DAO treasury management lessons

DeXe Protocol
4 min readMar 8, 2023

Remember when we wrote about how the Top 10 DAOs manage their treasury and governance? Some trends are emerging from that research:

One token treasury

Most top DAOs only hold their own token in their treasury, sometimes accompanied with a bit of funds in stablecoins. This makes sense as they initially get their governance token for free and can subsequently use it to trade for cryptos in which to pay for expenses or invest into ways to grow their treasury (like yield farming, buying NFTs, etc.). However, such investment is apparently rare, judging by the lack of LP tokens and NFTs in the treasuries. It would be very encouraging to see DAOs use their governance token’s purchasing power to diversify into other assets and earn income so that DAO members have a bigger treasury to govern with.

DeXe’s Take: The DAO treasury is too powerful to just hold the governance token. DeXe’s DAO builder allows DAO creators to have both a governance token and a governance NFT (as well as a separate validator governance token). DAOs created with our constructor can also invest in all kinds of assets and interact with outside DeFi protocols. Because why not use your treasury funds to grow the treasury? You have the hive mind brilliance of your DAO members to find worthy investments.


Perhaps the most disappointing finding of our research was to find so few members actively voting in the Top 10 DAOs (for Uniswap DAO, less than 6% ever voted!). Are most just holding the governance token for pure speculation and hoping to qualify for future air drops? That’s a valid investment strategy, of course, but one that undermines the DAO aspects of these projects. How can these DAOs incentivize their members to be more than passive investors? Are they attracting the right token holders? Are the rewards properly aligned with actions most benefiting the DAOs’ growth?

DeXe’s Take: The “free rider” problem of passive governance token holders is real. We believe it’s an issue of misaligned incentives. DAOs created with the DeXe DAO constructor can reward submitting proposals and voting on them. Treasuries could be used by DAO members to fund various reward programs like farming, marketing contests, and more. Don’t expect altruism from your members — make their financial interest align with the growth goals of your DAO!

Proposal dispersal

Proposals are the hallmark of active DAOs — this is how new ideas are floated by members and ultimately decided upon. Within the Top 10 DAOs, there was a wide variance in the number of proposals. BitDAO only had 22; Aragon had 577. The quality of the proposals is also important. Some DAO proposals focused on very minor technical and non-controversial issues. Others were much more contentious and substantial, though that was less frequent. Most discouraging was the overwhelming percentage of proposals decided by a unanimous or near-unanimous vote (usually a “yes”). A good sign of a healthy, growthing DAO that embodies its democratic side is a plurality of ideas with enough cost and vision to cause some disagreement.

DeXe’s Take: Routine technical proposals are ok. But more ambitious proposals will be more contentious. Encourage innovative proposals by giving members the power over the treasury and governance. For example, DeXe DAO’s own member created a detailed Ambassador Program with a big marketing budget — DAO members approved it and the program successfully ran for months, rewarding community members including any DAO member that wanted to participate. In this way, members acted as both governors and beneficiaries of the treasury.

Snapshot or not

The majority of DAOs use Snapshot for their proposals. Snapshot is off-chain and is thus very easy and cheap to use. It makes perfect sense for routine proposals that do not have enough controversy to need everyone’s vote. For more important votes where you want to have an on-chain record, some DAOs use on-chain voting: Lido uses Aragon. Aragon DAO, understandably, also uses Aragon. It’s good to have flexibility of both on-chain and off-chain voting to optimize resource spend and minimize complexity in voting.

DeXe’s Take: Flexibility is key. DAO’s built with DeXe’s protocol can have both on-chain and off-chain voting in the same place. That’s important too — instead of having to find and try out multiple tools for on-chain and off-chain voting, it’s much easier and more effective to have both systems in place right within your DAO, out of the box. Don’t make governance more complex than it needs to be!

All in all, top DAOs have the seeds of what could be good DAO governance but need to make it simpler and more profitable for members to actively — and positively — participate in governance. Having all the tools for it under one roof makes it a lot easier.

Stay tuned!

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DeXe Protocol

An innovative infrastructure for creating and governing DAOs.