What to Do When Your Treasury Token Isn't Working

What's the first move when your treasury token keeps losing value?

The first move is to split the treasury into two working balances instead of debating whether to sell the token: a stable balance that carries operating costs, and a native token balance held by the team. We treat the dual asset position as the starting point for any issuer whose token is bleeding, because every other decision, from venue coverage to market making terms, depends on whether payroll is exposed to the chart.

A treasury that funds the next eighteen months of work out of a falling token has to sell into the same book it wants to support, and the selling is visible. Growing the stable side first removes that forced flow. Runway stops moving with price, and the team regains the ability to say no to a bad raise, a bad listing or a bad liquidity deal, which is usually where the deeper damage comes from. We have argued the same point at greater length in our piece on whether a project should hold its treasury in its own token.

The other half of the move runs in the opposite direction. Buybacks raise the share of supply the team controls, which is what gives a treasury something to work with when the book is thin. Supply that sits with the team can be deployed into liquidity, placed through OTC into hands that are not selling next week, or simply held back from circulation. In our view that is the practical meaning of a treasury steadying a market: it is adding inventory it controls rather than adding sell pressure it cannot withdraw.

The two sides are run together, not sequenced one after the other. An issuer that buys back while the stable balance is still thin ends up repeating the forced sale a quarter later, and an issuer that only accumulates stables watches float drift further out of its hands. Once both balances exist and the ratio between them is being managed deliberately, the questions that follow, how much depth to fund, on which venues, and under what market making structure, have an actual budget behind them rather than a hope that price recovers first.

How do you sell down treasury token holdings without crashing the price yourself?

Treasury sales that do not crash the price run as coordinated windows with structured execution, TWAP or VWAP schedules or OTC blocks, rather than as independent selling pushed through the market-making desk. That last pattern is the one we see most often and the one that does the damage. The desk quoting both sides of the book is the worst place for size leaving the treasury, because the inventory meant to absorb everyone else's flow ends up absorbing the issuer's, and the spread widens at the moment the treasury most needs it tight.

Coordination, in our use of the word, means the sell program and the liquidity program are aware of each other before either moves. Selling that arrives at the desk unannounced produces the aftermath teams later describe as the market maker failing to hold the price, when in our reading of those episodes the treasury was competing with its own liquidity provision. Separating the two is what makes the difference measurable afterwards, and it is also what makes an audit of what the desk actually did legible rather than contested.

OTC blocks matter here because size that clears away from the book never prints into it, so the chart carries no signature of the sale at all. The counterparty, the structure and the concession are negotiated rather than discovered by sweeping the book, and how those trades get put together is a separate discipline from on-book execution.

The second variable is pacing rather than venue. A treasury that diversifies through a steady execution program carries different costs from one that diversifies by announcement, and we think the gap between them is mostly optics plus impact arriving on the same day. A single disclosed move concentrates both: the size hits the market at once, and the market reads the team declaring it no longer wants to hold what everyone else is being asked to hold. A program running as standing policy spreads the first cost and largely removes the second, and the position ends up mixed without any one day on which the sale was the news.

Should treasury holdings be spread across more custodians and stablecoins?

Yes, and we treat concentration in a single custodian or a single stablecoin as an unforced error after 2022. A treasury spread across venues survives one of them halting withdrawals; a treasury spread across stablecoins survives one of them breaking from par or having its issuer restricted. Neither of those events is hypothetical any more, and the operational cost of holding balances in more than one place is small next to the cost of discovering, during a freeze, that the entire runway sits behind one login.

The point generalises past custody to counterparties. The lending desk, the exchange, the OTC desk and the issuer of the stable a team holds are four separate credit exposures, and in our experience teams tend to count them as one because the balance shows up on one screen. We think the useful question is how many independent failures it takes to interrupt payroll. When the answer is one, the structure is wrong regardless of how good the counterparty looks on any given week.

This matters more, not less, for a team whose treasury token has stopped working. A project already dealing with a weak market in its own asset has less tolerance for a second problem arriving from the custody side, and fewer options for raising cash quickly if the stable portion is stuck. Diversification here does nothing for the token price. What it does is keep the non-token part of the balance sheet available on the days the token part is not, which is when operating cash is being drawn down hardest.

Splitting balances is also the easy half. The harder half is the policy underneath: who signs, which venues are approved, what triggers a move out of a counterparty, and how often the split gets revisited as issuers and venues change. We build and run that policy as part of our treasury management work, alongside the separate question of how much of a treasury should sit in the project's own token at all. The first review usually surfaces at least one balance nobody had looked at since the year it was deposited.

Is treasury management the same thing as chasing yield?

No. Treasury management is a mandate covering policy, execution and runway, while yield is a product that can sit inside that mandate without ever standing in for it. We keep the two separate in how we work, because the moment a treasury is judged by the return it generates, the stewardship questions stop getting asked.

The mandate has three legs and each produces different artefacts. Policy sets what the treasury holds, in what proportions, under what constraints, and who signs off on a change. Execution covers how positions actually move: which venues, over what period, with what reporting back to whoever holds the mandate. Runway is the arithmetic of obligations against assets that can be realised without forcing the price. A yield venue answers none of those three. It answers a narrower question, which is what a given pool of capital earns while it sits there, and that question only becomes meaningful once the first three have answers.

Conflation tends to show up under pressure. A treasury token has fallen, the headline number looks bad, and deploying the position somewhere that quotes a return feels like a response. Our view is that this usually adds counterparty exposure on top of the price exposure that caused the problem, without changing the runway figure that prompted the anxiety in the first place. The underlying holding is still the same holding, now less available to move.

We also decline to treat quoted yields as guaranteed, and nothing we set out about treasury structure is financial advice. What we do insist on is that the execution leg carries reporting a treasurer can check independently, the same standard we apply when teams audit what their market maker is actually doing. Once the policy document names who can move treasury assets, at what size, and with what approval, a proposal to deploy into a yield venue arrives at a committee with a written remit rather than at a founder watching a chart.

What if treasury income arrives in a non-liquid token?

Treasury income paid in a non-liquid token arrives as an exposure rather than as funding, and turning it into funding takes a desk that can hedge the position and work it out OTC. Until that happens the balance sits at the mercy of whatever thin book the asset trades on, and the number in the treasury report moves for reasons that have nothing to do with the business that earned it.

The hedge and the placement do different jobs, and we treat them as two steps rather than one. Hedging fixes the economics of what has already been received so the value does not drift while a buyer is being found. The OTC placement is the slower part, because a non-liquid asset has to go to counterparties who want that specific exposure, in sizes and at a pace the on-screen market could never absorb. We have written more about how those negotiated blocks get structured and executed elsewhere.

Where the income is recurring rather than a one-off settlement, our view is that it changes category. A single payment is a position to be unwound. A stream of payments in the same asset is revenue, and once hedged and converted it can fund buybacks of the main token on a schedule the treasury controls, paid for out of operating income instead of out of reserves. That distinction matters more than the size of the first receipt, because a stream supports a programme and a lump does not.

The practical sequence is that each payment is hedged on receipt, placed OTC over the following weeks, and the cleared proceeds are split between operating costs and whatever buyback budget the treasury has committed to. Teams that skip the hedge step usually discover the gap at the point of sale, when the price they book is the price three months after the invoice rather than the price on the day the work was done.

Is raising more capital the right fix for a struggling treasury?

Raising more capital fixes a struggling treasury only when the raise funds growth or licences, and it fixes nothing when the gap it closes is payroll. We draw that line hard: a raise that exists to cover fixed costs buys time at the price of dilution, and the same gap reappears on the next cycle with a smaller cap table share left to sell against it.

The diagnostic sits on the cost side rather than the treasury side. Fixed costs want to be capped as a share of revenue, so that the structure holds when token income falls rather than only when it rises. A team whose headcount and infrastructure are sized to a treasury mark will find that the mark, not the business, is setting the burn, and no amount raised changes that relationship. Our view is that resizing fixed costs is the prerequisite step, and that a raise taken before it simply refinances the problem at a worse valuation.

Where a raise does work, the use of funds is specific and external: a market to enter, a licence to obtain, a product line that needs capital to reach revenue. Those are things capital buys. Survival is not something capital buys, because survival is a function of the cost base, and investors who have seen the pattern price the difference accordingly. We have watched framing drift here, where a deck says expansion and the cash goes to salaries, and that gap tends to surface in diligence rather than after it.

There is also a mechanical consequence for the token itself. A raise against a treasury token means more supply reaching a book that is already absorbing selling, which is a question of how the round gets priced against existing depth rather than a question of how much is needed. The sequence we would expect to hold is costs capped first, use of funds named second, pricing set against the book as it actually trades, and the raise executed once those three are settled.

Disclosure

Vandergrid provides market making for token launches on CEXs and DEXs.

Not investment advice.