Full Disclosure: Delphi Ventures holds YFI, UNI, and RUNE. Delphi Consulting holds AAVE and SNX.

In order to be truly decentralized, crypto protocols need to find a sustainable way to fund development and operations. Treasury management is the way a protocol manages its assets and cash flow to ensure the going concern of the protocol . As DeFi embraces DAOs, it’s becoming increasingly important to understand community governed treasuries.

Key Takeaways:

  • The style of treasury management that a protocol adopts is decided by how it generates income. Usually, founding teams can allocate tokens to the treasury to help it bootstrap as the protocol grows. Some projects like yEarn Finance didn’t have the luxury of pre-funding a treasury with its native token. 
  • Because the YFI token is fully issued, yEarn charges a fee for using its products and funds future operations with said fees. yEarn is adopting a new fee structure with the hopes of using the protocol’s cash flows to attract skilled strategy creators. 
  • Synthetix’s treasury grew primarily as a result of SNX’s appreciation since 2019. The SynthetixDAO, currently managed by core team members, stakes SNX to generate more of the token. Eventually, as Synthetix grows, the DAO will be able sustain itself off trading fees earned by staking SNX. 
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