Executive Summary
2025 was a year of active treasury management for CoW DAO’s treasury, guided by a conservative approach focused on capital preservation and consistent yield generation. A continuous stream of protocol fee revenue, combined with disciplined execution and prudent allocation, drove the year’s results. Throughout the year, the treasury prioritised strengthening liquidity deployment, improving risk-adjusted returns, and streamlining positions across Ethereum Mainnet, Gnosis Chain, Base, and other networks.
Key highlights of 2025 included:
- Runway Secured: A substantial increase in stablecoin reserves to approximately $26.8 million, securing roughly two years of operating runway for the DAO’s development, grants, and Foundation needs.
- Conservative Growth: In parallel with building the stablecoin reserve, the treasury maintained a substantial allocation to volatile assets such as ETH and deployed it across DeFi strategies, generating additional results on top of the core runway allocation.
- Native Token Deployment: Active deployment of the native COW token in liquidity pools (Balancer, Uniswap v2/v3/v4, PancakeSwap on Base) to support the ecosystem’s token liquidity and earn trading fees for the treasury.
The Treasury team navigated several market challenges with a focus on safety and capital preservation. After the Balancer protocol incident and a liquidity crunch on Morpho in Q4, the team prioritised capital protection by consolidating or exiting higher-risk positions. This included withdrawing from UpShift (Maxi USR vault), reducing the Gauntlet USDC Core allocation on Morpho, and fully exiting Ethena (USDe). Overall, positions were consolidated into lower-risk strategies and more stable yield sources, prioritising capital preservation over short-term yield. This prudent response ensured that no major losses were incurred from these events.
Strategic Overview
The core treasury strategy in 2025 centred on securing a stable financial runway and aligning treasury management with CoW DAO’s long-term goals. A primary objective was to build and maintain $28 million in stablecoin reserves, equivalent to two years of operating expenses, ensuring the DAO could continue funding development and community initiatives through market volatility.
The treasury balanced USD- and EUR-denominated stablecoins to hedge currency risk and support EUR-denominated operational funding needs, while maintaining selective exposure to volatile assets where aligned with the DAO’s conservative risk appetite. This approach prioritised capital preservation and cautious growth over speculative positioning.
Several governance-driven initiatives shaped treasury strategy during the year. In mid-2025, CoW DAO and Balancer completed a strategic token swap (CIP-69), exchanging 200,000 BAL for ~631,000 COW under a two-year mutual no-sale commitment. This strengthened long-term alignment between the two ecosystems and built on the launch of COWAMM pools on Balancer in August 2024.
In November 2025, kpk published a scope and strategy update, refining treasury operations and introducing a performance-linked fee structure. As part of this update, several protocol operations Safes were moved out of the Treasury scope and into a dedicated protocol operations domain, clarifying responsibilities between investable reserves and day-to-day protocol revenue handling. This adjustment tightened the treasury mandate, improved execution efficiency, and strengthened alignment between CoW DAO and kpk.
Treasury Composition and Allocation
Asset Allocation: By the end of 2025, CoW DAO’s total treasury (under the Core Treasury Team’s management) stood at approximately $34.36 million in net assets. Of this total, $29.19 million was actively managed by kpk (the “investable” treasury), with the remainder held in a separate Defense Reserve (approximately $5.17 million set aside as an emergency fund). The actively managed portfolio was allocated as follows by year-end:
- USD Stablecoins: ~$17.13 million (≈58.7%)
- Native Token (COW): ~$4.49 million (≈15.4%)
- EUR Stablecoins: ~$4.48 million (≈15.3%)
- ETH-Correlated Assets: ~$3.09 million (≈10.6%)
This category breakdown shows that stablecoins (USD and EUR) represented nearly three-quarters of the deployed assets. By year-end, total stablecoin exposure (including the Defence Reserve) was close to the ~$28 million target for a two-year runway, reflecting strong progress towards the DAO’s financial security goal. Maintaining a meaningful EUR allocation (e.g., Circle’s EURC and Monerium’s EURe) added currency diversification and was actively deployed across Curve pools and Aave markets to earn yield while partially hedging USD exposure; a decision that, in hindsight, proved particularly effective.
Ether Correlated Assets: By December 2025, ETH and LSTs made up ~10% of the active portfolio, mainly via Lido (stETH), StakeWise (osETH), and WETH deployed into kpk-curated Morpho vaults. After being a larger share earlier in the year, ETH exposure was deliberately reduced as stablecoin reserves grew, keeping a benchmark-aligned allocation focused on safe yield rather than price speculation.
COW Token Holdings and Liquidity Provision: Throughout 2025, kpk actively managed the DAO’s COW token holdings to benefit both the treasury and the wider ecosystem. Rather than just holding COW, the treasury supplied significant liquidity using COW (often paired with ETH or stablecoins) on various decentralised exchanges. This strategy achieved two important goals: (1) supporting healthy trading markets for COW across different networks – which facilitates user access to the token and helps maintain price stability – and (2) earning liquidity provider fees that flowed back into the treasury. These positions were actively managed and adjusted as needed; for instance, after the Balancer incident in November, some liquidity was withdrawn or reallocated to mitigate risk, thereby preserving on-chain trading integrity for COW. By year-end, the treasury’s total COW exposure stood at roughly $4.5 million, held across a combination of idle token balances and various liquidity pool positions. If you’d like a clearer overview of CoW’s protocol-owned liquidity, we invite you to review the following Dune queries created by the kpk team, which provide visibility into COW LP performance and activity.
Risk and Performance Commentary
Risk Management: kpk’s management of CoW DAO’s treasury in 2025 followed a cautious, proactive risk approach. The treasury remained broadly diversified across DeFi protocols, with no single protocol representing more than ~30% of total exposure at any point during the year. This diversification, combined with thoughtful allocation sizing, meant that the potential impact of any one protocol’s failure or exploit on the overall treasury was greatly limited.
Conservative asset allocation played a major role in risk mitigation. The treasury consistently favoured low-volatility, highly liquid assets and reputable yield sources over high-risk, speculative plays. Deployments were made only after a rigorous internal due diligence process, and were concentrated in well-audited protocols. Furthermore, the team improved active tracking and real-time monitoring of on-chain events affecting our positions using Hypernative. This allows for a rapid response to emerging risks.
Performance: During 2025, the treasury delivered positive, risk-adjusted results consistent with its conservative profile. Performance was driven primarily by stable, low-volatility strategies, with additional upside coming from a limited number of opportunistic deployments identified through kpk’s network. These included selective private arrangements and partnership-based opportunities. While modest in size, these positions contributed meaningfully to overall returns and complemented the treasury’s core performance over the year.
Forum Engagement and Community Updates
Transparency and community engagement became a renewed focus for the treasury operations toward the end of 2025. After a brief pause in regular public updates earlier in the year, kpk’s Core Treasury Team resumed monthly reporting on the CoW DAO Forum in the last months of 2025. Forum posts for November and December 2025 were published, providing the community with up-to-date insights into the treasury’s allocation changes and strategy rationale. Going forward, the team has committed to continuing regular monthly forum reports throughout 2026, ensuring that CoW DAO’s stakeholders stay informed and have a channel for oversight and input regarding treasury activities.
It’s also worth noting that the kpk treasury team worked closely with the CoW Treasury Working Group, sharing both strategy and execution. This collaboration is reinforced through two joint calls per week with the CoW team, focused on execution and strategy, helping keep the mandate clearly defined and aligned with the treasury’s objectives and CoW’s evolving needs. Overall, the latter part of 2025 saw a marked improvement in communication and transparency, setting a positive precedent for the coming year.
In addition, kpk actively participated in CoW DAO governance by voting on proposals, helping support informed decision-making and alignment across the DAO.
Fee Structure Update
An important development in Q4 2025 was the implementation of a new fee structure for kpk’s treasury management services, designed to better align incentives with the DAO’s interests. Effective 1 November 2025, kpk’s compensation model was updated — replacing the previous assets-under-management fee arrangement with a combination of a flat retainer and performance-based fees. As outlined in the Core Treasury Team’s Scope and Strategy Update from November 2025, the new structure consists of two components:
- Fixed Monthly Fee: A flat fee of $6,500 per month (paid in USDC) is paid to kpk for ongoing treasury management. This covers all routine operations – strategy execution, continuous monitoring and risk management, asset allocation adjustments, and comprehensive reporting. Importantly, this fixed fee is capped and does not scale with the size of the treasury. By setting a predictable USD-denominated retainer, the DAO avoids the previous situation where fees would naturally inflate as the treasury’s value grew (which was a concern under the old percentage-based model). This change brings stability to the DAO’s budgeting for treasury management.
- Performance Fee (Alpha-Based): A 30% performance fee applies only to net returns above clear, asset-specific benchmark rates. For USD stablecoin deployments, the benchmark is the Sky Savings Rate (SSR) on Ethereum mainnet; for ETH and other crypto assets, it’s the Lido staked ETH rate (Ethereum mainnet); and for EUR stablecoins, it’s the Aave v3 EURC market rate on Ethereum mainnet. Where a direct benchmark isn’t available, an equivalent proxy (typically stETH) is used. Any fee is calculated only on net outperformance and paid in USDC.
Conclusion
2025 was a challenging but ultimately positive year for CoW DAO’s treasury. Despite tough market conditions, several protocol incidents, and broader DeFi volatility, the treasury remained secure and delivered risk-adjusted growth. The kpk team stayed focused on the DAO’s core objectives: building and maintaining a two-year stablecoin runway, keeping measured exposure to volatile assets, and generating sustainable yield without compromising on safety.
With this foundation in place, the treasury enters 2026 in a stronger position, with clearer operating structure, improved transparency, and the flexibility to execute on the DAO’s priorities with confidence.
For those interested in reviewing month-by-month performance, detailed records are available on the kpk website under the report section, where historical performance data for the treasury can be accessed.