Programmable Money and Digital Asset Treasuries
Digital Asset Treasuries (DATs) hold $105 billion in assets and control a material percentage supply of the leading blockchains. The speed at which they’ve scaled has caused whiplash, with few stopping to think through the deeper implications of Wall Street’s latest gold rush.
To date, the conversation remains myopically focused on short-term speculation: how much money is being raised, how long the premiums will last, which asset will be next to capture the market’s imagination.
This is not without reason, as most DATs lack substance beyond their financial engineering and will likely fade away once the music stops. However, in overindexing on short-term speculative factors, the market is discounting the long-term economic potential of DATs that become winners.
We believe this period will ultimately be remembered as a frenzied bootstrapping phase – the necessary opening chapter for DATs to reach critical mass and outcompete peers. In the coming quarters, leading DATs will evolve their capital structures, adopt more sophisticated asset management strategies, and build out services that expand beyond treasury management.
In a nutshell, we imagine select DATs becoming for-profit, publicly traded counterparts to crypto foundations. However, unlike foundations, they will have broader mandates to deploy capital into their ecosystems and leverage the scale of their treasuries to operate businesses and participate in governance. A handful already hold more assets than the foundations of the protocols they orbit, and their ambitions to scale further are only accelerating.
Nevertheless, to understand the future of DATs, we must first revisit the core properties of cryptocurrencies themselves. Only then can we understand how DATs might mature from speculative vehicles into long-term economic engines for the cryptoeconomy.
Programmable Money
Bitcoin’s code enshrined a narrow set of principles such as deterministic issuance and peer-to-peer transferability that enabled it to become digital gold. Its Proof-of-Work consensus and small-block philosophy ensured sovereign-grade censorship resistance and easy end-user verification, creating a system that maximized credibility through simplicity.
Yet this conservatism came with trade-offs. Bitcoin’s security is unparalleled, but its limited design left little room for expressiveness, reducing its utility to simple transfers.
Ethereum in contrast was built to be a “world computer”. Its smart contracts allowed developers to create new assets and set up arbitrary escrow logic. Its Proof-of-Stake consensus enabled final settlement and greater scalability. Altogether this provided the foundation for a fully programmable financial system.
The expressiveness of Ethereum and now other smart contract platforms (SCPs) like Solana and Hyperliquid enables money itself to become programmable. Unlike Bitcoin, where most financial activity is forced into custodial wrappers, SCPs allow native assets to be financialized non-custodially. This not only reduces counterparty risk, but also increases the opportunity to put these assets to work.
As a starting point this means staking to secure the network in exchange for fees and borrowing against the native asset to generate yield. Yet, these use cases only scratch the surface, as programmability enables these assets to be rehypothecated and extended into entirely new forms of financial activity.
What’s unique about many of these onchain use cases is that they require large amounts of native capital to bootstrap operations, improve product quality, and scale.
For instance, RPC providers and prop AMMs on Solana that stake more SOL have stronger guarantees around landing transactions and spread capture. On Hyperliquid, exchange frontends that stake more HYPE can offer lower fees or capture a higher take rate without increasing user costs. These native capital requirements can constrain growth for sub-scale businesses, and many would benefit immensely from direct access to permanent pools of native assets.
The Capital Allocation Game
Programmable money transforms balance sheet management for DATs. Whereas Microstrategy (MSTR) can only experiment with the capital structure around holding Bitcoin, DATs for assets like ETH and SOL can get creative with both sides of the ledger.
These DATs sit at the intersection of a handful of familiar businesses. They borrow the permanent capital structure of closed-end funds and REITs, the balance-sheet orientation of banks, and the long-term compounding ethos of Berkshire Hathaway.
What makes them unique is that their returns are denominated in crypto per share, making them function as pure plays on underlying projects rather than fee-extracting asset managers. This structure provides capital allocation advantages that neither funds nor foundations can replicate.
Permanent Capital – Like closed-end funds or REITs, DATs raise permanent pools of capital that cannot be redeemed on demand. This shields them from the liquidity pressures that force funds to sell into drawdowns. Instead, they can accumulate opportunistically during dislocations and focus on compounding crypto per share.
Flexible Funding Toolkit – DATs can expand their balance sheets through equity issuance, convertibles, or preferreds. None of these funding sources are available to funds, providing structural advantages in their ability to juice returns for investors (shareholders). Access to cheap funding can be used to exploit a TradFi -> DeFi carry trade, and yield on assets like ETH and SOL enable DATs to better manage these funding sources than static treasuries like MSTR.
Productive Balance Sheets – As DATs begin staking tokens, injecting liquidity into DeFi, or acquiring ecosystem primitives such as validators, RPC providers, and indexers, their treasuries become productive engines. This creates recurring yield streams and gives them economic and political power within their ecosystems. Imagine for example if a leading DAT pushed through a controversial governance proposal by using their treasury assets.
Ecosystem Compounding – Foundations were designed to steward ecosystems but remain constrained by their non-profit mandates. DATs are their for-profit counterparts that can recycle profits into asset accumulation, product-building, and ecosystem expansion. Over time, the best managed ones could evolve into the Berkshire Hathaways of their blockchains which not only compound capital, but also shape the direction of their ecosystems.
Experimentation and Innovation – DATs are some of the most heavily incentivized public companies to pioneer the movement onchain. To start this may mean tokenizing their equity and executing market purchases onchain; however, over time this may also mean shifting everything from payroll to vendor payments there as well. If executed well, they could serve as a roadmap for other public companies and validate blockchains as financial infrastructure for corporations.
Framing DATs this way reveals what’s required to be successful. It’s not enough for teams to announce asset purchases and go on TV to repeat the same generic talking points day after day. As competition intensifies, winning teams will need skilled capital allocators and operators to grow shareholder value.
The first generation of DATs revolved around financial engineering, with Microstrategy as the blueprint. The next generation will become active capital allocators, deploying their treasuries onchain to earn yield.
However, in the long-run we expect the DATs that survive to be more than long-only accumulators of tokens. In many ways they’ll start to resemble operating companies, leveraging the economies of scale of their treasuries to operate businesses as detailed above. Anything less, we imagine will ultimately lead to collapsed premiums to NAV.
The Seeds of Destruction
As the frenzied bootstrapping phase of DATs progresses, greed is rising and opportunists are coming to the table. We expect this will lead to increasingly risky behavior and eventually consolidation.
For now, activity has been concentrated in BTC, ETH, and SOL. However, raising capital to accumulate your own token and sell it back to public equity investors at a premium is too tempting for opportunists to resist. Once the majors light the path forward, spillover into riskier assets is inevitable, just as it was during the ICO boom in 2017 and the “Web 3.0” venture frenzy in 2021. Now it's Wall Street’s turn.
At the time of writing, DAT capital has largely been raised as common equity. As such there is little leverage and minimal risk of forced selling. Moreover, there are strong deterrents against liquidating the underlying to fund buybacks at discounted mNAVs. Structurally, existing instruments don’t require it. Socially, selling the core asset would break the “social contract” that DATs are long-only accumulators aligned with tokenholders.
But perhaps that’s only a matter of expectations. Under real distress, shareholders may decide they just want NAV per share to rise by any means necessary, even if it means violating what was once sacred. As premiums turn into discounts, balance sheet experimentation creeps in, and more exotic funding sources appear, disciplined compounding may give way to reckless financial engineering.
In fact, we’d go as far as to say this is inevitable as most DAT operators are either inexperienced or have little vision for their companies beyond the current mania. We expect there to eventually be a ton of M&A between DATs in the wreckage. As will there be overtrading, with distressed treasuries even dumping out of favor assets to chase ones the market likes more.
Bubble or Boom?
The longer you think about DATs, the more you start to wonder if this meditation on long-term fundamentals is really just retroactive justification of their existence. Are these vehicles really the beginning of ”Berkshire Hathaways” for blockchains, or are they merely speculative wrappers born from the success of a madman levering up a waning software company to buy Bitcoin?
At the very least compared to prior fundraising booms in crypto such as ICOs, DATs are a step forward in that they’re regulated, investor-aligned, and far less prone to outright fraud. Moreover, they’re a welcome change in market structure, taking supply off the market without any sensitivity to price. The past couple years of memecoin mania and altcoin underperformance has broken retail psychology, creating excessive short-termism and pessimism, so it's good to finally have long-duration, diamond-handed buyers, of any sort.
Still, perhaps the question of whether this is all retroactive justification doesn’t matter. The world is path dependent, and we now live in one where public companies hold mountains of crypto on their balance sheets whether we like it or not. The real question is what happens next.
Wall Street is now being educated on everything the industry has built over the past few years, just as regulatory clarity and killer use cases emerge for blockchains. If even a fraction of that utility is absorbed into the way public companies and financial institutions operate, DATs will be a huge win for the asset class. As will it be if the asset class simply onboards a new set of buyers.
There are many reasons to be anxious about DATs that you’ll find on twitter and mainstream press. Markets are notoriously noisy in the short-term. But the further you zoom, the more likely you might find reasons to be a little more optimistic. And markets have a history of favoring the optimist long term.
Not all DATs will make it to the promised land. But the few that do, will likely leave a lasting impact on the cryptoeconomy.
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