How are DAO Treasuries and Tokens managed? | DeFi, ETH, Compound, UMA

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DAOs are quite complicated. They issue tokens, managed by treasuries, and meant for governance. There are many such governance tokens like COMP, MAKER, and more. In this video, we break down how DAOs can manage their corporate treasuries and what investors should look for in treasuries and tokens before they invest.

Contents:

00:00 - Intro: What are DAO Treasuries?
02:10 - How do DAOs raise money?
03:17 - Why are DAO Treasuries important?
05:00 - Why should investors know what's in Treasuries?
07:20 - DAO Treasuries holding too much of their own tokens?
09:03 - Tokens for DAO management
12:00 - Security of DAO Tokens and Treasuries
13:01 - What should you look at in DAOs?
13:58 - Outro: DAO Tokens roadmap

Every DAO has a corporate treasury. At times, this corporate treasury is transparent. This means token holders can see what their tokens represent. Governance tokens are nothing but representatives of the inner workings protocols. This means governance tokens are representatives of the corporate treasuries.

As an investor, this means you should know what the corporate treasury holds. Also, you should know how this ties into your overall portfolio. For instance, let’s say you buy governance tokens that are backed by ETH and USDC. In your overall portfolio, you should reduce your exposure to ETH and USDC because you have indirect exposure already. Having two investments into the same asset is not very diversified. These are questions DeFi token investors need to start asking. This was and is a common problem in traditional investing. Now, it has found its way into DeFi as well.

This points to the question of management. What do DAOs do with the funds they’ve received in digital assets. Yes, granted they’ve given out tokens with value. But what becomes of their corporate treasuries is the question.

Security of treasuries is another big issue. Since governance tokens are valued based on DAO treasuries’ crypto, their security is paramount. As a token holder, you should know the level of security, signatories, who has access, and who doesn’t. So, in totality, here’s what you should look at:

What is in the DAO Treasury?
What does it give me access to as an investor?
How is the treasury managed?
How secure is the DAO Treasury?

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