Advantages and Future Development of Ethereum Treasury Companies

The integration of cryptocurrency and traditional finance is accelerating, with the most significant progress coming from the rise of corporate crypto asset treasuries. This trend is fully reflected in the enthusiastic pursuit of such companies in the public market.

Strategy was the first to implement this strategy, pushing the company's market value to over $100 billion, with an increase even surpassing that of NVIDIA. The core logic of these financial strategies is: public stock offerings can obtain cost-effective unsecured leverage, which ordinary traders cannot access.

Recently, market attention has expanded from Bitcoin to the field of Ethereum. Some treasury strategy companies based on Ethereum, such as Sharplink Gaming and BitMine, are receiving increasing attention. This article will outline the advantages of Ethereum treasury and provide some suggestions for companies adopting this financial strategy.

Advantages of Ethereum Treasury

1. Convertible bonds are more attractive.

Ethereum has a higher historical volatility and implied volatility compared to Bitcoin, which makes convertible bonds supported by Ethereum more attractive to arbitrageurs and hedge funds. The higher volatility increases the opportunities to profit through gamma trading strategies, allowing Ethereum treasury companies to issue convertible bonds under more favorable conditions.

2. Preferred stock issuance provides differentiated value

Ethereum generates native returns through staking, re-staking, and lending, providing greater certainty for the payment of preferred stock dividends. This built-in yield may lead to higher credit ratings. Ethereum preferred stock has the potential to become a non-directional investment tool, allowing institutional investors to participate in network security without bearing directional risk related to the price of Ether.

3. Market price issuance ( ATM ) is more advantageous.

The Ethereum treasury company should enjoy a higher market value to net asset value ratio ( mNAV ) premium, which is attributed to Ethereum's native yield mechanism. A higher mNAV enables the company to raise funds more effectively through market price issuance, thereby creating a virtuous cycle.

How to Evaluate Treasury Companies

When assessing treasury companies, several aspects can be considered:

1. Retail Investor Base: The key to a successful market price issuance strategy lies in establishing a strong retail investor base, which often relies on charismatic leaders and continuous transparency of strategies.

2. Institutional sales channels: Successfully issuing convertible bonds and preferred shares requires strong institutional sales channels and good relationships with the capital markets.

3. Decentralized Contribution: The Ethereum treasury company should distribute its Ether among multiple staking providers and, where possible, become a validator itself to promote validator decentralization.

Competitive Landscape and Future Development

Unlike the winner-takes-all pattern formed by Bitcoin treasury, the treasury strategy of Ethereum is still in its infancy, with multiple Ethereum treasuries being launched in parallel. This state is beneficial for network health and can cultivate a more competitive and accelerated market environment.

From a valuation perspective, the Ethereum treasury model can be seen as a fusion of Strategy and Lido. Considering the speed, depth, and reflexivity of capital flows in traditional finance, it is expected that within a market cycle, the total scale of major Ethereum treasury companies is likely to exceed that of Lido.

Overall, Ethereum treasury companies demonstrate immense growth potential. Their role in promoting the decentralization of validators and fostering competition further highlights their unique value. As this model matures, it is expected to have a profound impact on cryptocurrency and capital markets, driving on-chain economies to integrate more deeply into the traditional financial system.