SCRF Interviews | Treasury Management - Bull Trapper and Darcy Allen (Ep. 4)

The first episode of our treasury management mini-series co-hosted with the Royal Melbourne Institute of Technology (RMIT) features a conversation between Yearn Finance’s Bull Trapper and RMIT Blockchain Innovation Hub senior research fellow Dr. Darcy Allen. The conversation was moderated by SCRF’s Head of Operations, Eugene Leventhal and Associate Professor and RMIT Blockchain Innovation Hub co-founder Chris Berg.


Audio (Spreaker, Apple)


At issue:

  • What unique challenges does treasury management present for web3 organizations?
  • How does a web3 organization balance diversification of treasury assets with growth and token buybacks?
  • How does a web3 organization use incentives to create a community that is aligned with its long term goals?

Takeaways from the discussion:

  • Many web3 projects aren’t bringing in much cash flow; they have treasury assets in highly volatile cryptocurrencies; and at times can be hamstrung by community voting.
  • DAOs don’t need to reinvent treasury management, transparency combined with traditional financial practices such as balance sheets and run rates can serve them well.
  • Sub-teams and committees can provide DAOs with the fast decision-making of a hierarchical organization.

Yearn Finance core contributor Bull Trapper remained anonymous during his conversation with SCRF but describes himself as coming from a traditional finance background. This experience proved to be an asset with the DeFi platform.

“Crypto is a very young industry,” he says. “There are a lot of people involved who only know crypto. When I came into Yearn, the first thing we did was calculate run rates and create balance sheets and made it all public, so everyone could see what was in our treasury and how things were spent.”

He identifies three major issues with web3 treasuries: they’re rarely profitable so there isn’t much cash flow coming in; most projects keep their treasury assets in cryptocurrencies that are extremely volatile, making hedging difficult, and because of the communal nature of decentralized communities, making swift decisions can be difficult.

Yearn uses small teams (Yteams) which are accountable to the community at large to act as stewards, and, partly as a result of their meticulous attention to treasury management, have managed to become profitable over the past year, accumulating enough cash for eighteen months of operation, even if the market drops to zero.

“Treasuries exist for two broad reasons,” says economist Dr. Darcy Allen. “They exist to fund local public goods such as marketing or research, and they also act as a costly signal to the ecosystem: a large treasury with a long runway signals to the ecosystem that this is a long-term play.”

Diversification is a crucial discussion. “There are a lot of different approaches to strategic diversification,” Allen says. “Crypto Winter is always coming. We also have to consider who we’re selling tokens to. Do VCs provide value for the discount they’re receiving? Many tokens also confer governance rights, which is also something to consider.”

Treasuries can also be used to generate funds. “From the very beginning we focused on managing debt and earning yield,” Trapper says. “Managing risk is a crucial part of earning. We’re always monitoring debt and prepared to pay down debt if there’s an adverse event.”

Young DAOs can benefit from really thinking about what their treasuries are for. “Overtime we’ll see two broad approaches,” Allen says, “It always comes down to a make or buy decision. It’ll be interesting to see if professional treasury fits in.” Trapper agrees. “A lot of protocols would really benefit from having experienced people who know how things run. Unless you know what you’re doing, you can’t run a treasury.”


To kick off the discussion, I have a slightly silly question – how come Bull Trapper had their identity concealed during the podcast?

1 Like

I enjoyed learning about how certain treasury management practices could benefit DAOs. For organizations that are hesitant to adopt more mature/conservative management practices like the ones Bull described or even consider profitability as an avenue, I wonder why they would be hesitant… Is it simply because they lack the knowledge/expertise to understand how it could be beneficial or is there an advantage to signaling a short-term play? Perhaps this makes a DAO or the ecosystem more attractive to certain actors with short-term motives.

I think large VC investments can positively serve growing DAOs, and it seems like with the SEC offering more protection for these actors, DAOs should consider how to offer alternatives to tokens or prioritize how VCs function in their governance protocols.