Introduction
CoW DAO’s treasury is managed by KPK (the Core Treasury Team, KPK with Core contributors) under the mandate set by CIP-62. The mandate prioritises runway security and yield optimisation: building and holding a stablecoin reserve sized to roughly two years of operating expenses, deploying it into conservative DeFi yield, diversifying across USD and EUR exposure, and holding measured ETH and native-token positions. Protocol fee routing, buyback execution and solver reward distribution sit outside this mandate, in the Protocol Operations domain.
This review consolidates the six monthly treasury reports for January to June 2026 into one period view. It follows the structure of the 2025 Annual Review and extends it with a dedicated section on alpha, the return KPK generated above the selected benchmarks.
Headline
The actively managed treasury opened the period at $29.19M (31 December 2025 close) and ended June at $21.98M. Total treasury in scope moved from $34.36M to $26.54M. The decline reflects both market factors and operational transfers out of the treasury, executed under CIP-82 (approximately 140k DAI), CIP-79 (6.3M USDC) and CIP-83 (25 M COW), over the first half of 2026.
H1 2026 was a demanding half for onchain treasury management. A series of security incidents across DeFi, most consequentially the April rsETH bridge exploit, tightened liquidity in ETH and stablecoin markets and forced defensive, capital-preservation decisions that shaped allocation and weighed on benchmark-relative yield in the affected sleeves. Through all of it the treasury recorded no loss of capital.
On a benchmark-relative basis, the balance-weighted return across the three benchmarked sleeves (USD, ETH and EUR) was 3.89% annualized against a 3.52% blended benchmark, an excess return of +37 bps, positive in four of six months and led by the USD sleeve, which outperformed in every month.
Beyond the strictly treasury management and investment part of the mandate, the first half saw significant operational progress. Working with the CoW Treasury Working Group, KPK successfully implemented a non-custodial permissions framework that allows to manage the treasury within a predefined set of approved actions, protocols and deployments, without ever taking custody of the underlying assets. This implementation has meaningfully improved operational efficiency and reduced the demands on the CoW Treasury Working Group, while significantly shortening KPK’S reaction time when emergency situations arise. It also reflects the breadth of the mandate, which is operational and security driven in addition to performance-driven. On that basis, KPK continued to strengthen its onchain risk management over the period, including real-time monitoring through Hypernative and Cyvers.
Financial update
Treasury size and composition
Figure 1 shows month-end treasury size, with the 31 December 2025 close as the opening reference.
Figure 1: Treasury size by month: actively managed and Defence Reserve (USD)
The actively managed treasury held between $25M and $28M from January to April, then declined to about $22M in May and June as the CIP-83 grant replenishment and COW price moves reduced native-token exposure. The Defence Reserve held between $5.2M and $5.3M from January to May, then fell to $4.57M in June after it funded reimbursements to victims of the cow.fi domain hijacking under CIP-86.
Figure 2: Managed treasury composition by sleeve (monthly share)
At 30 June, USD stablecoins represented the majority of the managed basket, followed by EUR stablecoins, ETH-correlated assets and a small native-token position. By protocol, Aave v3 and Morpho were the two largest venues, followed by sDAI on Gnosis Chain and Lido, with idle balances reduced to about 6% after the elevated levels of April and May due to the rsETH de-risking.
Figure 3: June month-end composition, by protocol
Returns and benchmark performance
Performance is assessed on a benchmark-relative basis, consistent with the fee structure: the performance fee accrues only on return in excess of an asset-specific benchmark, so excess return, not absolute return, is the primary measure. The benchmarks are passive hold rates set per sleeve: USD stablecoins against the Sky Savings Rate, ETH against the Lido staked ETH rate, and EUR stablecoins against the Aave v3 EURC market rate, all on Ethereum mainnet, with a stETH proxy where no direct benchmark applies. Excess return therefore, measures the value added by active management relative to a passive hold of the same assets. The graph below shows the monthly relative performance versus the selected benchmarks.
Figure 4: Monthly excess return by sleeve (alpha) versus the selected benchmarks
In April and May the EUR sleeve lagged its benchmark, after the rsETH incident pushed the Aave EURC supply rate sharply higher. In response, KPK and the CoW Treasury Working Group chose to withdraw EUR from Aave and hold it in lower-risk positions to protect capital.
Table 2 sets out the monthly evolution. Portfolio and benchmark returns are the balance-weighted blend of the three benchmarked sleeves; the native token sleeve is excluded, as it is not benchmarked. All returns are annualized. Section 3 provides the attribution by sleeve.
| Jan | Feb | Mar | Apr | May | Jun | |
|---|---|---|---|---|---|---|
| Total AUM ($M) | 31.06 | 32.35 | 33.06 | 32.14 | 27.35 | 26.54 |
| Actively managed ($M) | 25.80 | 27.14 | 27.82 | 26.88 | 22.07 | 21.98 |
| Portfolio return (blended) | 4.60% | 4.11% | 4.12% | 3.50% | 3.44% | 3.58% |
| Benchmark return (blended) | 3.69% | 3.60% | 3.40% | 3.68% | 3.49% | 3.26% |
| Excess return (alpha) | +0.91 | +0.50 | +0.73 | -0.18 | -0.06 | +0.32 |
Table 2: monthly evolution (annualised returns, benchmarked sleeves, returns computed on deployed capital)
Alpha and performance attribution
Risk management remained the primary consideration in the investment process throughout the first half of 2026. Positions were sized and diversified with concentration limits in mind, so that no single protocol or venue held a disproportionate share of the portfolio. The excess return presented in this section was therefore generated on a risk-controlled basis, consistent with a mandate that places capital preservation and diversification ahead of yield maximization. Concentrating capital in the highest-yielding opportunities could have enhanced headline returns, but would have introduced protocol and liquidity risk beyond the treasury’s tolerance. The attribution that follows should be read in that context, as active management delivered within clearly defined risk parameters.
| Sleeve | Jan | Feb | Mar | Apr | May | Jun | Avg |
|---|---|---|---|---|---|---|---|
| USD stablecoins | +1.03 | +0.34 | +0.89 | +0.20 | +0.52 | +0.42 | +0.57 |
| ETH-correlated | -0.01 | +1.41 | -0.15 | +0.11 | -0.11 | +0.27 | +0.25 |
| EUR stablecoins | +0.99 | +0.58 | +0.61 | -1.95 | -2.83 | -0.15 | -0.46 |
| Blended (weighted) | +0.91 | +0.50 | +0.73 | -0.18 | -0.06 | +0.32 | +0.37 |
Table 3: Alpha by sleeve on deployed capital, monthly
USD stablecoins: approximately two-thirds of the managed portfolio. Average annualized excess return of +57 bps, positive in all six months. This outperformance was driven by active rotation across SyrupUSDC, GHO and Savings GHO, the KPK USDC Prime vault on Morpho and Aave, and sDAI on Gnosis Chain, each of which delivered returns above a passive allocation to the Sky Savings Rate, the USD selected benchmark. The low month-to-month dispersion of results points to a repeatable capacity to generate excess return. As the largest and most consistent contributor, this sleeve accounted for the majority of the blended excess return over the period.
ETH-correlated: average annualized excess return of +25 bps, positive in three of six months. Relative performance stayed close to the Lido stETH rate benchmark in most months. The three months of modest underperformance were immaterial in both relative and absolute terms. They arose because part of the sleeve was allocated to Ethereum Morpho vaults, where compressed borrowing demand over the first half of 2026 held down supply rates on the allocation.
EUR stablecoins: average annualized excess return of -46 bps, the only sleeve with negative excess for the period. Performance was positive through the first quarter (+99, +58 and +61 bps), driven by the EURC rotation into KPK Morpho vaults and Aave EURC deployments on mainnet and EURe on Gnosis Chain, then turned negative from April (-195, -283 and -15 bps).
The reversal is attributable to a risk-management decision rather than security selection: during the April rsETH event the EURe position was withdrawn from Aave while the benchmark rate (Aave v3 EURC) rose sharply as a result of the incident. Holding idle EUR through that window and reallocating into safer venues preserved capital but produced negative excess against an elevated benchmark.
Strategy and allocation
The strategy through the period stayed conservative and liquidity-led. Table 4 summarises the monthly focus and the notable actions.
| Month | Focus | Notable actions |
|---|---|---|
| Jan | Rebalancing and vault upgrades | USDT rotated into sDAI on Gnosis Chain and SyrupUSDC. Morpho positions migrated to V2 vaults. Public Syncrone dashboard launched. |
| Feb | Liquidity consolidation, capital efficiency and operational outflows | EURC rotated from Aave into the KPK EURC Morpho vaults. Protocol-owned COW liquidity tightened across chains. CIP-79 and CIP-82 treasury outflows. |
| Mar | Consolidation into core yield | Increased GHO and SyrupUSDC. Expanded ETH allocation to Stakewise. Held sizeable USDC on Morpho and sDAI on Gnosis Chain. |
| Apr | De-risking and capital preservation | After the rsETH exploit, exited stkGHO and SyrupUSDC to USDC and withdrew EURe from Aave on Gnosis Chain. |
| May | Governance-driven flows, liquidity | 25M COW grant replenishment out of the Mainnet Treasury Safe (CIP-83). USDC redeployed to the KPK USDC vault. KPK ETH vault fully exited to Lido. |
| Jun | Redeployment, selective yield | USDC into the KPK USDC Prime vault and Savings GHO. Additional Stakewise. EURC fully moved to Aave mainnet after a 15-day Morpho hold. |
Table 4: monthly strategy and notable actions
News and governance highlights
The period’s developments consolidate into the themes in Table 5.
| Theme | Summary |
|---|---|
| Transparency and reporting | January introduced a public Syncrone dashboard for stakeholders to track portfolio evolution through the month, alongside the resumed monthly forum reporting. |
| Risk event and response (rsETH) | On 18 April an exploit of Kelp DAO’s LayerZero V2 bridge minted unbacked rsETH, freezing rsETH and WETH on Aave and tightening ETH markets. CoW had no direct rsETH exposure. KPK exited stkGHO and SyrupUSDC to USDC on mainnet and withdrew EURe from Aave on Gnosis Chain, all through the non-custodial Permissions Layer, about 20 minutes from alert to first exit. No funds were lost. |
| Governance-driven flows | May executed CIP-83, the CoW Team grant replenishment, with 25M COW moved from the Mainnet Treasury Safe. Work continued on CIP-86, an exceptional discretionary grants program (CoW Legal Defence Fund) linked to the cow.fi domain hijacking incident. |
| Fee framework | The June report confirmed the management fee step-up to $9,500 per month, effective June, after the six-month transition milestones were met. The performance fee is unchanged. |
| Active management | Ahead of moving EURC to Aave mainnet in June, KPK identified a temporary spike in borrowing demand in the WBTC and wsETH against EURC Morpho market and held the position for about 15 days, capturing roughly 4.5% APY against about 0.7% in normal conditions before completing the move. |
| COW liquidity strategy | KPK maintained COW liquidity across Ethereum, Gnosis Chain, Arbitrum, BNB Chain and Base. |
Table 5: key themes, January to June 2026
Lookback on the mandate
Risk management: H1 2026 was the worst half-year for DeFi exploits on record, with more than 200 across the six months. The period’s defining event was the rsETH exploit, and the response was the clearest evidence of the mandate working as intended. With no direct rsETH exposure, KPK still identified contagion risk to stkGHO, SyrupUSDC and EURe and executed precautionary exits within minutes through the Permissions Layer. No funds were lost. As Section 3 shows, the cost of that decision was benchmark-relative yield in the EUR sleeve for two to three months, a tradeoff consistent with a capital-preservation mandate.
Benchmark performance: the portfolio generated positive excess return over the period, +37 bps annualized on a blended basis, led by a USD sleeve that outperformed in every month. The single negative sleeve, EUR from April, reflected a deliberate reduction in risk during the rsETH dislocation.
Governance participation: KPK worked alongside the CoW Treasury Working Group through the period, including regular joint calls on strategy and execution, supported governance-driven flows, and participated in CoW DAO governance.
Looking forward
H1 2026 was a demanding half, and the treasury came through it in good shape. Capital was preserved in full through difficult markets and the rsETH dislocation, the benchmarked sleeves delivered +37 bps of blended excess return led by a USD sleeve that outperformed in every month, and the move to a non-custodial permissions framework made execution faster and risk management stronger.
The priorities for the second half follow directly from these results: rebuild EUR-sleeve yield now that the rsETH window has passed, sustain the USD-sleeve advantage within the conservative venue set, redeploy the remaining idle balances, and advance on-chain risk controls including automated emergency exits, while progressing CIP-86 and continuing to report benchmark-relative performance each month.
KPK thanks the CoW Treasury Working Group and the wider CoW DAO community for their trust and partnership over the period, and looks forward to continuing this collaboration and to supporting the DAO’s treasury in the half ahead.