[Discussion] DAO Treasury Management

#1

Summary

This post aims to initiate a community discussion on optimizing Rari DAO’s treasury management to ensure financial sustainability, diversify assets, and support RARI token liquidity.

Background

The latest report on the state of the DAO treasury can be found here. As the report highlights a lot of the DAOs treasury is denominated in the native token. In the past few weeks revenue in terms of WETH and ETH has started to accumulate which helps in diversifying the treasury.

Another side of the equation which is indirectly related to the DAO treasury is that of onchain liquidity. A highly liquid token encourages large trades, hence giving confidence to larger buyers who can portentially step in. However, currently, the largest liquidity pool sits at a TVL of 32K USD, which not only discourages larger buyers but also creates high volatility in the token price in the short term.

A well structured treasury management strategy not only allows the DAO treasury to function optimally, but also allows the liquidity to deepen overtime, thus creating a positive feedback loop.

What can we do?

Here, I’ll outline three major ways DAOs have gone about implementing a treasury management strategy.

  1. Hire a service provider

The DAO hires a service provider elected via an RFP (Request for Proposals) process which manages the treasury for the DAO. The most notable example is the ENS DAO. One can read more about their approach here

  1. Establish a Treasury Management Working Group

Another approach is to establish a delegate led working group in house to manage the treasury, by following the framework for establishing a working group. One can read further on this approach from Lido DAO

  1. Hybrid

The latest approach loosely being trialed at Arbitrum DAO involves having an Oversight committiee elected by the DAO which set high level priorities, while service providers are tasked with executing on these priorities.

Open Questions

  • What are Rari DAO’s primary treasury goals (e.g., diversification, liquidity support, protocol growth)?

  • Which approach best suits the DAO treasury and governance structure? Should we explore a unique strategy?

  • Should treasury management and performance reporting be handled by separate entities for accountability?

  • What risk management measures should be prioritized given the DAOs current state ?

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Proposal Discussion Call
#2

Thank you, @jengajojo for this proposal, I think this is important topic that the DAO needs to address. I personally like the hybrid approach, however, if the delegates recommend option # 2 (working group) or # 3 (hybrid approach), the question that we need to identify, is that do we have the skill set and experience currently in the DAO to serve on this working group?

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#3

Hi Jengajojo, thanks for raising the discussion.

Indeed this is an important topic as Rari DAO is going multichain and we agree a dedicated committee could bring clarity and efficiency to DAO-owned assets.

As a note, in addition to the assets reported in this Treasury Report, there are more DAO-owned assets under Foundation management, as reported in the 2024 Transparency Report. This highlights the need for a clear accounting of DAO balances.

Working with an established Treasury Manager would be ideal. However, it’s difficult to onboard these type of service providers given the limited size of Rari Treasury and the modest funding for fees. We believe if a suitable service provider cannot be found, the community has enough experience to organize and form a lean, efficient Treasury Committee that can achieve the most pressing needs for Rari Treasury, being them organize and update DAO-owned balances, increase RARI token liquidity onchain and diversify Treasury assets.

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