Digital-Asset Projects Hold Over 70% of Treasury Assets in Their Own Tokens, GSR Says

Digital-asset projects hold more than 70% of their treasury assets in self-issued tokens, highlighting the need for advance risk management ahead of market downturns, according to GSR.

In a report released on Aug. 8, the market maker said more than 70% of decentralized autonomous organization, or DAO, treasury assets consist of native tokens. If token prices fall, projects may be forced to sell more tokens to raise the same amount of operating funds.

Selling additional tokens in a bear market can put further downward pressure on prices and increase the number of tokens that must be sold later. Projects should assess whether their current treasury assets would be enough to execute their roadmaps even if the market declines further over the next 12 months, GSR wrote.

The firm also said hedging, an investment strategy designed to limit potential losses, should be put in place before prices slide sharply. Demand for hedging is typically low in bull markets, but it has repeatedly surged when markets fall and projects seek protection from downside risk. Hedging should be treated not as a one-off trade tied to a market view, but as an ongoing treasury-management policy.

As one hedging tool, GSR pointed to the collar strategy.

A collar involves selling a call option with a strike price above the current market price and using the premium to buy a put option with a strike price below the current price.

Projects that have successfully navigated multiple market cycles tend to separate and manage treasury assets according to their purpose, GSR said. Holding an entire treasury in a project's own token can erase years of operating runway in a major price decline.