A New Mental Model for Defi Treasuries

DAOs should discount native tokens from their treasury immediately – they are the crypto equivalent to authorized but unissued stock.

To summarize the financial impact, $6 million in credit losses from Black Thursday erased $10 million in earnings accumulated over 3 years. The $4 million in additional losses could have been avoided if Maker held more treasury reserves in stable assets like DAI, as they could have used these funds to cover insolvent loans without needing to sell M... See more

We hope you see the connection to native tokens in DAO treasuries: these are the crypto-equivalent of authorized but unissued shares. They are not assets of the protocol but merely report how many tokens the DAO could “legally” issue and sell to the market.

While we agree that native tokens inside a project’s treasury may be financial resources, counting them as assets on their balance sheet does much more harm than good and is often used as an excuse for poor treasury management.

However, almost all of this supposed treasury value comes from the projects’ native tokens such as UNI, COMP, and LDO, as the following charts show: