Decentralized autonomous organizations face structural risks as most hold majority treasury assets in their own tokens, amplifying market downturns.
Most decentralized autonomous organizations hold approximately 70% of their treasury assets in their native tokens, creating procyclical negative feedback loops. This concentration causes treasury value, protocol revenue, and market activity to decline simultaneously during downturns.
The report highlights that projects typically seek hedging only after token prices fall, when implied volatility rises and protection becomes expensive. This reactive approach exacerbates financial instability during bear markets.
Recommendations include separating operational reserves from long-term holdings and using collar structures to secure downside protection at zero cost, potentially extending runway during market stress.