GSR says DAO treasuries concentrated in native tokens risk negative spiral

Crypto market maker GSR said in a recent report that most decentralized autonomous organizations hold about 70% of their assets in self-issued tokens, a structure that could quickly weaken financial health during market downturns. GSR said a drop in a DAO’s native token price can reduce the value of treasury holdings while also dampening protocol revenue and market activity, creating a negative cycle that increases financial strain. The firm added that projects often move to hedge only after token prices have already fallen, which can raise hedging costs as volatility climbs. It suggested separating operating funds from long-term token holdings and using tools such as options to prepare for price declines. GSR added that broader adoption of such treasury changes could help ease selling pressure in the market over the medium to long term.