Why Is Diversification Crucial for a DeFi Protocol’s Long-Term Treasury Health?

Diversification spreads risk across different asset classes, protecting the treasury from a catastrophic loss if the native token's price collapses. It ensures the protocol has reliable funding in stablecoins for operating expenses, audits, and development, regardless of market volatility.

Holding assets like ETH, BTC, or other blue-chip DeFi tokens also provides potential growth and liquidity. A diversified treasury is more resilient and trustworthy.