The Ethereum ecosystem welcomes a new chapter: Opportunities and challenges under the institutional investment boom

Recently, a company focused on Ethereum investment increased its holdings by 10,605 ETH, bringing its total holdings to 345,362 ETH, valued at approximately $1.27 billion. This is the company's second large-scale increase within less than half a month of its listing.

As a company focused on Ethereum investment, it announced in July that it will be listed on Nasdaq, with an initial plan to hold 400,000 ETH, valued at nearly 1.6 billion dollars. By the end of July, the company had already made a purchase of 15,000 ETH.

The company's aggressive expansion coincides with a critical period in which multiple publicly listed companies are competing to purchase Ether. As the regulatory environment becomes increasingly clear, more and more public companies are starting to incorporate Ether into their asset allocation.

Ethereum Treasury Track: A Battleground for Institutions

The Ethereum treasury sector has become the focal point of institutional competition. With the entry of new players, the landscape of the entire track has undergone significant changes in just two weeks.

According to reports, on July 21, when a certain company announced its listing, the ETH reserves of the other two companies were 300,000 and 280,000 respectively, both lower than the planned initial scale of 400,000 by that company. However, by August 5, one company's holdings had soared to 833,000 (market value of $3 billion), an increase of 177%; the other company's reserves also reached 498,000 (market value of $1.8 billion), an increase of 78%, and publicly announced its goal to reach 1 million. Even a former Bitcoin mining company urgently shifted directions and accumulated 120,000 ETH.

This frenzied accumulation trend confirms a prediction made by a certain bank: a treasury company has purchased more than 1% of the circulating ETH supply, and this ratio could soar to 10%. A multi-billion dollar "arms race" is escalating comprehensively.

In this heated competition, some companies have emerged with a dual advantage of "capital + strategy." First of all, the initial capital of nearly $1.6 billion provided strong ammunition. However, the more crucial advantage lies in its differentiated approach. While competitors are still frantically hoarding coins to capture market share, the company has already enhanced its yield to 4-5.5% through re-staking and a combination of DeFi protocols. In a low-interest-rate environment, this stable high yield has become a powerful weapon to attract institutional funds.

Dissecting High-Yield Strategies

To understand how to achieve an annualized return of 4-5.5%, it is essential to grasp its core positioning - "Ethereum generation company."

This concept can be likened to the oil economy: traditional cryptocurrency investment is like buying crude oil for hoarding in anticipation of price increases; while this new model chooses to become an "oil company," allowing the assets themselves to generate cash flow.

Through a certain protocol, the staked ETH achieves "one fish, multiple eats"—providing security for the Ethereum mainnet while simultaneously serving protocols such as oracles and cross-chain bridges, with each service bringing additional收益.

Just like bank deposits can earn interest while also "working" to earn extra money. The total locked value of $16.591 billion for this protocol confirms the appeal of this model.

In addition to re-staking rewards, the company also earns returns by participating in DeFi protocols. When the basic staking yield for ETH is only about 3%, this combined strategy boosts total returns to 4-5.5%.

At this point, ETH has transformed from a "waiting for appreciation" static asset into a "continuously creating value" productive asset.

The uniqueness of the new model

The market always likes to find a reference point. When a new investment model emerges, many people are asking the same question: "Is this the next typical cryptocurrency investment company?"

On the surface, some companies seem to be doing the same thing – holding a large amount of crypto assets under the identity of a publicly listed company. But upon closer inspection, you will find that these are two completely different approaches.

The logic of the traditional model is simple and straightforward: issue bonds to buy Bitcoin, betting that the price of the coin will rise to cover the interest. However, the efficiency of this model is declining rapidly. In 2021, 12.44 BTC could generate one basis point of return for shareholders. By July 2025, 62.88 BTC will be needed to achieve the same effect. The scale has increased fivefold, but the efficiency has dropped to one-fifth.

In contrast, the new model takes a different path. By participating in staking and DeFi, ETH generates approximately 5% annual cash flow every day. There's no need to wait for the price of coins to rise, nor to pray for a bull market—this is real income, not paper wealth.

The fundamental difference lies in the asset attributes: Bitcoin is digital gold, its value lies in scarcity and consensus. On the other hand, Ethereum is digital infrastructure, its value lies in its ability to support the operation of the entire ecosystem.

We can now trace back history and find that we are experiencing the third phase of the evolution towards a crypto treasury:

1. Pioneer Dividend Period (2020-2023): Companies that were not favored at the time proved that publicly traded companies can achieve a premium by holding cryptocurrency assets.

2. Mode Replication Period (2024-2025): Successful imitators emerge. The stock price of the imitators skyrockets by 4000% and then plummets by 70%. Other companies follow suit, but the results are also unsatisfactory, revealing risks in the simple coin-holding model.

3. Mode Evolution Period (2025-): Represented by a new model - not hoarding assets, but operating assets to create diversified sources of income.

However, achieving this evolution from hoarding assets to operating assets is no easy task. It requires not only a deep understanding of the crypto world but also experience in navigating the maze of traditional financial compliance.

Key Figures Behind the New Model

A group of well-established professionals is trying to reshape the landscape of institutional crypto investment.

The story begins with a certain company in the Ethereum ecosystem. It was there that several key figures first met. At that time, they had no idea they would become deeply bound with the world's top financial institutions.

In 2017, after the ICO bubble burst, the "crypto winter" enveloped the entire industry with despair. At this moment when everyone was fleeing, someone aimed to use Ethereum to knock on the doors of large tech companies and banks.

"They look at these people as if they are looking at a madman selling a perpetual motion machine."

But they did not give up. Time after time of rejection, time after time of explanation, until doubt gradually turned into curiosity. Ultimately, they founded the Enterprise Ethereum Alliance (EEA), bringing the term "Ethereum" into the boardrooms of the Fortune 500 for the first time.

Meanwhile, others are driving the commercialization transformation within the company, leading over $700 million in financing and mergers.

In countless late-night discussions, they realized that the gap between traditional finance and the crypto world is not only one of prejudice but also a real compliance chasm.

"Countless institutions are interested in Ethereum, but ultimately stop because of a lack of credible investment tools."

This pain point prompted them to make a bold decision: to no longer just be "evangelists," but to personally get involved in creating a regulated financial vehicle.

The team's first action shocked everyone – a member invested over $600 million worth of personal ETH as the initial investment. "If I don't believe in it myself, how can I make others believe?"

His full commitment allowed everyone to see his determination. In a later interview, he further clarified: "I would rather have an iPhone than a landline." This metaphor aptly explains why he only bets on Ethereum.

Next, the team gathered and began. They found a "double-faced person" who had experience managing risks in traditional financial institutions and was also a core contributor to DeFi protocols. His task was clear: to strike gold in the wild west of DeFi while keeping his life safe.

To ensure technical security, experts with twenty years of banking-level system experience have joined the team. Finally, the arrival of a certain payment company's director and a former senior executive from a certain capital firm provided the final endorsement for the company's governance structure.

The internal team is not smooth sailing. The traditional finance faction advocates for conservative and prudent approaches, while the crypto native faction tends to favor aggressive innovation. After several meetings with no consensus, someone made a decisive statement: "We are not here to choose one side, but to become the bridge connecting both sides."

This sentence has become the core concept of the new model.

Concerns of the Ethereum Founder: Beware of the Full Invasion of Institutional Capital

If we say that the idealism represented by the Ethereum Foundation, which is centered on technology and community, constitutes the first lifeline of ETH, then what we are witnessing today is the natural evolution and transition of this lifeline: as the foundation gives way to capital, the second lifeline of ETH has already begun.

This new lifeline may not necessarily deviate from its original intention, but it will undoubtedly take Ethereum into a more complex deep water zone. The question is, what will Ethereum become in this process? What risks will it face?

The first and foremost risk is technical risk: vulnerabilities in smart contracts and the possibility of staking penalties could lead to a 100% loss of ETH. Coupled with a unlocking period lasting several weeks, liquidity has become a luxury. When a single entity controls a large amount of ETH, are we reinforcing Ethereum or changing its essence?

Subsequently, there was a clear divergence in community opinions. Some comments accurately captured this anxiety: from "building a decentralized Ethereum" to "selling 400,000 ETH to enterprises," ultimately evolving into "Web3 becoming Wall Street 2.0."

Even the founder of Ethereum has issued a warning: "We should not rush to pursue large institutional capital." Now, as 70% of the staked ETH is concentrated in a few pools, is his concern becoming a reality?

At the same time, "Who cares about decentralization when prices are rising?" Someone has pointed out the core dilemma of the community. A staking return of 4%-5.5% seems attractive, but history tells us that all excess returns will eventually be arbitraged away.

Similarly, although some believe that Ethereum has become the biggest beneficiary of a certain bill, it seems that a spring of regulation has arrived. But what happens after spring? When the policy winds change, will these institutional efforts instead become targets of regulation?

A sign of maturity, or the end of an ideal?

Perhaps every successful technology will ultimately lead to institutionalization. The Internet, mobile payments, and social media have all gone through this process.

As Ethereum transitions from an idealistic experiment to an investment product embraced by Wall Street, is this a sign of maturity or a departure from its original intentions?

Time will provide the answer.