Treasury management is the next big web3 thing

Every web3 company will be a Defi company

Celsius showed us that cash flow management is essential to the survival of a business.

In simple terms, treasury management means ensuring you always have available cash (or other liquid assets) to cover payments that need to be made, while also trying to maximise income on that cash.

Well, it's a nightmare...

What are the problems ?

1. Timing - How should you structure between locked incomes generating yield and where to put it and available cash to pay for opex ?

You should always have a healthy balance between money you won't need that can be leveraged and money that you need in the next 12months to cover opex.

Then comes the question of diversification in your cold treasury itself. Should you use DEXs to generate a higher yield ? Should you buy bonds at 1% ? Should you keep DCA into crypto ? It really depends on your risk management strategy but it needs to be allocated accordingly.

2. Currency - How can you hedge against mismatch between currencies in inflows and outflows ?

Not a better time to talk about this. A lot of EU companies running on short margin businesses like e-commerce stores that import in $ and sell in € have been hit by a 20% currency shift. It kills a business.

Now, this is true, especially in crypto where volatility is taking the risk of change at an another level. 70% drops in 6 months ? What the hell.

Should you swap 50% in USDC every time you get inflows ? Should you buy call options to buy later at the price of today ?

Most of the time headcount is 70% of a decentralized application burn in USDC/USDT but nearly 50% of treasury is in ETH. It becomes tricky.

3. Geography - How can you hedge against mismatch between geographies in inflows and outflows ?

You get paid in ETH but you need to pay your supplier in Yen or dollar. How your treasury should reflect this ?

4. Account management

You have several bank accounts & wallets in multiple countries. How do you create the right framework to rebalance between those accounts ?

It feels like every company we're talking with doesn't have a strategy on handling those risks while i think that's one of the biggest risk of all.

In web2, the narrative is around the transfer of data. How do i get more data to sell this on advertising platforms? Facebook/Google are businesses built on top of this model. So the most important questions were : how do i manage efficiently multiple sources of data & take intelligent decisions. A new wave of businesses like salesforce/netsuite emerged.

In web3, the narrative is around the transfer of value. So the question all dapps/DAOs will ask themselves are : how do i manage efficiently multiple sources of value/incomes & take intelligent FINANCIAL decisions.

That's why, every web3 company will be a DeFi company.

Eytan Messika is one of the co-founders at Nilos.

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