Decentralized Autonomous Organizations (DAOs) have emerged as a new way for communities to collaborate, make decisions, and pool resources without relying on traditional corporate structures. At the heart of every DAO is its treasury—the collective pool of funds used to support the organization’s goals, operations, and growth. But how exactly do DAOs raise and manage these funds? Let’s break it down.
How DAOs Raise Funds
Token Sales
Many DAOs issue governance tokens that give holders voting rights. These tokens can be sold to the public or distributed through private sales, serving as the primary way to bootstrap the treasury.
Membership Contributions
Some DAOs operate on a membership model, where joining requires a contribution—often in crypto—that goes directly into the treasury.
Grants and Partnerships
DAOs often collaborate with other projects or foundations. They may receive grants to fund development, research, or community-building efforts.
Revenue-Generating Activities
DAOs can run services, launch products, or even invest in assets. Profits from these activities are funneled into the treasury to sustain future initiatives.
How DAOs Manage Treasury Funds
On-Chain Governance
Treasury funds are managed through smart contracts, with spending proposals voted on by token holders. This ensures transparency and community control.
Multi-Signature Wallets
To reduce risks, many DAOs use multi-signature wallets, requiring multiple key holders to approve any transaction.
Diversification Strategies
DAOs often diversify their treasuries by holding stablecoins, native tokens, or other crypto assets to manage risk and ensure financial stability.
Automated Tools and Protocols
Tools like Gnosis Safe and other treasury management platforms help DAOs track, allocate, and optimize funds in a transparent and secure way.
Why This Matters
The way DAOs raise and manage their treasuries directly affects their sustainability and trustworthiness. A well-managed treasury ensures that the DAO can fund projects, reward contributors, and weather market volatility—all while remaining true to its decentralized ethos.