Listed companies are intensifying their funding efforts to increase their Ethereum (ETH) holdings, and Vitalik Buterin is supporting listed companies strategically purchasing ETH.
However, the Ethereum co-founder warned about the risks of excessive leverage. He cautioned that excessive financial leverage could lead to fatal consequences for Ethereum.
Companies Pursue Billions of Dollars in ETH Asset Plans
BeInCrypto has extensively reported on companies' ETH treasury transitions, and this trend continues. Fundamental Global Inc. took a significant step by submitting an S-3 registration document to the US Securities and Exchange Commission to raise $5 billion for Ethereum treasury.
The company's securities issuance may include common stocks, preferred stocks, depositary shares, bonds, warrants, and units. The company plans to primarily use the raised funds to acquire ETH.
This follows Fundamental Global's announcement of initiating its ETH holding strategy and raising $200 million through a private placement.
"Today marks the beginning of a mission to maximize Ethereum's potential as our ultimate holding asset. This capital positions us to execute an ETH treasury strategy at scale, targeting a 10% stake in the Ethereum network." โ Fundamental Global CEO Kyle Sermirana statement.
Meanwhile, SharpLink Gaming, the second-largest public ETH holder, announced raising $200 million. These funds were raised through a direct public offering led by four global institutional investors at a price of $19.50 per share.
Notably, the company subsequently acquired 10,975 ETH, amounting to $42.79 million. According to OnChain Lens, SharpLink Gaming's total ETH holdings currently stand at 532,914, valued at $2.07 billion.
Similarly, Cosmos Health secured a $300 million funding contract. These funds were raised through convertible bonds via an institutional investor agreement. The funds will support the company's Ethereum treasury strategy, with ETH assets to be stored and staked through BitGo Trust.
Ethereum Institutional Participation Risks... Buterin's Concerns
These initiatives highlight companies' willingness to increase ETH exposure. The increasing momentum also brings many advantages.
In a recent Bankless podcast episode, Buterin explained that ETH treasury companies provide multiple ways for people to access Ethereum. This is particularly beneficial when considering individuals' diverse financial situations and incentives. He stated,
"The social aspect of holding ETH as an asset is good and valuable. Providing people with more choices is good. There are clearly valuable services being offered."
But are there downsides to institutional involvement in ETH? Yes, but only when companies use excessive leverage.
"If someone says in three years that treasury caused Ethereum's collapse, it's probably because they turned it into an excessive leverage game." โ Buterin mentioned.
He also described scenarios where ETH price drops could lead to forced liquidation. This could trigger a chain reaction of further price declines. Ultimately, this could result in significant losses and damage to Ethereum's credibility.
"But the people of Ethereum, even those doing finance in Ethereum, are responsible people. We're not talking about Do Kwon followers." โ Buterin added.
Therefore, the increasing trend of corporate Ethereum treasury has undeniable benefits such as increasing ETH exposure and liquidity. However, as Buterin warns, the risk of excessive leverage in these treasuries cannot be ignored.
While ETH's potential as a holding asset is significant, these institutions must approach it with caution and responsibility to avoid jeopardizing the network's future.
