A recent study by market maker GSR reveals that decentralized autonomous organizations (DAOs) typically hold around 70% of their reserves in their own tokens. Analysts indicate that this practice leads to procyclical vulnerabilities: when token values decline, it simultaneously devalues collateral, reduces protocol revenues, and diminishes market activity. As a result, projects are forced to liquidate more tokens to cover operational expenses, further exacerbating price drops. Generally, platforms seek protective measures against price declines only after a drop in values has occurred, when volatility is heightened and insurance becomes more expensive.