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Written by Lorenzo Valente Compiled by: Chopper, Foresight News From August to September 2025, Digital Asset Treasuries (DATs) will become the core carrier of Wall Street's crypto asset mainstreaming. This shift must have come as a surprise to many in the industry, who originally believed that exchange-traded funds (ETFs) would continue to dominate rather than be gradually replaced by DATs. What happened behind the scenes? A few years ago, Strategy pioneered the Bitcoin DAT model, but at the time investors did not know how to apply it to other crypto assets. This article will delve into the market landscape and related controversies of DAT. Definition of DAT A crypto treasury (DAT) refers to a company that holds cryptocurrencies such as Bitcoin, Ethereum, Solana, etc. directly on its balance sheet, and investors can indirectly gain exposure to crypto assets by purchasing their shares. Unlike spot Bitcoin/Ethereum ETFs regulated by the U.S. Securities and Exchange Commission (SEC), ETFs passively hold cryptocurrencies and issue shares that are pegged 1:1 to the held assets. DAT is an operating company that manages positions through leverage, corporate strategy, or financing instruments. ETFs serve as regulated public investment vehicles, providing compliant asset exposure; DAT, on the other hand, introduces enterprise-level risks, where gains or losses can fluctuate beyond the range of the underlying asset itself. Long before the term "crypto treasury" was coined, Strategy created the first DAT for Bitcoin. Under Michael Saylor's leadership, the company downplayed its enterprise software business and went all out to hoard Bitcoin. As of September 15, 2025, Strategy has purchased more than 632,000 Bitcoins for $46.5 billion, with an average unit price of $73,527. Currently, the company holds more than 3% of the total supply of 21 million Bitcoins. Strategy has accumulated its Bitcoin holdings through a variety of financing strategies: an initial issuance of convertible senior notes, followed by a 6.125% coupon rate senior guaranteed notes, and the real breakthrough comes from the mark-to-market stock issuance program. Due to the significant premium of its stock (ticker MSTR) to its book value, Saylor diluted its existing shareholders' equity by issuing new shares, using the proceeds to buy more Bitcoin and increase its Bitcoin holdings per share. Essentially, the funds provided by shareholders provided leverage backing Strategy's exposure to Bitcoin. This model has sparked widespread controversy. Critics have criticized DAT for "selling $1 for $2," noting that if a DAT trades at twice its market value net worth (mNAV), investors would pay $2 for $1 of Bitcoin on its balance sheet. In their view, this premium is neither reasonable nor sustainable. But so far, Strategy's stock performance has overturned that judgment, delivering substantial returns for shareholders. With the exception of a brief discount during the bear market from March 2022 to January 2024, MSTR maintained a significant mNAV premium for a long time. More importantly, Saylor strategically leverages this premium by issuing shares at prices much higher than book value, continuing to increase Bitcoin holdings and increasing their holdings. The results show that since its initial purchase of Bitcoin in August 2020, MSTR has not only allowed shareholders to compound their exposure to Bitcoin but has also significantly outperformed the strategy of simply buying and holding Bitcoin. The market landscape of DAT Five years after Strategy first bought Bitcoin, hundreds of DATs have emerged today. These new carriers are hoarding various crypto assets such as Ethereum, SOL, HYPE, ADA, ENA, BNB, XRP, TRON, DOGE, SUI, AVAX, and more. The market is now gathering towards large-cap assets, and many well-funded DAT are competing to hoard ETH and SOL. As shown in the chart below, ETH-focused DAT holds a total of 3.74% of Ethereum's supply, while Solana-based DAT holds 2.31% of SOL's supply. Source: Blockworks, as of August 25, 2025 In our opinion, although some DAT may be established for short-term speculative purposes, the ultimate winner may become a more efficient crypto asset vehicle than spot ETFs. With the corporate structure advantage, DAT can use leverage, corporate finance, and strategic options that ETFs cannot achieve. These advantages will persist as long as their mNAV premium is sustainable, and this topic will be explored further in subsequent sections. Why is the mNAV premium for AT justified? ARK Invest, an asset manager with a large exposure to cryptocurrencies, has shown a keen interest in the burgeoning DAT space and has recently invested in Bitmine Immersion, a leading Ethereum DAT. While we remain cautious about DAT and closely monitor its rapid development, we can understand why some DAT are receiving an mNAV premium, mainly the following: Revenue / Staking Income Smart contract L1 blockchains, particularly Ethereum, offer native yield through a staking mechanism that rewards users for participating in network security maintenance. In the crypto asset ecosystem, this income is essentially equivalent to a "risk-free interest rate" because it is generated within the protocol and does not involve counterparty risk. In contrast, spot ETFs in the United States do not allow staking the underlying asset for profit. Even if regulators change their stance and are limited by the design of the Ethereum network, ETFs can only stake a small number of positions (possibly less than 50%) – the Ethereum network's "liquidity limit" dictates the number of validators that can be added or withdrawn per period. This limitation is crucial for network security, preventing malicious actors from instantly launching or shutting down a large number of validators, avoiding collapses in consensus mechanisms or state management, which could lead to a process of up to two weeks for staking or unstaking ETH. While ETFs can circumvent this restriction through liquid staking protocols, compliance, liquidity, and centralization risks may prevent them from staking positions on a large scale. DAT offers greater operational flexibility. A typical DAT is a lean organization, often run by a small team, but generating significant revenue. Taking Bitmine Immersion as an example, if its market capitalization reaches $10 billion and all ETH is staked, it can generate about $300 million in free cash flow per year. These funds can be reallocated for mergers and acquisitions, token purchases, on-chain opportunities, or dividends. Hoarding speed The speed of asset hoarding and the growth rate of crypto assets per share are important reasons why DAT receives a book value premium. The growth rate of DAT per crypto asset may exceed the price increase of the underlying asset itself, thereby accelerating revenue growth through staking income. Take Bitmine, for example. On July 13, the company held 163,142 ETH on top of approximately 56 million fully diluted shares; Based on the unit price of ETH at the time of $2,914, each share corresponds to 0.0029 ETH, worth $8.45. Just 31 days later, according to our estimates, Bitmine's ETH holdings increased to 1.15 million, and fully diluted shares increased to 173 million shares; Based on the unit price of ETH at the time of $4,700, each share corresponds to 0.0066 ETH, worth $32.43. In a month, the price of ETH has increased by about 60%, while Bitmine's ETH holdings per share have increased by 130%. In other words, Bitmine creates value through the arbitrage model of "issuing shares at market price (ATM) + value-added acquisitions", far exceeding the direct holding of ETH. Of course, this dynamic only holds true if the mNAV premium exists and the ATM issuance has a value-added effect. If the premium narrows or turns into a discount, DAT will have to rely on other capital market instruments, such as selling some of the underlying tokens to buy back shares. Using the Shapli value decomposition method, Bitmine's (ticker symbol BMNR) stock price performance can be attributed to three variables: ETH price, growth in ETH holdings per share, and changes in mNAV premium or discount (see chart below). As of August 25, ETH holdings per share were the biggest drivers of BMNR's stock price and shareholder returns. Source: Ark Investments, as of August 25, 2025; Note: Based on Shapri average values, only publicly available data are used Liquidity and low-cost funds Liquidity is the core reason for the DAT premium. Issuing mark-to-market shares (ATMs) and convertible bonds is only feasible if the stock is liquid: ATMs rely on sufficient daily trading volume, requiring DAT to continue issuing shares without depressing the stock price; The same goes for convertible bonds – investors buy "bonds + convertible options", and the value of the option depends on the stock having sufficient liquidity to be sold or hedged efficiently. Illiquid instruments cannot attract investors or may lead to high financing costs for issuers. Scale is equally critical, as bond markets often serve large corporations. Investment banks and institutional lenders rely on secondary market demand, which depends on company market capitalization and liquidity. In practice, most syndicated loans and institutional convertible bond issuances are only open to companies with a market capitalization of more than $10-$2 billion. Below this threshold, financing costs will rise significantly, and financing access is often limited to customized or venture capital credit instruments. For example, Strategy was able to issue multiple rounds of convertible bonds totaling billions of dollars because its shares were liquid and had a market capitalization of tens of billions of dollars at the time. This is also reflected in the issuance of preferred shares. The structured equity transactions used by Strategy require both strong balance sheet support and secondary market liquidity to attract institutional investors, and preferred stock buyers must trust that they can exit or hedge their positions, and illiquid DAT cannot access this financing channel. In short, liquidity reduces financing costs. To compensate for the risk of illiquidity, investors demand higher returns, so illiquid DAT is paid for in one or more ways: higher discounts on equity offerings, higher bond coupon rates, and stricter covenant terms. Conversely, liquid DAT can raise funds at a lower cost to hoard Bitcoin or Ethereum, creating a flywheel effect that reinforces the premium. Strategic options Many investors compare crypto assets, especially L1 tokens, to stocks, commodities, or currencies, but in reality their differences far outweigh the similarities. DAT highlights this distinction and demonstrates that ETFs can be inefficient as a vehicle for L1 assets. DAT's corporate structure provides "strategic options corresponding to book value premiums". Large DATs can buy tokens at a discount (such as FTX's bankruptcy liquidation sale) or other DAT that are lower than mNAV transactions. For example, Bitmine Immersion, with a market capitalization of $10 billion, only needs to issue 2%-3% of its shares to acquire $200 million worth of Ethereum DAT at a discount, achieving value-added mergers and acquisitions. In addition to mergers and acquisitions, ecosystems such as Solana and Ethereum also offer other opportunities: these networks carry hundreds of billions of dollars in liquidity and applications, and DAT large enough can be profitable through "on-chain security maintenance" or "liquidity provision". In fact, protocol parties may offer incentives to attract well-funded participants to its ecosystem. Another arbitrage opportunity exists in the "traditional market vs. on-chain interest rate differential", which sometimes exceeds 500 basis points (i.e., 5%). In a low-interest rate environment, DAT can borrow USD at low cost in traditional financial markets and deploy funds in on-chain lending pools to obtain significantly higher returns. Currently, stablecoin pools such as sUSDS, sUSDe, and SyrupUSDC have an annualized yield of around 7%, which is about 300 basis points (3%) higher than the yield on US Treasuries, giving DAT the opportunity to gain additional revenue streams beyond mere token appreciation. risk While DAT offers investors new avenues to gain exposure to crypto assets, it also poses significant risks that investors need to weigh carefully. The first is dependence on market premiums. The DAT pattern, especially crypto asset growth per share, relies on stocks trading above mNAV. When the premium narrows, DAT's ability to increase in value by issuing shares will diminish or even disappear, forcing them to slow down acquisitions, or sell tokens to buy back shares. Second, liquidity is a double-edged sword. While liquidity allows DAT to access low-cost funds, it can also trigger a liquidity crisis when the market is down. In an ongoing bear market, DAT could be trapped in a negative feedback loop: stock prices plummeting, funding costs rising, and potential redemption pressure forcing the token to sell. Third, regulatory uncertainty is becoming increasingly prominent. Unlike ETFs, DAT is in a regulatory gray area and may face regulatory scrutiny for accounting, disclosure, etc. – these regulatory requirements apply more to investment funds than to operating companies. Regulatory interventions may affect their access to capital market financing or limit their strategic options. Fourth, governance and operational risks may be underestimated. Many DATs are managed by small teams to manage multi-billion dollar asset pools, and weak internal controls, poor risk management, or misaligned incentives can quickly erode value. In the worst case, some DAT may become "aggressive on-chain hedge funds in disguise" - chasing returns, increasing leverage, and lacking transparency in capital allocation, leading to hidden risks and even bankruptcy. conclusion The rise of DAT has provided investors with new ways to gain exposure to crypto assets. From Strategy's seemingly maverick bet to becoming a widespread phenomenon today, DAT has rapidly gained popularity among mainstream L1 blockchain protocols like Ethereum, Solana, and more. Although critics dismiss its model as "selling $1 for $2," the reality is more complex. DAT's enterprise architecture has unique potential advantages that ETFs can't match, which is why it receives a book value premium: the ability to increase the value of ETH or SOL per share at a rate higher than the price of the underlying asset; It has liquidity and scale advantages, and can obtain cheap capital in the entire capital structure; And have the opportunity to conduct mergers and acquisitions, token purchases, and on-chain investments. Unlike ETFs that passively hold crypto assets, DAT is a dynamic capital market vehicle with the potential to amplify asset exposure, capture protocol yields, and optimize capital allocation. For some assets, DAT may not only be more sustainable than ETFs, but also more efficient. They are not short-term arbitrage tools, but may become long-term institutions that connect traditional financial markets with the new world of crypto assets.