ETH Rallies on SharpLink's $425M Treasury Plan

Camila Russo & Olivia Capozzalo
May 27, 2025

gm Defiers!

Today’s big story:

Consensys’ Joe Lubin spearheads SharpLink’s corporate ETH treasury

Plus:

Crypto markets are mostly flat today, except ETH
Trump Media announces $2.5B corporate Bitcoin treasury (this time it’s real)
Circle launches its long-awaited IPO
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Today’s big story is, we’re seeing the birth of what ETH holders have been clamoring for: A MicroStrategy for ETH. The initial obvious reaction is, this is great for ETH. But we can also middle curve it.

First, the main details of the deal: SharpLink Gaming, a Nasdaq-listed sports marketing firm, just closed a $425 million private investment in public equity (PIPE) deal to kick-start an Ethereum treasury, with Joe Lubin as board chair. Lubin is the founder of MetaMask wallet maker Consensys and a co-founder of Ethereum. Top crypto VCs, including ParaFi, Electric Capital, Pantera, and Galaxy Digital, participated in the deal.

The announcement sent SharpLink’s stock soaring over 400%, leaping from under $7 to more than $30 in a single session. The reason for the jump is apparent. SharpLink does affiliate marketing via casino and betting websites – and it’s not going well with the company burning cash. The bet is that the stock will essentially become a wrapper for a leveraged ETH investment, and investors can forget about the company’s casino websites.

But why would investors buy SBET instead of just buying ETH? Same reasons they’re buying MicroStrategy and the other public company crypto vehicles popping up:

Familiar legal framework & reporting – Regulated equity vehicles simplify tax, custody, and compliance for institutions.
Equity issuance & debt leverage – These companies can sell new shares or raise debt against those shares, turning their stock into a leveraged bet on ETH’s price.
Avoids ETF constraints – Spot Ether ETFs still face capacity limits, higher fees, and ongoing SEC scrutiny, making equity proxies feel more manageable. In the case of ETH, they can’t even stake.

Why MicroStrategy’s Playbook Works

MicroStrategy’s Bitcoin treasury has thrived thanks to cheap, unsecured convertible notes carrying near-zero interest and no margin-call triggers. According to The Kobeissi Letter, Strategy’s debt doesn’t mature until 2027, and forced liquidation would only occur if BTC plunged more than 50% from today’s levels and stayed down — an unlikely “mayday” scenario given convertible-note flexibility and Michael Saylor’s voting control. BitMEX Research similarly argues that, under current terms, near-term liquidations are highly improbable.

How SharpLink Can Run Strategy’s Strategy

At roughly $2,700 per ETH, a $425 million raise translates to about 157,000 tokens. That stash will be used to seed a high-beta ETH position. The first obvious step is staking that ETH. But as we listed above, one of the main reasons for using public company shares is the ability to issue more shares and take on debt against that equity, so it’s highly likely SBET will start doing just that and become a proxy for a leveraged ETH position.

The playbook is straightforward: issue equity or debt at a slight discount to the underlying ETH value, deploy the proceeds to buy and stake ETH, then, if the stock begins trading above its implicit ETH-per-share valuation, tap the market again for fresh capital to repeat the cycle ad infinitum.

This MicroStrategy-style flywheel not only creates a public, regulated ETH proxy for institutions unable to hold tokens directly but also scoops up a significant chunk of supply into long-term staking, tightening liquid markets.

How SBET Can Be Better Than MSTR

Michael Saylor just said it’s a “bad idea” for institutions to provide proof of reserves. SharpLink’s $SBET could outshine $MSTR by embracing full on-chain proof of reserves. By publishing its staked-ETH addresses and corresponding Merkle-tree attestations—akin to how Wrapped Bitcoin (WBTC) exposes its 1:1 backing on Ethereum — $SBET would let anyone verify that every share is actually matched by real ETH. Integrating industry-standard Proof of Reserve oracles, like Chainlink’s, would automate these verifications in real time. This practice would ward off “paper ETH” concerns, where liabilities exceed actual holdings, and build trust with investors.

But Will it Work?

This best-case scenario depends on whether SharpLink can actually get these favorable terms. The strategy is a lot riskier if it hinges on secured loans, higher interest rates, and stricter covenants. When the market turns, margin calls or covenant breaches could force rapid ETH sales, amplifying volatility and risking liquidation cascades.

Let’s Focus on the Positive

For Ethereum bulls, the “Microstrategy for Ethereum” meme is the firepower ETH needs to catapult it out of its recent funk, attract fresh capital, and shore up confidence in what’s still the leading smart-contracts network.

With love,

Cami, founder of The Defiant

📈 Markets in the last 24 hrs:

TICKER	VALUE	24H
Bitcoin	$110,371	0.77 %
Ethereum	$2,673.53	4.99 %
XRP	$2.34	1.14 %
BNB	$691.79	2.40 %
Solana	$178.4	1.31 %

This is the news that mattered in the past 24 hrs:

Bitcoin and other top cryptocurrencies are trading sideways today, with the exception of ETH, which is up over 6%; the surge is driven by the news that a Nasdaq-listed firm plans to raise $425 million for an ETH treasury, with Consensys’ Joe Lubin leading its board.
Trump’s media company has confirmed that it is indeed creating a Bitcoin treasury, starting with a $2.5 billion haul; the move marks yet another addition to the Strategy bandwagon of publicly held firms adding BTC to their balance sheets.
USDC issuer Circle finally announced the launch of its IPO, looking to raise up to $624 million at a valuation of up to $7 billion; Circle’s initial plans to go public via SPAC merger, first announced back in 2021, ended up being mutually terminated.

🎬WATCH

In our latest video, we discuss one of the most important topics in crypto: security. As Bitcoin hits new all-time highs, scammers are coming up with increasingly sophisticated ways of getting to your crypto.

The Defiant team shares valuable tips on how to protect yourself from potentially devastating hacks. Stay safe out there, friends.

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