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On paper, Ethereum-based projects appear to have enormous treasuries, with some treasuries containing billions of dollars worth of native tokens. But upon closer inspection, a lot of these funds are questionable. 

Although these projects may seem stable on the surface, the bulk of their holdings are actually in highly volatile or illiquid tokens. Consider what transpired with Luna for instance. Its stablecoin's value fell during a market meltdown because it was backed by other tokens.

One of the most notable projects that faced issues due to backing with volatile tokens was Luna, which was unable to safeguard its stablecoin with tokens that quickly lost their value due to the poor liquidity. Ethereum-based projects that mainly rely on their own tokens for their treasury valuation may experience something similar. We can observe from the data that some projects have very little or even almost no stablecoin reserves. 

This is problematic because their treasuries are nearly totally dependent on their native tokens, whose value is subject to extreme fluctuations. Any treasury in this precarious position runs the risk of losing most of its on-paper value in a major market drop, as happened with Luna. It is safe to say that some of these DAOs are not as liquid as they may seem.

Although their native tokens may be highly valued, they lack both tangible backing and real-world liquidity. These projects' treasuries would be all but worthless if they experienced unexpected demand for funding or had to convert their holdings into stablecoins during a market meltdown.

The aforementioned approach may result in overstated paper values, concealing the fact that many of these projects are insecure, including financially. What looks like $20 billion in value today could drop to just a few million if the market as a whole collapses, leaving many projects in the dust.