Sharplink Gaming’s Joseph Chalom asserts that new entrants to the Ether treasury sector may overreach to compensate for their late arrival, a move that is believed to only introduce heightened peril.
According to Joseph Chalom, co-CEO of Sharplink Gaming, firms that acquire and retain Ether to maximize the yield on their holdings will be exposed to considerably greater peril in the event of a market downturn.
During a Monday interview with Bankless, it was stated by Chalom that individuals, much like in conventional finance, will exist who seek to secure the final one percent of returns and assume it to be entirely without risk.
He noted that while high-yield returns on Ether (ETH) are obtainable, such strategies are accompanied by considerable dangers.
He elaborated that the asset entails credit, counterparty, duration, and smart contract risks. He also contended that a genuine hazard is introduced by companies attempting to overcompensate for their delayed entry.
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He believes that the greatest peril is presented by those who are far behind, as they will undertake gambles that are not considered judicious.
The Wider Industry Could Be Tainted by “Imprudent” Moves
Chalom contended that the sector could be compromised by individuals who take imprudent actions, such as in the way capital is acquired or how the yield derived from their Ether (ETH) holdings is distinguished.
He inquired, “If you excessively expand and a market slump occurs, how can your capital structure be designed to remain resilient at the highest price of Ethereum?”
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Sharplink Gaming is the second-largest publicly-traded holder of ETH with a value of $3.6 billion, a valuation that is surpassed only by BitMine Immersion Technologies, which possesses $8.03 billion.
Based on data from StrategicETHReserve, a total of approximately 3.6 million ETH is held by companies with Ether in their corporate treasuries, an amount that was valued at roughly $15.46 billion at the time of publication.
The Model’s Dire Consequences
In a recent statement to , Josip Rupena, the chief executive of lending platform Milo and a former Goldman Sachs analyst, asserted that crypto treasury firms present hazards comparable to collateralized debt obligations, securitized bundles of home mortgages and other debt that were catalysts for the 2008 financial crisis.
Conversely, it was recently asserted by Matt Hougan, chief investment officer at Bitwise, that Ether treasury and holding companies have overcome Ethereum’s communication challenge by presenting the digital asset in a way that traditional investors understand, which has attracted more capital and accelerated its adoption.
Chalom noted that a key advantage of ETH treasury companies is their ability to expand almost without limit. According to CoinMarketCap, Ether is valued at $4,327 at the time of this writing.
Recently, apprehensions regarding the wider crypto treasury model have been voiced more frequently.
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In a July 5 post on the social media platform X, Glassnode’s principal analyst, James Check, contended that the Bitcoin (BTC) treasury strategy is likely to have a considerably shorter lifespan than is generally anticipated.
On June 29, venture capital firm Breed contended that only a limited number of Bitcoin treasury companies will endure, thereby avoiding a destructive “death spiral” that will be faced by BTC holding firms that trade close to net asset value.
