How Can a DAO Treasury Use Stablecoins to Mitigate Native Token Inflation Risk?
By diversifying a significant portion of its holdings into stablecoins (e.g. USDC, DAI), the DAO treasury creates a hedge against the inflation and volatility of its native governance token.
Stablecoins provide a reliable, non-volatile base of capital for operational expenses, ensuring the DAO's essential functions can continue even during market downturns or periods of high native token inflation.
Glossar
DAO Treasury Use
Allocation ⎊ DAO Treasury Use represents the strategic deployment of capital held by a decentralized autonomous organization, functioning as a core mechanism for protocol development and ecosystem growth.
Native Token Inflation
Inflation ⎊ The programmed increase in the total circulating supply of a native token, often implemented as a reward mechanism for network validators or stakers, directly impacts its monetary characteristics.
Inflation
Purchasing ⎊ General economic inflation erodes the real value of fiat collateral used to back traditional financial derivatives, creating an incentive for utilizing crypto assets as an inflation hedge.
Dao Treasury
Control ⎊ Dao Treasury refers to the pool of assets, often composed of protocol fees, native tokens, or various cryptocurrencies, managed collectively by the decentralized autonomous organization through on-chain voting.
Native Token
Collateral ⎊ Native Token refers to the primary, fungible cryptographic asset issued by a specific blockchain protocol, frequently used as the unit of account, for staking, or as collateral within that ecosystem's derivatives markets.