Current State of DAO Treasury Management: A “DeFipunk” Approach

Analysis

2025-06-25 - 6 min read

As of June 2025, DeFi remains a cornerstone of the Ethereum ecosystem. TVL is up to $90 billion and stablecoin market cap currently exceeds $120 billion via major issuers like Tether (50.5% of supply), Circle (30%), Ethena (5.5%) and the remaining 14% spread across 140 issuers. 35 million ETH staked with a 390% surge in whale activity in Q1 2025, indicates growing confidence whilst Visa’s USDG integration for treasury yield access and JP Morgan’s JPMD token are an indicator that the long-awaited institutional interest and accumulation is finally here. Ethereum is making its comeback, with stronger security, decentralization, liquidity, and toolings for treasury managers seeking a fully on-chain experience with battle-tested, modular, non-custodial and permissionless smart contracts. This evolution opens up to a new approach to treasury management - one that is very close to our ethos - as it balances capital preservation with capital optimization, all using mission-aligned strategies within a “Defipunk” framework.

P.A.L.O. Investment Guidelines In our view, DAO treasury management must balance four core objectives and must adhere to a robust set of operational guardrails that are native to each specific ecosystem. Internally, we refer to this framework as P.A.L.O. (Preservation, Alignment, Longevity, Optimization). These principles serve as a north star, guiding our approach to sustainable treasury management as explained below: Capital Preservation : Safety first. Without protecting assets from hacks, volatility, or systemic risks, a DAO cannot function or achieve its mission. This is the bedrock of treasury management. P.A.L.O. guidelines minimize exposure to unproven smart contract protocols, favoring battle-tested, industry-leading open-source platforms to enhance security. Mission-Aligned Capital : Investment decisions must reflect the DAO’s non-negotiable values to maintain its integrity. Misaligned incentives erode credibility and destabilize the protocol.

Treasury managers must align protocols’ interests and community goals, favoring permissionless, censorship-resistant systems and prioritizing on-chain settlement over opaque, off-chain backroom deals. This approach minimizes reliance on native asset liquidations and rejects high-risk, speculative investments in favor of predictable, low-risk opportunities that uphold “Defipunk” values. Protocol Longevity : Longevity means calculating operating costs and ensuring sufficient resources to sustain protocol operations over time. Ensuring sufficient resources for multi-year operations can help DAOs avoid financial strain, and ensure their treasury supports long-term ecosystem development. Capital Optimization : Generating yields isn’t a must, but it enhances financial flexibility, and allows to support growth and extend protocols’ runway. The Ethereum Foundation’s Treasury Policy (June 4, 2025) exemplifies this by maintaining a 2.5-year operational expenditure (opex) buffer in low-risk, liquid assets.

Other approaches such as stablecoin looping strategies, on-chain covered calls and tokenized real-world assets are just some of the additional approaches DAOs can use to optimize capital efficiency. Optimization Strategies Defipunk meets P.A.L.O. where at the core the number one objective is to limit reliance on centralized and opaque practices in favor of more efficient and transparent treasury management. Some of the most common DeFi native strategies for DAOs include, but are not limited to: Stablecoin Strategy: Stablecoins are distributed across lending protocols such as Compound, Aave, Morpho and Euler and are automatically rebalanced to optimize yields. Yields generally come from diversified sources such as delta neutral strategies, T-bills, arbitrage or borrow fees. Ethereum Strategy : Increase yields in a risk-managed way, whilst still capturing potential upside in ETH’s performance.

Idle ETH are allocated to lending protocols and flash loans are used to achieve yields that exceed the staking rate. Volatility Targeting : Reduces volatility by adjusting allocations within a trading range for yield and stablecoin diversification. Covered Call Strategy : Convert to stablecoins at higher market levels for short-term diversification, or earning a premium while retaining upside potential, ideal for monetizing volatility without capping long-term gains. Protocol LP : Enhances yields by deploying native and paired tokens to improve liquidity and earn fees. Dynamic Hedging with Tokenized RWAs : Hedges volatility with stable returns from tokenized real-world assets. Private LP : Maximizes yields by funding new protocol launches for native tokens. Decumulator Strategies : Generates yield by selling tokens at strike prices with a knockout barrier to limit downside risk. In addition to token-native strategies, DAOs may also consider traceable investment paths that align with their mission and the P.A.L.O.

framework - such as non-token-based investments in early-stage startups building within the ecosystem and capital-intensive infrastructure deployments like validator fleets, decentralized compute, or protocol-owned hardware that generate long-term, compounding yield. All of these approaches meet treasury transparency standards and enhance capital optimization within a strategic, mission-aligned framework that respects the ethos of the DAOs and their communities. Permissionless Protocols Higher market liquidity, and new permissionless protocols are making optimization more efficient and safer for DAOs looking to generate yields while staying truthful to Defipunk values and P.A.L.O. principles. The same guiding principles help us help us choose the protocols we prioritize collaborations with: Safe by Gnosis : This is the backbone of DeFi. Safe wallets provide a secure, multi-signature wallet infrastructure for founders and DAOs to self-custody their assets, manage strategies transparently and protect against unauthorized access.

Gauntlet and Aera Finance : Gauntlet is a leading vault curator and risk manager in Web3, working with the largest protocols in the space. They provide institutional-grade risk management expertise, model market exposure, and stress-test strategies. Aera’s autonomous vaults are designed to dynamically rebalance across different DeFi strategies, including stablecoin lending, to find the most sustainable yields in DeFi. Enzyme Finance : A three-product suite ranging from Blue, Myso and Onyx. Enzyme Blue is a non-custodial asset management platform to establish vaults for diversified DeFi investments. It utilizes audited, permissionless smart contracts to facilitate automated yield strategies across various decentralized finance protocols, including Aave and Compound. The platform provides on-chain transparency, supporting DAO governance through verifiable transaction data. Enzyme Myso is a DeFi protocol specializing in on-chain structured products for founders, DAOs and asset managers.

The protocol enables users to earn USD income from idle tokens through bespoke covered call and cash secured put strategies, whilst leveraging defi primitives of self-custody, on-chain execution and full transparency. Myso has been working together with leading treasuries like Compound, Gitcoin, Obol, and Aave to provide seamless access to onchain structured products, sourcing the best quotes from multiple providers and settling fully onchain without handing over custody to trading firms. Enzyme Onyx (coming soon) is the wallet tokenization layer that enables businesses and institutions to deploy and operate tokenized products directly from existing wallet setups, whether that’s Fireblocks, Safe, or other wallet solutions. Euler : Euler is a decentralized, non-custodial lending protocol designed to facilitate efficient money markets. It allows for a wide range of assets to be used as collateral for lending and borrowing on a non-custodial basis.

Pendle : Pendle is a DeFi protocol specializing in the tokenization of yields. It enables the separation of an asset’s future yield from its principal component into two distinct, tradable tokens: Principal Tokens (PTs) and Yield Tokens (YTs) which allows users to tokenize and trade future yield, used for strategies such as locking in fixed returns, hedging against yield volatility, or speculating on future yield rates. ether.fi : ether.fi is a non-custodial crypto-native platform offering Stake, Liquid, and Cash - a complete onchain solution for DAO treasuries to save, grow, and spend. Through Stake treasuries can stake ETH, BTC, or stablecoins to receive value-accruing assets like weETH, eBTC, or eUSD, earning rewards while remaining fully composable across DeFi. Liquid vaults build on this by automating DeFi strategies and rewards, while giving treasuries flexibility to direct capital into mission-aligned protocols.

Cash extends these capabilities, enabling real-world spending and borrowing against onchain assets through non-custodial corporate cards. Numerous treasuries, including Nexus Mutual, Balancer, CoW Protocol, and Gnosis, actively deploy assets with ether.fi, which is battle-tested as one of the largest protocols on Ethereum, secured by decentralized validators, continuous audits, and active bug bounty programs. Conclusion DAO treasury management in 2025 reflects the evolution of DeFi, with Ethereum as its backbone and plenty of liquidity and advanced permissionless set of protocols. The EF’s Treasury Policy provides a robust framework for balancing capital preservation and optimization, emphasizing security, liquidity, and Web3 values but protocols like Gnosis Safe, Enzyme, Myso, Gauntlet, Aera Finance, Euler, Pendle, and ether.fi enable DAOs to take their treasury management practices a step further.

This transparency revolution, fueled by on-chain execution, transforms the relationship between treasury managers and the communities they serve. We harness our deep DeFi technical expertise to bring added value and empower founders and DAOs to shape strategies alongside us, fostering trust and alignment with “Defipunk” values. As Ethereum advances with upgrades like Pectra and institutional adoption grows, DAO treasury management emerges as a vital niche, ensuring protocol longevity while building a more transparent, permissionless, and robust financial future. About ExaGroup ExaGroup is a research, financial advisory and asset management boutique firm with a mission to deliver deep acumen in token economic modeling, governance and digital asset management for founder and DAOs looking to optimize value creation and protocol longevity whilst not compromising on core Web3 values. For enquiries send an email to research@exagroup.xyz or follow us on Twitter and LinkedIn .