Ethereum Treasuries Soar As Enterprises Bet On DeFi’s Economic Engine

Michael Saylor pioneered the idea of crypto treasuries at Strategy, formerly known as MicroStrategy, investing billions of dollars in order to gain exposure to the world’s top digital asset, Bitcoin. 

These days, dozens of companies have followed his lead, building up Bitcoin-centric crypto treasuries, and they continue to stockpile the asset. However, some are now going further, charting a new course by amassing huge amounts of Ether, the economic engine that powers the Ethereum ecosystem and the vast majority of decentralized finance. 

Recent data from strategicethreserve.xyz shows that ETH is not just for crypto whales, DeFi traders and NFT collectors. Increasingly, a growing number of enterprises are stacking up on Ether too, and the value of those ETH treasuries recently surpassed $10 billion, marking a key milestone for institutional adoption of the asset. 

According to that report, 64 companies that now hold at least 100 ETH account for 2.26% of the world’s total supply, valued at $10.58 billion. Since the report was published, that figure has grown to more than $12.9 billion, in a clear sign that Ethereum is no longer seen as just a platform for smart contracts and DeFi natives, but instead evolving to become a vital cog in the world of digital finance. 

Why Do Companies Want ETH?

The success of Ethereum’s transition to a proof-of-stake consensus mechanism has helped to kick start a renewed wave of growth in the DeFi economy, while the growing optimism and acceptance of Bitcoin is another energizing factor. Ethereum’s native currency is now seen as a viable alternative to BTC as a long-term store of value, with the added benefit that it can also be staked or invested in DeFi protocols to generate yield. 

As Ethereum’s ecosystem continues to improve with concepts like Layer-2 scaling networks that improve transaction efficiency, and tokenization enabling new classes of assets to be brought on-chain, organizations are beginning to see ETH as a strategic investment and a more useful asset than traditional fiat.  

The adoption of Ethereum treasuries is beginning to mirror the corporate growth of Bitcoin that has gathered momentum in recent years, and has been supported by favorable regulatory changes. The most recent has been the U.S. Securities and Exchange Commission’s decision to approve in-kind redemptions for crypto exchange-traded funds, which means authorized institutions can exchange BTC and ETH directly for shares in ETFs, instead of using cash. With this move, the structure of crypto ETFs is aligned more closely with traditional markets, providing tax efficiency benefits. 

Elsewhere, BlackRock recently announced it has been approved by the SEC to support staking within its ETH ETF, paving the way for institutional investors in those funds to earn additional yield on those investments. 

Lingling Jiang, a partner at the crypto-focused investment firm DWF Labs, said companies are starting to treat Ethereum as a key piece of digital financial infrastructure. “Seeing ETH treasuries cross $10 billion is a big moment,” he added. “It is not just a bet on price. [Ethereum] is something you can actually build on and earn from. It reminds me of how early internet companies invested in the web before it went mainstream.” 

Who’s Stacking Up? 

According to strategicethreserve.xyz’s leaderboard, the biggest publicly-traded entity holding Ether is Bitmine Immersion Tech, which has amassed an incredible 833,100 ETH that’s valued at approximately $3.54 billion. 

In second place, Sharplink Gaming holds 521,900 ETH, valued at around $2.2 billion, followed by The Ether Machine in third place with a hefty holding of 345,400 ETH, worth $1.47 billion. 

The Ethereum Foundation, which is the decentralized organization responsible for Ethereum’s development and was once the biggest holder of Ether, has now been pushed down to fourth place. Its stash numbers 236,600 ETH, valued at $988.3 million. PulseChain Sac rounds out the top five, with an estimated 166,300 ETH worth $706.6 million. 

There are many other publicly-traded companies on the list, though, with the likes of Coinbase, Bit Digital, Coinbase and BTCS Inc. holding stashes worth $581.2 million, $511.2 million and $297.5 million, respectively. Other major players include Gamesquare Holdings, ETH Strategy, Intchains Group, BTC Digital and Centaurus Energy. 

There’s also a bunch of crypto natives on the list, such as Mantle, Golem Foundation, Gnosis DAO, Lido, Arbitrum, Optimism and Aave DAO, as well as the U.S. government, which holds $254.8 million worth of ETH. 

Vitalik Gives Full Endorsement

Ethereum’s co-founder and leading ambassador Vitalik Buterin hailed the growing prominence of Ethereum treasuries during a podcast last week, saying they provide options for institutions looking for more flexible investment vehicles. 

“The social aspect of coordinating around ETH just being an asset that companies can have as part of their treasury is good and valuable,” Vitalik said. “Having different vehicles for people to have access to ETH, which is, I think, one of the reasons why people are buying into treasury companies instead of just ‘hodling’ ETH directly, is also good.”

On the other hand, Vitalik warned institutions against excessive leverage, saying that it could backfire and create a scenario where forced liquidations might cascade into spiralling price losses.

“If you woke me up three years from now and told me that treasuries led to the downfall of ETH, my guess would be that somehow they turned it into an overleveraged game,” he said, before adding that he’s optimistic that investors will be able to avoid this. 

What’s Next For Ethereum?

With more corporations adding ETH to their balance sheets, most analysts agree this is a very bullish signal regarding its long-term value. As more institutions buy and hold ETH, it reduces the asset’s circulating supply, putting upward pressure on its price. At the same time, such activity strengthens Ethereum’s legitimacy among traditional financial players, and can potentially accelerate its adoption as a mainstream financial asset. 

That’s why there’s a lot of excitement about ETH treasuries surpassing the $10 billion milestone, as it shows there is growing belief among organizations regarding not only its value, but the underlying technology, the utility of Ether, and its vital role as a tool for DeFi. 

“Ethereum is rapidly becoming a serious part of the modern financial stack,” Jiang said. 

Since the report, the price of ETH has continued to surge, surpassing $4,231 as of August 10, representing a gain of more than 43% in the last 30 days.