as a base and adding them to the Treasury with Ethereum, Bitcoin, and stable currencies, and adding other cryptocurrencies and another part to promising cryptocurrencies. In my opinion, the diversification may be useful.

11.Is it better to keep high liquidity? or invest the cryptocurrencies in the treasury and keep only the necessary liquidity to meet the operational expenses?

What is the amount of liquidity that should be maintained?

12.Is there an intention to try to raise the value of the native token?
or the intention to maintain its current price? or is there a desire to reduce it?

13.Is there a desire to increase the demand for buying the native token?

14.Is there a desire to rationalize spending so that cryptocurrencies are injected into other investments? or develop existing products?

Treasury management is certainly influenced by management objectives.

The answers to the previous points are never the same, and policies differ from one organization to another. The answers determine the way to manage the treasury.

Let’s see different models.
I got the data from the following website: https://openorgs.info/

We can see some models.
nm1

In this model, the Treasury has no diversity but contains only native tokens or a few cryptocurrencies.

Other models of diversification exist, and in a different way, in some organizations,
the treasury contains multiple cryptocurrencies with a good variety, native tokens, stable coins with Ethereum, and other currencies.

nm2

In my opinion, the second system is better; perhaps it is not suitable for everyone, but from my point of view, it may be safer.

The topic is for discussion, and I hope community members will contribute their opinions in the comments.