DAO Treasury/Balance Sheet Management

Much the same as how traditional corporations can use retained earnings, equity, and debt to finance themselves, DAOs also have a similar universe of options:

Retain protocol revenue and non-operating income generated from treasury assetsSell native tokens for stablecoin/ETH/BTCTake on debt.

Most protocol DAOs currently only hold their native protocol token on their balance sheets. Given the volatile nature of cryptocurrencies, this could mean that DAOs are forced to sell their native tokens during extended bear markets (and therefore at inopportune prices) to finance ongoing operations. Consequently, DAOs should first ensure that they... See more

Given their operating expenses are denominated in USD/fiat, another sustained bear market might force DAOs to sell native tokens at “fire-sale” prices to finance their normal operations. DAOs therefore ought to generate multiple income streams (i.e., protocol revenue and yield from investments) that can cover these operating expenses; but since the... See more

Currently, even some of the largest protocols are unable to generate enough revenue to cover operational expenses (audits, salaries/payments to contributors, marketing, etc.). Yearn, for instance, operates at a loss even after accounting for non-operating income from yield farming. As such, retaining protocol revenue alone is likely to be insuffici... See more

Currently, only overcollateralized debt has become commonplace in DeFi. Despite this, the vast majority of DAOs cannot simply go on Compound/Aave/Maker and open a debt position — even if a DAO’s native token can be found on e.g., CREAM or Unit Protocol, the borrow capacity/debt ceiling for the token likely will be insufficient for the DAO’s needs. ... See more