A treasury is generally defined as “a place or location where treasure, such as currency or precious items are kept. These can be state or royal property, church treasure or in private ownership”.
Here is how this translates to the Crypto and the Decentralized Finance space and a number of benefits it brings.
Treasury funds in Decentralized Finance means that there are funds available for the general public interest without direct ownership. These can be accessed by individual investors through a protocol or blockchain voting mechanism that requests funds for a proposed use case without the need to spend their own assets.
Here are three meaningful ways to utilize a treasury:
- Request funding for developers that plan to release a project that otherwise wouldn't be able to be realized because of lack of development funds
- Initiate improvements to the blockchain that the treasury is built on by paying developers for additional security or pay out Bounties (example: a hackathon)
- Hand out Tips for community contributions that deserve a reward like free-to-use D’Apps or mobile Applications for proper appreciation
These use cases outline the impact a treasury fund can have for a DeFi project and its investors with it greatly contributing to the long-term sustainability of projects that decide to implement it.
It also acts as an easy to use and low cost way to reward various improvements to the respective protocol from third party developers.