GSR: About 70% of DAO Treasury Assets Concentrated in Native Tokens, Projects Hedge Late

GSR's market analysis reveals that approximately 70% of DAO treasury assets are held in the form of their own tokens. When the market declines, the token prices shrink, leading to a decrease in treasury value, while operational costs are still denominated in USD. This forces projects to sell more tokens to raise funds, creating a vicious cycle. GSR observes that projects typically seek hedging protection only after prices have fallen, at which point implied volatility has risen and the cost of protection is at its highest. GSR recommends treating hedging as a continuous treasury policy, suggesting the use of a collar options strategy, where selling call options generates premiums to buy put options, thus setting a price range for the tokens and obtaining downside protection without spending stablecoins. Projects that successfully navigate multiple cycles often divide their treasury into two parts: holding cash or stable assets for operational reserves to pay salaries and operational expenses, while managing long-term crypto holdings through appropriate hedging.