GSR report flags structural risk in DAO treasury design
DeFi & Yields ·
A new GSR analysis finds that most DAOs keep about 70% of treasury assets in their own native tokens, a concentration that can amplify downturns rather than cushion them.
The report describes crypto treasury management as carrying major structural flaws, chief among them this heavy reliance on native-token holdings. When a project's token price falls, treasury value, protocol revenue, and market activity tend to decline together, producing what GSR calls a procyclical negative feedback loop: the same downturn that erodes a DAO's balance sheet also weakens the demand and activity that might otherwise support the token.
Part of the problem, according to the analysis, is timing. Projects typically look for hedges only after prices have already dropped, by which point implied volatility has risen and protection has become more expensive. That reactive pattern leaves treasuries exposed during the exact stretch when a hedge would be most valuable and least affordable.
A related read on the same findings notes that this concentration in native tokens creates a structural vulnerability to correlated asset declines, echoing GSR's core point that treasury, revenue, and market activity are not independent variables for most DAOs but move together.
To address this, GSR recommends separating operational reserves from long-term holdings, rather than treating the treasury as a single undifferentiated pool. It also points to collar structures as a way to secure downside protection at zero cost, a mechanism intended to extend a project's runway specifically during bear markets when native-token concentration is most punishing.
The report does not specify which DAOs or protocols were examined to reach the 70% figure, nor does it detail how widely collar structures or reserve segmentation have already been adopted across the industry. Whether treasury managers act on these recommendations before the next downturn, rather than after prices have already fallen, remains an open question.