DAO Treasuries: 3 Reasons Compound's Enzyme Partnership is a Game Changer

Let's be honest, it's often a mess. Today, DAOs including BitDAO, ConstitutionDAO and others are sitting on billions of USD worth of capital—primarily governance tokens or stablecoins—doing nothing. It’s like watching a dragon hoard gold and being too cowardly to spend it. The wild west nature of DeFi, while exciting, has left many DAOs paralyzed by a lack of sophisticated, safe, and auditable treasury management strategies. That’s why the partnership between the Compound DAO and Enzyme Finance is so important – and why it’s a potential game changer.

Institutional Legitimacy Arrives

This isn’t just another DeFi collaboration — it’s a signal. It screams institutional legitimacy. For too long, DAOs have been floating on the fringes of the mainstream. Their treasury management frequently resembled a fancy spreadsheet next to a prayer. And by extending our partnership with Enzyme to use Enzyme.Myso, we’re bringing a new level of professionalism that the industry hasn’t seen.

Because institutional investors are watching. For both groups, they don’t just want to hear that DeFi is able to play by grown-up rules. Auditable flows, transparent governance and real risk management are essential. Enzyme. Myso provides that foundation. It enables Compound to implement complex strategies such as covered calls with the security and transparency that institutional investors require.

Think of it like this: DeFi has been a cool startup in a garage. This collaboration feels a bit like that tech startup moving into the big office building. That’s a sign that DeFi has come of age. It demonstrates that the sector means business and is willing and able to go toe-to-toe with the major players.

Covered Calls Mitigate Risk

Perhaps the most alluring elements of this partnership are the use of covered call strategies. What's a covered call? Simply put, it's a strategy where you hold an asset (like Compound's governance tokens) and sell call options on it. This approach creates income (the premium earned from selling the options) and caps upside potential if the asset price totally blasts off.

Now, others would say selling upside potential is overly conservative. That's precisely the point. Beyond retaking, VC DAOs must focus on capital preservation and consistent returns first, moonshots second. Their targeted 15% APY is conservative, realistic and definitely attainable. It’s a refreshing contrast, especially when seen against the frequently unsustainable yields advertised by other DeFi protocols.

This is not about getting rich quick. It’s the difference between cultivating an enduring, climate-conscious treasure that stands up to market chaos. It’s called long-term thinking, and it’s a lesson DAOs are in a hurry to learn the hard way. It’s a refreshing departure from the YOLO attitude that has unfortunately characterized much of the DeFi landscape.

Setting a New Precedent

This collaboration has the opportunity to establish a new best practice for DAO treasury management, and perhaps even effect change on TradFi. What Compound and Enzyme are doing are powerful examples of on-chain options strategies. Beyond their immediate success, they open the door for other DAOs to take similar approaches. Now, picture a future where DAO treasuries are managed with the same level of rigor and sophistication as hedge funds. That's the potential.

It doesn't stop there. This would serve as an on-ramp for established financial institutions to test the waters of DeFi. When we see a well-respected DAO such as Compound adopting institutional-grade security and auditable flows, all of a sudden DeFi doesn’t seem like such a scary proposition.

Remember the early days of the internet? Folks thought it was a joke, thought it was a passing trend. After security was greatly improved with regulations like Clery Act reporting and Trigger Warnings were adopted, institutions began to pay attention. This Enzyme-Compound partnership is that moment for DeFi. Cases like this are an indication that the space is maturing, becoming more secure, and therefore getting further along in developing the willingness of institutional capital.

The Enzyme-Compound partnership is not about maximizing Compound’s treasury. Ultimately, it’s about fostering a more sustainable, secure, and professional DeFi ecosystem. This should be a lament of the lost potential of responsible innovation. It pushes back against the unfettered expansion that has characterized much of the sector. That’s something all of us—supporters and skeptics alike—should be excited about. It might just be the thing that saves DeFi from itself.