# Treasury Diversification

LBPs can help treasuries and DAOs enter or exit large positions with reduced market impact.

# Mental Model

LBPs can be used by treasuries to enter (invest) or exit (divest) positions over time, using a scheduled weight shift rather than a single large swap. Arbitrage keeps the LBP internal price aligned with external markets as the sale progresses.

# Strategic Divestment (Selling)

Divestment involves selling a large quantity of an asset (e.g., a grant received in an illiquid token, or diversifying treasury holdings) into a more liquid asset like USDC or ETH. Unlike a Token Launch (which typically runs over days), a Strategic Divestment prioritizes stability and value retention over longer horizons.

# Strategic Investment (Buying)

While token buybacks focus on retiring supply, a Strategic Investment allows treasuries to acquire large stakes in other protocols (e.g., a DAO rotating stablecoins into another governance token or ETH) without triggering a parabolic price response. These operations are often run over weeks or months, rather than days.

# Case Study: The Gitcoin Akita Divestment

The viability of using LBPs for institutional-scale divestment was demonstrated by the Gitcoin DAO.

Challenge:

In 2021, Vitalik Buterin donated approximately 49 trillion AKITA tokens (valued at ~$5 million) to Gitcoin. The on-chain market depth was insufficient to absorb this liquidity; a direct sale would have resulted in roughly 99% slippage and a collapse of the token's community value.

Solution:

Instead of an atomic sell-off, the DAO deployed a LBP with the following parameters:

• Duration: 1 Year (slow decay).
• Weight Shift: 90% AKITA / 10% WETH 10% AKITA / 90% WETH.

Results:

Over the 12-month period, the mechanism successfully converted the illiquid asset into WETH.