Looking at on chain DAOs treasury

Introduction

Are we in a prolonged bear market or not? Nobody really knows.

If it is the former a lot of projects which have not yet failed, will eventually go under. Not because the product or the service offered was not good or because they committed fraud but because they did not spend their cash wisely during the bull. That’s why you don’t want to hold tokens that do not have any money left or incentives to work.

Looking at DAOs treasury

Cash and treasury management allow you to keep building the project no matter what happens.

Cash accrued in the DAO treasury is generally speaking equal to the money received in the raising rounds + tokens allocated for community initiatives and project grants + the revenues generated by the project.

In theory.

I say in theory because many projects do not put the money received from seed rounds into the DAO treasury and prefer to keep it in a classic legal entity. Some of them also don’t accrue any revenues generated by the protocol into the DAO treasury and prefer to keep it flooding in the legal entity (example: dYdX).

Every project is unique in this regard that’s why it is very difficult to compare “treasuries” between projects because it is most of the time an apples to oranges comparison.

The aim of this article is to focus on what is available on chain so we are looking into an aggregation of both DAOs treasury and community funds/grants.

For obvious reasons, I cannot estimate the cash of a private company for which I don’t have access to financial statements (example: Binance, dYdX or Liquity).

It is indeed impossible to determine for centralized entities or pseudo DeFi projects what their treasury looks like right now because the info is not public (private companies do not need to publish quarterly financial results, only public companies do) and they won’t tell you anyway.

You could use the raising rounds as estimate for cash and factor in the number of people working on the project to guess their cash runway but that would be easier to do with a crystal ball which I don’t have.

However for actual DeFi and web3 projects/DAOs putting their treasuries on chain (or a part of it) you can get a grasp of how their cash position is going and determine who has deep pockets to make it through the bear.

Looking at treasuries is also not exact science as it needs to be coupled with the team willingness to continue to work on the project.

Do they still have “enough” team tokens under vesting? How much is the token worth right now ? Guess if the token is already down 99%, the team might not be willing to continue to work for peanuts going forward and so they will simply stop and do a classic slow rug. It is always good to ask questions to the team to gauge their dedication to the project they established.

As for Community grants, they are a very good way to bootstrap community involvement around the project and cost nothing (no cash, only some “free” tokens) which were allocated for grants from the very beginning of the project. And guess what? If people build an add on for their favorite project we will certainly keep their tokens.

So the article’s objective is to look at DAOs treasury and community funds and compare them with their respective market cap and FDV numbers to see whether they are cheap from a cash perspective and whether they can survive the bear.

A List of DAOs treasury

I have taken into account the largest DAOs putting their treasury and community funds on chain to compile a list of projects.