Crypto market maker GSR said in a treasury management analysis released on Aug. 8 that the industry still faces a basic treasury weakness: close to 70% of DAO treasury assets are held in native tokens, with only a small share allocated to stable assets or diversified reserves.
According to GSR, that structure leaves projects exposed to three hits at the same time during bear markets. Token prices decline. Protocol activity weakens. Fee income shrinks. Operating costs, however, remain denominated in U.S. dollars, which can force teams to sell a larger amount of tokens at lower prices to cover fixed expenses. GSR said that process can push token prices down even more and accelerate treasury depletion.
Hedging demand often arrives when protection is most expensive
GSR said project teams almost always look for protection at the wrong moment. During bull markets, few are willing to pay option premiums. After a market drop, hedging demand surges, but implied volatility has already jumped by then, which makes protection most expensive հենց when demand is highest.
GSR described the pattern this way: “It’s like buying insurance only once the storm is already overhead.”
Collars can protect treasury exposure without selling tokens
GSR said a project does not need to sell tokens to add protection. The most commonly used structure is a collar: the project sells a call option above the current price and uses the premium received to buy a put option below the current price. If the premiums offset each other, the trade can be executed at zero cost, while establishing a floor for the token within a chosen range.
The firm said that setup turns a highly volatile asset into a price band that a finance team can use when planning an annual budget, while still preserving token holdings and operating reserves.
Treasury layering matters more than a single hedge
GSR also stressed that a collar only protects a price range set on the day the position is established. Projects that successfully make it through multiple cycles tend to manage treasuries in layers: operating reserves are held in cash or stable assets to cover expenses, long-term holdings remain invested but are hedged appropriately, and strategic positions are left untouched without putting the organization’s survival at risk.
In GSR’s model, a treasury held entirely in native tokens can lose years of operating runway during a sharp drawdown. Separating reserves and protecting long-term holdings, by contrast, can preserve a large portion of that runway even without relying on any market rebound.