Web3, the decentralized web, is facing a significant challenge when it comes to capturing value. While many projects have reached billions in market capitalization, the majority of them continue to extract value from their communities rather than giving back. This extractive model, where venture capitalists and founding teams profit from token sales and vesting schedules while early adopters and community members see diminishing returns, needs to change. The solution lies in community-governed treasury management.
The Value Return Imperative
In the world of cryptocurrency, projects often dilute token value by increasing supply through grants, incentives, and foundations. This inflation is absorbed by the community, while the revenue generated by the ecosystem rarely flows back to the token holders. This lack of value return leads to decreased engagement, loyalty, and growth over time. Recognizing this challenge, many protocols are exploring new approaches to treasury management that prioritize community benefit.
Community-First Treasury Management
It is essential for projects to return value to their communities once they achieve scale and sustainability. Early supporters who provided liquidity, built applications, and took risks deserve to share in the project’s success. Strategic buybacks, such as those implemented by Offchain Labs and Movement Labs, provide a transparent way to fulfill this obligation. By gradually acquiring tokens according to predetermined parameters, projects can create a positive relationship between network usage and community value.
Astar Finance Committee (AFC)
Astar is leading the way with the Astar Finance Committee (AFC), a new initiative focused on managing the DAO allocation in alignment with the community’s long-term interests. The AFC’s mandate is to manage treasury resources transparently, explore reinvestment strategies for ecosystem benefit, and create governance mechanisms for accountability and collective input.
From Theory to Practice
Community-governed finance requires a dedicated governance body with representatives from the core foundation, a representative council, and the broader community. This committee makes strategic financial decisions, maintains transparency, and explores avenues to generate sustainable revenue streams for reinvestment in the ecosystem.
Beyond Grants: Self-Sustaining Ecosystems
The grant-dependent model in crypto should evolve into self-sustaining ecosystems. Community-governed treasury management represents the next stage in tokenomics, creating systems that benefit all participants through transparent mechanisms for value return.
Transparency as a Requirement
Transparency is crucial for the success of buyback initiatives, ensuring community enrichment rather than market manipulation. Projects must communicate the source of funds, execution parameters, governance mechanisms, and long-term strategy behind buyback programs. Regular reporting, public multisig wallets, and transparent execution build trust in the ecosystem.
A Call for Industry Evolution
Every blockchain project serious about long-term sustainability and community alignment should implement community-governed treasury management. By giving back to the communities that support them, projects can create a logical link between network adoption and community benefit. It’s time for the industry to evolve towards transparent, community-governed mechanisms for value return.