What You Need to Know About Effective Treasury Management

What You Need to Know About Effective Treasury Management

In 2024, companies face unique challenges in managing their treasury. While raising funds in cryptoassets has gained popularity, the practicalities of using digital assets for everyday expenses present a substantial hurdle. In this article, we will discuss how Web3 companies can tackle these challenges by taking inspiration from recent industry developments.

Insights from KuCoin's Research

KuCoin Research's January 2024 monthly report highlights a resurgence in investment in the Web3 market, with 22% of projects securing over $10 million in funding. 

According to the report, the cryptoasset market exhibited positive momentum at the end of 2023, influenced by the Federal Reserve's dovish turn, record highs in the US stock market, and increased positions in the Bitcoin options market. High-speed public chains like Solana, Avalanche and ETH Layer2 experienced rebounds, contributing to the flourishing markets.

Despite the high number of investment projects, seed rounds and strategic financing prevailed, with a significant increase in projects securing funding exceeding $10 million. The report findings also highlight a shift in investor behaviour and reflect the resurgence of investment and financing in the Web3 market.

Recent Web3 Success Stories

Tune.FM stands out from the plethora of music streaming platforms by addressing the longstanding issue of artists receiving only a tiny fraction of streaming revenue on major platforms. The platform ensures that up to 90% of streaming revenue goes directly to the artists, a tenfold increase compared to conventional streaming services.

This Web3 music platform leverages Hedera Hashgraph's blockchain technology for streaming in the platform's native JAM token (JAM) and recently secured a substantial $20 million in capital. When it comes to effective cryptoasset treasury management, Tune.FM is a good point of reference. This effective treasury management likely played a role in securing funding for the platform.

Similarly, projects like Wormhole and Layer Zero have made headlines with impressive funding rounds. Wormhole, a project facilitating communication between developers on different blockchains, secured an impressive $225 million in funding at a $2.5 billion valuation. Notably, Wormhole executives revealed that the investment was entirely in yet-to-be-released tokens rather than equity in the company.

LayerZero, another between-blockchains messaging protocol, raised $120 million at a $3 billion valuation earlier in 2023. 

Cryptoasset Payments Going Mainstream

The substantial increase in Bitcoin-accepting vendors shows a growing trend of acceptance of cryptoasset payments in the mainstream. According to Cointelegraph, the number of such vendors grew by 174% in 2023. This shows the rising popularity of digital assets across various sectors, making it imperative for cryptoasset companies to adapt their treasury management strategies accordingly.

Web3 Treasure Management: Striking the Right Balance

Effectively running a Web3 company involves balancing holding funds in cryptoassets and the practical necessity of using fiat for day-to-day expenses. While holding funds in digital assets is acceptable, flexibility is key. Companies should have the tools to seamlessly switch between fiat and cryptoassets to cover operational costs, pay office rent, and more.

For example, Tune.FM's integration with Hedera Hashgraph's blockchain technology enables artists to receive micropayments in the platform's native JAM token (JAM). The network's efficient payout system attracts users, allows for efficient streaming revenue distribution and empowers artists to mint non-fungible tokens (NFTs) for digital music assets. One reason why this company is so successful is because its treasury is a well-oiled machine that can manage both digital assets and fiat with ease.

The Role of Trusted Partners in Web3

Cryptoasset treasury management is complex, so finding a trustworthy and secure partner is crucial. Companies need a partner that understands the nuances of the industry and provides comprehensive support.

At XEROF, we specialise in collaborating with companies to ensure they can navigate these challenges effectively. Our on-ramp/off-ramp solutions enable seamless transitions between cryptoassets and fiat, allowing companies the flexibility they need to thrive.

Learn More About Effective Treasury Management in Web3

Successfully navigating treasury challenges in the digital asset industry demands a strategic approach. The XEROF team is dedicated to assisting companies in mastering their treasury management and providing the support they need. 

If your company is looking for reliable, cost-effective treasury and exchange solutions, feel free to get in touch with us. Our team will be happy to arrange a meeting!