The Rise of Digital Asset Treasuries

Digital Asset Treasuries (DATs) refer to publicly traded companies that hold crypto assets like BTC or ETH on their balance sheets, emerging as a new channel for market access.

The launch of spot ETFs in 2024 unlocked demand from investors previously unable to hold BTC and ETH through direct custody. Similarly, DATs allow investors to gain exposure to these assets and their ecosystems via publicly traded stocks while enabling strategic capital raising and deployment.

Previously, we analyzed Michael Saylor’s playbook—raising funds through equity and convertible debt to accumulate over 628,000 BTC (2.9% of Bitcoin’s supply). Globally, companies from Marathon Digital to Japan’s Metaplanet have followed suit, offering shareholders amplified (leveraged) BTC exposure.

Now, this model is expanding to other ecosystems, with a wave of companies racing to add ETH to their corporate treasuries.

While the goal of increasing shareholder exposure to the underlying asset remains the same, ETH treasuries differ fundamentally from BTC treasuries—ETH treasuries can participate in Ethereum’s staking and DeFi ecosystems, leveraging ETH’s native yield and deploying capital on-chain efficiently. This article explores the impact of ETH treasury companies on Ethereum’s supply dynamics and the potential network effects of these large-scale institutional on-chain entrants.

Supply Dynamics: Competing for 5% of Market Supply

Since July this year, Ethereum digital asset treasuries have accumulated 2.2 million ETH, representing ~1.8% of current supply. Five major companies are raising funds via equity (e.g., public offerings or PIPE private placements) and deploying capital to grow their holdings:

Bitmine Immersion Technologies: 1.15M ETH (~$4.8B)

SharpLink Gaming: 521K ETH (~$2.2B)

The Ether Machine: 345K ETH (~$1.4B)

Bit Digital: 120K ETH (~$503M)

BTCS Inc.: 70K ETH (~$293M)

Among them, Bitmine Immersion Technologies is the largest corporate ETH holder, with 0.95% of supply, and its holdings are rapidly approaching its publicly stated goal of 5% of circulating supply. As market conditions evolve, these companies are building reserves quickly and at relatively low costs, intensifying acquisition competition.

This trend stands out when contrasted with Ethereum’s issuance mechanics. Under Proof-of-Stake (PoS), new ETH is issued to validators, while some transaction fees are burned, causing net issuance to fluctuate between deflation and inflation.

Since the "Merge" in September 2022, Ethereum has issued 2.44M ETH and burned 1.98M ETH, resulting in a net supply increase of 454,300 ETH. In contrast, ETH treasury companies have accumulated 2.2M ETH since July alone, far exceeding net new issuance over the same period.

Compared to Bitcoin’s hard cap and halving-driven supply compression, Ethereum’s supply is dynamic and currently inflationary. Given ETH’s market cap is ~1/4.5 of BTC’s, the scale and speed of this demand wave are particularly striking.

This supply-demand imbalance becomes even more pronounced when considering inflows into Ethereum ETFs—which have also accelerated in recent months. Combined, these investment vehicles are steadily absorbing Ethereum’s 107.2M circulating supply (market-available supply), excluding the 29% of ETH staked at the consensus layer and 8.9% held in other smart contracts. Thus, if treasury and ETF accumulation continues, it will amplify price sensitivity to incremental demand.

Ecosystem Impact: Staking, DeFi, and On-Chain Activity

While most ETH treasuries are still in the accumulation phase, some capital may eventually flow on-chain. By tapping into Ethereum’s staking and DeFi infrastructure, these companies aim to enhance risk-adjusted returns and utilize assets efficiently—a stark contrast to Bitcoin treasuries’ more passive holding approach. This shift has already begun, with SharpLink Gaming staking most of its holdings, BTCS Inc. using Rocket Pool to generate yield, and firms like The Ether Machine and ETHZilla preparing for more active on-chain management.

Ethereum currently offers a nominal 2.95% annualized staking reward (2.15% real, inflation-adjusted) to secure the network. This allows treasury companies to earn steady cash flow alongside potential asset appreciation. For example, if 30% of the current 2.2M ETH held by treasuries were staked at today’s ~3% nominal yield and $4,000/ETH price, annual revenue could reach ~$79M. While increased staking could compress yields, the impact is muted as Ethereum’s reward rate gradually declines with total stake.

Corporate treasuries typically participate in staking via two methods: running their own validator nodes or using liquid staking protocols (the latter explicitly deemed non-securities by the U.S. SEC).

The second method allows firms to stake via third parties like Lido, Coinbase, or Rocket Pool, receiving tradable "liquid staking tokens" in return.

These tokens (e.g., Lido’s stETH) introduce additional risks but are widely used in DeFi as collateral for borrowing or to earn yields above baseline staking APY, enhancing capital efficiency.

For instance, Aave v3’s deep liquidity pool (supplied/borrowable assets) of ETH and liquid staking tokens (e.g., wstETH) currently holds ~1.1M ETH. Treasury participation could further strengthen this pool, compounding yields while boosting market liquidity.

Despite Ethereum mainnet daily transactions hitting all-time highs (1.7–1.9M/day), total fees remain near multi-year lows—recent gas limit increases and blob capacity expansions have eased congestion, diverting some activity to L2s. If treasury capital flows on-chain en masse, high-value transactions could increase L1 block space demand and fee revenue, creating a virtuous cycle: treasury activity → liquidity growth → increased on-chain usage → ecosystem vibrancy.

Linking Corporate Treasury Performance to On-Chain Health

As publicly traded ETH treasuries expand their on-chain footprints, their financial performance may increasingly influence Ethereum’s long-term network health, directly tying off-chain corporate outcomes to potential on-chain effects. Large-scale, long-term holding can reduce circulating supply, enhance credibility, and deepen on-chain liquidity, but excessive concentration, leverage, and operational risks mean corporate-level volatility could spill over into the network.

While these are network-level considerations, corporate treasuries remain subject to market forces and investor sentiment. Healthy balance sheets and sustained investor confidence can drive treasury expansion and deeper participation; conversely, sharp price declines, liquidity crunches, or over-leverage may trigger ETH sell-offs or reduced on-chain activity.

Metrics Tied to Treasury Company Performance

By tracking both network-level impacts and these firms’ financial health, market participants can better anticipate how corporate treasury actions will affect Ethereum’s supply dynamics and overall network health.

Conclusion

The rapid rise of corporate ETH treasuries highlights Ethereum’s dual appeal as a reserve asset and on-chain yield source. Their growing presence may deepen liquidity and network activity but also introduces risks tied to leverage, financing, and capital management. From stock performance to debt obligations, off-chain pressures could quickly transmit on-chain as linkages tighten. Thus, monitoring balance sheet health and on-chain activity will be key to understanding the impact of these institutional vehicles as they scale.