Original title: Exploring the On-Chain Effects of ETH Treasury Companies
Original author: Tanay Ved, Coin Metrics
Original text compiled by: Saoirse, Foresight News
Key Points
· Focused on Ethereum, digital asset reserves are rapidly expanding, having accumulated 2.2 million ETH (accounting for 1.8% of total supply) in just two months, resulting in a supply-demand imbalance.
· These funds are adopting active on-chain strategies, planning to allocate funds through staking and DeFi, while enhancing yields and providing support for network security and liquidity.
· Although still in the accumulation phase, higher on-chain participation may increase Ethereum's liquidity and security while amplifying its exposure to corporate funding risks.
The Rise of Digital Asset Reserves
Digital Asset Treasuries (DATs), or publicly traded companies holding crypto assets like Bitcoin or Ethereum on their balance sheets, have become a new market entry channel. The launch of spot ETFs in 2024 has released demand from investors who previously could not hold BTC and ETH through direct custody. Similarly, digital asset treasuries provide investors with access to these assets and their ecosystems through publicly traded stocks, along with the ability to strategically raise and allocate funds.
We previously conducted an in-depth analysis of Michael Saylor's (strategy manual), through which he raised funds by issuing stocks and convertible bonds, cumulatively accumulating over 628,000 Bitcoins (accounting for 2.9% of Bitcoin's total supply). Many companies around the world are following suit, from Marathon Digital to Japan's Metaplanet, all providing shareholders with amplified or 'leveraged' Bitcoin exposure. Today, this model is expanding into other ecosystems, with many entities competing to accumulate ETH within their corporate treasury reserves.
While the goal of increasing shareholder exposure to the underlying assets remains unchanged, there is an essential distinction between Ethereum reserves and Bitcoin reserves: the former can leverage Ethereum's staking and DeFi ecosystem. This creates potential for enhancing returns through the effective allocation of Ethereum's native yields and on-chain capital. In this article, we will analyze the dynamic impact of Ethereum reserves on Ethereum's supply and explore the potential effects on the network following the entry of these large institutions onto the chain.
Supply Dynamics: The Race for 5% of the Supply
Since July of this year, Ethereum's digital asset reserves have reached a cumulative total of 2.2 million ETH, accounting for nearly 1.8% of the current total ETH supply. There are currently five major participants in this area, raising funds through equity financing methods such as public offerings or private investment in public equity (PIPE), to allocate capital and enhance the value of their holdings. As of August 11, the holdings of these entities are as follows:
· Bitmine Immersion Technologies: 1.15 million ETH, worth approximately $4.8 billion
· SharpLink Gaming: 521,000 ETH, worth approximately $2.2 billion
· The Ether Machine: 345,000 ETH, worth approximately $1.4 billion
· Bit Digital: 120,000 ETH, worth approximately $503 million
· BTCS Inc.: 70,000 ETH, worth approximately $293 million
Bitmine Immersion Technologies is currently the largest corporate holder of ETH, with a holding accounting for 0.95% of the total ETH supply, and it is rapidly moving towards the established goal of accumulating 5% of the circulating supply of ETH. As market conditions change, these companies are able to build reserves on a favorable cost basis, intensifying the competition for a larger share of ETH.
Source: Coin Metrics Network Data Pro and public documents (as of August 11, 2025)
Considering Ethereum's issuance dynamics, this trend is even more pronounced. Ethereum's supply is regulated by the PoS mechanism, with newly issued ETH allocated to validators, while some transaction fees are burned, causing the net issuance to fluctuate between negative (deflationary) and positive (inflationary).
Since the 'Merge' in September 2022, Ethereum has issued a total of 2.44 million ETH and burned 1.98 million ETH, resulting in a net issuance of 454,000 ETH. Since July of this year, Ethereum treasury companies have cumulatively accumulated 2.2 million ETH, far exceeding the net new issuance during the same period. Bitcoin's supply cap and halving mechanism directly reduce its new issuance, while Ethereum's supply is dynamic and currently in an inflationary state. Given that Ethereum's market cap is about 1/4.5 of Bitcoin's, the scale and speed of recent demand are particularly noteworthy.
Source: Coin Metrics Network Data Pro and public documents
Considering the increase in funds flowing into Ethereum ETFs in recent months, this supply-demand imbalance is even more pronounced. Overall, besides the 29% ETH staked in the consensus layer and the 8.9% ETH held in other smart contracts, these tools are continuously absorbing Ethereum's freely circulating supply of 107.2 million ETH (market available supply). Therefore, the ongoing accumulation of reserves and ETFs could amplify price sensitivity to new demand.
Ecosystem Impact: Staking, DeFi, and On-chain Activities
Although most ETH treasuries are still in the accumulation phase, some of their funds may eventually enter the chain. Unlike the relatively passive approach of Bitcoin treasuries, these companies plan to leverage Ethereum's staking and DeFi infrastructure to enhance risk-adjusted returns and effectively utilize their holdings. This shift is already underway: SharpLink Gaming has staked the majority of its held assets, BTCS Inc. is earning through Rocket Pool, and other companies like The Ether Machine and ETHZilla are also preparing for more aggressive on-chain management.
Source: Coin Metrics Network Data Pro
Currently, Ethereum can provide a nominal yield of 2.95% and a real (inflation-adjusted) yield of 2.15% through staking rewards for network security. This can not only bring price appreciation to the underlying assets but also provide stable income streams for treasury companies. For instance, if 30% of the 2.2 million ETH currently held by treasury companies is staked at the current nominal yield of about 3%, and ETH is priced at $4,000, it could generate approximately $79 million in annual income. Although a large influx of funds into staking may depress yields, the impact is relatively mild since Ethereum’s reward rate gradually decreases with the increase in total staked amount.
Corporate treasuries primarily participate in two ways: first, by operating their own validation nodes, and second, by utilizing liquid staking protocols. The U.S. SEC has clarified that liquid staking protocols are not considered securities, allowing companies to stake through third-party institutions like Lido, Coinbase, or RocketPool and receive 'liquidity' certificate tokens as rewards.
Source: Coin Metrics ATLAS
Despite additional risks, tokens like Lido's stETH are widely used in DeFi for staking and lending, or to obtain extra returns in a capital-efficient manner based on the benchmark staking annual yield. For example, in Aave v3, ETH and liquid staking tokens like stETH constitute a large pool of available liquidity (the supply of assets available for lending). This liquidity pool has currently increased to about 1.1 million ETH, and the addition of reserve funds could further expand the pool size, enhancing market liquidity while increasing yields.
Source: Coin Metrics Network Data Pro
Although the transaction volume on the Ethereum mainnet has now surpassed historical records (1.7 to 1.9 million transactions daily), recent gas limit increases and block capacity expansions have alleviated network congestion and diverted some activities to Layer 2, keeping total fees at low levels for years. If treasury company funds enter the chain on a large scale, the high-value transactions on Ethereum L1 may drive growth in total demand for block space and fee revenue, potentially creating a positive feedback loop between reserve activities, liquidity, and on-chain usage.
Linking corporate treasury performance with on-chain health
As the on-chain layout of listed Ethereum treasury companies continues to expand, their financial performance will increasingly impact the long-term health of the Ethereum network, linking off-chain corporate performance with potential on-chain effects. Large-scale long-term holdings can reduce circulating supply, enhance recognition, and increase on-chain liquidity, but centralization, leverage, and operational risks mean that corporate-level issues may be transmitted to the network.
The Impact of Large ETH Reserves on-chain
Although these are network-level considerations, corporate treasuries themselves are also influenced by market forces and investor sentiment. A strong balance sheet and sustained investor confidence can allow reserves to expand holdings and increase participation. Conversely, a significant drop in the price of the underlying assets, tightening liquidity, or excessive leverage may lead to ETH sell-offs or reduced on-chain activity.
Indicators Related to Treasury Company Performance
The indicators describe price volatility tracking company stock prices as well as the prices of the underlying assets. A significant drop may pressure the treasury to sell ETH holdings, thereby affecting on-chain liquidity and market stability. Net Asset Value (NAV) measures the total value of all company assets. mNAV (market asset net value) is the ratio of market capitalization to the value of held ETH. A significant drop in NAV may limit the company's ability to retain ETH on-chain. The equity premium/discount compares the market price of the stock to its net asset value. A premium indicates that the market values the company higher than the underlying ETH (possibly due to additional utility or growth potential). A persistent discount may indicate investor skepticism, which could affect treasury management and willingness to hold ETH long-term. The amount of ETH held per share is the number of ETH held per circulating share.
By tracking the network-level impact and the financial health of these companies, market participants can better predict how corporate treasury behaviors may influence Ethereum's supply dynamics and overall network health.
Conclusion
The rapid rise of corporate Ethereum treasuries reflects Ethereum's appeal as a reserve asset and on-chain income source. Its increasing influence may enhance liquidity and activate network activities, but it also comes with risks related to leverage, financing, and capital management. As off-chain factors (such as stock performance and debt repayment) become more closely linked to on-chain activities, these factors may quickly impact the chain. As these institutions scale, tracking their balance sheet health and on-chain activities will be key to understanding their impact.
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