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 platform X, pointing out that the ETH treasury strategy is rapidly becoming a market focus. He wrote: "There has been a lot of discussion about the ETH treasury strategy recently, and it is worth carefully analyzing 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 obtaining returns through staking. These companies are not only attracted to ETH's yield and deflationary characteristics but are also exploring a new type of capital structure and growth model with on-chain assets.
This article will systematically dismantle the underlying logic, operational pathways, potential risks, and development prospects of the ETH treasury strategy.
Why ETH? The underlying logic of treasury preferences
Conner presented four core reasons why ETH is favored by treasuries:
· Staking yield is between 3%-5%;
· Deflationary mechanism (EIP-1559 burn offsets issuance);
· GAAP guidelines allow for fair value accounting;
· ETH is the primary collateral asset in DeFi.
He indicated that Ethereum’s proof-of-stake mechanism provides stable annual returns, while the burn mechanism introduced by EIP-1559 brings deflationary expectations, enhancing ETH's role as a 'store of value.' Additionally, the latest revisions of US GAAP allow companies to account for ETH at market value, reducing the risk of financial reporting distortions. Finally, ETH's status as collateral in DeFi is almost irreplaceable, further strengthening its asset hierarchy's security and liquidity.
Operational path: How companies deploy ETH treasury strategies
Conner succinctly summarized the execution path of these companies:
The typical model is: raise funds through ATM or PIPE models, buy ETH over the counter, stake it (self-held or through Lido, Rocket Pool, custodians), combine with PR promotions, cyclically stake rewards, or collateralize staked assets to borrow and reinvest.
This strategy integrates the financing mechanisms of capital markets with the asset yield logic of crypto-native assets, forming a highly financialized, on-chain driven 'reinvestment flywheel': companies first raise funds to purchase ETH, use staking to obtain returns, and then amplify the asset pool through reinvestment or borrowing, creating a growth cycle. Additionally, by publicly promoting this layout, they may also gain additional attention and premiums in the secondary market.
Risk exposure: Price volatility and regulatory compliance
Conner has not overlooked the potential risks involved:
Key risks include: severe price fluctuations of ETH, penalties for validating nodes (slashing), potential triggering of SEC's investment company designation, and the need to wait 7 days for staking unlocks, during which there is a lack of flexibility.
The price volatility of ETH poses a significant challenge for companies holding it in treasury form; the 'punitive reduction' in the staking mechanism may also lead to actual asset losses. Moreover, if companies overly rely on investment-type returns, they may hit the regulatory red line of 'investment companies' under US securities law. Compared to the liquidity of the over-the-counter market, staked assets require a 7-day waiting period for withdrawal, which also weakens short-term liquidity scheduling ability.
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 (with a staking rate of up to 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 considerable 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 model enterprises of 'Ethereum treasuryization.'
Return reinvestment strategy: From staking rewards to leveraged operations
Conner pointed out that most companies will reinvest staking rewards directly to further increase their ETH holdings. "Some companies use staked ETH (like stETH) as collateral to borrow stablecoins for operational turnover or leverage allocation." This strategy can improve capital efficiency and provide companies with more flexible financial operations, but it also introduces new variables such as interest rate fluctuations and liquidation risks.
Opportunity size: How much potential is there for institutional allocation of ETH?
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. However, in reality, current corporate treasury allocations are less than 0.5% of this amount.
In other words, the penetration rate of the ETH treasury strategy is still in the very early stages, and once traditional companies or institutions increase their allocation efforts, it may have a structural impact on ETH's price and financial status on the supply-demand level.
Key variables that investors need to pay attention to
Conner reminds investors to focus on the following observation points:
· Dilution calculation situation;
· Security and compliance of staking service providers;
· How the company board participates in ETH governance voting;
· Whether L2 layer restaking strategy is included in future plans.
These factors not only affect the financial performance of companies but also influence their actual impact in Ethereum network governance and ecology.
Future outlook
Conner predicts 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 attributes.
The ETH treasury strategy is gradually moving from the margins of experimentation 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 crypto-native characteristics 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 jokingly suggested: "Perhaps share this article with the CFO who still says ETH is an 'internet magic coin.'"
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