The Revival Battle of Ethereum: Lubin Leads the $425 Million Treasury Strategy

Written by: Prathik Desai

Compiled by: Block unicorn

Preface

Two weeks ago, Ethereum co-founder and ConsenSys founder and CEO Joe Lubin announced that he would serve as the chairman of SharpLink Gaming's board and lead its $425 million Ethereum treasury strategy.

This move adds a new chapter to the revival of the world's second-largest cryptocurrency, Ethereum, which has been hovering below $3,000 for more than four months.

This move is in line with the strategy promoted by Michael Saylor, focusing on Bitcoin's financial strategy that has inspired a large number of publicly listed companies to participate in the construction of Bitcoin reserves.

In this article, we analyze whether this is one of the best opportunities for the revival of Ethereum.

Ethereum Treasury

When SharpLink Gaming announced fundraising to establish an Ethereum treasury, the market reacted quickly and clearly.

Its stock price surged more than 450% in one day, skyrocketing from $6.63 per share to over $35. Within five trading days, the stock price surged more than 17 times from $6.63. Even after the pullback, its trading price is still more than three times higher than when the increase started.

What is the reason behind this surge?

People believe that Lubin can help SharpLink replicate the success that Saylor achieved at Strategy (formerly MicroStrategy).

Ethereum allows Lubin to do at least one thing better than the Bitcoin treasury: to build an active ETH treasury that not only stores value like Bitcoin but also creates more value.

How to achieve this?

Active Vault Theory

The difference between Bitcoin and Ethereum vault strategies is significant. The logic of the Bitcoin vault is simple: buy Bitcoin, hold Bitcoin, and enjoy price appreciation. This approach is elegant and straightforward, but is essentially passive.

The treasury strategy of Ethereum is different from that of Bitcoin: most ETH tokens will be used for staking, creating what Ethereum core developer Eric Conner describes as "high beta, yield-generating ETH leverage."

Staking strategies will transform corporate treasuries from static vaults into active participants in cybersecurity.

Holding Bitcoin in Strategy does not generate any native yield, but staking ETH with SharpLink will yield at least 2% per year, while enhancing Ethereum's consensus mechanism.

Conner also mentioned that the "flywheel effect" is a key advantage of the ETH treasury.

Companies can raise cash at a price below the net asset value, purchase and pledge ETH, and then if the stock trading price exceeds the per-share value of ETH, raise more cash and repeat this process. This is a classic Strategy loop, but its super strong yield capability is not replicable by the Bitcoin treasury.

The advantages go far beyond basic staking.

Decentralized finance (DeFi) protocols offer additional yield strategies through lending, liquidity provision, and complex financial instruments that do not exist in the Bitcoin ecosystem. SharpLink is supported by DeFi-savvy companies such as ParaFi Capital and Galaxy Digital, indicating their understanding of this potential.

The vault of ETH and BTC

The initial coin offering (ICO) of Ethereum in 2014 raised $18 million. At that time, the price of ETH was between $0.30 and $0.40, laying the foundation for the Ethereum ecosystem, which is now worth over $320 billion.

SharpLink's promised $425 million is more than 20 times the funds raised in the ICO, enough to acquire over 150,000 ETH at current prices. However, this still only accounts for 0.25% of the ETH sold during the ICO (60 million ETH).

The ICO in 2014 laid the foundation for Ethereum. The current treasury strategy may validate its maturity as an institutional asset and contribute to the construction of financial infrastructure in the next decade.

Institutional Frenzy

In addition to the vault strategy, Ethereum ETFs have also continued to record inflows in the institutional channel over the past two weeks.

As of June 9, Ethereum ETFs recorded net inflows for 16 consecutive trading days, marking the second longest streak of gains since being approved in July 2024.

In the past two weeks, inflows of $281 million and $285 million were recorded, marking the best two weeks for Ethereum ETFs in four months.

BlackRock, the world's largest asset management company, has accumulated over $500 million worth of ETH in just 11 trading days. Its ETHA ETF currently manages nearly $4 billion in assets.

Bernstein analysts pointed out in a recent study that: "Over the past 20 days, ETH ETF inflows have reached $815 million, with annual net inflows turning positive at $658 million."

CoinShares stated that the inflow of $1.5 billion into ETFs over the past seven weeks marks a "significant recovery in investor sentiment."

Ethereum-based products currently account for 10.5% of the total assets under management in crypto ETPs.

"The narrative surrounding the value accumulation of public blockchain networks is at a critical turning point," and this "is beginning to reflect in investors' interest in ETH ETF inflows," Bernstein stated.

Our viewpoint

Lubin's actions at SharpLink not only had a direct financial impact but also marked the evolution of Ethereum from a speculative technology to an important financial infrastructure.

As payment giants like Visa and Mastercard develop stablecoin strategies, as Coinbase builds merchant payment systems, and as Robinhood plans to launch tokenized assets - they are essentially betting on the Ethereum ecosystem.

This may be the "key turning point" referred to by Bernstein, which is the moment when the blockchain network undergoes a transformation.

The timing seems to be well thought out.

As stablecoin legislation advances in Congress and regulatory clarity emerges, institutional investors finally have the confidence to allocate within the necessary framework. This week, Circle successfully went public with a closing price 160% higher than its listing price, showcasing Wall Street's enthusiasm for investing in crypto infrastructure.

For Ethereum, the adoption of corporate treasuries, the inflow of institutional ETFs, and the convergence of regulatory clarity have created conditions that did not exist in previous cycles.

If SharpLink's experiment is successful, it could trigger a "domino effect" in corporate adoption, similar to what Saylor's Strategy has done for Bitcoin. Considering that the similar risk model for Bitcoin has been proven to be manageable, the adoption of Ethereum may happen faster and on a larger scale.

Apart from corporate adoption, if BlackRock continues to increase its holdings and regulatory clarity is consolidated as expected, then Lubin's actions may be remembered as the first step for Ethereum towards institutional chapters.