Introducing Castle
DAOs represent the next evolution in the organization of humans and capital.
DAOs are built to keep up with the digital age’s pace of innovation, which continues to accelerate. These novel organizations leverage the advances of distributed ledger technology to solve legacy issues of transparency and bureaucracy. Trusting code is inherently easier than trusting people. Anyone with internet access has the ability to participate in the future of the decentralized web and be compensated for their contributions.
With the right tools at their fingertips, DAOs can form, hire, and build quicker than their traditional corporate counterparts.
DAO Growth Is Exploding
DAOs are the current flavor of the month, and rightly so. DAO growth has exploded on nearly every metric since the start of 2021. Total membership has tripled to over 1.7 million participants across 1,075 organizations. DAOs are sitting on nearly $11 Bn worth of treasury assets, with over 90 DAOs controlling over $1m in protocol funds, up from 12 at the start of 2021.¹
Essentially, DAOs have raised the largest seed round of all time. They possess enough firepower to carry out their visions and enact some serious change.
DAO Treasuries Are At Risk
In a previous post, we highlighted how DAO treasuries aren’t sufficiently diversified and are subject to wild swings in value. Most DAOs hold the vast majority of their wealth in their governance tokens, which are prone to 70–90% pullbacks during bear markets. This means that market turbulence can hinder a DAOs ability to meet its short-term liabilities. During bear markets, many DAOs would be at risk of not having the financial means to to scale their protocols, pay their contributors, and execute their goals.
DeFi Shouldn’t Just Be For Degens
Today’s DeFi isn’t made for the careful and cautious. Shiny projected APYs take center stage, with limited-to-no disclosure of past performance or novel risks. Current products are riddled with difficult to navigate UIs, and optimal strategies often require financial and technical expertise that few possess.
Just take a look at the events of the past week. The case for prioritization of risk management over absolute returns has never been stronger.
It doesn’t take long to see that DeFi has been built for those who are comfortable losing money for a chance at their own rags to riches story. DAOs are different. DAOs have enough capital to disrupt industries and create an equitable, meritocratic future. This kind of potential isn’t something to be gambled with.
Enter Castle
At Castle, we are building DeFi products with a strong emphasis on risk management in order to minimize any chance of principal loss. We prioritize prudent management over possible returns. This starts with identifying DeFi’s unique risks, implementing mitigation strategies, and THEN optimizing yield earned within our risk-management frameworks. We are collaborating with ecosystem participants to research systemic risk, define best practices, and create innovative solutions to DeFi’s most common problems.
We work with DAOs to simplify financial management, building tools that address the full array of treasury assets, from stablecoins to liquidity provisioning to staking. Our products eliminate the need to spend valuable resources earning sustainable yield in a risk-managed fashion. This frees up bandwidth so web3 builders can focus on development and growth.
If you are interested in learning more about what we’re building at Castle, or would like to chat about improving your project’s risk and return profile, please reach out to us.
contact@castle.finance or on Twitter: @CastleFinance
Sources:
(1) — DeepDAO as of May 12th, 2022; https://deepdao.io/organizations
