DAO Treasury Management

Transcript

[Music] Hey everybody. Uh my name is Cassidy. I work at a project called Centerfuge. Uh we do asset financing. Uh tokenizing assets um pulling them together, giving them liquidity. uh currently on Ethereum. Um also going to be expanding to other chains. Today I'm going to be talking about Dowo Treasury management. This is not a new topic um but it is a newly relevant topic. Uh and I'm going to go

into why um but first I'm going to start off with why why is this important? Why are we even talking about this today? So what is it first of all? So DAO treasury management are all of the different activities processes involved in actually managing a DAO's treasury. So that includes things like custody of the assets that a Dow treasury is holding. Uh but also the strategy around that and then the active management of those funds that are held by the DAO. And there are unique constraints uh when you are a DAO. Um, of course, just like any treasury manager, even if you're a corporate treasury, you're thinking about mitigating risk. You're responsible for actually stewarding this capital, right? If you are managing this

DAO treasury, um, and that means both understanding what the liquidity needs of your DAO are. So, if you're a DAO and you have funds, that means you're probably wanting to spend those funds, right, to actually help the project uh, that this DAO is responsible for. And so there are going to be needs for actually fulfilling those funding requests in the short term. And so a DAO treasury manager needs to think about what is the liquidity of the funds in this DAO. For example, you wouldn't go stake all of the assets of your DAO um and not be able to unstake those assets for a year.

Uh so these are some of the things that you would think about. Um and you'd think about that even if you were a normal normal treasury manager uh for a corporation. But I think what's really interesting for DAO treasury managers is that they're also thinking about the alignment to your DAO's mission. So there's needs for liquidity. There's needs for wanting this capital to actually be available long term so your DAO can continue to exist in the future. But you're also thinking about things like how do I do this in a way that supports my DAO's ecosystem? How am I aligning this with the mission of my DAO and being able to actually both be responsible in my management make sure that our DAO continues to exist continues has the funds to do that but also doing it in a way that's aligned

with our core mission. So I think this is some interest something interesting that's more of a constraint for Dows than it is would be for a corporation and some of the different things that a treasury manager is thinking about when it comes to this uh management. So, you want to think about preservation. Um, and this is just being able to ensure your treasury exists into the future. And if you want to be able to fund your DAO for the next 50 years, you actually have to actively manage those funds to be able to do that. Um, and so you'll have preservation strategies that are part of your Dow Treasury's goals. Um, but at the same time, you'll need to be thinking about liquidity. And so oftentimes they're at odds with each other where a strategy that you might

use to actually make a decent return so that you can continue existing into the future would not necessarily be the most liquid strategy. And so you need to be able to balance those two things as well as other investment strategies that you might have. And this I think is an interesting piece for Dow treasuries because that appreciation piece is probably most aligned with your DAO's mission as well. that would be what you're doing to actually actively support other projects in your ecosystem potentially. And they might have the best returns, but they're also going to be the riskiest things probably that you're doing with the Dow's funds. So, these are all different things that a DAO treasury manager is thinking about.

And these are all really important reasons why we're talking about this today and why I think this is a really interesting topic for Dows. Um, I think one of the other backgrounds to how we've also gotten here, uh, is that Dowo treasuries have historically not really needed to think about this quite too much, uh, just because of the bull market. I mean, uh, prices were rising. If the DAO had funds only in their own native token, it looked like things were going pretty well during the bull market and DeFi TVL was going up because the returns that were available in DeFi were much more attractive. Whereas now in a bare market, you've got DeFi TVL going down. And at the same time, Dow

treasuries are really starting to feel the burn to their treasuries value. and they're starting to think about, okay, if I want this project to exist for the next 50 years, I've really got to start implementing these strategies. And so, I think this is a really important reason why right now you have a lot of different Dows actively thinking about this and actively building tools and solutions to actually target this problem. Um, another I think interesting thing to note is just that DeFi yields generally right now are lower even than tradi. And so this is just a comparison of the Fed funds rate um as one basic TRDFI comparison to both collateralized lending in DeFi as well as ETH staking.

And I think ETH staking is uh still relatively good and definitely probably part of a lot of Dowo Treasury strategies, but still it's something that they need to consider uh diversifying out of. And I think one interesting constraint though is that they have all of their funds on chain. they're not going to go and invest in US treasuries offchain, right? Because as a DAO, if you held everything on chain, I mean, it's already uh probably a a vote and a big decision for a DAO to diversify into a stable coin. And then to say that we actually want to pull that into some sort of legal entity, that is an extremely large headache for a Dow to think about. And so, we're actually starting to see a lot more

onchain solutions uh that are coming. And so yeah, I think coming back to this question like if this is a well understood problem of Dow treasuries needed to actively manage this um why haven't they actually addressed it up until now and I think one of the large reasons is that we haven't had the tools to do that up until now and like I mentioned with everything being on chain that means you need a solid onchain infrastructure to actually actively manage your Dow treasury. And I think this is one of the best things uh that's happened I think in the last one or two years for a Dow treasury manager is that they're actually starting to be real tools to do this. Uh one of those fundamental tools is just having really

like you would think table stakes a custody solution for a DAO. And I mean this in not just in terms of something like safe uh which has actually been a huge improvement for Dows generally and also DeFi users obviously uh but also things like um uh gosh I'm forgetting the name but Nosis Guild built a built a tool that's a smart contract tool that actually allows you to really selectively manage as a DAO through governance how you're actively going to allow a manager to manage the funds of that DAO. And so you can get really specific in the types of custody that you're letting a manager take control of. And I think this is something that's been extremely important for Dows because as a token holder, if you're

trying to steward this well, you want to be able to know exactly what's happening. And I think this is actually something that for me excites me about the space is that with DeFi, you can actually do that. And we have the tools finally to be able to do that in a way that in Tradfi you could never. Um, I think one of the other huge aspects that's come around most recently is governance. Um, and so you actually have a lot of Dows now coming up with real governance processes that a token holder can actually follow and understand what this process looks like and walk through with a manager that's having a proposal.

something that's understandable where you understand okay this is what this manager wants to do with the funds of my DAO and you can actually understand all of the different elements of the process and make an informed decision and with those managers I think that's something else that's actually coming to the space that's a really big uh I think change is actually having people that are skilled in actively managing a treasury come into DeFi and actually help these Dows and I think there's a lot more of a conversation happening now between people that have experience in trad Tradfi, but you also just don't want to bring someone from TRDFI to manage a DAO treasury. They actually have to really fully understand again that mission of the DAO and understand how what you're doing is balancing what this DAO's

mission is. And I think both of those things are fundamentally important and we're starting to see more managers uh come into the space that I think fulfill both of those needs. Um, and then also real world assets are one example here, but just assets in general coming on chain that are diversifying away from just holding other crypto tokens. And so you actually can have many different types of strategies now that you can deploy as a Dow Treasury, whereas before all you had access to was was ETH staking. Um, and now you actually can not just hold stables, but you can actually diversify into many different types of assets. you can start investing in real estate on chain as a Dow Treasury. Not necessarily that that would be part of your strategy, but it's

now possible. And I think these are some of the important building blocks that we have now that I think makes this conversation relevant now more than ever. Um, and then finally, part of that I think is uh my little note here to centerfuge and our product there I think is building on top of all these tools and it's why I'm personally most excited about this right now. So these are just some of the different players that I would say are building the stack of tools for Dowo treasury management. So you've got safe again for the custody. Carpotkkey is an example of one of those asset managers that's actively working with Dows. Uh working with them on developing a governance process that makes sense for them. Um, Stakehouse Financial is an example of uh, a team

that's actually doing financial reporting for DAO so that you can actually have not just the transparency on chain but in a digestible way that actually makes sense for token holders to understand what's going on with that treasury. And then of course you've got teams like Maker with DI and being able to actually hold stables in a way that you can uh, participate in this entire system. So I think all these things coming together is what has changed. It's new and I think it makes this area really exciting for us going forward where we can actually be much better stewards of capital for the Dows that we all work in. Um and then this is just an example of how all those different products come together. So uh you've got you know the portfolio allocation like

using all those tools to actually manage those assets. Uh you've got teams like stakehouse financial doing the financial reporting. you've got new teams coming in doing credit analysis as well. Um, and then around all of this, one of the other large things that's changed is being able to have a legal wrapper around a portion of this that allows the DAO to actually do this in a way where they're not taking risk and they're not making their token holders take any risk in this process. And so I think there's been so much change and progress in all of these different areas um that we're all building on top of that in the end allows you to actually actively manage your DAO treasury in a very responsible way and hopefully fulfill the mission of

your DAO. Um these are just a couple of examples of some of the uh governance proposals that we've seen recently. So one of these is Karpotkkey uh proposing to the Nosis DAO to actually be able to actively manage a portion of that treasury. And I think this is a really interesting example to take a look at of you know just the process that that they've gone through and understanding like what needs to actually be um transparent for all of the the token holders in a DAO and how how Karpotkkey is proposing to work with Nosis is actually I think going to set the stage for any other active manager that's going to come into DAO treasury management again using those tools like uh this you know selective um

permissions that you're able to give as a token holder and you can make it very specific what Karpatki actually has control of in the Nosis DAO treasury instead of just saying okay we give these funds to another entity actually it's completely non-custodial what Karpatkkey does and I think that's what makes this really different uh to what uh happens in tradi um and then on the other side here you've got um stakehouse financial doing financial reporting for ENS also another really interesting example um and So yeah, I think all of these things together basically bring us to a a place today where we can have both efficient but also transparent and onchain management of Dowo treasuries.

And I think this finally enables Dows to actually meet their needs and be responsible stewards of capital uh for their Dows. Um and yeah, that's all I have today. Um I don't know if we have time maybe one or two questions. Hi, just quickly um wanted to hear more about the the talent and expertise that's coming on because you know I work with startups, you know, treasury management is a common problem for every tokenized um startup here. So um and it seems to me that there's a real der of capacity to to to manage all of these

issues. Um would you be able to say more about how much interest are you just seeing a lot of interest because you're a high-profile project? Um what can we expect for that the evolution of uh talent coming on board uh to help us out? I think um I would say the bull market did a good job of bringing in a lot of TRDI people into the space. Um and I think the ones that stuck around in the bare market are the ones that I'm seeing like were bought in, right? Like the bull market brings people here and the bare market is where you filter out those of us who are actually still actively interested in making this better. And I think what changed is that you know there was this huge like you know boom in all of the the projects and all the value coming on chain and in

that there was all these new tools that have been built and I think it's making it really clear for skilled people in the space to understand that this is actually making everything better like it is improving 100x or more on how all of this works in tradi. much more transparent, it's much more efficient, and you're not getting things lost in an Excel sheet somewhere. It's all on chain, and you have the tools to be able to manage it now. So, I think um yeah, I mean, we could talk a little bit more about some of that, but I think that's something that I've seen that's really interesting.

Thank you so much. I just have one one more question. Thank you so much for the interesting present. I'm in the back here. Hi. Oh yeah. Thank you much for the interesting. just wanted to maybe hear from you because you have the insight um um about the parallels and the differences between the indicators that are used in Trefy and in um DeFi for onchain risk analysis. So like from experience, speaking from experience, what do you say? How are those new people coming in with their backgrounds of you know like managing banking treasuries, how are they adjusting their perspectives onto to crypto?

I wouldn't necessarily say that the risk assessment itself is changing. Um, and I think that's actually where we're catching up with the onchain uh, options that we have is that we're we're still trying to mirror even just what we're able to do in Tradfi in terms of like what what are we tracking on chain. Um, and and that's what something that centerfu is building and we're working with like a credit fund to actually understand what their needs are and be able to do that on chain. What I think is the most interesting for them is that it is fully tracked. it is fully transparent. They don't have to keep track of it in anything else, right?

It's all there on chain. They don't have to give uh access to it to to another entity. Uh they can just manage access control and then that entity has access to everything, right? Um and so there's a lot of ways that it's reducing the amount of like basically back office overhead in terms of risk assessment, which hopefully leaves a lot more time for the actual assessment of the risk. uh rather than needing to hire like a 20 person back office just to manage the overhead. And I think that's one of the probably the the biggest gains that we're going to see in the short term is being able to make that change. And I think that will open up new doors in terms of what we're able to see in the future.

Okay. Thanks everybody. [Music]