Joseph Chalom, co-CEO of Sharplink Gaming, pointed out that companies that buy and hold Ethereum (ETH) in pursuit of maximum returns will face significantly higher risks when the market declines.
Chalom stated in an interview with Bankless on Monday, "Just like in traditional finance, there will be those who want to capture the last 100 basis points of return and think it is risk-free."
He mentioned that while there are ways to achieve double-digit yields on Ethereum (ETH), it comes with substantial risks.
He indicated that this involves credit risk, counterparty risk, duration risk, and smart contract risk, adding that companies trying to catch up also face real risks.
"I think the biggest issue is that companies that are far behind will take on unwise risks."
He noted that the industry could be affected by some companies engaging in unwise practices, such as how they raise funds or how they differentiate themselves through yield generation from ETH holdings.
He said, "If you overextend yourself and the market goes down, how do you ensure your callback structure can be established at Ethereum's peak price?"
Sharplink Gaming is the second-largest publicly held company of ETH, holding $3.6 billion worth, second only to BitMine Immersion Technologies, which holds $8.03 billion.
According to StrategicETHReserve data, as of the time of writing, Ethereum treasury companies collectively hold approximately 3.6 million ETH, valued at about $15.46 billion.
Milo's CEO and former Goldman Sachs analyst Josip Rupena recently told Cointelegraph that the risks posed by crypto treasury companies are similar to those of collateralized debt obligations, mortgage-backed securities, and other types of debt that triggered the 2008 financial crisis.
On the other hand, Bitwise's Chief Investment Officer Matt Hougan recently stated that Ethereum treasury and holding companies have solved the narrative problem of Ethereum by packaging digital assets in a way that traditional investors can understand, attracting more capital and accelerating adoption.
Chalom stated, "The biggest advantage of Ethereum treasury companies is their almost unlimited scalability." According to CoinMarketCap data, as of the time of writing, the price of Ethereum is $4,327.
Recently, concerns about the crypto treasury model have intensified.
Glassnode's Chief Analyst James Check posted on X platform on July 5, stating that his "intuition is that the lifecycle of treasury-style Bitcoin strategies is much shorter than most people expect."
On June 29, venture capital firm Breed stated that only a very few Bitcoin treasury companies can withstand the test of time and avoid falling into a net asset value-driven "death spiral," which would affect Bitcoin (BTC) holding companies.
Related: Gemini files S-1 application for IPO, plans to issue 16.7 million shares of GEMI stock on Nasdaq
Original article: “Sharplink Gaming CEO: Ethereum (ETH) treasury companies chasing yields face the greatest risks”
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