Crypto news

In the course of my own analysis of market data, conducted as part of digital asset monitoring, I identified a troubling trend: decentralized autonomous organizations (DAOs) on average hold about 70% of their reserves in their own native tokens. This practice, which at first glance seems logical for supporting the ecosystem, carries a fundamental structural risk that many teams underestimate.

The problem is distinctly procyclical in nature. When the market price of the internal token begins to fall, the effect multiplies: collateral assets depreciate simultaneously, protocol revenues shrink, and overall user activity declines. As a result, DAOs are forced to sell even more coins to cover operational expenses, which only intensifies the downward trend and creates a vicious cycle of self-reinforcing decline.

Of particular concern is the behavioral aspect of risk management. Most projects turn to hedging tools—such as options or futures—only after volatility has reached peak levels and the cost of insurance has become prohibitively high. This is a classic management mistake: preventive measures are taken when they are most expensive and least effective, instead of building in protection during a relatively stable market phase.

In my view, DAOs need to reconsider their treasury policy toward diversification. Holding a significant portion of reserves in stablecoins or market-correlated assets would reduce systemic risk and increase resilience to price shocks. Moreover, implementing automated hedging strategies that trigger at certain volatility levels could be a more rational alternative to reactive actions.

The market has already witnessed examples where excessive reliance on one's own token led to cascading liquidations and a loss of investor confidence. While this issue has not yet received due attention from regulators, institutional investors are increasingly asking questions about reserve structure when assessing the long-term viability of projects.