Public companies are stepping up efforts to raise funds to increase Ethereum (ETH) reserves, and Vitalik Buterin has expressed support from the ETH Treasury Ministry.
However, the co-founder of Ethereum also warned of the dangers of excessive leverage. He warned that excessive use of the Treasury could lead to catastrophic consequences for Ethereum.
Companies are moving forward with multi-billion dollar ETH financial plans
Beincrypto has extensively reported on the company’s Eth Treasury Pivot, and that trend continues. Basic Global took a significant step by raising $5 billion for the Ethereum Treasury Department by filing an S-3 registration statement with the Securities and Exchange Commission.
The Company’s securities offerings may include common stock, preferred stock, depositary stock, debt securities, warrants and units. The company will primarily use the funds raised for the ETH acquisition.
This comes after Basic Global announced it has launched its ETH Reserve Strategy and raised $200 million through private placements.
“Today is the beginning of FG Nexus’ mission to completely lock into Ethereum’s greatest potential as the ultimate reserve asset. This capital demonstrates the implementation of a massive ETH financial strategy with the goal of 10% equity in the Ethereum network.”
Meanwhile, Sharplink Gaming, ETH’s second largest public owner, has revealed it has raised $200 million. The funds were raised through direct supply, with four global institutional investors leading the round at a price of $19.50 per share.
Notably, after this, the company acquired 10,975 ETH, worth $4279 million. Sharplink Gaming’s Total ETH Holdings currently stands at 532,914, which is worth $2.07 billion, according to Onchain Lens.
Similarly, COSMOS Health has secured a $300 million funding agreement with institutional investors through convertible promissory notes. The funds will be stored and staked through Bitgo Trust to support the company’s Ethereum Treasury Strategy.
Risks of institutional involvement in Ethereum: Butaline’s concerns
The initiative highlights the company’s commitment to increasing ETH exposure. The rising momentum also offers many benefits.
In a recent episode of the Bankless Podcast, Buterin explained that ETH Treasury businesses offer multiple ways for people to access Ethereum. He stated that,
“The social aspect of adjusting ETH centers is that it’s good that it’s an asset that businesses can have as part of the Ministry of Finance, and there’s a lot more options for people. There’s a valuable service that’s available there.”
But are there any downsides to so many institutional involvement in ETH? Well, yes, but only if the company over-leverages itself.
“If you wake me up three years from now and tell me that the Treasury has led to the downfall of ETH, of course, why did they basically somehow turn it into an over-game,” Buterin said.
He also detailed a scenario in which a decline in ETH prices leads to forced liquidation, leading to a chain reaction of further price drops. This can ultimately lead to significant losses and damage to Ethereum’s reliability.
“But I think Ethereum people are generally the ones responsible, even including those who make money from Ethereum. These are not the followers of Kwon that we’re talking about.”
Therefore, the growth trends of the Ethereum Treasury Department have undeniable benefits, such as increased ETH exposure and liquidity. However, as Buterin warns, the risk of overlaying these Treasury Departments cannot be ignored.
While the potential of ETH as a reserve asset is important, these agencies must approach carefully and responsibly to avoid risking the future of their network.
Post Vitalik Buterin reveals what’s going wrong as businesses push all-in on Ethereum.
