Author: 137Labs

1. Why is a seemingly ordinary fund collaboration attracting the attention of the entire crypto market?

In May 2026, Galaxy Digital and SharpLink announced the establishment of an institutional-level on-chain yield fund with a scale of 125 million dollars. After the news was released, although the size of this funding cannot be considered a historical large fund in the crypto industry, the level of discussion in the market has clearly exceeded that of many larger financing events.

Because what truly matters is not the "125 million dollars" itself, but:

Wall Street institutional capital is, for the first time, systematically introducing corporate-level ETH Treasury into the DeFi yield system.

In the past few years, the crypto industry has experienced several completely different stages of development.

From 2020 to 2021, it was the "retail finance experiment" phase of DeFi Summer. Many protocols attracted funds with extremely high APYs, and the core logic of the market was:

· High yield

· High leverage

· High risk

· High volatility

DeFi during that period resembled a carnival of on-chain capital.

However, after 2022, with the collapse of Terra, the FTX explosion, the liquidation of Three Arrows Capital, and several major protocol vulnerability incidents, the entire market's understanding of DeFi began to change.

Institutions gradually realized:

DeFi is not a simple "high-yield casino"; its truly important aspect is that:

It created an on-chain capital market independent of the traditional banking system.

After 2025, as ETH ETFs, stablecoins, RWAs, restaking, L2 networks, and the on-chain bond market mature, institutions began to reassess a question:

If future financial activities increasingly migrate on-chain, will the on-chain yield market become a new global capital allocation system?

The collaboration between Galaxy and SharpLink essentially emerged in this context.

This is not as simple as a listed company "buying coins."

It represents:

Corporate Treasury starting from "passively holding tokens" to "actively managing on-chain assets."

This is also an important sign of the crypto industry truly entering the next stage.

SharpLink: A company that is becoming the "ETH version of MicroStrategy"

In this collaboration, SharpLink's identity is highly symbolic.

Many media outlets have begun to refer to SharpLink as:

"ETH Treasury Company"

The logic behind this is extremely similar to Strategy (formerly MicroStrategy)'s BTC model.

In the past few years, Strategy has successfully promoted the formation of a new understanding in capital markets by continuously increasing its BTC holdings:

Listed companies can treat Bitcoin as a reserve asset.

SharpLink is attempting to replicate this logic to ETH.

However, ETH and BTC are fundamentally different.

BTC resembles a form of digital gold, and its core value comes from:

· Scarcity

· Inflation resistance

· Long-term store of value

In contrast, ETH possesses more complex economic attributes.

It is both:

· Blockchain network fuel

· Settlement asset for smart contracts

· On-chain collateral

· Core asset of the DeFi interest rate market

At the same time, it is also a type of:

Underlying capital of internet finance that continuously generates yields.

That is why more and more people are starting to see ETH as:

"The internet treasury bond of the digital age."

Previously, SharpLink mainly obtained yields through ETH staking.

However, with increasing industry competition, relying solely on staking has become insufficient to meet the capital market's demands for yield and capital efficiency.

This is also why SharpLink has begun to explore:

· More proactive on-chain yield management

· More complex capital strategies

· A more institutionalized DeFi yield system

Essentially, SharpLink is transitioning from:

"A company holding ETH"

to:

"A company managing ETH capital efficiency."

This may also become the development direction for many ETH Treasury companies in the future.

The role of Galaxy: Bringing Wall Street risk management into DeFi

If SharpLink represents "enterprise on-chain capital," then Galaxy represents:

Wall Street attempting to take over the asset management layer of DeFi.

The greatest significance of Galaxy is not the scale of funds, but:

It is trying to embed institutional risk management systems from traditional finance into the on-chain yield market.

Over the past few years, the biggest problem of DeFi has never been insufficient yield.

On the contrary, the biggest problem of DeFi has always been:

Unsustainable yields, unquantifiable risks.

For retail investors, high APY is inherently attractive.

But for institutions, what truly matters is:

· Risk exposure

· Volatility control

· Counterparty risk

· Capital liquidity

· Asset transparency

· Compliance

What Galaxy aims to do is gradually transform DeFi from a "retail high-yield experiment" into:

A on-chain financial market capable of accommodating institutional-level capital allocation.

Therefore, the significance of this fund is not merely for "generating yields."

More crucially:

Galaxy is attempting to establish a new industry role:

On-chain Asset Manager

This future role may resemble traditional finance entities such as:

· BlackRock

· Apollo

· Ares

· Bridgewater

But what they manage is not traditional bonds and stocks, but:

· ETH Treasury

· Stablecoin liquidity pools

· On-chain liquidity

· Restaking assets

· RWA yield assets

· DeFi interest rate strategies

This implies that:

The industry structure of DeFi is undergoing changes.

Previously, the core players in DeFi were:

· Protocol developers

· DAOs

· VCs

· Retail LPs

In the future, we may gradually see the emergence of:

· On-chain asset management companies

· On-chain prime brokers

· On-chain risk management platforms

· Institutional liquidity providers

· Corporate Treasury management platforms

Galaxy is essentially seizing:

The "institutional-level on-chain asset management entry point."

Why are institutions now starting to embrace DeFi again?

This is the most worth analyzing part of the entire event.

Because after experiencing the major crash from 2022 to 2024, many believed:

Institutions may never truly enter DeFi.

But now the market environment has changed dramatically.

1. DeFi has entered the "cash flow era"

The DeFi Summer of 2020 was essentially:

The "liquidity mining era."

Most yields came from:

· Token incentives

· Inflation releases

· High leverage

But now, the industry is transitioning into:

The "real yield era."

Currently, many on-chain yields have started to possess:

· Government bond yield logic

· Stable cash flow

· Real fee income

· Sustainable interest rate markets

For example:

· Stablecoin lending rates

· On-chain government bond yields

· ETH restaking yields

· RWA income pools

· DEX fee sharing

This means:

DeFi is no longer just a "speculative tool," but is gradually acquiring attributes of financial infrastructure.

2. The stablecoin track has begun to institutionalize

Stablecoins are essentially the true foundation of institutional DeFi.

As institutions enter the on-chain world, their first demand is not speculation, but:

Dollar liquidity.

Today, the stablecoin market has evolved from being a "medium for crypto trading" to:

· An on-chain dollar system

· A global payment network

· An internet currency layer

· An on-chain short-term government bond market

Products like USDC, USDT, USDY, and BUIDL are essentially promoting:

"Financialization of on-chain dollars."

Once the stablecoin market matures, institutions will naturally begin to focus on:

· Stable yields

· On-chain interest rates

· Capital management

· Treasury yield optimization

The fund created by Galaxy and SharpLink is aptly positioned at:

The intersection of stablecoin financialization and ETH yield generation.

3. Restaking is reconstructing the ETH interest rate system

Developments in the restaking track such as EigenLayer are also significant reasons why institutions are re-examining ETH.

Previously, ETH yields only consisted of:

· Staking APR

But now, new yields are emerging:

· Restaking yields

· AVS yields

· Re-collateralization yield layers

· On-chain security service markets

This indicates that:

ETH is gradually forming a system akin to "internet benchmark interest rates."

Once ETH becomes a core collateral in the on-chain financial system, then:

Yield management, risk management, and capital efficiency optimization around ETH will create a massive industry.

What SharpLink and Galaxy are currently doing is, in fact:

Strategically positioning themselves as institutional entry points into the "ETH interest rate market."

Why is this potentially an upgrade to the ETH narrative?

In recent years, BTC has established a very mature institutional narrative:

Digital gold.

However, the narrative of ETH has always been unclear.

Some see it as:

· Tech stocks

· Web3 oil

· Gas Token

· Smart contract platform

But these narratives are insufficient for traditional capital to establish a long-term valuation system.

Now, the market is beginning to form a new understanding:

ETH is "productive capital" within the on-chain financial system.

This is a crucial shift.

Because once ETH is regarded by institutions as:

· Yield-bearing asset

· Productive reserve

· On-chain collateral

· Internet capital asset

Then its valuation logic will undergo significant changes.

In the future, the value of ETH may no longer be merely about:

"Expectation of price increase."

But rather:

· On-chain cash flow

· Network interest rates

· DeFi capital efficiency

· Scale of on-chain financial activities

This will begin to show increasing similarities with traditional finance involving:

· Government bonds

· Interbank interest rate markets

· Money market funds

The collaboration between SharpLink and Galaxy fundamentally aims to promote:

ETH’s upgrade from "crypto asset" to "on-chain financial underlying asset."

Risks still exist: Institutionalized DeFi does not equal absolute safety

Of course, the market will not automatically become safe just because institutions enter.

In fact:

The biggest problem with institutionalized DeFi is exactly that "systemic risk may be further amplified."

Previously, the risks in DeFi were mainly:

· Single protocol risk

· Single project risk

However, in the future, if a large amount of institutional capital enters the on-chain world, then:

Risks may evolve into:

· Liquidity systemic risks

· On-chain leverage risks

· Large-scale liquidation risks

· Cross-protocol risk contagion

This is actually quite similar to the development path of traditional finance.

The essence of the 2008 financial crisis was also:

Excessive financialization and risk embedding.

DeFi is gradually moving toward:

A more complex capital structure.

For example, in the future, we may see:

· On-chain structured products

· On-chain CDS

· On-chain interest rate swaps

· DeFi credit markets

· Tokenized hedge funds

These phenomena will greatly improve capital efficiency, but at the same time, will increase systemic complexity.

Therefore, the true importance of institutions like Galaxy in the future may not just be "generating yield," but:

Becoming the risk management layer of the on-chain world.

What does this really mean?

From a more macro perspective, the collaboration between Galaxy and SharpLink actually represents:

The global financial market is seriously beginning to construct "on-chain capital markets" for the first time.

For decades, the core of the traditional financial system has always revolved around:

· Banking system

· Government bond system

· Federal Reserve interest rates

· SWIFT settlement network

What blockchain truly aims to create is not just a new asset.

What it genuinely seeks to establish is:

A complete native internet financial system.

Now this system has begun to take shape:

· Stablecoins = on-chain US dollars

· ETH = on-chain reserve assets

· DeFi = on-chain banking system

· Restaking = on-chain security market

· RWA = on-chain bond market

· L2 = on-chain settlement network

The fund created by Galaxy and SharpLink is essentially:

The first batch of serious experiments attempting to integrate traditional institutional capital into this system on a large scale.

Therefore, the truly important aspect of this matter has never been the "125 million dollars."

But:

Institutional capital has already begun to believe:

In the coming decades, the on-chain financial market may become an important part of the global financial system.

And this may just be the beginning of the crypto industry truly entering a mature stage.

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