Smart money management is the secret to cryptocurrency survival.
The most enduring companies—those that have weathered multiple market cycles—share a common denominator: They manage their money prudently, closing funding rounds and selling assets in the frenzy of a bull market, and then falling through the winter Deposit fiat currency before arrival.
Now, however, another cryptocurrency organization is coming to the fore. Decentralized Autonomous Organizations (DAOs) control more digital assets than ever before, and they too must learn to weather crypto seasonality by protecting their treasury value.
The difficulty is that DAOs do not deposit funds with banks or prime brokers to provide traditional money management services. Instead, what they need are crypto-native tools for managing day-to-day DAO operations and efficiently distributing assets.
Difficulties in DAO Fund Management
Over the past few years, the largest Decentralized Autonomous Organizations have controlled a huge amount of value: total funding of DeFi DAOsover $9 billion, by mid-2022, assets under management per DeFi DAO on averageover $100 million。
However, while DAOs are well-funded, DAOs are not necessarily well-managed.
Traditional centralized cryptocurrency companies usually hold large cash reserves, but as of June 2022, only 23% of DAOs hold stablecoins, and 85% of DAOs store their funds in a single asset.
In fact, many DAOS treasuries consist only of their native tokens.
Yes, when a bear market hits, those same tokens can suffer 80% to 90% drawdowns, undermining efforts to ensure critical spending can continue to be funded.
Still, selling treasury tokens for stablecoins is often viewed as heresy. It can trap the token holding community and have a big impact on the price.
Thus, the DAO Treasurer is caught between a rock and a hard place.
What to look for in a DAO treasury management solution
To find a solution to this conundrum, DAOs need the right toolset.
The right DAO treasury management solution will protect shared assets from internal and external threats and enable all treasury functions - including diversification - to be carried out efficiently and securely.
access to financial services
A key job of a financial manager is to allocate assets efficiently to minimize risk and maximize longevity. For many DAOs, this simply means being able to diversify into stablecoins with minimal market impact. But it can also mean growing capital through investments, accessing credit to fund development and operations, farming tokens to earn yield, or using sophisticated financial instruments to hedge against market volatility.
governancegovernance。
Protect funds with security and governance policies
Following 2016The first DAOAfter the $60 million hack, we saw a string of other exploits that continues to this day. In the past few months alone,BadgerDAOwas hacked and lost $120 million,Audius TreasuryHacked and lost $6 million.
Additionally, DAOs remain vulnerable to insider threats of corruption and collusion from members who assign access to assets to manage day-to-day activities such as allocating budgets, rewarding contributors, and funding proposals.
Traditional multi-signature is a solution, but it has serious limitations: all key holders have the same ability to sign transactions, which means that only simple governance threshold schemes can be implemented. Also, when a signer leaves or a new signer joins, you typically have to transfer all funds to a brand new wallet.
Qredo decentralized multi-party computation reduces the possibility of theft to impossible odds and allows you to delegate specific permissions to different members based on their roles in the DAO. This way, every time a transaction is sent, it must follow a workflow determined by a predefined governance policy.
Record keeping and report export
To meet investor demand, DAOs are producing increasingly extensive reports (such as this example from Yearn) that disclose details such as income statements, balance sheets, key revenue drivers, operating expenses, and salaries.
Qredo facilitates this by recording all transactions (including policy changes, transactions, etc.) on a layer 2 blockchain, providing an immutable record of activity.
The Future of DAO Fund Management
As decentralized governance models mature and increase in complexity, we are likely to see more complex DAO treasury management—increased use of credit and other financial instruments to support day-to-day operations and transactions such as decentralized M&A.
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Original link:https://www.qredo.com/blog/dao-treasury-management-the-next-big-thing
Qredo Chinese page:qredo.com/zh-cn
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