How to Build a DAO That Survives the First Bear Market

Short summary: This field-tested playbook shows decision‑makers how to engineer DAOs that don’t just survive downturns but get stronger—covering treasury diversification with tokenized T‑bills, resilient governance parameters and tooling, bicameral voting, identity and privacy upgrades, cross‑chain risk controls, legal wrappers, and a 90‑day hardening plan grounded in current case studies.

Why most DAOs fail their first winter (and how not to)

A bear market stress‑tests everything—your treasury, voting processes, contributor incentives, and even your legal posture. In the last cycle, we saw:

Treasuries overexposed to their own governance token, forcing panic sells at lows (or governance capture when prices tank).
Governance apathy and vote buying that crippled roadmaps.
Bridge exploits turning cross‑chain governance into an attack surface.
Legal “unknowns” turning into real liabilities for holders who merely voted.

The good news: we now have live patterns—legal, financial, and technical—that worked for DAOs in 2024–2025. This guide distills those patterns into specific, implementable decisions with current examples and numbers.

1) Treasury: model for a 24‑month runway, then diversify like an institution

If your treasury can’t fund 18–24 months of operations without selling native tokens at the bottom, governance quality will deteriorate. Start with a conservative runway model (salaries, audits, grants, bug bounties, infra, legal, and slippage buffers), then diversify into three buckets with explicit targets and rebalancing rules.

Liquidity and spend (stablecoins + cashlike RWAs): 12–18 months of burn in redeemable, regulated money‑market exposures and high‑quality stables. In 2024–2025, tokenized T‑bill funds matured significantly:
- BlackRock’s BUIDL (tokenized via Securitize) surpassed $1B AUM in March 2025 and later expanded share classes across major L1s/L2s, making it practical collateral and a reliable on‑chain yield source. (coindesk.com)
- Superstate’s USTB launched continuous pricing—NAV updates and interest accrual by the second—so treasuries can match DeFi’s always‑on settlement. (superstate.com)
- Franklin Templeton (BENJI), WisdomTree (WTGXX), and others are now common DAO counterparties via RWA rails. (theblock.co)
Growth‑beta (ETH, LSTs): 6–12 months of burn equivalent, reserved for strategic liquidity, staking yields, and ecosystem alignment.
Governance/native token: hold with discipline and articulate a sell‑less plan. Delegate and use it to bootstrap governance rather than as a slush fund.

Practical example (copy this):

Set a policy to keep 18 months of burn in a mix of regulated tokenized T‑bills and top stables (e.g., 70% BUIDL/BENJI/USTB, 30% USDC/GUSD). Rebalance quarterly to maintain runway.
Stream operating budgets in real time to vendors and teams to reduce lumpy sell pressure and improve accountability (Sablier/Superfluid). ENS DAO and Optimism pioneered streaming payouts for service providers and grants. (discuss.ens.domains)
For idle ETH, run an RFP to place a capped slice (e.g., 7,500 ETH) into low‑risk, composable strategies on your home L2, evaluated by an independent committee with public scoring—Arbitrum’s Growth and Treasury programs are a live reference. (forum.arbitrum.foundation)

Case study: Arbitrum’s STEP program

Launched mid‑2024, STEP deployed tens of millions from the DAO into tokenized U.S. Treasuries; in May 2025, the DAO approved another 35M ARB (~$11.6M) into Franklin Templeton, Spiko, and WisdomTree products. Result: sustainable on‑chain yield, better liquidity planning, and less native‑token risk. (theblock.co)

Case study: ENS Endowment discipline

ENS DAO reports operational revenues, expenses, and runway, with the Endowment managed professionally (e.g., karpatkey). In H1 2025, DAO assets (ETH + stables) implied a 9.8‑year runway at recent burn—setting a standard for transparency and solvency signaling. (discuss.ens.domains)

What to avoid:

Single‑asset treasuries or “we’ll sell if we must.” If Nouns taught anything, it’s that treasury composition and exit options can invite value‑extraction when prices and sentiment diverge. Over half the DAO forked in 2023 and withdrew ~$27M—design for dissent before you need it. (blockworks.co)

2) Governance that stays legitimate under pressure

A bear market amplifies governance weaknesses. The design choices below have emerged as resilient defaults.

Set parameters that reflect your holder base

Proposal threshold: require skin‑in‑the‑game (e.g., 0.1–1.0% of voting power) or sponsorship by recognized delegates.
Quorum: 3–6% of supply with adaptive or super‑quorum for high‑risk changes (OpenZeppelin’s GovernorVotesQuorumFraction and SuperQuorum are standard). (docs.openzeppelin.com)
Prevent late‑quorum sniping: enable GovernorPreventLateQuorum so votes can’t flip outcomes in the last block without giving others time to respond. (docs.openzeppelin.com)
Timelocks: 24–72 hours for routine treasury ops; 5–7 days for protocol upgrades. Use separate executors for “routine vs. critical.”

Professionalize delegation (and pay for it)

The DAOs that improved decision quality in 2025 started funding and empowering high‑context delegates. Uniswap’s Delegate Reward Initiative and Treasury Delegation program locked up to ~~18M UNI (~~$113M) to bolster delegate voting power and pays top performers to show up—raising participation and proposal review quality. (theblock.co)
Publish a “delegate charter”: required disclosures, office hours, conflict controls, and KPI‑based stipends.

Bicameral or multi‑house structures for legitimacy and speed

The Optimism Collective splits authority between Token House (economic stakeholders) and Citizens’ House (impact‑oriented badgeholders) for Retro Funding, with rounds allocating 10M+ OP to builders—separating value capture from public‑goods legitimacy. Design your own “second house” for grants and retro‑rewards to minimize governance capture. (community.optimism.io)

Security councils with transparent constraints

For L2s and core infra DAOs, an elected Security Council with high‑threshold multisig (e.g., 9/12) can perform emergency actions without a vote—but only under a constitution that mandates disclosure, post‑mortems, and narrow scope. Arbitrum’s constitution is a usable template. (docs.arbitrum.foundation)

3) Identity, privacy, and anti‑bribery: upgrade your voting stack

Sybil resistance and social pressure distort votes during drawdowns. 2025 gave us pragmatic upgrades:

Verifiable uniqueness for sensitive votes: integrate privacy‑preserving KYC/uniqueness gates (Civic Pass, Gitcoin Passport) for one‑person‑one‑vote or quadratic rounds, while keeping token‑votes for economic policy. Reweight stamps and keep criteria live to resist gaming. (civic.com)
Shielded voting by default on Snapshot: Shutter + Snapshot announced permanent shielded voting using threshold‑homomorphic encryption to prevent coercion and vote‑buying signals, with a production roadmap in 2025. Make it the default for contentious votes. (blog.shutter.network)
Research‑backed guardrails: recent work shows token‑weighted systems leak voter choices even with secret ballots; mitigate by limiting whale concentration and, where feasible, adding noise to tallies for bribery‑resistance (B‑privacy), combined with delegate caps. (arxiv.org)

4) Cross‑chain governance: minimize bridges, assume they fail

Bridges remain the single largest systemic risk in on‑chain systems. Every governance message that crosses a bridge inherits that risk.

Architect for “home‑chain” governance: execute upgrades where assets and contracts actually live; avoid bridging governance calls if you can deploy a local executor and sync via canonical mechanisms.
If you must bridge governance:
- Use audited, widely used bridges with robust validator sets and published incident response. Track research: 2021–2023 bridge exploits exceeded $2–3B; design for end‑to‑end value accounting and live monitoring (XChainWatcher, accounting invariants). (arxiv.org)
- Add a human fail‑safe: require a high‑threshold Security Council to co‑sign high‑impact cross‑chain executions.
- Delay and observe: introduce a delay window on the destination chain for community review.

Concrete lesson: Binance’s BSC Token Hub (2022), Wormhole (2022), and Nomad (2022) hacks were different bugs, same outcome—catastrophic minting or message acceptance. Don’t let governance depend on a single cross‑chain assertion. (investopedia.com)

5) Legal wrappers: remove existential risk for voters and contributors

The idea that “a DAO can’t be sued” ended with Ooki. In 2023, a U.S. court held a DAO is a “person” under the Commodity Exchange Act; enforcement targeted web assets and imposed penalties—making voter liability a real concern for unwrapped organizations. Wrap your DAO. (cftc.gov)

What works in 2024–2025:

Wyoming’s DUNA (Decentralized Unincorporated Nonprofit Association) statute (effective July 1, 2024) gives DAOs legal existence, limited liability for members, tax posture, and the ability to contract and appear in court—without shutting the door to for‑profit activity. Several blue‑chip DAOs began exploring or adopting DUNA status in 2025. (coindesk.com)
Marshall Islands’ DAO LLCs (amended late 2023) offer series‑LLC structures for sub‑DAOs and clarify that most pure‑governance tokens aren’t securities if they don’t confer economic rights—useful for grants houses and working groups. (coindesk.com)

Regulatory volatility cuts both ways. In March 2025, the U.S. removed Tornado Cash from OFAC’s SDN list after adverse court rulings—an example of why your legal strategy needs contingency plans and clear contributor guidance, not hand‑waving. (reuters.com)

Action items:

Commission counsel to recommend a wrapper (DUNA, DAO LLC, foundation + operating cos), contributor agreements, IP, and tax guidance.
Publish a plain‑English “Legal & Risk” page for voters, delegates, and grantees.

6) Contributor operations: reduce churn, increase signal

Compensation and accountability degrade fastest in a downturn. Adopt these patterns:

Streamed, milestone‑gated payments: convert lump‑sum grants into streams that pause on missed milestones; auto‑publish burn dashboards and earned‑to‑date figures. ENS DAO’s service‑provider streams are a good template. (discuss.ens.domains)
Delegate pipelines: fund 5–15 high‑context delegates with explicit KPIs and monthly reporting. Uniswap’s 2025 programs (delegate rewards + treasury delegation) are a production reference for incentive design and power distribution. (theblock.co)
Grants as catalysts, not subsidies: cap overhead, use staged unlocks, clawbacks, and measurable protocol KPIs (TVL moved, integrations shipped, audits done). Uniswap Foundation’s grants budgeting and impact reporting is a live example. (uniswapfoundation.org)

Hard truth: not every program survives. In April 2025, Gitcoin shut down its software division (Grants Lab) and sunset Allo Protocol/Grants Stack to refocus—plan your own graceful wind‑down paths and data archiving. (theblock.co)

7) Tooling that doesn’t become a single point of failure

Governance contracts: adopt OpenZeppelin Governor with vote‑extension, time‑locks, super‑quorum for high‑risk actions, and a Proposal Guardian for emergency cancel. Audit any custom extensions. (docs.openzeppelin.com)
Multisig and modules: Safe with Zodiac modules (e.g., Reality for Snapshot‑to‑execution) bridges off‑chain legitimacy and on‑chain execution while keeping signer accountability. (zodiac.wiki)
Monitoring and incident response: instrument proposal pipelines, multisigs, and executors; run playbooks for pausing, role rotation, and proposal cancellation. Note: OpenZeppelin is sunsetting Defender as SaaS by July 1, 2026 in favor of open‑source Relayer/Monitor—budget migration time in 2025–2026. (blog.openzeppelin.com)

8) Design for dissent: controlled exits beat chaotic forks

A rage‑quit or fork mechanism can be a pressure valve—if designed with safeguards. Nouns DAO’s 2023 fork drained ~$27M and revealed how exit options plus treasury “book value” can be gamed by arbitrageurs if incentives aren’t aligned. If you introduce exit, add: higher initiation thresholds, cooling‑off periods, anti‑sybil identity checks, and limits on pro‑rata claims to funded liabilities. (coindesk.com)

Your 90‑day bear‑market hardening plan

Week 1–2: governance and budgets

Adopt parameter updates: proposal threshold, quorum, vote‑extension, timelocks; publish a constitutional “risk classes” matrix (what requires super‑quorum).
Stand up a Security Council (e.g., 9/12) with an emergency policy and reporting obligations. (docs.arbitrum.foundation)
Approve a 24‑month runway budget; move 12–18 months into tokenized T‑bills/stables with two issuers minimum (e.g., BUIDL + BENJI/USTB). (coindesk.com)

Week 3–4: delegation, privacy, identity

Launch a funded delegate program with KPI‑based stipends; publish monthly scorecards. Use treasury delegation to underrepresented but active delegates. (theblock.co)
Enable shielded voting on Snapshot for contentious votes (Shutter). (blog.shutter.network)
Gate sensitive one‑person‑one‑vote decisions behind Gitcoin Passport/Civic Pass. (civic.com)

Week 5–6: cross‑chain risk

Map every governance call that crosses a bridge; where feasible, replace with local executors and canonical sync; add mandatory delays and council co‑sign for cross‑chain upgrades. Document bridge runbooks with halt procedures. (arxiv.org)

Week 7–8: legal and comms

Mandate a legal wrapper (Wyoming DUNA or DAO LLC where appropriate). Publish a plain‑English legal brief for voters and contributors (liability, taxes, reporting). (coindesk.com)
Issue an “operating in volatile regulation” memo with clear stances and incident comms procedures (e.g., sanctions posture changes like Tornado Cash in March 2025). (reuters.com)

Week 9–10: operations and security

Migrate payouts and grants to streaming with pause/clawback controls; mandate milestone‑based unlocks and public progress logs. (discuss.ens.domains)
Instrument monitors for proposal pipelines, multisigs, treasury wallets; test pausing and signer‑rotation drills quarterly; plan migration from Defender SaaS to open‑source relayers/monitors in 2025–26. (blog.openzeppelin.com)

Week 11–12: transparency and audits

Publish a quarterly solvency dashboard (runway months, RWA/stable/ETH/native splits, counterparty exposures).
Commission an external governance review (parameters, participation, delegation map) and a security tabletop focused on bridge/governance failure modes.

Implementation checklist (copy/paste into your forum)

Treasury
- Policy: Maintain 18 months runway in tokenized T‑bills/stables across 2+ issuers.
- Streams: All grants/ops streamed with milestone pause/clawback.
- ETH RFP: Low‑risk strategies on home L2; committee with published criteria.
Governance
- Parameters: quorum 4% (adaptive), proposal threshold ≥0.25%, vote‑extension on.
- Timelocks: 2–3 days (ops), 5–7 days (protocol).
- Delegation: fund 10+ delegates; quarterly reviews; conflict disclosures.
Identity & privacy
- Shielded voting default for high‑stakes Snapshot.
- Passport/Pass gating for one‑person‑one‑vote and quadratic rounds.
Cross‑chain
- Local executors; delay window for bridged governance.
- Security Council cosign on cross‑chain upgrades.
Legal
- Adopt DUNA/DAO LLC; contributor agreements; IP and tax memos published.
Security & monitoring
- Monitors on multisigs/proposals; quarterly incident drills.
- Plan Defender → open‑source tooling migration.

The mindset shift: govern like you expect winter every year

Downturns aren’t black swans; they’re seasons. The DAOs that came out stronger in 2024–2025 professionalized their treasury with on‑chain RWAs, paid and empowered delegates, added identity and privacy to voting, de‑risked cross‑chain execution, and wrapped themselves legally so builders and voters weren’t the liability sink. If you adopt the playbook above and hold yourself to quarterly accountability, your DAO won’t just survive the next bear market—it’ll use it to consolidate trust, talent, and time.

7Block Labs can help your team implement the full hardening plan end‑to‑end—from policy design and tooling integration to governance upgrades and legal wrapper coordination—so you’re ready before the market tests you.