Key Takeaways
- The original digital asset treasury (DAT) model, pioneered by MicroStrategy, involves buying and holding cryptocurrencies.
- But in a competitive landscape, modern crypto treasury companies are chasing higher returns.
- Strategies include DeFi yield farming, active token management, and hedging to protect against market downturns.
Ever since Michael Saylor steered MicroStrategy (now known as Strategy) toward its first Bitcoin purchases in 2020, the basic digital asset treasury (DAT) formula has remained unchanged: raise money, buy crypto, and HODL.
But in an increasingly crowded marketplace, a newer generation of DAT firms is looking beyond passive buy-and-hold strategies.
DATs Chase DeFi Yield
More than five years after Saylor pioneered the concept, over a hundred public companies collectively hold more than a million Bitcoins.
While Strategy maintains the largest treasury and a significant lead over its rivals, a crop of copycats has still managed to accumulate healthy stockpiles. But as the market has expanded, new entries increasingly need to differentiate themselves.
For Ethereum treasuries, staking is the bare minimum required to ensure assets grow and aren’t devalued by ETH inflation. Seeking to enhance yield, some firms have deployed their treasury assets in decentralized finance (DeFi) protocols.
For instance, GameSquare has described a “dynamic treasury engine” built by Dialectic that incorporates stablecoin and NFT yields to amplify returns. Meanwhile, SharpLink said it plans to allocate $200 million worth of ETH to ether.fi and EigenCloud.
Dynamic Treasury Strategies
Chanelling funds into DeFi is paying off for Ethereum treasuries..
In August, GameSquare reported an annualized yield of 7.84%—notably higher than the 3–4% achievable through validator staking and well above the rates offered by third-party staking services.
As the sector evolves, successful yield farming strategies could help ETH treasury farms stand out and attract investors. But they inevitably involve risks that don’t apply to vanilla HODLing.
Steering clear of DeFi altogether, other companies have developed strategies that seek to shelter treasuries from losses in a bear market.
In an interview with CCN, Republic Technologies CEO Daniel Liu said the company has multiple tools in its arsenal to maximize returns, regardless of market conditions.
“Digital assets are incredibly volatile, and when you put that into the public markets, it comes with way more risks than any traditional company would face,” he observed, concluding that it is prudent for DATs to hedge against downturns.
Altcoins and BTCFi
Ethereum-focused companies aren’t the only ones exploring more active treasury models.
Increasingly, dedicated altcoin DATs are leveraging the unique features of their respective ecosystems to maximize and diversify yield.
For example, the BitTensor treasury company, TAO Synergies, recently pivoted to an alternative form of staking that generates subnet tokens, rather than just TAO.
In a similar vein, Avalanche Treasury Co. has vowed to utilize its billion-dollar AVAX reserves to support new blockchain launches, aiming to achieve higher returns through strategic investments.
According to Rich Rines, an Initial Contributor at Core DAO, even Bitcoin-focused companies want to get in on the action. “Every Bitcoin Treasury or large Bitcoin corporate is interested in Bitcoin yield,” and many are already exploring their options, he said in an interview.
In Rines’ view, Sayloresque financial engineering is no longer sufficient for new entrants. In the future, he expects to see more DATs park their BTC in yield-generating sidechains, such as Core, or wrap it for use in DeFi, rather than letting it sit idle.
Moreover, in his conversations with Bitcoin treasury operators, Rines found that they increasingly treat yield platforms like a venture book—allocating a portion of their assets to experimental protocols with the potential for outsized returns.
“They’re willing to take a risk […] because they think some of these yield products […] could outperform the return on their portfolio,” he observed.
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James Morales is CCN’s blockchain and crypto policy reporter. He has been working in the news media since 2020, writing about topics such as payments, banking and financial technology. These days, he likes to explore the latest blockchain innovations and the evolving landscape of global crypto regulation.
With an educational background in social anthropology and media studies, James uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.
