A project treasury is a reserve of tokens controlled by the project team or a decentralized autonomous organization (DAO). Treasury funds are used to finance ongoing development, strategic partnerships, liquidity provision, grants, and other operational needs.
Treasury management is critical for a project's long-term sustainability. How and when treasury tokens enter circulation can significantly impact the token's supply dynamics. Well-managed treasuries implement transparent spending policies and often require governance approval for large disbursements.
The size of a project's treasury relative to circulating supply is an important metric. A large treasury provides financial runway but also represents potential future dilution if tokens are sold or distributed carelessly.