Q4 2024 Financial Transparency Report

Reporting
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Recovered from https://forum.treasure.lol/t/q4-2024-financial-transparency-report/129 Originally posted 2025-03-01.

Q4 2024 Financial Transparency Report

Key Links:

We would like to acknowledge and apologize for the delay in publishing this financial report. This was due to the launch of the Treasure Chain and the subsequent integration of the chain into our existing subledger accounting technology. This integration was necessary to ensure the accuracy and consistency of our financial data. We appreciate your patience and understanding as we worked to provide the most reliable and comprehensive financial insights.

Regen Financial is pleased to present Treasure’s 2024 Q4 financial review. The report takes a deep dive into the financials and performance from October 2024 to December 2024, focusing on revenue and expenditures in Q4 2024 compared to Q3 2024. We also show annual numbers and charts where appropriate to build context.

Some key insights have been pulled out onto this forum post; however, we advise everyone reading this to review the full report (link above). This document provides a Profit or Loss Account, Balance Sheet, and Runway Analysis coupled with supporting notes.

As r3gen Finance continues to support TreasureDAO’s commitment to transparency and financial stewardship, this report represents a comprehensive overview of our efforts to foster informed decision-making within the community. We aim to maintain a high standard of accountability and clarity in our reporting, ensuring that all members have the necessary insights to actively contribute to Treasure’s future and we encourage you to review and ask questions.

Key Financial Highlights

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  • Current Treasury holdings total $14.8M, which is largely composed of MAGIC and Stablecoin Holdings.

  • Stablecoins make up 21.8% of the total (market value) treasury holdings.

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In Q4 2024, MAGIC experienced significant price fluctuations, starting at $0.36 in October, peaking at $0.59 in November, and declining to $0.42 by year-end, continuing the broader downtrend seen earlier in the year. The mid-quarter peak suggested renewed market interest, likely driven by partnerships within the Treasure ecosystem as well as the launch of the Treasure chain.

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In Q4, TreasureDAO generated revenue primarily from marketplace fees, totaling $39,559, reflecting a 7% increase from Q3, and from Magicswap fees, which amounted to $623, marking a 42% increase. The growth in marketplace fees is likely attributed to the launch of Treasure Chain, which is expected to drive sustained revenue growth in the future.

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  • Expenses totaled $4.26m for Q4 which was a 57% increase from Q3 (excluding Crypto gain/Loss).

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  • The top expenditures are related to the Management Service Charge and Human Capital Costs. TreasureDAO has several relationships at an arm’s length with various service companies and is charged a management service fee assessed by a managing company for the services provided to maintain, administer, or oversee an organisation.

  • Total Liquidity and Mining Emissions for Q4 were $21.08k a 67% increase from Q3.

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In previous iterations of the transparency report, the runway was calculated based on actual historical costs. This approach provided a retrospective view of our financial sustainability, grounded in past expenditure patterns. However, for this iteration, the methodology has been updated to calculate the runway based on forecasted cost changes. This forward-looking approach is intended to provide a more accurate projection of our financial trajectory by taking into account anticipated adjustments in Treasure’s cost structure. You can find a more detailed breakdown of the calculations within the report.

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We invite all stakeholders to review this financial report in detail. We hope this report sparks good discussion, feedback is welcome and we will continually iterate and improve it throughout the next few quarters. Please share any thoughts or comments either directly on the forum or through this link on what you would like to see in the next iteration of this report.

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Thanks for the report. I have few questions:

  1. Fig 16 - Treasury Assets (Market Value) says USDC balance as of Dec 24 is $3,222,907.64. Then Runway Analysis says “As of Feburary 28, 2025, the stablecoin holdings amounted to $ 3,234,771”. How does the balance increase?

  2. Can you share the rationale behind this projection? “The projected average monthly expenditure for the period from March 2025 to December 2025 is estimated at $339,085.” or ~$1m per quarter. Q3, Q4 spending were $2.7 and $4m respectively. Which expenses are being cut so drastically? And why now and not earlier?

  3. Why is Q4 still reflecting service charges from Darkbright? Q3 report indicated that this should no longer have been included in the next report. It seems the stablecoin balance already excluded Darkbright’s but expense still counted

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Original question from Def4Life:

Per the q3 report, magic was at .38 end of quarter. Per the q4 report, magic was .42 at end of quarter. At the end of q3 there was 162,913,172 magic valued at 61,416,474. At the end of q4, you didn’t provide how much magic was owned, just the usd value at 10,693,585. If magic was higher at end of q4, how is the usd value down 51,000 000? Only explanation is that the team sold to keep the lights on, correct? My math indicates that would be 25,460,916 magic owned and 137,452,255 magic sold last quarter. Finally, q4 report states we have runway thru December 2025 based on drastically lowered expenses of 339,085/month. I assume this means no more Management Service Charge. Can you share who you got rid of to save 1.8m per quarter?

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Original question from Dani:

*What are these “Management Service Charge” and why are them so high. *

How can they be 5x higher that payroll?

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My own question, referring to Karel’s explanation when everyone was confused by those high “management service fees” in Q3

(That was the TL;DR of his response:

** There’s a good amount of detail that is captured within this single sleeve and we can see how we can improve the reporting here (cc: @Elliott | r3gen Finance)*

** On main drivers, one of the larger cost lines that has kicked on over the past few months/year is Smolbound/Darkbright as well as on the contributor front.*

** RE: contributors, we had some terminations/departures notably from the international end (which would have fallen under TTF) but re-hired and this all netted neutral/more cost effective but now sit under GBS within management services.*

  • Some of this also goes back to the inception of Treasure and establishment of pay for early contributors (since departed). If I’m being honest as one who joined later, some folks were paid a wee bit generously so we worked to clean house, bring things down closer to market, provide MAGIC incentives instead, and optimize for more compatible timezones but as they were brought in under the service provider vs. the Foundation, it ends up rebalancing over to this*

→ The transparency did not increase, last quarter’s “main driver” should be completely taken care of (?) and yet that mysterious fees drastically increased with little information of what’s inside it. What is it this time? 1.7M USD?

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Thank you all for taking the time to review the report and share your feedback. In the following comments, we will address your specific questions in detail.

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The $1.7 million charge consists of several key components, detailed as follows:

Salaries and Staff Costs:

This includes salaries paid to both GBS and DBS staff. While DBS has been carved out as a separate entity, the process to fully transition personnel is still ongoing, with all costs being done at cost to GBS which are reimbursed on an ongoing basis (within 30-days of payment). This is maintained in order to be able to provide DBS staff with competitive rates, health insurance, and other benefits that are both possible and more cost effective with scale. Over time, personnel will be fully transferred over which will see the exposure through DBS to be reduced to zero. The total staff costs also encompass employer contributions and various statutory payments required by law.

Legal Expenses:

A portion of the charge is allocated to legal expenses paid to Dentons, covering a wide range of legal services. These services pertain to matters such as Intellectual Property (IP) protection, trademark registration, partnership agreements, and other related legal areas that support the organization’s operations and growth.

Professional Fees:

This category includes fees paid for accounting and tax consulting services, as well as expenses related to services provided by Windwalk, Helika, and other freelance consultants who support various business functions across game design, growth, and strategic advisory.

Tooling Costs:

The tooling costs encompass a variety of software and technology tools utilized by GBS as the core developer operating on behalf of TreasureDAO across different departments and functions. This includes services and tools such as AWS, thirdweb, Google Cloud Platform, Google Workspace, Vercel, Cloudflare, GitHub, Linear, Rippling, HelloSign, Mintlify, Typefully, and Hex, among others. These tools support the day-to-day operations, development and product management efforts, and overall productivity of the core developing team. Since the launch of the Treasure chain on December 11, 2024, the turn of the year has seen an increase in infrastructure tooling costs such as thirdweb.

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In our Q4 financial report, we introduced crypto impairment accounting for MAGIC holdings to align with standard financial reporting practices. This change ensures that our financial statements reflect the impact of market fluctuations on asset valuation, even when the actual holdings remain unchanged.

In previous reports (e.g., Q3 transparency report), MAGIC was reported at its market value without impairment adjustments. However, under IAS 36 (Impairment of Assets), crypto assets classified as intangible assets must be impaired if their fair value falls below the carrying amount at the reporting date. Once impaired, the valuation cannot be reversed even if the price later increases. The impairment expense is the expense that devalues the holdings to its Market Value.

This explains why the reported USD value of MAGIC decreased in Q4, despite a higher price per token compared to the end of Q3:

  • Q1 2024 - Q3 2024 Report: MAGIC was reported at market value without impairment.

  • Q4 Report: MAGIC was impaired based on fair value principles, following IAS 36.

*** Result:** The USD value reported in Q4 reflects the impaired valuation, rather than a simple price-times-quantity calculation.

To clarify, no MAGIC was sold to extend the runway. The drop in USD value is solely due to the shift in accounting methodology. Going forward, we will conduct monthly impairment assessments to ensure consistency and compliance with fair market valuation principles under IFRS.

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3 - To clarify, while it is correct that the stablecoin balance as of the end of Q4 has excluded Darkbright’s holdings, there are still ongoing services being procured and utilized on behalf of Darkbright. These services are reflected in the Management Service Charge within the report. As mentioned, while DBS has been carved out as a separate entity, the process to fully transition personnel is still ongoing, with all costs being done at cost to GBS which are reimbursed on an ongoing basis (within 30-days of payment). This is maintained in order to be able to provide DBS staff with competitive rates, health insurance, and other benefits that are both possible and more cost effective with scale. Over time, personnel will be fully transferred over which will see the exposure through DBS to be reduced to zero. The inclusion of these charges in the Q4 report, therefore, reflects the continuation of those ongoing transactions and the corresponding expense.

The reimbursement process is actively being managed, and once completed, any related adjustments will be reflected in the subsequent financial periods.

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  1. To clarify, the amount stated in Figure 16 reflects the USD balance of USDC as per our accounting records as of December 24, 2024, which amounted to $3,222,907.64. In contrast, the Runway Analysis reflects figures as of February 28, 2025. It also includes alternative off chain and onchain holdings for the purposes of giving a holistic forecast of the runway. The USDC balance as per the report does not include these and focuses strictly on the USDC balances per the on chain wallets and does include alternative USD holdings such as our holdings with Flowdesk, the DAO’s market maker. Moving forward, these assets will be included in future reports.
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2- DAO expenses include a combination of “soft” and “hard” expenses in order to provide a holistic view of expenditure, but potentially misrepresent runway and costs without additional context. “Soft” expenses include those that are pre-allocated and denominated as MAGIC but contribute to bottom-line expenditure figures, such as contributor token vesting drawn out of pre-allocated contributor tokens, ecosystem grants to game studio partners in line with TIP-09 via the ecosystem fund, liquidity incentives via the liquidity multisig for LP rewards in Magicswap, or Bridgeworld emissions allocated out of the mining multisig. In areas such as contributor token vesting, the impact on monthly expenditure tends to be smoother while others such as ecosystem grants that may be tied to milestones may be a bit chunkier in certain quarters over others, similar to prior annual halvening and draw out of the mining multisig for Bridgeworld emissions. “Hard” expenses capture discrete expenses that draw from stablecoin and MAGIC balances, such as payroll, tooling subscriptions, and more. Q4 saw an uptick in contributing vesting as well as ecosystem grant expenditure, as a result of vesting periods and milestone achievements falling in a tighter timeframe.

Management service expenses (detailed later to capture salaries and staff costs, legal expenses, professional fees, and tooling costs), ecosystem grants, and contributor vesting expenses have been continually streamlined and optimized since inception. As the Treasure chain has launched and a number of the building blocks progress from active development to being shipped and now are able to remain in a steady state, resources and focus can be reallocated towards net new development, allowing for cost reduction and optimization.

Key expense lines that have been materially impacted include:

(1) tooling costs (AWS, Vercel, thirdweb) as infrastructure and spend in this capacity has been greatly optimized

(2) salaries and staff costs as certain contributors roll off (or are expected to transition from) the organization as well as accept reduced salaries in favor of long term MAGIC packages in response to less favorable market conditions (pulled from the already pre-allocated and DAO ratified sleeve for contributor allocations)

(3) legal expenses have been reduced dramatically as key workstreams have concluded.