DAO Dynamics: Treasury and Market Cap Interaction

Abstract

The treasury of a DAO is purported to uphold the value of the DAO-issued token, and this study represents a pioneering effort to delve into these realms. We explore the relationship between the treasury and market capitalization in two DAO projects, namely Olympus DAO and KlimaDAO. Employing Granger Causality tests, we scrutinize the relationship between market capitalization and the treasuries of these DAOs. Furthermore, we use an EGARCH model to investigate the in-fluence of carbon offset tokens on KlimaDAO’s market capitalization, incorporating this variable into the model's conditional mean equation. The findings reveal a significant relationship between market capitalization and the treasuries of the DAOs, indicating a potential impact of market capitalization on treasuries. Additionally, the well-specified EGARCH model highlights the sig-nificance of carbon offset tokens, suggesting their potential to influence the overall market capi-talization of a DAO project and support its value.