Meme Strategy price

Written by Kevin, Co-Director of Investments at Penn Blockchain Compiled by: Planet Daily Azuma (@azuma_eth) While the crypto community has long been enthusiastic about bringing traditional assets on-chain in tokenized form, the most significant recent progress has actually come from the reverse integration of crypto assets into traditional securities. The recent public market pursuit of "crypto asset treasury" stocks perfectly illustrates this trend. Michael Saylor pioneered this strategy through MicroStrategy (MSTR), which has propelled his company's market capitalization to over $100 billion, surpassing Nvidia's gains over the same period. We have analyzed it in detail in our special report on MicroStrategy (a great learning resource for those new to the treasury space). The core logic of this type of treasury strategy is that listed companies can obtain low-cost, unsecured leverage that ordinary traders cannot reach. Recently, the market's focus has expanded from BTC treasuries to ETH treasuries, such as Sharplink Gaming (SBET), led by Joseph Lubin, and BitMine (BMNR), helmed by Thomas Lee. But is the ETH treasury really reasonable? As we demonstrated in our MicroStrategy analysis, treasury companies are essentially trying to arbitrage the difference between the long-term compound annual growth rate (CAGR) of the underlying assets and the cost of capital. In an earlier article, we outlined our view on ETH's long-term compound annual growth rate: As a programmable scarce reserve asset, ETH plays a fundamental role in maintaining on-chain economic security as more assets migrate to blockchain networks. This article will explain the bullish logic of the ETH treasury in the general direction and provide operational suggestions for enterprises adopting this strategy. Liquidity Acquisition: The cornerstone of treasury companies One of the main reasons tokens and protocols seek to create these treasury companies is to open up avenues for tokens to access traditional finance (TradFi) liquidity – especially against the backdrop of shrinking altcoin liquidity. This type of treasury company mainly obtains liquidity to increase its assets in three ways. It is important to note that these liquidity/debts are unsecured in nature, i.e. they cannot be redeemed in advance. Convertible bonds: Funds raised by issuing debt that can be converted into shares, and the proceeds are used to purchase more cryptocurrencies; Preferred equity: financing through the issuance of preferred shares that pay fixed annual dividends; Market Offering (ATM): Sell new shares directly on the open market to access flexible real-time funding for cryptocurrency purchases. Advantages of ETH Convertible Bonds In our previous research on MicroStrategy, we noted that convertible bonds offer two major benefits for institutional investors: Downside protection and upside opportunities: Allows institutions to gain exposure to underlying assets (such as BTC or ETH) under the inherent protective characteristics of bonds; Volatility-Driven Arbitrage Opportunities: Hedge funds often profit from the volatility of the underlying asset and its securities through gamma trading strategies. Among them, gamma traders (hedge funds) have become the dominant force in the convertible bond market, with ETH having higher historical and implied volatility compared to BTC. Convertible bonds (CBs) issued by ETH Treasury Corporation can naturally reflect this high volatility in their capital structure, making them more attractive to arbitrageurs and hedge funds. More importantly, this volatility allows ETH treasury companies to issue convertible bonds at higher valuations and obtain more favorable financing terms. Odaily Note: Comparison of the historical volatility of ETH and BTC. For convertible bond holders, higher volatility means increased opportunities to profit through gamma strategies. In short, the more volatile the underlying asset, the more profitable gamma transactions become, giving ETH treasury convertible bonds an advantage over BTC treasury. Odaily Note: Historical volatility comparison of SBET, BMNR, MSTR. However, it is important to note that if ETH cannot sustain long-term compound annual growth, the appreciation of the underlying asset may not be enough to meet the conversion conditions before maturity. At this time, the treasury company will face the risk of full debt repayment. In contrast, BTC's more mature long-term performance makes it less likely that this will happen to its convertible bonds - historical data shows that most convertible bonds under this strategy eventually convert into shares. Odaily Note: Comparison of four-year CAGR between ETH and BTC. Special value of ETH preferred shares Unlike convertible bonds, preferred shares are designed for fixed income investors. While some convertible preferred stocks have mixed upside potential, yields remain a top concern for most institutional investors. Such instruments are priced based on credit risk – whether the treasury can reliably pay interest. A key advantage of MicroStrategy's strategy is the utilization of ATM issuance to pay interest. Since this typically represents only 1-3% of the market capitalization, the risk of dilution is minimal, but the model still relies on market liquidity and volatility for BTC and MicroStrategy's underlying securities. ETH, on the other hand, can generate native income through staking, re-staking, and lending, which provides greater certainty in preferred interest payments and should theoretically receive a higher credit rating. Unlike BTC, which relies solely on price appreciation, ETH's returns combine long-term compound annual growth expectations with native benefits from the protocol layer. Odaily Note: The annualized return of ETH native staking. My innovative idea is that ETH preferred shares can be used as a non-directional investment vehicle, allowing institutions to participate in network security maintenance without risking the price of ETH. As highlighted in our ETH report, maintaining at least 67% honest validators is crucial for network security. As more assets go on-chain, it becomes increasingly important for institutions to actively support Ethereum's decentralization and security. Many institutions may be reluctant to go long on ETH directly, but ETH treasury companies can act as intermediaries - absorbing directional risk while providing institutions with fixed-income-like returns. The on-chain preferred shares issued by SBET and BMNR are designed for this purpose, making them more attractive to investors looking for stable income without taking on the full market risk by bundling protocol layer incentives, for example. ATM issuance is a particular advantage for the ETH treasury The key valuation metric for treasury companies, mNAV (Market Capitalization to Net Asset Value Ratio), is conceptually similar to the price-to-earnings ratio and reflects the market's pricing for future growth per asset. ETH treasuries naturally enjoy a higher mNAV premium due to their native yield mechanism - these activities can generate continuous "yield" or increase the corresponding amount of ETH per share without additional capital. In contrast, BTC treasury companies must rely on synthetic income strategies (such as issuing convertible bonds or preferred stock), making it difficult to justify any gains when the market premium approaches NAV. More importantly, mNAV is reflexive - higher mNAV allows treasury companies to raise capital more value-added through ATM issuance. They issue shares at a premium and increase their holdings of the underlying assets, increasing the value of assets per share, forming a positive cycle. The higher the mNAV, the stronger the value capture capacity, making ATM issuance particularly effective for ETH treasury businesses. Access to capital is another key factor. Firms with deeper liquidity and more financing capacity naturally earn higher mNAV, while companies with limited market access tend to trade at a discount. Therefore, mNAV often reflects a liquidity premium – a reflection of the market's confidence in a company to access more liquidity efficiently. Screening treasury companies based on first principles ATM issuance can be viewed as financing to retail investors, while convertible bonds and preferred stock are generally intended for institutional investors. Therefore, the key to a successful ATM strategy is to build a strong retail base, which often requires a credible and charismatic spokesperson, as well as consistent and transparent strategic disclosure to gain long-term retail trust. Conversely, convertible bonds and preferred shares require a robust institutional sales channel and capital markets sector. By this logic, I think SBET has a more retail-driven advantage (thanks to Joe Lubin's leadership and the team's continued transparency in increasing ETH per share), while BMNR has easier access to institutional liquidity due to Tom Lee's deep connections in the traditional financial world. The ecological significance and competitive landscape of ETH treasury One of the biggest challenges facing Ethereum is the increasing concentration of validators and staked ETH (mainly on liquid staking protocols like Lido and centralized exchanges like Coinbase). ETH treasury helps counteract this trend, promoting validator decentralization. To enhance long-term resilience, these companies should diversify their ETH across multiple staking providers and operate their own validators when possible. Odaily Note: Ethereum's staking category distribution. In this context, I believe that the competitive landscape of ETH treasury companies will be fundamentally different from BTC treasury companies. The Bitcoin ecosystem has formed a winner-takes-all situation (MicroStrategy holds more than 10 times that of the second-largest corporate holders), dominating the convertible bond and preferred stock market with its first-mover advantage and strong narrative control. The ETH treasury, on the other hand, starts from scratch, without a single dominant entity, and multiple projects develop in parallel. This state of no first-mover advantage is not only healthier for the network, but also fosters a more competitive environment for accelerated development. Given the similar ETH holdings of the leading companies, SBET and BMNR are likely to form a duopoly pattern. Odaily Note: Comparison of ETH Treasury Company Holdings. Valuation framework: MicroStrategy meets Lido Broadly speaking, the ETH treasury model can be seen as a fusion of MicroStrategy and Lido designed for traditional finance. Unlike Lido, ETH treasury companies can capture a larger proportion of asset appreciation because they hold the underlying assets, and are far superior in terms of value accumulation. Here's a rough valuation reference, Lido currently manages about 30% of ETH staking, with an implied valuation of over $30 billion. We believe that within a market cycle (4 years), SBET and BMNR have the potential to outperform Lido in aggregate size, driven by the speed, depth, and reflexivity of traditional financial capital flows, as demonstrated by MicroStrategy's growth strategy. To add another background data, Bitcoin's market capitalization is $2.47 trillion, while Ethereum's is $428 billion (17-20% of Bitcoin). If SBET and BMNR reach 20% of MicroStrategy's $120 billion valuation, the long-term value will be about $24 billion. Currently, the two are valued at less than $8 billion, and there is still huge room for growth as the ETH treasury matures. epilogue The emergence and development of digital asset treasury is a major evolution of the further integration of the crypto market with traditional finance, and the ETH treasury is becoming a powerful new force. Ethereum's unique advantages, including higher convertible volatility and native yield from preferred shares, create differentiated growth space for treasury companies, and its ability to promote validator decentralization and stimulate competition further differentiates it from the BTC treasury ecosystem. The combination of MicroStrategy's capital efficiency and ETH's embedded yield unlocks significant value and pushes the on-chain economy deeper into traditional finance. The rapid expansion and growing institutional interest bode well for a transformative impact on crypto and capital markets in the coming years.