Huobi Growth Academy | Digital Asset Treasury (DAT) In-Depth Research Report: A New Paradigm of Financial Innovation from On-Chain Hoarding to Equity Flywheel

1. DAT Market Overview

Digital Asset Treasury (DAT) has become a new phenomenon at the intersection of capital markets and the cryptocurrency market in recent years. Its core logic is to raise funds through public equity financing tools—such as publicly traded company stocks, convertible bonds, ATM issuances, PIPE private placements, etc.—and allocate mainstream crypto assets like Bitcoin and Ethereum on the balance sheet, thereby creating returns for shareholders through operations and revenue management. Essentially, it is "using equity financing to purchase on-chain assets," allowing traditional secondary market investors to gain leveraged, structured, and tradable exposure to crypto assets in the form of stocks. This mechanism not only bridges the gap between on-chain and traditional finance but also creates new trading logic and investment narratives in the market.

Compared to ETFs, DAT exhibits significant differences across multiple dimensions. First is the difference in liquidity pathways. The operation of ETFs relies on a cumbersome subscription and redemption mechanism, requiring authorized participants and market makers to intervene, with fund settlement often taking one to two days, whereas DAT stocks can be traded instantly in the secondary market, making their efficiency more aligned with the liquidity characteristics of on-chain assets. Second is the pricing basis. ETFs typically anchor on net asset value (NAV), with relatively limited volatility, making them more suitable for long-term allocation; DAT stocks, on the other hand, are driven by market value (MV), exhibiting greater price elasticity and higher volatility, allowing hedge funds and arbitrage institutions to exploit premiums and discounts for structured operations. The third distinction lies in the leverage structure. ETFs usually lack leverage at the fund level, while DAT companies can layer leverage through convertible bonds, ATM issuances, PIPE financing, etc., expanding their asset base and amplifying excess returns during upward cycles. Finally, there is discount protection. The premium and discount of ETFs are quickly corrected by arbitrage mechanisms, while DAT stocks, once they fall below their treasury net value, effectively allow investors to purchase underlying crypto assets at a discount, theoretically providing a form of downside protection. However, this protection is not absolute; if the discount arises from passive deleveraging, companies may sell underlying assets to repurchase stocks, potentially triggering more severe downward pressure.

Since 2025, DAT has accelerated its development in the Ethereum direction, becoming a focal point of market attention. BioNexus was the first to announce its Ethereum treasury strategy, marking the inaugural year of corporate ETH holdings; BitMine (BMNR) disclosed in August that it holds 1,523,373 ETH, becoming the world's largest Ethereum treasury with a market value reaching billions of dollars; SharpLink (SBET) has continuously increased its ETH holdings through high-frequency ATM financing, accumulating over 800,000 ETH and staking almost all of its assets, thereby directly converting Ethereum's productive asset attributes into cash flow. These companies have introduced traditional investors' funds into crypto assets through equity market financing activities, promoting the institutionalization and financialization of Ethereum prices. Meanwhile, the activity of decentralized exchanges also reflects the liquidity characteristics of this new mechanism. In August 2025, the spot trading volume on the DEX platform Hyperliquid exceeded that of Coinbase in a single day, indicating that capital flow is rapidly migrating between on-chain trading, equity markets, and derivatives markets, with DAT becoming an important node in this cross-market capital flow. Some companies have even introduced innovative methods in shareholder incentives. For example, BTCS announced that it would attract long-term investors through ETH dividends and loyalty rewards, enhancing market stickiness while countering short-selling activities through stock lending.

However, the risks associated with DAT cannot be ignored. Its model relies on a premium flywheel during bull markets: rising stock prices drive financing expansions, with the raised funds used to purchase more crypto assets, and asset appreciation further increases mNAV, stimulating stock prices to continue rising. This cycle can yield substantial returns during upward cycles but may become a risk amplifier during bear markets. When mNAV shifts from premium to discount, investor confidence in management wanes, and companies often sell underlying assets to repurchase stocks in an effort to stabilize valuations, creating a negative feedback loop. If multiple DATs simultaneously enter a discount state and take similar measures, the market may face systemic risks. Leverage is another key concern. DAT companies widely use convertible bonds, short-term financing, and equity issuances to layer leverage, amplifying returns during upward movements but potentially triggering margin calls or forced liquidations during downturns. A significant drop in on-chain asset prices could lead to concentrated sell-offs that impact the market, especially when the concentration of assets like Ethereum is high, making the risks more pronounced.

Market research has simulated possible scenarios. In the baseline scenario, companies gradually adjust positions through over-the-counter trading, exerting limited downward pressure on ETH prices; in a severe scenario, if 20%-30% of Ethereum treasury holdings are concentrated and sold within weeks, prices could drop to $2,500-$3,000; in an extreme scenario, if regulatory tightening or funding chain breaks occur, forcing over 50% of holdings to be liquidated, Ethereum prices could plummet to $1,800-$2,200. Although the probability of extreme situations is low, their potential impact should not be underestimated. Notably, DAT executives' compensation is often closely tied to stock prices, leading them to favor short-term measures when facing stock price discounts, such as selling tokens to repurchase stocks to boost market value, rather than adhering to long-term strategic holdings. This mismatch in governance and incentives makes DAT more prone to pro-cyclical amplification of risks under pressure.

Nevertheless, the prospects for DAT remain promising. In the next three to five years, DAT is likely to develop in parallel with ETFs, forming a complementary landscape. ETFs provide stable β exposure, suitable for passive investors; DAT offers high elasticity and engineered return opportunities, making it more suitable for hedge funds, family offices, and institutional investors seeking excess returns. More importantly, the DAT model is expanding from Bitcoin and Ethereum to high-quality altcoins, providing some projects with a capital market channel akin to an "IPO moment," further institutionalizing the crypto industry. The gradual clarification of regulatory frameworks, improvement of information disclosure mechanisms, and diversification of shareholder incentive tools will jointly determine the long-term sustainability of DAT. Overall, DAT represents an important experiment in the integration of capital markets and crypto markets, potentially becoming a milestone for a new generation of institutional financial tools or, due to its pro-cyclical characteristics, an amplifier of market volatility. For investors, effectively leveraging the complementarity of ETFs and DAT, and flexibly adjusting strategies between mNAV premiums and discounts, may become a core issue in the future era of crypto finance.

2. Industry Development and Key Events

In 2025, the most striking phenomenon in the market evolution of Digital Asset Treasury (DAT) is undoubtedly the concentrated explosion in the Ethereum direction. Unlike the previous reserve logic centered around Bitcoin, Ethereum is gradually becoming the protagonist of corporate treasuries. BioNexus was the first to announce its Ethereum treasury strategy in March, officially incorporating ETH into its corporate balance sheet and expanding its holdings through equity financing. This move is seen as a landmark event, symbolizing the inaugural year of corporate Ethereum holdings. Unlike previous exchanges like Coinbase that held ETH for operational needs, BioNexus's approach is to treat Ethereum as a strategic reserve asset, sending an institutional signal to the outside world. This not only enhances the company's capital market visibility but also guides funds to begin recognizing Ethereum as having a reserve status equivalent to Bitcoin. Subsequently, BitMine (BMNR) took this trend to new heights. In August, the company disclosed that its Ethereum holdings had reached 1.52 million, with a market value exceeding $6 billion, accounting for approximately 1.3% of Ethereum's circulating supply. This scale quickly made BitMine the "Ethereum version of MicroStrategy," gaining significant attention in both capital markets and on-chain narratives. BMNR's model is similar to that of MicroStrategy back in the day: continuously expanding its balance sheet through convertible bonds and equity financing, creating a "financing—buying tokens—valuation increase—refinancing" flywheel that drives a mutually reinforcing cycle between stock prices and on-chain assets. Market evaluations of BMNR are polarized: on one hand, it is considered a milestone in shaping Ethereum's institutionalization; on the other hand, there are concerns that high leverage and concentrated holdings may amplify systemic risks during market reversals. Regardless, BMNR has become one of the most watched DATs in 2025, directly altering the funding landscape for ETH.

In parallel, SharpLink (SBET) has adopted a more frequent and aggressive approach to expanding its balance sheet. SBET has continuously issued new financing in the secondary market through ATM financing mechanisms, disclosing new financing and buying scales almost every week. By the end of August, the company had cumulatively increased its Ethereum holdings by over 800,000, with nearly all of it used for on-chain staking. This strategy directly converts Ethereum's productive asset attributes into cash flow, allowing the company to not only have paper gains on its balance sheet but also generate actual returns. SBET's model has attracted significant attention, as its weekly disclosures and high transparency provide confidence to investors while making its strategy easier for the market to quantify, track, and speculate. Critics argue that this "full staking" strategy increases exposure to the security and liquidity risks of on-chain protocols, but supporters emphasize that this path of converting ETH into productive assets may become a best practice for DAT.

Notably, BTCS has demonstrated another innovative idea in this round of competition. The company launched a combination plan of "ETH dividends + loyalty rewards," distributing dividends in the form of Ethereum while setting loyalty reward clauses to encourage shareholders to transfer stocks to designated transfer agents and hold them until early 2026. This way, investors can not only receive cash and ETH dividends but also enjoy additional incentives through long-term holding. This approach enhances shareholder stickiness and somewhat suppresses stock lending short-selling activities, thereby stabilizing market sentiment. Although there are doubts about the sustainability of "distributing dividends in ETH," it undoubtedly showcases the flexibility and creativity of DAT in financial engineering, highlighting the differentiated response strategies companies adopt when facing stock price discount risks.

Meanwhile, changes at the trading level are also noteworthy. In August 2025, the spot trading volume on the decentralized exchange Hyperliquid exceeded that of Coinbase in a single day, a highly symbolic phenomenon. For a long time, centralized exchanges (CEX) have been viewed as the core of cryptocurrency asset liquidity, but with the continuous emergence of DAT stock financing and the deepening interaction of on-chain capital through DEX and equity markets, the liquidity landscape is undergoing reconstruction. Hyperliquid's trading volume surpassing Coinbase is not an isolated incident but a signal of the gradual integration of capital markets and on-chain trading. Capital is forming a new cycle through "DAT stock financing—companies purchasing on-chain assets—staking/re-staking generating returns—investors arbitraging and trading." This cycle accelerates the integration of on-chain and traditional markets and may amplify liquidity shocks during market pressures.

Overall, the evolution of the DAT market in 2025 showcases the emergence of a new ecosystem. BioNexus opened the door to the ETH treasury strategy, BitMine established its industry-leading position through large-scale holdings, SharpLink explored different paths with high-frequency financing and full staking strategies, while BTCS created unique shareholder incentive tools in financial engineering. At the same time, changes in Hyperliquid's trading volume reflect the liquidity restructuring between capital markets and on-chain markets. These cases collectively illustrate that DAT is not merely a simple model of "companies buying tokens," but has evolved into a comprehensive financial innovation encompassing multiple dimensions such as financing methods, asset allocation, revenue management, and shareholder governance. In the future, this ecosystem will continue to expand and evolve, potentially becoming an accelerator for the institutionalization of crypto assets or, due to mismatches in leverage and liquidity, an amplifier of market volatility. Regardless of the outcome, DAT has profoundly changed the capital market narrative for crypto assets in 2025 and has become a focal point that global financial observers must closely track.

3. Risks and Potential of DAT

As the DAT model rapidly develops, the underlying risks and systemic concerns are becoming increasingly prominent. On the surface, digital asset treasuries provide new sources of funding and liquidity support for the market, but a closer analysis reveals that their operational mechanisms possess strong pro-cyclical attributes, capable of amplifying gains in bull markets while potentially exacerbating declines in bear markets. This double-edged sword effect makes DAT's role in capital and crypto markets particularly sensitive and complex. First is the leverage risk. The balance sheet expansion logic of DAT often relies on equity issuances and convertible bond financing. During bull markets, as stock prices and market values rise, companies can raise large amounts of capital at lower costs, further increasing their holdings of Bitcoin or Ethereum, creating a flywheel effect of valuation and positions. However, this leverage model can quickly backfire when the market turns. If the prices of underlying assets experience significant corrections, debt repayment and margin clauses may be triggered, forcing companies to passively sell holdings to address funding gaps. Leverage amplifies returns but also amplifies risks, which is particularly dangerous given the high volatility of crypto assets.

Second is the discount crisis. The valuation of DAT is anchored in the so-called mNAV, which is the ratio of the company's market value to the fair value of the crypto assets held in its treasury. In bull markets, mNAV is typically well above 1, and investors are willing to pay a premium for the company's future expansion and earnings. However, once market sentiment reverses and stock prices fall below net asset value, mNAV shifts from premium to discount, leading to a rapid decline in investor trust in management. In such cases, companies often sell underlying ETH or BTC to repurchase stocks in an effort to repair valuations and soothe the market, attempting to pull stock prices back toward net value. However, this approach essentially sacrifices long-term holding strategies for short-term stock price repairs, which may temporarily reduce discounts but impose additional selling pressure on the market, creating a vicious cycle.

Liquidity shocks are another concern. The scale of crypto assets held by DAT is growing, and once these holdings are released in concentration, the impact on the market could exceed expectations. Especially in cases of insufficient liquidity on decentralized exchanges, coordinated sell-offs by multiple DATs could lead to waterfall declines in the market. Past experiences indicate that when highly concentrated assets encounter passive deleveraging, price declines often exhibit nonlinear characteristics. In other words, even if the overall scale of sell-offs only accounts for a small portion of the circulating market value, it could lead to severe volatility due to insufficient liquidity absorption. This risk is particularly pronounced in tokens like Ethereum, where holdings are highly concentrated. Regulatory uncertainty is another sword hanging over the DAT model. Currently, there is no unified standard for accounting treatment, information disclosure, leverage ratio limits, and retail investor protection for treasury-type companies. Differences in attitudes across jurisdictions could change the survival environment for DAT at any time. For instance, regulators may require companies to disclose on-chain addresses and staking risks, limit their leverage ratios, or prohibit dividend distributions in token form, all of which could significantly impact DAT's financing capabilities and market narratives. For DATs that heavily rely on capital market financing and investor confidence, such regulatory changes not only imply increased costs but could also directly undermine the sustainability of their models.

Additionally, the mismatch between governance structures and incentive mechanisms is a potential issue for the DAT model. Most DAT executives' compensation is directly linked to stock prices, which can stimulate balance sheet expansion during bull markets but may lead management to adopt short-term operations during bear markets. When stock prices are discounted and investor confidence declines, executives may prioritize selling underlying assets to repurchase stocks, boosting market value to protect their compensation, rather than adhering to long-term holding strategies. This incentive mismatch not only weakens the strategic stability of DAT but also increases the likelihood of pro-cyclical sell-offs, exacerbating market fragility. Beyond risk analysis, scenario simulations provide a more intuitive understanding. In the baseline scenario, assuming ETH prices experience a mild correction, DAT companies may gradually offload through over-the-counter trading to smooth market impacts, exerting limited pressure on prices. However, in a severe scenario, if 20%-30% of ETH treasury holdings are concentrated and sold in a short time, the market may struggle to absorb them fully, potentially causing ETH prices to drop to the $2,500-$3,000 range. This level is close to a 30% decline from current prices, sufficient to reshape market sentiment. In extreme scenarios, if over 50% of holdings are forced to liquidate due to funding chain breaks, regulatory tightening, or systemic crises, ETH prices could plummet to $1,800-$2,200. Such a decline would completely erase the gains since the initiation of the DAT wave, bringing the market back to early 2025 levels. Although the probability of extreme scenarios is low, given DAT's heavy reliance on financing and leverage, once triggered, the market impact could be profound. Overall, the rise of DAT undoubtedly injects new narratives and liquidity into the crypto market, but it is not a robust "new normal." Its pro-cyclical characteristics determine that it is both an amplifier of bull markets and a source of risk in bear markets. For investors, understanding the leverage chain under the DAT model, the dynamics of mNAV premiums and discounts, and the incentive structures of management is key to assessing its sustainability. In the absence of comprehensive regulation and risk isolation, DAT resembles a high-leverage financial experiment that could either promote the institutionalization of crypto assets or become a catalyst for market turmoil. In the coming years, the risk management capabilities of DAT and the maturity of regulatory frameworks will determine whether this model can genuinely transition from speculative narratives to robust financial tools.

Looking ahead to the next three to five years, Digital Asset Treasury (DAT) is likely to develop in parallel with ETFs, jointly constructing the investment landscape for the institutionalization of the crypto market. ETFs have already proven their advantages in compliance, stability, and low costs, providing robust β exposure for passive investors, pension funds, and sovereign wealth funds. In contrast, DAT, with its higher elasticity, more complex capital engineering, and direct holdings of on-chain assets, is naturally more suitable for hedge funds, family offices, and active institutions seeking excess returns. This division of market structure suggests that ETFs and DATs are not in a zero-sum competitive relationship but rather complement each other, jointly promoting the deep integration of traditional capital and the crypto market. From the perspective of asset expansion, DAT's investment scope is likely to extend beyond BTC and ETH. As the industry ecosystem matures, high-quality altcoin projects may gain access to similar "IPO moments" through DAT, leveraging the equity financing of publicly listed treasury companies to establish early large-scale on-chain positions. This could not only provide institutional backing for related tokens but also create entirely new capital market narratives. For instance, core protocols related to Layer 2, decentralized data networks, or stablecoins may become targets for future DAT allocations. If this trend materializes, DAT will not only serve as a leveraged tool for BTC/ETH but also act as a "booster" for the next generation of public chains and protocols in the capital market, profoundly impacting the crypto ecosystem.

In terms of operational models, the revenue engineering of DAT will become the next focus. Currently, some companies have begun exploring staking their holding tokens to earn on-chain interest income, converting it into cash flow to benefit shareholders. In the future, this model is expected to expand into diversified methods such as options hedging, basis arbitrage, re-staking, and governance participation. Unlike traditional ETFs that solely track prices, DAT can form a "dynamic treasury" through active operations, generating on-chain returns while enhancing its influence over the underlying ecosystem. This means that DAT is not only an asset holder but may also become an important governance participant in on-chain protocols, potentially evolving into an "institutional player" in the crypto economy. The gradual clarification of regulatory frameworks will be a key factor in the sustainable development of DAT. Currently, attitudes toward DAT vary across different jurisdictions, with issues such as information disclosure, accounting standards, leverage ratios, and retail protection remaining unresolved. However, as market scales expand and the investor base grows, regulatory pressure will inevitably increase. In the future, DAT may be required to disclose its on-chain addresses, clarify holding scales and staking ratios, and even standardize dividend distribution models to ensure transparency and investor protection. In a sense, this will enhance DAT's compliance and credibility, making it easier to attract institutional funds, but it may also weaken the flexibility of its capital engineering. Stricter regulations present both challenges and a necessary path for DAT to transition from "financial experiment" to "institutional tool."

In the long run, DAT has the potential to evolve into a quasi-financial intermediary in the crypto market. Its uniqueness lies in its ability to connect both equity capital markets and on-chain asset markets, forming a bridge for cross-market capital allocation. When investors purchase DAT stocks, they are indirectly participating in the holding and operation of on-chain assets, while DAT companies introduce traditional capital into the crypto space through equity financing. This bidirectional interaction will enable DAT to play an increasingly important role in global capital flows and asset allocation. Especially in the context where cross-border capital finds it challenging to invest directly in crypto assets, DAT may become one of the compliant channels, providing "indirect exposure" and thereby expanding the investor base for crypto assets. However, this bright prospect is accompanied by significant systemic risks. The pro-cyclical characteristics of DAT mean that it may act as an accelerator for price increases in bull markets but amplify the depth of market declines in bear markets. Unlike the passive holdings of ETFs, DAT heavily relies on equity market financing and the maintenance of mNAV premiums; once market conditions reverse, the financing chain of DAT could quickly break, leading to large-scale passive deleveraging. In other words, while the prospects for DAT are broad, its ability to genuinely grow into a robust institutional sector depends on its performance in risk management and regulatory adaptation.

Overall, in the next three to five years, the development of DAT will present two parallel trajectories. On one hand, it will continue to innovate, gradually building a unique competitive advantage through expanding asset ranges, embedding revenue engineering, and enhancing on-chain participation; on the other hand, it will explore more robust and sustainable models amid regulatory constraints, leverage controls, and market volatility. DAT symbolizes the integration of capital markets and crypto markets while also reflecting the risks of pro-cyclicality. Only by finding a balance between institutionalization and innovation can it truly become a new type of intermediary in the global financial system, driving crypto assets from the margins to the mainstream.

4. Conclusion

The rise of Digital Asset Treasury (DAT) is undoubtedly one of the most significant events in the capital markets and crypto industry in 2025. It is not only a new asset allocation tool but also an institutional experiment combining equity financing with on-chain assets, representing a deep coupling of two major financial systems. Essentially, DAT directly binds the financing capabilities of publicly listed companies with the high volatility of blockchain assets, creating an unprecedented investment logic and market narrative. For investors, it provides a new channel for amplifying returns while also introducing new risks. During bull market phases, the operational logic of DAT is particularly smooth. The premium on stock prices boosts mNAV, making it easier for companies to raise funds through convertible bonds, PIPEs, or ATM issuances. The raised funds are further converted into purchases of crypto assets like ETH and BTC, and the expansion of the balance sheet in turn boosts market value, forming a "premium—financing—position increase" flywheel. This mechanism makes DAT an important catalyst for market upswings, with its market value elasticity far exceeding that of traditional ETFs, making it a target for hedge funds and high-net-worth investors. Under this narrative, DAT is not only a product of financial innovation but also a core participant in the flow of funds and valuation expansion during bull markets.

However, DAT in bear markets may present a completely opposite picture. When prices fall and mNAV shifts from premium to discount, market confidence in management wavers. To repair stock prices, companies may sell underlying assets to repurchase stocks, seeking to temporarily reduce discounts. However, this behavior often leads to increased selling pressure, accelerating price declines and causing more DATs to fall into deleveraging dilemmas simultaneously. Under this pro-cyclical mechanism, DAT may no longer serve as a stabilizer for the market but could become an amplifier of systemic risks. In other words, the risks associated with DAT are not merely individual company risks but the potential impact on the overall crypto asset market when multiple treasury-type companies engage in coordinated sell-offs. In terms of investment, the functional division between DAT and ETFs is becoming increasingly clear. ETFs are more suitable as cornerstone tools for long-term allocations, providing transparent, low-cost, and predictable β exposure; whereas DAT, with its high leverage, high elasticity, and active revenue management characteristics, becomes a choice for incremental allocations, particularly for those seeking excess returns and willing to take on risks. For family offices or actively managed funds, DAT offers capital engineering advantages that traditional ETFs cannot replicate, but it also requires bearing potential liquidity risks and governance uncertainties. In the future, how investors find a reasonable combination between ETFs and DAT will become a core issue in asset allocation strategies.

In the next three to five years, DAT may grow into an institutional sector alongside ETFs. Its development path will primarily depend on three factors. First, regulatory clarity. Only when unified standards are established for accounting treatment, information disclosure, leverage ratios, and shareholder protection can DAT attract a broader inflow of institutional funds. Second, information transparency. Public disclosure of on-chain addresses, holding scales, staking ratios, etc., will become important bases for investors to assess risks and valuations, as well as a prerequisite for DAT to establish long-term trust. Third, market resilience. The ability of the crypto market to maintain resilience amid potential pro-cyclical shocks will directly determine whether DAT serves as a positive force for institutionalization or exacerbates volatility as a source of risk.

If these conditions are met, DAT may become another milestone in financial history, akin to how ETFs transformed index funds. Gradually transitioning from initial market experiments to widespread application, DAT has the potential to redefine the boundaries between capital markets and crypto markets, allowing crypto assets to truly enter larger-scale investment portfolios. However, if these conditions cannot be achieved, DAT may merely represent a brief frenzy, ultimately proving to be "a gamble between financial innovation and risk management." The historical development of capital markets indicates that the emergence of each new tool brings both efficiency gains and opportunities, along with unknown risks. The emergence of DAT is an inevitable product of the current era, combining traditional financing logic with decentralized assets to create a new method of value capture. However, whether it can sustain itself in the long run depends not only on market enthusiasm but also on the maturity of regulatory governance, robust governance, and risk prevention mechanisms. Investors, companies, and regulators must recognize that DAT is not a risk-free arbitrage tool but a new challenge to the entire market structure. Ultimately, the future of DAT will fundamentally depend on the joint shaping of the market and the system. If regulation and market mechanisms can form a positive interaction, DAT has the opportunity to become an important bridge for promoting the institutionalization of crypto assets; conversely, it may exacerbate market turbulence due to its pro-cyclical characteristics and leverage chains, becoming a case study of "failed financial alchemy." Just as ETFs were once questioned two decades ago but have now become cornerstone tools in global markets, the fate of DAT may also reveal its answers in the next decade. Regardless, its emergence has already left a mark in the long river of capital markets that is destined to be remembered.