• About Us
  • Careers
  • Contact
No Result
View All Result
Monday, September 29, 2025
DeFi Planet
  • News
    • People
    • Business
    • Crime
    • Regulation
    • Crypto
    • CBDC
  • Market Analysis
    • Bitcoin
    • Ethereum
    • Stablecoins
    • Altcoins
    • Crypto ETFs
    • Memecoins
  • Policy
  • Articles
    • Press Releases
    • Opinion
    • Explainers
    • Guest Post
    • Sponsored
  • Directory
    • Companies
    • People
    • Products
    • Wallets
  • Multimedia
    • Videos
    • Podcasts
  • Learn
    • DeFi Basics
    • Tutorials
    • Reviews
    • Blockchain Fundamentals
  • Research
    • Case Studies
  • Explore
    • DeFi
    • Crypto Gaming
    • NFT
    • DAO
    • Metaverse
    • Glossary
  • Jobs
  • Markets Pro
    • DeFi Planet Pro
    • Spend Crypto
    • Swap Crypto
    • Coin Prices
    • Crypto Exchanges
    • Crypto Analyzer
  • News
    • People
    • Business
    • Crime
    • Regulation
    • Crypto
    • CBDC
  • Market Analysis
    • Bitcoin
    • Ethereum
    • Stablecoins
    • Altcoins
    • Crypto ETFs
    • Memecoins
  • Policy
  • Articles
    • Press Releases
    • Opinion
    • Explainers
    • Guest Post
    • Sponsored
  • Directory
    • Companies
    • People
    • Products
    • Wallets
  • Multimedia
    • Videos
    • Podcasts
  • Learn
    • DeFi Basics
    • Tutorials
    • Reviews
    • Blockchain Fundamentals
  • Research
    • Case Studies
  • Explore
    • DeFi
    • Crypto Gaming
    • NFT
    • DAO
    • Metaverse
    • Glossary
  • Jobs
  • Markets Pro
    • DeFi Planet Pro
    • Spend Crypto
    • Swap Crypto
    • Coin Prices
    • Crypto Exchanges
    • Crypto Analyzer
No Result
View All Result
DeFi Planet
No Result
View All Result

Investment Policy Statements: Ending Misalignment and Empowering Long-term Vision in Decentralized Organizations

14 August 2025
in Opinion
Reading Time: 8 mins read
104 4
Home Articles Opinion

Contents

Toggle
  • Why DAOs Need an Investment Policy Statement
  • What’s Inside an IPS?
  • Connecting the Investment Policy Statement (IPS) to Crypto Treasury Management
  • Case Study: A DAO Without an IPS
  • Case Study: A DAO With an IPS
  • Empowering Decentralized Investment
  • Building Long-Term Value
  • Closing Thoughts: A Smarter Way to Manage Crypto

As the crypto space evolves, many DAOs are now managing millions of dollars in treasury funds and community-led initiatives. These funds are used for things like paying contributors, funding projects, giving out grants, and investing in other protocols. But with so many people involved, making sure everyone agrees on how money should be spent is not always easy, and that is where something called an Investment Policy Statement (IPS) comes in.

An Investment Policy Statement is a written plan that explains how an organization will manage its money. It is common in traditional finance, and now DAOs are starting to use it too because the IPS helps everyone in a DAO stay on the same page by laying out clear rules and goals for how the treasury should be handled. This includes things like where the money can be invested, how much risk is okay, and what the long-term goals are.

Why DAOs Need an Investment Policy Statement

One of the things that makes DAOs special is that they don’t have a CEO or board of directors, and what this means is that decisions are made by members who vote using tokens. This is called DAO governance. While this setup can be more democratic, it also creates challenges, and without a shared long-term vision, a DAO can get pulled in many different directions. Members might vote for short-term spending that feels good in the moment but hurts the organization in the long run.

This kind of misalignment often occurs when there is no clear investment plan, leading to disagreements on investment risk levels or the allocation of savings versus spending. Some may want to buy risky tokens that could grow fast, while others want safer options like stablecoins. That is why having an Investment Policy Statement (IPS)  is so important. It acts as a guide for everyone involved.

What’s Inside an IPS?

A good Investment Policy Statement includes a few key parts: First, it defines the long-term strategy of the DAO. What this means is that setting clear goals, such as supporting core contributors, building reserves, or funding innovation, becomes significantly easier with an IPS than it would have been without it. Second, it describes the DAO’s risk management approach. How much risk is acceptable? What types of assets should be avoided? Should the treasury hold mostly stablecoins, ETH, or other tokens?

Third, the IPS explains how decisions will be made. It might set rules like requiring a certain number of votes before making big changes to the portfolio, and it could also include spending limits, timelines for reviews, and how progress will be measured.

This level of structure helps prevent chaotic or impulsive decisions, also giving the community confidence that the DAO is being managed responsibly.

Image showing How Investment Policy Statements in DAOs Work on DeFi Planet

Connecting the Investment Policy Statement (IPS) to Crypto Treasury Management

In the world of Web3, a crypto treasury is like the bank account of a DAO, but instead of one person managing it, the treasury is controlled by a multisig wallet or smart contract. Members vote on proposals to decide how funds are used, and with millions of dollars at stake, treasury management becomes a serious job.

That’s where the IPS makes a big difference: by setting clear guidelines, the IPS helps treasury managers and community members avoid confusion and conflict. For example, if someone proposes a high-risk investment, the DAO can look back at the IPS to see if that kind of risk fits the agreed strategy.

Some tools, like Coinshift or Gnosis Safe, help DAOs manage their crypto treasuries with transparency and control. These tools work even better when paired with a solid IPS because everyone understands the “why” behind each transaction.

Case Study: A DAO Without an IPS

When you have a DAO, for example, called FutureDAO that has $2 million in its treasury, you then have members who are excited about a new project and vote to invest $1 million into a small, risky token. A few weeks later, the token crashes, and the treasury loses half its value. Members start blaming each other, and trust is typically broken.

This situation could have been avoided with a clear Investment Policy Statement. If the IPS had said the DAO could only invest 10% of its treasury in high-risk assets, that vote might never have passed, and instead, the DAO could have protected its core funds and avoided internal conflict.

The fallout wouldn’t just stop at the treasury loss, and core contributors could become demotivated, some leaving the project entirely, and community engagement would drop. Proposals that used to pass very easily will become more controversial as members no longer trust each other’s judgment. What began as a single bad investment will now end up stalling development and damaging the DAO’s reputation.

Worse, new contributors who were considering joining the DAO will decide to walk away and seeing how quickly funds were lost and how poorly the team handled the aftermath, they will feel that the DAO lacked professionalism and foresight. The absence of an IPS didn’t just lead to a financial mistake; it also created a very messy governance crisis.

RELATED: Most DAOs Are Doomed to Fail- Here’s Why

The lesson here is clear: when there is no shared strategy or framework, even well-meaning decisions can cause long-term harm. Without a clear policy to guide investment choices, DAOs risk both their assets and their community trust.

Case Study: A DAO With an IPS

Now imagine a different DAO, GreenChain, which also has $2 million. They created an Investment Policy Statement that focuses on sustainable growth, and the policy says they must keep at least 60% of the treasury in stablecoins and only invest 20% in experimental projects. When a new idea comes up, they check the Investment Policy Statement. If it doesn’t match the strategy, the proposal is adjusted or rejected.

Thanks to the IPS, GreenChain avoids reckless decisions and typically earns the trust of its members. Contributors know what to expect, and treasury managers can act with renewed confidence. This allows the DAO to grow steadily while staying aligned with its long-term goals.

Empowering Decentralized Investment

An IPS also encourages decentralized investment, which means the community can participate in financial decisions without needing a central authority. This creates a more open and transparent environment where everyone understands the rules.

In traditional finance, decisions are made behind closed doors, but in DAOs, the investment policy statement makes the process visible and fair. Everyone from core contributors to casual members can suggest ideas that match the investment plan. This builds stronger participation and smarter decision-making.

READ MORE: Are Investment DAOs The Next Big Thing in Venture Capital? 

Building Long-Term Value

The goal of any good DAO is to create lasting value, and without an investment policy statement, it’s easy to get distracted by trends or spend too much too quickly. But with a clear long-term strategy, the DAO can focus on growth that benefits everyone.

For example, a DAO might use its IPS to slowly build a reserve of stablecoins that can support contributors during a market crash. Or it might set aside funds for research and development. These choices don’t just help the DAO survive; they allow it to thrive in any market.

When members see that their DAO is prepared and thinking ahead, they’re more likely to stay involved and contribute. That is how long-term communities are built and maintained.

Closing Thoughts: A Smarter Way to Manage Crypto

The need for intelligent, structured decision-making in growing DAOs and handling large treasuries is becoming clear, and an Investment Policy Statement wouldn’t just be a piece of paper; it would be more of a powerful tool that keeps everyone aligned, reduces risk, and supports a shared vision for the future.

This would typically be done by linking DAO governance, crypto treasury planning, and strong risk management. The IPS empowers DAOs to become more professional, transparent, and resilient. In a world where every decision is recorded on-chain and every mistake is public, that kind of clarity matters.

The next step for many DAOs isn’t another DeFi integration or NFT drop, although helpful, it’s writing down their strategy, agreeing on their values, and making wise, long-lasting choices. That’s the real power of the IPS: helping decentralized communities act with unity, even when no one is in charge.

 

Disclaimer: This article is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence. 

 

If you want to read more market analyses like this one, visit DeFi Planet and follow us on Twitter, LinkedIn, Facebook, Instagram, and CoinMarketCap Community.

Take control of your crypto  portfolio with MARKETS PRO, DeFi Planet’s suite of analytics tools.”

Don't miss out!

Subscribe To Our Newsletter

Receive top education news, lesson ideas, teaching tips and more!
Invalid email address
Give it a try. You can unsubscribe at any time.
Thanks for subscribing!
Tags: DAOsDeFi
Share63Tweet40Share11
Previous Post

The Truth About Crypto Contract Trading No One Tells You

Next Post

Gold-Backed vs. USD-Backed Stablecoins: A Comparative Overview

Faari Labinjo

Faari Labinjo

Related Posts

Why Tech Giants Like Meta, Amazon, and Microsoft All Said No to Bitcoin as Corporate Treasury
Opinion

Why Tech Giants Like Meta, Amazon, and Microsoft All Said No to Bitcoin as Corporate Treasury

28 September 2025
Why Token-Based Voting Doesn’t Equal Fair Governance
Opinion

Why Token-Based Voting Doesn’t Equal Fair Governance

27 September 2025
Will AI Agents Need Crypto Wallets?
AI

Will AI Agents Need Crypto Wallets?

23 September 2025
The $280B Stablecoin Surge: Is Crypto Trading Becoming Too Reliant on Fiat-Pegged Assets?
Opinion

The $280B Stablecoin Surge: Is Crypto Trading Becoming Too Reliant on Fiat-Pegged Assets?

14 September 2025

Editors Picks

Mining vs. Staking: Which Crypto Validation Method Will Shape the Future?

Mining vs. Staking: Which Crypto Validation Method Will Shape the Future?

byOlajumoke Oyaleke
15 July 2025
0

Where Are the Ethereum-Killers Now?

Where Are the Ethereum-Killers Now?

byOlayinka Sodiqand1 others
6 January 2025
0

source: investorplace.com

How to Find the Newest Cryptocurrencies Before They’re Listed

byOlayinka Sodiq
30 December 2024
0

Exploring the Role of AI in Enhancing DeFi Security

Exploring the Role of AI in Enhancing DeFi Security

byOlayinka Sodiq
1 October 2024
0

The Ultimate Guide to How NFT Royalties Work

The Ultimate Guide to How NFT Royalties Work

byAdedamola Ojedokun
17 April 2024
0

Read More

Chain of Thoughts

The Aesthetics of Web3: Why Vibe Matters in Decentralized Communities

The Aesthetics of Web3: Why Vibe Matters in Decentralized Communities

byOlu Omoyele
27 September 2025
0

...

Zero-Knowledge Everything: Trust, Privacy, and Verification in the Digital Age

Zero-Knowledge Everything: Trust, Privacy, and Verification in the Digital Age

byOlu Omoyele
30 August 2025
0

...

What Happens When AI Gets a Wallet?

What Happens When AI Gets a Wallet?

byOlu Omoyele
31 July 2025
0

...

The Game-changing Triumvirate: Blockchain, Data Science, and Artificial Intelligence

The Game-changing Triumvirate: Blockchain, Data Science, and Artificial Intelligence

byOlu Omoyele
30 June 2025
0

...

Markets Update

Solana Market Cap Hits $120 Billion: A Breakthrough Moment for Adoption?

28 minutes ago

Your Weekend Crypto Roundup | September 2025 (Week 4)

3 days ago

Network Tokens on the Edge: Commodities vs Securities and the SEC’s Next Big Move

4 days ago

Tether Eyes $20B Fundraise at $500B Valuation

5 days ago

Do Tokenized Stocks Confuse Investors? Risks You Should Know

1 week ago

Can Europe’s Stablecoin Ambitions Withstand Pressure From the US and China?

1 week ago
Read More

Events

Blockchain Life 2025
Blockchain Life 2025
28 Oct 25

Spotlight

All about Ethereum
All about Algorand
All about Bitcoin
All about Gora

Press Releases

WBTC Strengthens its Role as Multichain Standard for Bitcoin in DeFi

bychainwire
29 September 2025
0

BitMine Immersion (BMNR) Announces ETH Holdings Exceeding 2.65 Million Tokens and Total Crypto and Cash Holdings of $11.6 Billion

bychainwire
29 September 2025
0

McKay Brothers Launches Fastest Private Transport for Crypto & FX Trading Between London and Singapore

bychainwire
29 September 2025
0

Alt.town Introduces $TOWN Token Utility Across Platform Services and Launches ValueFi Deposit Event

bychainwire
29 September 2025
0

Mitchell Demeter Appointed CEO of Sonic Labs to Drive Global Growth and Institutional Expansion

bychainwire
29 September 2025
0

Read More

ADVERTISING

ABOUT

TEAM

CAREERS

CONTACT

TERMS & CONDITIONS

PRIVACY POLICY

© Copyright 2025 DeFi Planet

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
Please enter and activate your license key for Cryptocurrency Widgets PRO plugin for unrestricted and full access of all premium features.

Add New Playlist

No Result
View All Result
  • News
    • People
    • Business
    • Crime
    • Regulation
    • Crypto
    • CBDC
  • Market Analysis
    • Bitcoin
    • Ethereum
    • Stablecoins
    • Altcoins
    • Crypto ETFs
    • Memecoins
  • Policy
  • Articles
    • Press Releases
    • Opinion
    • Explainers
    • Guest Post
    • Sponsored
  • Directory
    • Companies
    • People
    • Products
    • Wallets
  • Multimedia
    • Videos
    • Podcasts
  • Learn
    • DeFi Basics
    • Tutorials
    • Reviews
    • Blockchain Fundamentals
  • Research
    • Case Studies
  • Explore
    • DeFi
    • Crypto Gaming
    • NFT
    • DAO
    • Metaverse
    • Glossary
  • Jobs
  • Markets Pro
    • DeFi Planet Pro
    • Spend Crypto
    • Swap Crypto
    • Coin Prices
    • Crypto Exchanges
    • Crypto Analyzer

© Copyright 2024 DeFi Planet   |   Terms & Conditions   |   Privacy Policy

-
00:00
00:00

Queue

Update Required Flash plugin
-
00:00
00:00