Writing the policy before the position
Why an investment policy is the real product

Most losses in onchain treasuries do not come from exotic exploits. They come from positions nobody agreed to: an allocation that crept past its limit, a token that was never meant to be held, a market that stayed open after the reason for being in it had gone.

An investment policy statement fixes that by deciding in advance what is allowed. It lists permitted assets and venues, caps on each, the liquidity the treasury must always keep, and who has to sign off when any of it changes.

Policy as code

The step that matters onchain is translating that document into permissions. When a policy says no more than a fifth of reserves in any single lending market, the account that executes trades should be physically unable to exceed it. The written policy and the enforced one must be the same thing.

A short checklist

• Every permitted action is named, and everything else is refused by default.
• Limits are expressed in units the contract can check, not in adjectives.
• Changing a limit takes more signatures than using it.
• Reports compare what happened with what the policy allowed.