DAOs are Staking Their Idle Treasury Funds For Extra Income Streams

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DAOs and the future: As busi­ness­es increas­ing­ly move away from cen­tral­ized and prof­it-above-all mod­els, DAOs will take their place. As DAOs grow, so too will their trea­suries, says Simon Fur­long, Co-Founder of Geode Finance.

The birth of Web 1.0 gave rise to dig­i­tal con­tent and peer-to-peer com­mu­ni­ca­tion. Web 1.0 was large­ly non-com­mer­cial through its ear­ly years. Then came Web 2.0, which facil­i­tat­ed com­mu­ni­ca­tion and col­lab­o­ra­tion on a much larg­er scale. Busi­ness­es like Ama­zon, Face­book, and Google stepped in to pro­vide the infra­struc­ture and plat­forms need­ed to sup­port a grow­ing user base.

Now we’re in the ear­ly days of Web 3.0, where cryp­to assets and decen­tral­ized finance (DeFi) pro­to­cols are pro­vid­ing the build­ing blocks for a new Inter­net – one that’s based on val­ue instead of information.

Sim­i­lar to the ear­ly days of Web 1.0, the ear­ly days of cryp­to were dom­i­nat­ed by indi­vid­ual investors and hob­by­ists. Cen­tral­ized exchanges like Mt. Gox, Coin­base, and Bit­Stamp stepped in to pro­vide the much-need­ed infra­struc­ture for a grow­ing ecosys­tem. At the time, use cas­es for cryp­tocur­ren­cies were lim­it­ed pri­mar­i­ly to spec­u­la­tion and trading.

Ethereum’s breakthrough

But then came a break­through. In 2013, Vita­lik Buterin pro­posed Ethereum, which paved the way for an entire­ly new class of decen­tral­ized appli­ca­tions (dApps). These dApps enabled a wide range of valu­able use cas­es like lend­ing, bor­row­ing, and much more.

And sim­i­lar to the Web 2.0 rev­o­lu­tion, as the Web 3.0 ecosys­tem has grown and matured, retail and insti­tu­tion­al investors have poured increas­ing­ly large amounts of mon­ey into DeFi pro­to­cols. This growth and mat­u­ra­tion in the cryp­to and DeFi mar­kets has cre­at­ed B2B oppor­tu­ni­ties that couldn’t have exist­ed in years past.

There are now count­less com­pa­nies, decen­tral­ized autonomous orga­ni­za­tions (DAOs), and rev­enue-gen­er­at­ing pro­to­cols that sup­port and pro­vide valu­able ser­vices to their users. Unlike years past, many of these “users” are now oth­er com­pa­nies or DAOs, instead of just indi­vid­ual retail participants.

The demand for B2B ser­vice providers in Web3 is surg­ing as com­pa­nies and DAOs seek tools and resources to sup­port their busi­ness­es. For instance, Aragon pro­vides appli­ca­tions and tem­plates to help DAOs get up and run­ning. Gno­sis Safe offers mul­ti-sig solu­tions for DAO asset man­age­ment. And Geode Finance enables DAOs to increase rev­enue by pro­vid­ing white label liq­uid stak­ing products.

DAOs and their treasuries

DAOs are essen­tial­ly Web3-native com­pa­nies, and like tra­di­tion­al com­pa­nies, they have trea­suries to main­tain and grow. They need solu­tions that enable them to gen­er­ate rev­enue and earn yield on idle trea­sury assets. This is where DeFi comes in.

For most DAOs liv­ing on Proof of Stake (PoS) chains, liq­uid stak­ing presents an inter­est­ing option for gen­er­at­ing rev­enue on idle trea­sury assets. A grow­ing part of DeFi, liq­uid stak­ing allows users to val­i­date PoS net­works to earn pas­sive stak­ing return with­out hav­ing to nec­es­sar­i­ly sac­ri­fice oth­er oppor­tu­ni­ties in DeFi for the same liq­uid­i­ty. Retail users love liq­uid stak­ing for this rea­son, but so do DAOs that are sit­ting with trea­suries full of base assets not earn­ing any yield.

But who is being drawn to DeFi, like moth to a flame, and is increas­ing demand for these services?

DAOs are Staking Their Idle Treasury Funds For Extra Income Streams

DeFi is attracting enterprise

Enter­pris­es are by def­i­n­i­tion risk-averse. They’re built to last, which means they’re much less like­ly to take chances on unproven tech­nolo­gies. But as the DeFi space matures, we’re see­ing more and more busi­ness­es dip their toes into the world of decen­tral­ized finance.

This trend is being dri­ven by the grow­ing num­ber of robust, bat­tle-test­ed pro­to­cols and tools avail­able in the DeFi ecosys­tem. These pro­to­cols and tools are enabling enter­pris­es to do things that sim­ply weren’t pos­si­ble before.

As PwW reports, near­ly half of tra­di­tion­al hedge fund man­agers are look­ing at invest­ing in cryp­to. The likes of HSBC, JP Mor­gan, Cit­i­group, Mit­subishi UFJ Finan­cial Group, Bar­clays, UBS, Gold­man Sachs, Com­merzbank, BNY Mel­lon, Sig­na­ture Bank, and SBI Hold­ings are pur­su­ing blockchain-relat­ed projects – the big guns are start­ing to take notice of DeFi.

At the same time, insti­tu­tion­al investors are using plat­forms like Aave Pro and Alke­mi, which are tai­lored specif­i­cal­ly for them. These plat­forms offer fea­tures like com­pli­ance and KYC’d pools, which make it eas­i­er for enter­pris­es to get involved in DeFi with­out hav­ing to wor­ry about reg­u­la­to­ry hurdles.

DAOs foster B2B adoption of DeFi

As DAOs progress and become more estab­lished, their stake­hold­ers are becom­ing increas­ing­ly focused on achiev­ing their goals, finan­cial or oth­er­wise. This has led to a boom in the devel­op­ment of B2B solu­tions specif­i­cal­ly designed to meet the needs of DAOs, which is evi­dence of DeFi’s evo­lu­tion and mat­u­ra­tion. B2B tool­ing gives DAOs access to addi­tion­al prod­ucts and ser­vices that they can’t cre­ate them­selves either because they don’t have the abil­i­ty, or they lack the time and resources.

One of the most impor­tant ben­e­fits of these B2B solu­tions is that they allow DAOs to offer more sophis­ti­cat­ed prod­ucts and ser­vices to their users. This in turn expands their poten­tial reach and longevi­ty, as users are more like­ly to stick around if they feel they are get­ting val­ue from the DAO.

DeFi solu­tions, in par­tic­u­lar, have been a boon for DAOs. We are already see­ing a strong spir­it of col­lab­o­ra­tion in the DeFi space, which is pro­vid­ing a lot of val­ue. For instance, ora­cles and index­ers like Chain­link and The Graph are help­ing DAOs to access accu­rate data, while white label liq­uid stak­ing pro­to­cols like Geode Finance are pro­vid­ing DAOs with new rev­enue-gen­er­at­ing prod­ucts for their users. With Geode, DAOs can earn inter­est on dig­i­tal assets in their trea­suries and expand their rev­enue streams with stak­ing fees.

Fur­ther, liq­uid­i­ty pro­vi­sion and mar­ket-mak­ing ser­vices are help­ing DAOs to list their tokens on more exchanges and attract more users. And final­ly, invest­ment firms are pro­vid­ing DAOs with the cap­i­tal they need to grow and scale.

All of these B2B solu­tions are help­ing to fos­ter the adop­tion of DeFi among DAOs. As more DAOs adopt DeFi, we can expect to see even more inno­va­tion and growth in this space.

DAOs are Staking Their Idle Treasury Funds For Extra Income Streams

DAOs and the future

The tra­di­tion­al cor­po­ra­tion is based on a hier­ar­chi­cal mod­el that’s opti­mized for effi­cien­cy and growth. But this mod­el is no longer fit for pur­pose in today’s world. We now live in a world where infor­ma­tion flows at the speed of light and tech­nol­o­gy is chang­ing at an unprece­dent­ed rate.

As busi­ness­es increas­ing­ly move away from cen­tral­ized and prof­it-above-all mod­els, DAOs are poised to con­tin­ue grow­ing. With their decen­tral­ized gov­er­nance struc­tures, DAOs align the inter­ests of all stake­hold­ers – from employ­ees and cus­tomers to investors and ecosys­tem partners.

As DAOs grow, so too will their trea­suries and the need to cre­ate addi­tion­al income streams. This is just part of what makes tool­ing such an impor­tant area of growth as DAOs seek out B2B ser­vices. Demand will increase for solu­tions that allow DAOs and their mem­bers to earn yield on idle assets. Thus DAOs, with the help of liq­uid stak­ing pro­to­cols and oth­er crit­i­cal infra­struc­ture, are in a unique posi­tion to cap­i­tal­ize on the Web3 revolution.

It’s only a mat­ter of time before DAOs com­plete­ly upend the sta­tus quo. From sales and mar­ket­ing to vir­tu­al land and legal ser­vices, DAOs are slow­ly but sure­ly tak­ing over tra­di­tion­al busi­ness mod­els. DAO-focused tool­ing and infra­struc­ture providers are- and will con­tin­ue to be a major con­trib­u­tor to this shift, and it’s only going to become more pro­nounced in the com­ing years.

About the author

Simon Fur­long is the Co-Founder of Geode Finance, a white label liq­uid stak­ing pro­to­col for DAOs and DeFi pro­to­cols. Simon has more than a decade of com­bined expe­ri­ence in the finan­cial, dig­i­tal prod­uct, and media rights sec­tors, work­ing pre­vi­ous­ly as a risk ana­lyst, prod­uct lead, and media rights direc­tor. His pro­fes­sion­al expe­ri­ences and pas­sions have inspired his mis­sion to build prod­ucts that sup­port the growth of an effi­cient, decen­tral­ized, and vibrant Web3 ecosystem.

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Disclaimer

All the infor­ma­tion con­tained on our web­site is pub­lished in good faith and for gen­er­al infor­ma­tion pur­pos­es only. Any action the read­er takes upon the infor­ma­tion found on our web­site is strict­ly at their own risk.



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