Let’s talk about DAO treasuries for a moment.
A brief layman’s description of treasuries for the uninitiated: a DAO’s treasury is its capital – said another way, it is all of the resources (in the form of both fungible and non-fungible tokens) that a DAO has at its disposal to be used to both pay for and do stuff. When a DAO wants to pay contributors or issue grants to advisors or cement partnerships via a token swap, they dip into this treasury to do so. Because treasury balances are often used as currency for transactions, people discuss them as if they are simply cash-like assets. They usually aren’t. The purpose of this piece is to talk about why that is and, more importantly, why it matters.
On one hand, you can sort of forgive people for the aforementioned misconception. At first glance a DAO treasury really does resemble a balance sheet of cash-like assets. There are a bunch of tokens in the treasury, and you can, quite easily, go to any crypto exchange to ascertain the value of these tokens. On the other hand, a large chunk (often the majority) of almost any DAO treasury is made up of that particular DAO’s governance tokens. This creates a bit of a paradox and thus the confusion. How should we actually think about the size of DAO treasuries? How do treasuries play into the the aggregate value of a DAO’s equity? More specifically: how does the makeup and utilization of a DAO’s treasury impact the ultimate trading value of its governance token?
It’s been a little over two weeks since the Yuga / Larva bombshell dropped. A quick summary of what we know below:
And… that’s about it. At least as far as the official communication goes. Some of our initial takeaways:
We’re nearly four months late to the Fei|Rari acquisition recap party. We’ve been a bit busy the last few months between leaving our investment banking jobs and beginning our new lives as M&A freelancers. Crypto will very much be a part of this new venture, and maybe soon the entirety of it. In terms of content, a retrospective look at the first DAO-to-DAO acquisition of this magnitude felt as good a place to start as any.
Before we get started, congratulations to everyone involved in the deal. To state the obvious, this was a landmark transaction and an incredibly bold step for each of these teams to take. Doing something that has no real precedent, playbook, or roadmap takes an impressive amount of fortitude.