Treasury
A treasury is a type of internally owned account in a DAO which holds cash currency. Treasuries can be built for many different purposes, and so will have different specifications depending on their intent.
DGF offers four different categories of treasury designs, using the different native mechanisms of the platform. Broadly, treasuries can be generated quickly by investors who directly deposit cash in an internal account (e.g., ICOs) or by issuing BOND tokens sold at market to buid a treasury. Treasuries can alternatively be generated in a slower, more stable fashion, by siphoning a fraction of the fees the DAO earns from normal business, or they can be generated by siphoning REP tokens from normal business.
Overview[edit | edit source]
Treasuries are sometimes necessary for banking, insurance, or stable coins; development funds; or holdings of investments.
Despite being necessary, a treasury nevertheless always signifies a weakness in a DAO. Relying on a treasury is suboptimal to relying on business inertia where cashflows are healthy for two major reasons. First, a treasury incurs holding costs.[1] Second, any cash held by a DAO becomes a target of competition between members, which destabilizes the group, eroding their solidarity. This is because cash money is fungible and therefore tradeable instantly and therefore creates a zero-sum competitive business environment. (Compare this against reputation, which is a positive-sum entity which incentivizes collaboration.)
Notes and references[edit | edit source]
- ↑ Any liquid cash is subject to the holding costs that result from loss of opportunity, for instance from the interest or profit that could have been earned by depositing or investing.