Beyond the Flywheel: How DATs Can Reinvent Themselves

Introduction

The digital asset treasury (DAT) frenzy of summer 2025 has given way to a more challenging environment. Asset prices are declining, market to net asset value (mNAV) has compressed to near 1, and several DATs have sold assets to buy back shares in an effort to support their stock prices. (For example, ETHZilla sold $40 million in ETH in October 2025 to fund its repurchase plan, while French bitcoin DAT Sequans liquidated BTC holdings the following month to cover debt obligations.) This dynamic exposes a deeper structural question: as the raise-buy-appreciate flywheel stalls, it is unclear whether the DAT model premised on providing crypto asset exposure through public market vehicles is sustainable.

While the DAT landscape is broad, covering a wide range of crypto assets with significant concentration in bitcoin (more than 75%), this paper focuses on DATs holding Proof-of-Stake (PoS) assets. We argue that the next generation – we call them DATs 2.0 – must generate business value like any other company in order to sustain their stock prices. PoS DATs are uniquely positioned to do so. Unlike passive holding structures, they have the ability to stake their assets, creating a differentiated business model with the capacity to generate returns and stack value on top of their token holdings in ways that go beyond simple asset exposure.

Current Landscape

In our first DATs report, we totaled 105 companies holding 13 tokens. Since then, the number of distinct tokens that DATs hold has expanded to at least 27.

The tables below show the top 10 publicly traded holders (mostly but not all DATs) of Ethereum’s ether and Solana’s SOL as of April 8.

Factoring PnL

When thinking about creating value, we can analyze both the cost and profit sides of the equation to see if the model holds up.

Cost

The cost of running a DAT can be summarized in the formula below:

Cost = Token Acquisition Cost + Capital Raising Cost + Operational Overhead + Opportunity Cost

• Token Acquisition Cost: the amount of money used to acquire tokens and form the treasury.

• Capital Raising Cost: when raising money to acquire tokens, DATs issued equity and debt in a variety of forms: at-the-market (ATM) offerings; private investments in public equity (PIPE); equity lines of credit (ELOCs); convertible notes; warrants; and preferred equities. The cost burden of each instrument differs: debt instruments carry interest expense and covenant obligations, while equity issuance results in shareholder dilution.

• Operational Overhead: the costs incurred to manage, secure, and report on a DAT’s holdings. This includes the operational costs of the business set up to manage the DAT, as well as the cost of custody, a job many DATs farm out to third-party custodians.

• Opportunity Cost: The return DATs’ capital could have generated if not dedicated to the DAT strategy.

Profit

To offset these costs, DATs need to generate profit from multiple sources. Today, most PoS DATs rely primarily on token appreciation. However, beyond passive token holdings, DATs have a range of options to generate additional value: running their own validator infrastructure, deploying capital into DeFi, and investing in or acquiring businesses that support the ecosystem.

Profit = Token Appreciation + Staking Yield + MEV and Priority Fees + DeFi Yield Strategy + Return on Investments

• Token Appreciation: the price gains of the native assets. This is the primary driver of DAT equity performance today.

• Staking Yield: the yield from staking the protocol’s native asset as a network validator (ETH currently yields 3% and SOL 7%).

• MEV and Priority Fees: the additional revenue validators can capture by reordering, including, or excluding transactions from a block.

• DeFi Yield Strategy: returns generated by actively deploying treasury holdings into onchain protocols.

• Return on Investments: returns generated from deploying balance sheet capital into strategic investments, including minority stakes, acquisitions, and seed positions in ecosystem companies.

Business Models

Active Treasury Management

If you’re running a DAT that holds a Proof-of-Stake asset, staking yield is the default. Anyone can delegate to a validator and earn base issuance. It’s not a differentiated business model and by itself it does not justify a premium multiple. For DATs to sustain themselves through a downturn, they need operating cash flow that is recurring and at least partially decoupled from the token price. That means treating the treasury as a productive asset instead of a static one.

The strategies available to PoS DATs range in sophistication, and not every DAT should attempt every strategy. But the menu is there, and the DATs that survive the current environment will likely be the ones that move beyond passive holding.

Basis Trading

The simplest active strategy is basis trading: going long the spot asset (which the DAT already holds) while shorting perpetual futures when funding rates are positive, i.e. when long positions are paying short positions. For a DAT with a permanent long position, the spot leg is effectively free. The yield comes from collecting funding payments, which on assets like SOL and ETH have historically averaged 5% to 15% annualized during bullish market conditions, though they compress or turn negative during downturns. The trade can be executed via perpetual futures on crypto-native venues or through CME-listed contracts, with the latter offering cleaner counterparty risk. This is hardly a novel strategy (it’s widely used by crypto-native funds and market makers) but for a DAT, it is a natural and low-overhead extension of the balance sheet.

The primary risk is basis blowout and margin call. If the spread between spot and futures widens sharply against the position, the DAT may face margin calls, forcing liquidation at the worst possible time. The infrastructure needs for this strategy are modest relative to the ones that follow.

MEV Capture

MEV (maximal extractable value) refers to the additional value validators can capture by reordering, including, or excluding transactions from a block. This can include priority fees, liquidations (earning rewards for closing out undercollateralized loans), and sandwich attacks (inserting transactions before and after a user’s trade to manipulate execution price and extract value). For PoS networks with meaningful onchain activity (Solana, Ethereum, BNB Smart Chain, and Base), MEV revenue can materially exceed base staking yield. A DAT that simply delegates tokens to a third-party validator captures base issuance and perhaps a share of priority fees. A DAT that runs its own validator infrastructure and actively participates in MEV supply chains captures block-level revenue directly.

As Coinbase’s David Duong has written, “future iterations of DATs will instead specialize in the professional trading, storage, and procurement of sovereign block space.”

The barrier to entry here is considerable. Running a competitive validator requires dedicated infrastructure, low-latency connectivity, and highly sophisticated engineering talent. But for DATs with the scale and technical ambition to build this capability, MEV capture is perhaps the cleanest first step toward generating onchain-native operating revenue beyond staking.

Prop AMMs

A more ambitious path for technically sophisticated DATs is operating a proprietary automated market maker (AMM).

Proprietary AMMs differ from traditional AMMs like Orca or Raydium in a fundamental way: instead of pooling passive liquidity from external depositors, a proprietary AMM is a custom onchain program operated by a single entity that deploys its own capital and embeds its market-making strategy directly into the blockchain’s runtime. Pricing is actively managed through lightweight oracle updates rather than passively determined by a bonding curve. The result is tighter spreads, higher capital efficiency, and execution quality that in many cases rivals that of centralized exchanges.

Prop AMMs also primarily capture clean, non-toxic retail order flow (which is the most profitable kind of flow for a market maker).

For a PoS DAT holding a large SOL or ETH position, the opportunity is clear. Rather than delegating tokens or providing liquidity to an existing AMM and accepting impermanent loss, a DAT could deploy its holdings into a prop AMM that it operates.

The barriers are high, though. Operating a competitive proprietary AMM requires deep expertise in onchain market microstructure and custom Solana program development. The space is fiercely competitive, and even marginal efficiency gains in oracle update speed or compute optimization can determine whether a venue captures flow or gets left in the dust. This is definitely not a strategy for every DAT, but for those with the technical talent and ambition to build it, proprietary AMMs are one of the most capital-efficient ways to generate recurring onchain revenue.

AMM Liquidity Provision

Alternatively, DATs can deploy capital as liquidity providers (LPs) on existing automated market makers. This is riskier than prop AMMs but requires less technical sophistication. Concentrated liquidity positions on venues like Orca (Solana) or Uniswap (Ethereum) can generate meaningful fee income, particularly on high-volume trading pairs. Unlike passive full-range liquidity, concentrated positions allow a DAT to allocate capital within a defined price range, increasing capital efficiency and fee capture (but also increasing the precision required to manage the position).

The core risk here is impermanent loss: if the price of the underlying asset moves significantly outside the chosen range, the LP position underperforms simply holding the asset. For a DAT whose primary mandate is token exposure, this tradeoff requires careful calibration. The position must be actively monitored and rebalanced, which demands either an in-house trading team or reliable automation infrastructure.

That said, for DATs holding large token positions that would otherwise sit idle beyond staking, deploying a portion into concentrated liquidity can generate incremental yield that compounds meaningfully over time.

Liquidation Arbitrage

DATs with in-house trading capability can also participate in liquidation arbitrage on lending protocols. When borrows on platforms like Aave, Compound, or Kamino become undercollateralized, their positions are liquidated at a discount. But the process is not quite automatic. Participants known as liquidators identify eligible positions, pay the borrowers’ debts, sell the collateral, and capture the spread between the discounted collateral and its market value. For DATs already running validator and trading infrastructure, adding liquidation monitoring is an incremental capability (though it does require low-latency execution and robust risk management to avoid taking on unwanted inventory in volatile conditions).

The Spectrum

The distinction that matters is between passive and active treasury management. A DAT that delegates tokens and collects staking rewards is operating a passive balance sheet. A DAT that runs its own validator, captures MEV, provides concentrated liquidity, executes basis trades, or participates in liquidations is operating an active one.

The latter strategy generates diversified and recurring cash flows that are less correlated to token price, which is exactly what these companies need to justify trading above NAV when sentiment deteriorates.

Each strategy carries risk proportional to its sophistication:

The strategies at the top of the table are the most accessible starting points. Basis trading requires the least sophisticated infrastructure and can be implemented by nearly any DAT with basic operational capability. MEV capture and prop AMMs sit at the other end, offering the highest revenue potential but demanding engineering teams and infra that most DATs do not currently have.

The right approach for any given DAT depends on team expertise and risk tolerance. The broader point is that DATs that build even a subset of these capabilities will be structurally differentiated from those that remain pure treasury proxies.

Convergence of Foundation and DATs

A protocol foundation is a stewardship organization that supports the development of a blockchain network by funding ecosystem projects, coordinating protocol upgrades, and managing a treasury. Foundations are often net sellers of their own tokens, periodically liquidating holdings to fund operations.

The Ethereum Foundation is a classic example. It published its formal treasury policy in June 2025, designating 15% of its treasury to annual operating expenses and maintaining a 2.5-year cash runway. Its periodic ETH sales (before and after the policy was released) drew sustained community criticism, particularly when executed without prior notice.

DATs sit on the opposite end of the spectrum. They are structurally net buyers, using equity issuance and debt to accumulate tokens and provide shareholders with crypto exposure. DATs then can function as a quasi-bank for the protocol: deploying their balance sheets into structured capital strategies that generate yield, support ecosystem liquidity, and create a virtuous loop between DAT performance and protocol growth.

Increasingly, we are seeing a symbiosis between these two types of organization. The Ethereum Foundation has twice sold ETH directly to corporate treasury buyers via over-the-counter (OTC) deals: offloading 10,000 ETH to SharpLink Gaming in July 2025 at roughly $2,572 per token (~$25.7M), and most recently selling 5,000 ETH to BitMine Immersion Technologies on March 14 at ~$2,043 per token (~$10.2M). The DATs got assets for their treasuries, and the foundation got cash to pay for its work.

Sui Group (Nasdaq: SUIG), a DAT affiliated with the Sui blockchain ecosystem, offers a more formalized example of this convergence in practice. SUIG is the only Nasdaq-listed company with an official relationship with the Sui Foundation, giving it a unique position in the ecosystem. Since August 2025, it has accumulated over 108 million SUI tokens. Aside from staking, SUIG has ventured into stablecoins. It launched suiUSDe, a Sui-native synthetic dollar, in partnership with Ethena and the Sui Foundation. This marked the first collaboration between a publicly traded DAT, a blockchain foundation, and a stablecoin issuer. Ninety percent of fees generated by suiUSDe flow back to SUIG and the Sui Foundation, either to buy back SUI on the open market or to be redeployed into Sui-native DeFi. The stablecoin is deployed as collateral across DeepBook and other Sui DEXs, creating a direct feedback loop between stablecoin adoption and ecosystem growth.

The SUIG model points to what a more mature DAT-foundation relationship could look like: shared infrastructure, aligned incentives, and fee-splitting arrangements that benefit both parties. An effective DAT can strengthen protocol marketing, launch onchain products, and serve as a primary liquidity vehicle for the ecosystem. In more advanced cases, a DAT could, conceivably, seek to formally consolidate with a foundation, though the legal and regulatory complexity of such an unprecedented arrangement would be significant.

TradFi and Vaults

DATs have an opportunity to reinvent themselves: by shifting from passive token accumulators to active capital deployers at the intersection of DeFi and TradFi. With significant token holdings already on their balance sheets, DATs are well-positioned to seed the infrastructure that bridges these two worlds.

Vaults are one example. These are smart contract-based pools of capital that deploy assets into a defined investment mandate onchain. Common strategies include lending, liquidity provision, basis trading, and structured products. Returns they generate are distributed back to depositors. They are programmable, transparent, and composable. Total assets under curation have been growing as more assets are tokenized and moved onchain, and Morpho, one of the leading vault platforms, alone has attracted roughly $4.1 billion today. As agentic trading by AI bots matures, vaults could emerge as a preferred vehicle for automated capital deployment and gain more popularity.

For DATs, seeding vaults offers a straightforward path to earning diversified yield. In exchange for providing seed capital, DATs receive shares in the vault and participate in the returns generated by its underlying strategies. In effect, DATs can position themselves as capital providers for tokenized traditional financial products when they arrive onchain. Depending on DATs’ balance sheet composition, they can deposit native token holdings directly into asset-matched vaults or borrow stablecoins against them as collateral to access fiat-denominated strategies, all while earning yield without having to build infrastructure from scratch.

Ancillary Businesses

A core path to sustainability for DATs is generating revenue beyond token holdings, and one approach is investing in or acquiring public or private businesses that produce recurring cash flow and support the underlying protocol. Unlike passive treasury management but similar to capital seeding for vaults, this approach treats the DAT's balance sheet as productive capital, deployable into companies that are strategically aligned with the ecosystem the DAT is built around. Two early examples illustrate what this can look like in practice: Bitmine's $200 million investment in Beast Industries, and Nakamoto's acquisition of BTC Inc. and UTXO Management.

Bitmine invested $200 million in MrBeast's media platform Beast Industries in January. The strategic logic is twofold: MrBeast's platform represents an attractive investment opportunity in its own right. Beast Industries, the parent company, raised capital at a roughly $5 billion valuation and generated over $400 million in revenue, driven largely by Feastables, its snack food brand. With media projected to account for only a fifth of total revenue by 2026, Beast Industries is evolving from a content creator into a diversified consumer goods company. With one of the largest and most engaged audiences on the internet, the partnership could also create a natural marketing channel for Ethereum, aligning the world's largest social media creator with the leading platform (in Bitmine’s view) for the future of finance. Beast Industries’ recent acquisition of Step, a crypto-capable fintech app targeting young users, signals an even deeper push into financial services. As Beast Industries expands into crypto services, the overlap between the two could further elevate Ethereum's visibility with mainstream audiences.

Nakamoto's approach is the cleaner illustration of the model. By acquiring BTC Inc. and UTXO Management, it is building a recurring revenue base alongside its treasury exposure. BTC Inc. brings scale: In fiscal 2025, management estimates combined revenue of approximately $78 million across BTC Inc. and UTXO. BTC Inc. itself posted 106% revenue growth last year. The company has ~6 million aggregated social media followers and generated 1.13 billion social impressions in 2025. Its flagship conference series drew roughly 67,000 attendees in 2025. The best known of BTC Inc.'s media brands is Bitcoin Magazine, one of the longest running publications in the field. UTXO Management had $128 million in assets under management as of Jan. 31 and according to a Nakamoto investor presentation, its returns outperformed bitcoin by 59% last year.

While these numbers are modest relative to Nakamoto’s treasury exposure (5,398 BTC worth ~$360 million), they introduce operating cash flow that is not directly tied to short-term BTC price movements while deepening Nakamoto's presence in the Bitcoin ecosystem through media, events, and asset management.

The crypto ecosystem is home to many strategically valuable private businesses: infrastructure providers, developer tooling companies, wallet providers, media platforms, and ecosystem builders that are not yet ready or positioned to go public. For DATs, this creates a natural role that can range from corporate acquirer to strategic investor, deploying balance sheet capital into companies that simultaneously generate returns and strengthen the protocols underpinning their token holdings. The most value-accretive targets are those that drive token usage, expand protocol visibility, or support ecosystem participants. For companies that do not yet meet the requirements to go public but intend to, a DAT can serve as a meaningful capital partner and in doing so, build an operational footprint that distinguishes it from a one-dimensional treasury proxy.

Conclusion

The DAT frenzy of 2025 was driven by a powerful narrative: public companies accumulating crypto on their balance sheets represented a compelling new investment vehicle, one that could compound returns through repeated capital raises and token purchases. Investors rewarded this story with a hype premium, paying above mNAV for DAT shares in anticipation of continued flywheel growth. As asset prices decline and that flywheel stalls, the premium has compressed, and the narrative alone is no longer enough to sustain valuations.

DATs that survive will need to prove their worth as operating businesses, not just as token holding vehicles. For PoS DATs, staking is the natural starting point, but the opportunity set extends well beyond that: validator infrastructure, DeFi yield strategies, foundation partnerships, and ancillary business investments. The DATs that pursue these paths seriously are the ones best positioned to trade at a durable premium to NAV.

For those that cannot or will not make that transition, consolidation is the likely outcome. As we argued in our 2026 Predictions, larger DATs with greater token holdings and capital markets access will move to acquire smaller ones, absorbing their exposure and eliminating the overhead. The first wave of consolidations will likely generate a stock premium for those involved, but that window will not stay open for long. The DATs that remain passive vehicles face a narrowing path. In this next phase, scale and operational sophistication will determine who lasts. The survival of the fittest is on, and only the smart and big can last. Give investors a reason to pay a premium on your stock or hang it up.