Original Author: Ethereum Core Developer Eric Conner
Introduction: The Rise of the ETH Treasury Model
On July 17, 2025, veteran Ethereum observer Eric Conner posted on the X platform, pointing out that the ETH treasury strategy is rapidly becoming a focal point of market attention. He wrote, "There has been a lot of recent discussion about the ETH treasury strategy, and it is worth carefully unpacking its meaning and background." In his view, this trend represents a paradigm shift in corporate financial strategies—more and more publicly traded companies are mimicking MicroStrategy's path, starting to raise funds to purchase ETH and earn returns through staking. These companies are not only attracted to ETH's profitability and deflationary characteristics but are also exploring a new type of capital structure and growth model with on-chain assets.
This article will systematically break down the underlying logic, operational pathways, potential risks, and development prospects of the ETH treasury strategy.
Why ETH? The Underlying Logic of Treasury Preferences
Conner identified four core reasons why ETH is favored by treasuries:
- Staking yields of 3%-5%;
- Deflationary mechanism (EIP-1559 burning offsets issuance);
- GAAP standards allow for fair value accounting;
- ETH is the primary collateral asset in DeFi.
He pointed out that Ethereum's proof-of-stake mechanism provides stable annualized returns, while the burning mechanism introduced by EIP-1559 creates deflationary expectations, enhancing ETH's role as a "store of value." Additionally, the latest revisions to U.S. GAAP allow companies to account for ETH at market value, reducing the risk of financial reporting distortion. Finally, ETH's status as collateral in DeFi is nearly irreplaceable, further strengthening its asset hierarchy's security and liquidity.
Operational Pathways: How Companies Deploy ETH Treasury Strategies
Conner succinctly summarized the execution path for these companies:
"The typical model is: raise funds through ATM or PIPE models, buy ETH OTC, stake it (either self-held or through Lido, Rocket Pool, custodians), coupled with PR promotion, cycle staking returns, or use staked assets as collateral for loans to reinvest."
This strategy combines capital market financing mechanisms with the asset yield logic native to crypto, forming a highly financialized, on-chain driven "reinvestment flywheel": companies first raise funds to purchase ETH, use staking to earn returns, and then amplify their asset pool through reinvestment or borrowing, creating a growth cycle. At the same time, promoting this layout externally may also attract additional attention and premiums from the secondary market.
Risk Exposure: Price Volatility and Regulatory Compliance
Conner did not overlook the potential risks involved:
"Key risks include: severe price volatility of ETH, penalties for validating nodes (slashing), potential triggering of SEC's investment company designation, and the need to wait 7 days for staking unlock, during which there is a lack of flexibility."
The price instability of ETH poses a significant challenge for companies holding it in treasury form; the "penalty slashing" in the staking mechanism may also lead to actual asset losses. Furthermore, if companies overly rely on investment-type returns, they may cross the regulatory red line of "investment company" under U.S. securities law. Compared to the liquidity of the over-the-counter market, staked assets require a 7-day wait to exit, which also weakens short-term liquidity management capabilities.
Who is Taking the Lead? Overview of Leading Treasury Companies
As of July 2025, Conner provided a list of publicly traded companies currently leading this strategy:
- SharpLink (SBET): Holds 285,000 ETH (staking rate as high as 99%);
- BitMine (BMNR): 163,000 ETH;
- BitDigital (BTBT): 101,000 ETH;
- BTCS: 29,000 ETH.
These companies collectively control over 600,000 ETH, forming a substantial on-chain treasury cluster. Among them, SharpLink leads the industry trend with its high staking rate and largest volume, becoming one of the most representative model companies for "Ethereum treasuryization."
Reinvestment Strategy: From Staking Rewards to Leverage Operations
Conner noted that most companies will directly reinvest staking rewards to further increase their ETH holdings. "Some companies use staked ETH (such as stETH) as collateral to borrow stablecoins for operational turnover or leverage allocation." This strategy can enhance capital efficiency and provide companies with more flexible financial maneuvering space, but it also introduces new variables such as interest rate fluctuations and liquidation risks.
Opportunity Size: How Much Potential is There for Institutional ETH Allocation?
Conner emphasized the growth potential of the ETH treasury strategy with a set of comparative data:
"The total cash reserves of the S&P 500 are approximately $22 trillion. If only 1% were allocated to ETH, it would amount to 65 million ETH, accounting for more than half of the current total supply. In reality, current corporate treasury allocations are still less than 0.5% of this size."
In other words, the penetration rate of the ETH treasury strategy is still in its early stages, and once traditional companies or institutions increase their allocation efforts, it could have a structural impact on the price and financial status of ETH from a supply-demand perspective.
Key Variables for Investors to Monitor
Conner reminded investors to focus on the following observation points:
- Dilution calculations;
- The security and compliance of staking service providers;
- How the company's board participates in ETH governance voting;
- Whether L2 layer restaking strategies are included in future plans.
These factors will not only affect the company's financial performance but also influence its actual impact in Ethereum network governance and ecology.
Future Outlook
Conner predicted that as the financial attributes of ETH become clearer, more industries will follow this strategy:
"In the future, not only miners but also some SaaS companies and even biotech firms may begin to adopt on-chain treasury configurations due to ETH's financial advantages and yield properties."
The ETH treasury strategy is gradually moving from a marginal experiment to mainstream consensus and may even reshape the structural logic of corporate balance sheets.
Conclusion: A Revolution in Treasury Structure
The ETH treasury strategy represents not only a change in asset allocation logic but also an active absorption of the native characteristics of crypto into corporate financial structures. It integrates the transparency, programmability, and yield of on-chain assets, leading a structural transformation "from crypto-native to financial mainstream."
As Conner humorously suggested, "Feel free to forward this article to the CFO who still calls ETH an 'internet magic coin.'"
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