A new report by Bernstein analysts identifies Ethereum ETH/USD-native treasury companies — protocols that help DAOs manage, deploy, and grow onchain capital — as one of the most promising and underexplored areas in DeFi.
The report argues that these firms could eventually rival traditional asset managers and financial operating systems in both value and influence.
But the opportunity comes with serious caveats.
While these treasury platforms such as Karpatkey, Llama, and Avantgarde offer more transparency and real-time capital execution than their TradFi counterparts, Bernstein notes they are vulnerable to centralization risks, particularly in governance token distribution and control.
Many treasury DAOs are controlled by a handful of delegates or core contributors, raising concerns over accountability, especially when managing large sums of public capital.
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Even more pressing, the legal ambiguity around liability for treasury decisions is a key barrier to institutional adoption.
In many cases, it is unclear who within a DAO structure would be held responsible for asset mismanagement, a challenge that becomes especially urgent as protocols grow and deploy increasingly complex financial strategies.
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The report highlights that while treasury protocols offer unmatched composability, integrating everything from yield farming and staking to liquidity provisioning and grant funding, they remain difficult to scale in a fully decentralized and compliant manner.
“Ethereum-native treasuries are effectively unregulated asset managers,” the analysts write, warning that without a clear legal wrapper, these organizations could be exposed to enforcement action or internal governance breakdowns.
Nonetheless, Bernstein believes the category will mature as DAOs seek professional financial tooling and as the regulatory environment begins to define clearer standards for decentralized entities.
The report draws parallels to early hedge fund growth and suggests that DAO treasuries could eventually represent multi-billion dollar businesses serving as financial backbones for decentralized ecosystems.
As interest in Agentic Finance, DAO tooling, and onchain governance infrastructure accelerates, treasury companies sit at the center of DeFi’s next phase, bridging the programmable capital of Web3 with the performance standards of traditional finance.
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