Original Author: Ethereum Core Developer Eric Conner

Introduction: The Rise of the ETH Treasury Model

On July 17, 2025, senior Ethereum observer Eric Conner published an article on the X platform, pointing out that the ETH treasury strategy was rapidly becoming a market focus. He wrote: "There has been a lot of recent discussion about the ETH treasury strategy, which is worth carefully analyzing its meaning and background." In his view, this trend represents a paradigm shift in corporate financial strategy—more and more publicly traded companies are mimicking MicroStrategy's path, starting to fundraise to purchase ETH and earn returns through staking. These companies are not only attracted by the profitability and deflationary nature of ETH but are also exploring a new capital structure and growth model using on-chain assets.

This article will systematically break down the underlying logic, operational path, potential risks, and development prospects of the ETH treasury strategy.

Why ETH? The Underlying Logic of Treasury Preference

Conner put forward four core reasons why ETH is favored by treasuries:

· Staking yield of 3%-5%;

· Deflation mechanism (EIP-1559 burn to offset issuance);

· GAAP guidelines allow for fair value accounting;

· ETH is the primary collateral asset in DeFi.

He pointed out that Ethereum's proof-of-stake mechanism provides a stable annualized return, and the deflationary expectation introduced by EIP-1559 enhances ETH's role as a "value store." In addition, the latest revision of the U.S. accounting standard GAAP allows companies to account for ETH at fair value, reducing the risk of financial reporting distortion. Finally, ETH's almost irreplaceable status as a DeFi collateral further strengthens its asset-level security and liquidity.

Operational Path: How Enterprises Deploy the ETH Treasury Strategy

Conner succinctly summarized the execution path of such enterprises:

"The typical pattern is: fundraising through ATM or PIPE, OTC purchase of ETH, staking (self-held or through Lido, Rocket Pool, custodian), combined with PR promotion, cycling staking returns, or using staked assets as collateral for borrowing and reinvestment."

This strategy integrates capital market financing mechanisms with crypto-native asset return logic, forming a highly financialized, chain-driven "reinvestment flywheel": companies initially raise funds to purchase ETH, earn returns through staking, then amplify the asset pool through reinvestment or borrowing, creating a growth cycle. Simultaneously, by publicizing this layout, they may also gain additional attention and premium in the secondary market.

Risk Exposure: Price Volatility and Compliance Regulation

Conner did not overlook the potential risks involved:

“Key risks include: ETH price volatility, validator slashing, potential SEC scrutiny as an investment company, and a 7-day unlock period for staking with limited flexibility.”

The unstable price of ETH poses a significant challenge for enterprises holding it in treasury form; the “punitive slashing” in the staking mechanism could also lead to actual asset losses. Furthermore, if a company overly relies on investment returns, it may cross the regulatory threshold of being deemed an “investment company” under US securities laws. Compared to off-chain market liquidity, staked assets require a 7-day withdrawal period, weakening short-term liquidity management capabilities.

Who Is Taking the Lead? Top Treasury Management Enterprises Overview

As of July 2025, Conner identified the publicly traded enterprises currently dominating this strategy:

· SharpLink (SBET): Holding 285,000 ETH (with a staking rate of up to 99%);

· BitMine (BMNR): 163,000 ETH;

· BitDigital (BTBT): 101,000 ETH;

· BTCS: 29,000 ETH.

These enterprises collectively control over 600,000 ETH, forming a sizable on-chain treasury cluster. Among them, SharpLink leads the industry trend with a high staking rate and the largest volume, becoming one of the most representative blueprint enterprises for “Ethereumization” of the treasury.

Revenue Reinvestment Strategy: From Staking Rewards to Leveraged Operations

Conner pointed out that most enterprises will reinvest staking rewards directly to further accumulate ETH. “Some enterprises will use staked ETH (such as stETH) as collateral to borrow stablecoins for operational turnover or leveraged allocation.” This strategy can improve capital efficiency and provide enterprises with more flexible financial operational space, but it also introduces new variables such as interest rate fluctuations and liquidation risks.

Opportunity Size: How Big Is the Institutional ETH Allocation Potential?

Conner used a set of comparative data to highlight the growth potential of ETH treasury strategies:

“The total cash reserve of the S&P500 is approximately $22 trillion. If only 1% were allocated to ETH, that would be equivalent to 65 million ETH, accounting for over half of the current total supply. In reality, current enterprise treasury allocations are less than 0.5% of this volume.”

In other words, the penetration rate of the ETH treasury strategy is still in its very early stages. In the future, once traditional enterprises or institutions increase their allocation, it may have a structural impact on ETH's price and financial status at the supply and demand level.

Key Variables Investors Should Watch

Conner reminds investors to pay attention to the following key points:

· Dilution situation;

· Security and compliance of staking service providers;

· How the board of directors participates in ETH governance voting;

· Whether Layer 2 restaking strategies are included in future plans.

These factors will not only impact corporate financial performance but also influence their actual power in Ethereum network governance and ecosystem.

Future Outlook

Conner predicts that as the financial attributes of ETH become clearer, more and more industries will follow this strategy:

"In the future, not only miners, but some SaaS companies, and even biotech firms, may start adopting on-chain treasury allocation due to ETH's financial advantages and return attributes."

The ETH treasury strategy is gradually moving from marginal experimentation to mainstream consensus and may even reshape the structural logic of corporate balance sheets.

Conclusion: An Innovation in Treasury Structure

What the ETH treasury strategy represents is not just a change in asset allocation logic, but also the proactive absorption of the native cryptographic characteristics by corporate financial structures. It combines the transparency, programmability, and profitability of on-chain assets, leading a structural transformation from crypto-native to financial mainstream.

As Conner jokingly remarks: "You might as well forward this article to the CFO who still calls ETH the 'Internet Magic Coin'."

Original Article Link

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