Thoughts on Treasury Management

Astar Astar Initiatives
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GM everyone,

The current macro situation shouldn’t be an excuse to ignore the urgent need for proper treasury management. Let’s be honest—$ASTR is in a rough spot, hovering around $0.03. We’ve seen consistent sell pressure, a lack of strategic intervention, and growing concerns about the ecosystem.

With Astar’s expansion and the partnership with Sony, I assume there are already discussions about redesigning token economics. But this isn’t something that can be left to chance — we need well-modeled, carefully structured solutions. It’s not quite the Three-Body Problem , but it does require serious economic modeling and long-term strategic planning .

That’s why I’ve put together an overview as a reference point for discussion — a roadmap for active treasury management that goes beyond passive governance and builds a sustainable economic foundation for Astar.

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I like your idea, something already seen elsewhere obviously, but that with the right settings could be brought back to astar…I hope the discussion is carried forward.

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What a terrific contribution you just made! Your work and your constant ideas to improve the Astar ecosystem are definitely to be applauded.

In short, I’m not very good at tokenomics and pricing issues and strategies to maintain liquidity, I’ve focused so much on development that I haven’t learned these topics.

However I see very grounded your proposal and yes, I have participated in other large ecosystems where this model works and is often the basis of their governance or economic models that allows them to work in a better way to manage their treasuries, proposals, or support projects.

Thank you for raising this point! I hope the conversation will be more fluid and the whole community will participate.

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Thank you for your proposal.
Holding stablecoins in the treasury is certainly one approach to maintaining stability.

From my understanding, this proposal goes a step further by suggesting a dual-token system involving a governance token and a stablecoin. Several blockchain projects have already implemented similar systems.

Algorithmic Stablecoins

  • Terra: UST (Collapsed)
  • Near: USN
  • Tron: USDD (Transitioned to an overcollateralized model)

Overcollateralized Stablecoins

  • Acala: aSEED (Currently depegged due to a hack)
  • Berachain: HONEY (Currently backed by USDC and BYUSD)

Algorithmic stablecoins can be extremely powerful if they succeed, but very few have worked out, making them excessively high-risk. If Astar were to shift in that direction, I would likely step away from the project.

On the other hand, issuing an overcollateralized stablecoin and holding it in the treasury is essentially equivalent to holding the collateral itself. If the issued stablecoin is used for operations, it may appear as if governance tokens are not being sold. However, in a DeFi environment, the sell path often ends up being stablecoin → governance token → cash, leading to an indirect governance token sell-off. For this to work, the native stablecoin would need to be widely traded, which is a significant hurdle.

If the goal is to secure additional funding via stablecoins, a more practical approach would be similar to how governments issue bonds or corporations issue corporate bonds. However, without legal enforceability, this is also an unrealistic option.

If an overcollateralized stablecoin must be used, a third-party stablecoin like SONE, which allows collateralization with assets other than ASTR, would provide more stability. Additionally, if the chain itself issues a DeFi product, competition within the ecosystem could be disrupted, making it preferable to rely on third-party solutions. However, the capital efficiency in this model is quite poor.

If the goal is simply to hold stablecoins in the treasury, using a highly liquid and stable option like USDC would be more appropriate. While concerns about centralization exist, centralization often correlates with reliability (depending on the issuer). Since USD-backed stablecoins derive their value from national currencies, this trade-off may be acceptable. The main issue is that converting ASTR into stablecoins periodically equates to continuous sell pressure.

Summary of My Thoughts

If Astar wants to hold stablecoins in the treasury, there are two main options:

  1. Regularly swap ASTR for stablecoins (but this leads to continuous selling pressure on ASTR).
  2. Use ASTR as collateral to mint third-party stablecoins (but this favors specific dApps and increases third-party risks).

I don’t see the necessity for a dual-token system, as it would likely introduce more negative consequences than benefits.

For reference, let’s take a look at how other projects manage their treasuries. Using DeepDAO, we can analyze existing structures.

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As you can see, in most projects, over 90% of their treasuries consist of governance tokens—even in DeFi projects with fee revenues. This highlights the difficulty of incorporating stablecoins into a treasury in a sustainable way. Notably, Lido’s treasury is composed of nearly 38% ETH, which suggests that their business model is highly successful.

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Thanks for the discussion, @you425

DeepDAO is a nice tool, sadly it does not cover many Astar projects :slight_smile:

The proposal is less about building a new stablecoin, which introduces a whole lot more of factors to consider, let alone capital and regulatory framework required.

I agree, that a lot of organisations feature multiple token in their treasuries. Keeping them and buying them with their governance token is not enough for sure, if your goal is stability.

It depends on the strategic direction, how an organisation is designing their token utility and managing a treasury for a more or less sovereign L1 is way different than for an on chain entity, compare nation state to a company operating in that state.

Also, there are other means to improve the general composition, purchase power, like burning mechanisms, which in combination with the acquisition of stables can counter the sell off pressure.

What is your conclusion comparing an ecosystem like Astar with Lido? I agree, their business model seems right.

What are your suggestions?

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yes, actually it is something very dangerous, we need to think carefully about this type of proposal, I will follow the discussion, not having much experience in this regard

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@Forstar thanks for your thoughts.

Can you explain in what regard you feel stabilising the treasury by diversifying the portfolio with stable assets is dangerous?

For example:

  1. people sell ASTR and price goes down
  2. treasury can counter downward movements with buyback, burn and stables, which can even return yield

If you just sell for stables, it is not as severe as just extracting by selling elsewhere, but less effective than managing it actively.

It needs strategy and execution of course.

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I used DeepDAO because there were no better tools available for analyzing treasury structures. Whether it supports the Astar ecosystem is irrelevant—when making comparisons, it’s preferable to look at L1s or L2s. At this stage, referencing the Astar ecosystem itself is unnecessary.

For treasury diversification, the primary question is what the revenue sources are. Relatively healthy treasuries, such as Lido, Aave, and dYdX, operate on fee-based business models.

  • Lido: Earns from staking fees.
  • Aave & dYdX: Generate revenue from lending and trading fees.

However, Astar does not have fee revenue since:

  • 80% of gas fees are burned, and
  • The remaining 20% goes to collators.

Even if gas fees were redirected to the treasury, they would still be ASTR, which doesn’t fundamentally solve the issue.

Astar’s Treasury Structure: No External Revenue
Since Astar is an L1 with no revenue model, it has no external income sources. As a result, I believe that restructuring the treasury is difficult.

Additionally:

  • Treasury funds are largely unused, meaning there is no urgent financial issue.
  • Forcing diversification would introduce sell pressure on ASTR, increasing downside risks.

If a concrete solution exists, it must include a clear cash flow model to justify the approach.

The closest viable option is generating ETH revenue from Soneium, but this ultimately depends on Startale’s discretion, making it difficult to factor into a strategy.

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