What is crypto treasury management
Learn to identify and understand the three key pillars of managing a crypto treasury: liquidity, funding and risk.
What Is Crypto Treasury Management?
While we are on the subject of defining what crypto treasury management is, it is perhaps apt to draw some key distinctions between how it differs from traditional finance.
“One of the main differences is that managing a fiat treasury is largely about managing banking relationships, while managing a crypto treasury is done primarily through your crypto wallet stack”, says Jean-Baptiste Chenut, CFO of Request Finance.
Web3 treasury management is more than just the wallet, or custodian that holds your organization’s crypto assets. The primary goal of crypto treasury management is to oversee all the financial operations (FinOps) that support other functions like product development, marketing, and more.
Much like how an individual might plan their own personal finances, Web3 CFOs must also ensure that their organizations’ income, and savings can meet their expenses. That includes near-term expenses such as payroll and marketing, or longer term strategic investments such as venture capital, or R&D.
Good web3 treasury management ensures that a DAO, Foundation, or dApp team can always pay its bills.
With that end goal in mind, there are three broad scopes of responsibility for anyone managing a crypto treasury:
- Liquidity: Ensure that an organization can meet its obligations when they are due
- Funding: Managing an organization’s crypto asset holdings, and working capital
- Risk: Mitigating operational, financial and reputational risks
Our other resources
Crypto liquidity management
Ensuring liquidity is the primary goal of good crypto treasury management. Especially in bear markets, when token prices and company valuations tank, the distinction between liquidity and solvency becomes sharper.
Crypto funding management
Thus, this chapter focuses on two subdomains to investing a crypto treasury: (i) crypto trading & hedging, and (ii) crypto portfolio management.
Crypto risk management
This chapter will focus on how Web3 CFOs can identify and assess the different risks they may be exposed to from various treasury activities, and develop appropriate response plans ahead of time to reduce potential downsides.
Crypto Treasury Management softwares and solutions
DAO treasury management
However, there are key organizational features of DAOs that require special attention. You’ll learn how to apply these in the context of DAOs.