DAO Treasuries Overwhelmingly Concentrated in Native Tokens

A new report from GSR Markets has revealed that DAOs (Decentralized Autonomous Organizations) are holding over 70% of their treasuries in native tokens, creating a precarious feedback loop.

This concentration problem has been identified as a major vulnerability for DAOs, with the majority of their treasury assets being denominated in tokens whose value can fluctuate by 30-50% within weeks.

The report notes that this cycle has repeated across multiple market downturns, with projects consistently seeking hedging solutions only after prices have already plummeted. The authors advocate for a straightforward framework: separating treasuries into two buckets - operating reserves and long-term holdings.

GSR recommends options structures like collars as a hedging mechanism to mitigate the risks associated with concentrated treasuries. A collar involves buying downside protection while simultaneously selling some upside to offset costs, giving up potential gains in exchange for a floor on losses.