Smart Treasury (Balancer)

A smart treasury is an approach to managing the funds of a DAO that was promoted by Balancer Labs from around 2020. Instead of leaving the treasury in a wallet, the DAO deposits its own governance token together with other assets, such as ether or stablecoins, into a customisable Balancer liquidity pool. Traders who swap against the pool pay fees to the treasury, the pool's weights gradually rebalance the holdings, and the DAO can shift the weights over time to sell part of its own token in a controlled way and diversify. Idle Finance was among the projects reported to adopt the model. The approach exposes the treasury to the usual risks of providing liquidity, including losses when prices move sharply and smart contract vulnerabilities, and the term has been used less as DAOs adopted other treasury management methods. Details of individual implementations varied.