DAOs, Governance and Treasury Management

Introduction and Context

Decentralised autonomous organisations (DAOs) are blockchain-coordinated organisations whose rules, decision rights, assets and operational procedures are expressed partly through smart contracts and partly through social, legal and institutional arrangements. A DAO is not simply a token-holder vote. It is a governance system that determines who may propose actions, who may approve them, how decisions are executed, how resources are controlled, and how participants are held accountable.

DAOs have emerged in decentralised finance (DeFi), protocol development, investment coordination, public-goods funding, gaming, creator communities and infrastructure management. Their strategic importance arises from the possibility of coordinating people and capital without relying entirely on a conventional central management hierarchy. However, decentralisation does not eliminate power. It redistributes power among token holders, delegates, developers, multisignature signers, service providers, liquidity providers, investors and communities.

Effective DAO governance therefore requires more than technical deployment. It requires institutional design. A well-designed DAO aligns authority with competence, limits the ability of any actor to abuse resources, creates transparent procedures, and preserves the capacity to respond to emergencies. Treasury management is central to this objective because the treasury finances development, security, grants, operations, liquidity and long-term sustainability.

Learning Objectives

By the end of this chapter, the learner should be able to:

1. Explain DAO structures and distinguish on-chain governance from off-chain coordination.
2. Evaluate governance-token designs and their effects on power and participation.
3. Compare voting models, delegation systems and quorum rules.
4. Design a transparent proposal lifecycle.
5. Assess multisignature treasury controls and operational risks.
6. Construct contributor-incentive and accountability frameworks.
7. Analyse a DAO governance case and recommend improvements.
8. Integrate technical, economic, ethical, legal and strategic considerations into a governance design.

1. The Institutional Structure of a DAO

A DAO normally contains five interacting layers:

The phrase “autonomous” should be interpreted carefully. Smart contracts can automatically execute an approved transaction, but they cannot independently determine whether a proposal is socially legitimate, whether a contributor has acted ethically, or whether an emergency requires intervention. DAOs are therefore socio-technical systems: code supplies enforceable rules, while people supply interpretation, expertise and judgment.

On-chain and off-chain governance

On-chain governance records proposals, votes and execution rules on a blockchain. Its advantages include transparency, auditability and predictable execution. Its limitations include transaction costs, slow adaptation, voter apathy and the difficulty of encoding complex judgments.

Off-chain governance occurs through forums, social media, community calls, research reports and informal discussion. It is cheaper and more expressive, but it may be less transparent, easier for influential participants to dominate, and harder to audit. Many successful DAOs use a hybrid model: discussion and initial review occur off-chain, while binding decisions and treasury transfers occur on-chain.

Agency and constitutional problems

DAO governance can be analysed using principal–agent theory. Token holders are principals who delegate work to developers, delegates, signers or service providers acting as agents. Information asymmetry occurs when agents know more than ordinary token holders. Moral hazard arises when agents bear less risk than the principals whose resources they control.

Constitutional design addresses these problems by specifying:

• the scope of delegated authority;
• reporting and disclosure duties;
• approval thresholds;
• conflicts-of-interest rules;
• removal and replacement procedures;
• emergency powers; and
• audit and review requirements.

A DAO should avoid concentrating all authority in a single voting mechanism. Voting may approve an expenditure, but independent controls should verify the recipient, contract address, budget, performance and execution conditions.

2. Governance Tokens and Distribution of Power

A governance token is a digital asset that grants voting rights, economic rights, or both. Holding a token does not automatically make governance equitable. If voting power is proportional to token holdings, wealth concentration can translate directly into political power.

A simple token-weighted voting model is:

where V_i is the voting power of participant i and T_i is the participant’s eligible token balance. This model assumes that every eligible token has equal voting weight and that no delegation, caps or nonlinear weighting applies.

The participant’s voting share can be represented as:

where s_i is participant i’s share of total voting power, n is the number of participants, and the denominator is the total eligible voting power. The result is dimensionless and ranges from 0 to 1.

Token distribution may be affected by founders, venture investors, airdrops, liquidity mining, treasury allocations and exchanges. A token can therefore create formal participation while producing practical oligarchy. Governance designers should examine both ownership concentration and actual participation concentration.

Alternative voting rights

Common alternatives include:

• One-token-one-vote: simple and familiar, but vulnerable to wealth concentration.
• Delegated voting: holders assign voting power to representatives while retaining ownership.
• Quadratic voting: the marginal cost of additional voting power rises with the square of votes. It can reduce the dominance of large holders but requires careful funding and sybil resistance.
• Conviction voting: voting power increases with the time tokens remain committed to a proposal. It may express sustained preference but can be slow and difficult to calibrate.
• Reputation or contribution voting: voting rights are linked to verified contribution rather than wealth. This may improve expertise representation but introduces measurement and identity risks.
• Bicameral or dual-house systems: token holders and contributors, or capital providers and users, each have a separate decision role.

No voting system is universally superior. The correct model depends on the DAO’s purpose, participant identity, risk profile, legal environment and need for speed.

Transferability and governance risk

Transferable governance tokens can be bought, sold, borrowed or temporarily acquired. This creates risks including vote buying, flash-loan attacks, coordinated accumulation and conflicts between short-term traders and long-term users. Mitigations include snapshot voting, voting-escrow mechanisms, timelocks, proposal deposits, quorum rules, delegated representation and limits on emergency powers.

3. Voting Models, Quorum and Decision Rules

A voting process must answer four questions:

1. Who is eligible to vote?
2. What options are available?
3. What level of participation is required?
4. What majority is sufficient for approval?

Quorum

Quorum is the minimum amount of eligible voting power that must participate before a decision is valid. A basic quorum ratio is:

where q is the quorum ratio, P is participating eligible voting power, and E is total eligible voting power at the relevant snapshot. Both P and E are measured in tokens or voting units, so q is dimensionless.

For example, if 2.4 million voting units participate out of 10 million eligible units, then q = 2.4 ÷ 10 = 0.24, or 24%. If the quorum requirement is 20%, the participation condition is satisfied.

Quorum protects against decisions being made by a very small minority. However, an excessively high quorum can make governance permanently inactive, especially when token holders are dispersed or apathetic. Some systems use quorum requirements that adjust according to historical participation; this can improve resilience but may also allow a motivated minority to pass decisions during periods of low engagement.

Approval thresholds

Approval may be based on a simple majority, a supermajority or approval voting. Under a yes/no system, the approval ratio may be calculated as:

where Y is the number of affirmative voting units and N is the number of negative voting units. Abstentions are excluded from the denominator in this formulation, although a DAO may define abstentions differently.

A proposal requiring a simple majority passes when r > 0.5. A proposal requiring a two-thirds supermajority passes when r ≥ 2 ÷ 3, subject to quorum and any additional conditions.

Different decisions should use different thresholds. Routine operating expenditure may require a simple majority, while changing the governance contract, transferring control of a major reserve, or modifying emergency powers may require a supermajority, longer delay and independent review.

Delegation

Delegation allows a token holder to assign voting power to a representative. It addresses the expertise and participation problems of direct voting. A delegate may specialise in risk, protocol engineering, treasury management or community interests.

Delegation should be revocable, transparent and accompanied by disclosure. Delegates should publish voting rationales, conflicts of interest, attendance records and policy positions. A delegate’s authority should not be confused with ownership: delegation normally transfers decision power, not economic title.

A robust delegation system may include delegate registration, performance dashboards, periodic elections, recall mechanisms and compensation linked to documented work rather than merely to vote volume.

4. The Proposal Lifecycle

A proposal process converts an idea into a controlled decision. A professionally designed lifecycle commonly includes the following stages:

1. Problem definition: the proposer states the issue, objective and expected effect.
2. Informal discussion: community members examine assumptions and alternatives.
3. Specification: technical, financial, legal and operational details are documented.
4. Conflict disclosure: proposers, reviewers and beneficiaries disclose relevant interests.
5. Risk and security review: code, addresses, permissions and dependencies are checked.
6. Temperature check: a non-binding poll tests support and identifies objections.
7. Formal proposal: the final proposal is submitted under the required format.
8. Voting period: eligible participants vote under published rules.
9. Timelock: approved actions wait for a specified period before execution.
10. Execution: the authorised executor performs the transaction or activates the contract.
11. Reporting: outcomes, costs, deviations and lessons are disclosed.
12. Post-implementation review: the DAO assesses whether objectives were achieved.

A proposal should identify the requested amount, asset denomination, recipient address, purpose, milestones, delivery dates, performance indicators, legal restrictions, risk controls and cancellation conditions. Treasury proposals should never rely on a human-readable description alone; the exact transaction payload and destination address should be independently verified.

Timelocks and emergency mechanisms

A timelock creates a period between approval and execution. It gives participants an opportunity to inspect the final transaction and exit, veto or cancel if an error is found. Emergency guardians may pause a contract or block execution, but emergency powers should be narrowly defined, time-limited, publicly disclosed and subject to later review. An emergency role that can permanently seize funds is effectively a central authority and should be treated accordingly.

5. Treasury Management as a Governance Function

A DAO treasury is a portfolio of assets controlled by the organisation. It may contain native tokens, stablecoins, fiat-linked instruments, liquidity positions, governance tokens, intellectual property rights or claims on protocol revenue.

Treasury management has four strategic objectives:

• preserve solvency and operational continuity;
• fund approved activities;
• manage market, smart-contract, counterparty and liquidity risks; and
• align spending with the DAO’s mission.

Treasury policy

A treasury policy should define:

• permitted assets and prohibited exposures;
• target liquidity reserves;
• diversification limits;
• custody and signing arrangements;
• investment authority;
• borrowing restrictions;
• reporting frequency;
• valuation methods;
• conflict-of-interest procedures;
• emergency actions; and
• review and amendment procedures.

A useful liquidity measure is the reserve coverage ratio:

where R_c is reserve coverage, L is liquid, low-risk treasury value, and B_m is expected monthly operating expenditure. The result is measured in months. If liquid reserves equal 1.2 million units and expected monthly expenditure is 200,000 units, then R_c = 1,200,000 ÷ 200,000 = 6 months. This calculation assumes that expenditure forecasts are reliable and that the assets classified as liquid can be converted without material loss.

Coverage alone does not guarantee safety. A treasury holding a volatile governance token may have high value in a bull market but inadequate purchasing power during a downturn. Treasury reporting should therefore distinguish market value, liquid value, restricted value and stressed value.

Segregation of funds

Funds should be separated according to purpose, such as:

Segregation reduces the risk that a single operational error exposes the entire treasury. It also improves accountability because stakeholders can compare each pool with its approved purpose.

6. Multisignature Treasury Controls

A multisignature wallet requires several authorised signers to approve a transaction. An m-of-n arrangement requires at least m valid signatures from a group of n signers.

For example, a 3-of-5 wallet requires three signatures from five authorised signers. It reduces dependence on one key and provides operational redundancy. Nevertheless, it does not automatically create decentralisation. If three signers are controlled by one organisation, the effective authority remains concentrated.

Signer design

Signer selection should consider:

• independence from one another;
• geographic and infrastructure diversity;
• technical competence;
• legal and fiduciary responsibilities;
• availability and succession;
• identity verification appropriate to the risk; and
• conflicts of interest.

Key-management procedures should include hardware wallets, secure backups, transaction simulation, address allow-lists where appropriate, dual review of calldata, signer rotation and incident-response procedures. A signer should never approve a transaction solely because another signer has already done so.

Limits of multisignature governance

Multisignature systems create trust in a committee rather than eliminating trust. Risks include collusion, coercion, key compromise, signer loss, social engineering and unclear accountability. The wallet should therefore be integrated with formal governance, timelocks, transaction limits, public signing policies and regular attestations.

7. Contributor Incentives and Accountability

DAOs depend on contributors who perform work that cannot be obtained simply by counting token balances. These include software engineers, auditors, researchers, community managers, legal advisers, educators and operations specialists.

A contributor framework should specify:

• role and scope of work;
• deliverables and acceptance criteria;
• compensation and payment schedule;
• intellectual-property arrangements;
• confidentiality and security obligations;
• conflict-of-interest rules;
• evaluation procedures; and
• termination or renewal conditions.

Compensation may combine stable assets, native tokens, milestone payments, grants, bounties, retainers and long-term incentives. Token compensation aligns contributors with future success but exposes them to volatility and may create pressure to promote short-term token price. Stable compensation supports budgeting but may reduce long-term alignment.

Performance indicators should measure meaningful outcomes rather than superficial activity. Examples include successfully deployed features, resolved security findings, documented research, user retention, grant completion and response-time improvements. Metrics must be interpreted carefully: a high number of commits, proposals or social-media posts does not necessarily indicate high value.

Accountability should be reciprocal. Contributors need clear authority, timely payment and access to information; the DAO needs transparent reporting, quality standards and mechanisms for addressing underperformance or misconduct.

8. Illustrative Case: The Meridian Protocol Treasury

Background

Meridian Protocol is a fictional DeFi lending DAO with a governance token, a 7-of-12 multisignature treasury and approximately 18 million units of treasury assets. Its governance activity is low: fewer than 8% of eligible voting units participate in typical proposals. The treasury is heavily exposed to its volatile governance token, while recurring operating expenses are paid in stable assets.

Problem

A proposal requests 3 million units for ecosystem grants. The proposal identifies broad objectives but does not specify milestones, recipient screening, performance reporting or cancellation rights. A delegate who helped design the programme also expects to receive a grant. The proposal passes narrowly after meeting quorum, but several community members question the process. At the same time, two multisignature signers are employees of the same investment firm.

Analysis

The governance system has four weaknesses. First, low participation makes formal token voting vulnerable to minority control. Second, the conflict of interest is not disclosed in the proposal. Third, the grant programme lacks measurable accountability. Fourth, signer independence is weaker than the numerical 7-of-12 threshold suggests.

The treasury also lacks a formal reserve policy. If monthly operating expenditure is 450,000 units and liquid reserves are 2.7 million units, reserve coverage is:

Six months may be adequate, but only if the liquid reserves are not exposed to severe devaluation and the expenditure forecast includes security and emergency costs.

Approach and solution

The DAO adopts a revised framework:

1. Grant proposals above 500,000 units require a published evaluation rubric, conflict disclosures and independent review.
2. Grants are divided into milestone-based tranches rather than paid entirely in advance.
3. The interested delegate must abstain from the discussion and vote, or the proposal must use an independent review committee.
4. Major treasury transfers require a 10-day timelock and an address-verification checklist.
5. The signer set is reconstituted so that no more than two signers come from the same organisation.
6. A reserve policy targets at least six months of forecast operating expenditure in liquid assets, subject to annual review.
7. Delegates publish voting rationales and attendance records.
8. Quarterly treasury reports disclose asset composition, realised expenditure, grants, liabilities and material risks.
9. An emergency guardian may pause execution for up to 72 hours, after which continued intervention requires a formal governance decision.

Outcome

The revised grant programme distributes funds in three stages. The first tranche supports research and onboarding; the second depends on a documented product release; the final tranche depends on adoption and security criteria. Two grants are discontinued after failing their milestones, preserving treasury resources. Participation improves because delegates publish analysis and smaller holders can use delegation rather than vote directly on every proposal.

Learning points

The case demonstrates that governance quality depends on process, not merely on token voting. Quorum does not cure conflicts of interest, and a large multisignature threshold does not guarantee independent control. Treasury policy, disclosure, milestone payments, timelocks and post-decision review must operate together.

9. Ethical, Legal and Regulatory Considerations

DAO governance creates ethical questions about inclusion, voice, accountability and distribution. Token-based systems may exclude users who lack capital, technical knowledge or access to voting infrastructure. Governance designers should consider accessibility, plain-language documentation, translation, participation support and protection against harassment.

Transparency is necessary but not sufficient. Publishing wallet addresses may expose individuals to privacy risks. A DAO should disclose material information while minimising unnecessary personal data. Identity systems should be proportionate to the risk and should not create a single database vulnerable to misuse.

Legal classification varies by jurisdiction. A DAO may interact with company law, partnership law, securities regulation, tax law, anti-money-laundering rules, employment law and consumer-protection requirements. The use of a decentralised label does not automatically remove legal responsibility. Participants should obtain qualified legal advice before structuring token issuance, treasury activities, investment products or paid contributor relationships.

Ethical treasury management also requires avoiding misleading financial reporting. Treasury values should state the valuation date, asset price source, liquidity assumptions and treatment of locked or restricted assets. Governance participants should be warned when a proposal creates exposure to leverage, liquidation, oracle failure or correlated asset losses.

10. Technology, Automation and AI

Governance platforms can automate proposal submission, quorum calculation, delegation tracking, treasury dashboards, payment schedules and reporting. Smart contracts can enforce spending limits and milestone releases. Monitoring systems can alert participants to unusual transfers, signer changes, contract upgrades or declining reserves.

AI may assist with document summarisation, anomaly detection, risk classification and comparison of proposals. It should not replace human accountability. AI-generated analysis may contain errors, rely on incomplete data or reproduce the preferences of its training material. High-impact decisions should retain human review, source verification, conflict disclosure and an auditable explanation of how recommendations were produced.

11. Design Framework for Accountable DAO Governance

A practical design process consists of seven steps:

Step 1: Define the mission and decision boundaries

State what the DAO governs and what remains outside its authority. Avoid granting a governance contract unrestricted control over unrelated assets or systems.

Step 2: Map stakeholders and capabilities

Identify token holders, users, contributors, delegates, investors, signers, regulators and affected third parties. Record each group’s interests, information and legitimate decision rights.

Step 3: Match decisions with thresholds

Use lower thresholds for routine, reversible operations and higher thresholds for constitutional, irreversible or high-value decisions. Specify quorum, approval ratio, voting period and timelock for each category.

Step 4: Separate proposal, review and execution roles

The proposer should not unilaterally validate, approve and execute a transaction. Independent review is especially important for grants, upgrades, oracle changes and treasury investments.

Step 5: Establish treasury controls

Define asset limits, reserve targets, signer rules, spending caps, reporting periods, emergency procedures and audit expectations.

Step 6: Build participation and delegation

Publish delegate information, support informed voting and make delegation revocable. Measure participation quality, not only the number of votes.

Step 7: Review and adapt

Governance rules should be evaluated using evidence: participation, proposal success, execution errors, treasury performance, security incidents, contributor retention and stakeholder feedback. Changes to governance should themselves follow a documented process.

Challenges and Limitations

DAO governance faces persistent difficulties. Voter apathy can make nominally democratic decisions depend on a small group. Token concentration can produce plutocracy. Delegates can become entrenched representatives. Smart contracts can execute incorrect instructions with perfect reliability. Multisignature signers can collude or lose access. Treasury diversification can reduce volatility but introduce counterparty and complexity risk. Emergency powers improve responsiveness but can undermine decentralisation.

There is also a trade-off between participation and expertise. Broad voting may improve legitimacy while reducing technical quality; expert committees may improve quality while weakening representation. The appropriate response is not to seek perfect decentralisation, but to make authority explicit, reviewable and contestable.

Contemporary Developments and Best Practices

Current DAO practice is moving toward modular governance, where different decisions use different bodies and thresholds. Delegated representation, sub-DAOs, grants committees, risk councils and security guardians allow specialised work while preserving a broader constitutional role for token holders.

Best practices include:

• publish a governance constitution and treasury policy;
• use clear proposal templates;
• disclose conflicts before discussion and voting;
• use snapshots, timelocks and transaction simulation;
• separate operational, strategic and emergency funds;
• maintain signer independence and succession plans;
• report treasury assets at both market and stressed values;
• pay contributors against documented deliverables;
• use milestone-based grants;
• conduct independent security and financial reviews; and
• assess governance outcomes rather than treating participation as an end in itself.

Chapter Summary

DAOs are socio-technical institutions that combine blockchain execution with human coordination. Their effectiveness depends on the relationship among constitutional rules, voting arrangements, delegation, proposal procedures, treasury controls and contributor incentives. Governance tokens distribute formal authority but may also concentrate power through wealth, borrowing or delegation. Quorum and approval thresholds must be calibrated to balance legitimacy with decision capacity.

A sound proposal lifecycle includes discussion, specification, conflict disclosure, technical review, voting, timelock, execution and post-implementation reporting. Treasury management requires policy-based asset allocation, liquidity planning, segregation of funds, transparent valuation and defined risk limits. Multisignature wallets reduce single-key risk but do not eliminate collusion, concentration or operational failure.

Accountable DAOs align authority with competence, disclose conflicts, use independent review, protect minority interests and make emergency powers limited and reviewable. The central strategic lesson is that decentralisation is not achieved by removing institutions; it is achieved by designing institutions whose authority is transparent, constrained and responsive to stakeholders.

Key Terms

DAO: A blockchain-coordinated organisation governed through smart contracts and collective decision processes.

Governance token: A digital asset that grants voting or related governance rights.

On-chain governance: Governance whose rules, votes or execution are recorded and enforced on a blockchain.

Off-chain governance: Discussion and coordination conducted through forums, meetings or other non-blockchain systems.

Quorum: Minimum participation required for a decision to be valid.

Delegation: Assignment of voting power to another participant or representative.

Snapshot: A recorded point in time used to determine voting eligibility or balances.

Timelock: A delay between approval and execution of an action.

Multisignature wallet: A wallet requiring multiple authorised signatures for a transaction.

Treasury: Assets controlled or managed for the DAO’s objectives.

Reserve coverage: Liquid reserves expressed relative to expected expenditure.

Proposal lifecycle: The sequence from idea formation through review, voting, execution and evaluation.

Conflict of interest: A situation in which personal or organisational interests may influence a decision.

Sybil attack: Creation of multiple identities to obtain disproportionate influence.

Delegate: A participant who receives voting authority from token holders.

Supermajority: Approval threshold greater than a simple majority.

Milestone payment: Compensation released after specified deliverables are achieved.

Emergency guardian: A designated actor or group with limited authority to pause or protect systems during urgent threats.

Principal–agent problem: Risk arising when delegated agents have different information or incentives from principals.

Sub-DAO: A specialised governance or operational unit within a broader DAO.

Review Questions

Short Answer Questions

1. What is the difference between on-chain and off-chain governance?
2. Define quorum and explain its purpose.
3. What does a 3-of-5 multisignature wallet require?
4. Why are timelocks useful in treasury governance?
5. State two advantages of milestone-based contributor payments.

Long Answer Questions

1. Compare token-weighted voting, delegated voting and reputation-based voting. Identify the main risks and suitable applications of each.
2. Explain how principal–agent theory applies to DAO governance and describe mechanisms that can reduce agency problems.
3. Design a complete proposal lifecycle for a DAO that is approving a major protocol upgrade.
4. Explain the components of a robust DAO treasury policy.
5. Discuss the ethical and regulatory challenges associated with DAO governance tokens.

Analytical / Application Questions

1. A DAO has 12 million eligible voting units, of which 3.6 million participate. A proposal receives 2.1 million affirmative units and 1.5 million negative units. Determine the quorum ratio and approval ratio, then assess whether it passes a 25% quorum and simple-majority requirement.
2. Design a treasury-control framework for a DAO with volatile token holdings, recurring monthly expenses, a grants programme and a five-person signing committee. Justify your asset segregation, signer threshold, reporting and emergency rules.
3. Analyse the Meridian Protocol case. Identify the three most serious governance risks and recommend controls that preserve both participation and operational efficiency.

Multiple Choice Questions with Answers

Question 1

Which statement best describes a DAO?

A. A company that has no human participants

B. A socio-technical organisation combining blockchain rules with human coordination

C. A wallet controlled by one administrator

D. A database used only for token trading

Correct Answer: B. A socio-technical organisation combining blockchain rules with human coordination

Question 2

What is the principal purpose of quorum?

A. To determine the token price

B. To ensure a minimum level of participation before a decision is valid

C. To select multisignature signers automatically

D. To eliminate the need for voting

Correct Answer: B. To ensure a minimum level of participation before a decision is valid

Question 3

A DAO has 10 million eligible voting units and 2.4 million participate. What is the quorum ratio?

A. 2.4%

B. 20%

C. 24%

D. 42%

Correct Answer: C. 24%

Question 4

What is a major benefit of delegation?

A. It permanently transfers token ownership

B. It allows holders to use representatives with greater time or expertise

C. It guarantees that every proposal passes

D. It removes the need for conflict disclosures

Correct Answer: B. It allows holders to use representatives with greater time or expertise

Question 5

What does a 4-of-7 multisignature wallet require?

A. Four transactions from one signer

B. At least four valid signatures from seven authorised signers

C. Seven signatures from four wallets

D. One signature after four days

Correct Answer: B. At least four valid signatures from seven authorised signers

Question 6

Which control creates a delay between approval and execution?

A. Snapshot

B. Timelock

C. Airdrop

D. Liquidity mining

Correct Answer: B. Timelock

Question 7

Why should a major grant normally use milestone-based payments?

A. To prevent all reporting

B. To release funds progressively as agreed deliverables are achieved

C. To make the grant anonymous

D. To guarantee token-price appreciation

Correct Answer: B. To release funds progressively as agreed deliverables are achieved

Question 8

Liquid reserves are 1.2 million units and monthly expenditure is 200,000 units. What is reserve coverage?

A. 3 months

B. 4 months

C. 6 months

D. 8 months

Correct Answer: C. 6 months

Question 9

Which is a limitation of multisignature custody?

A. It makes all transactions irreversible before approval

B. It eliminates the possibility of collusion

C. Signers may collude, lose keys or become operationally unavailable

D. It prevents any form of treasury reporting

Correct Answer: C. Signers may collude, lose keys or become operationally unavailable

Question 10

Which proposal should generally receive the strongest approval and delay requirements?

A. A routine office-software subscription

B. A minor community announcement

C. A constitutional change transferring control of a major reserve

D. A recurring report with no financial effect

Correct Answer: C. A constitutional change transferring control of a major reserve