The founder of the cryptocurrency exchange Huobi and chairman of the Hong Kong investment company Avenir Capital has just raised US$1 billion to invest in Ethereum (ETH).
While details remain scant, the set-up has been reported to be through a Nasdaq-listed shell company. This company would launch a trust fund to accumulate ETH, the second largest cryptocurrency by marketcap after Bitcoin.
Ethereum at the forefront of one of the most consequential shifts in corporate finance
This move comes as institutional demand for ETH has surged in recent months as the Ethereum blockchain is the prime benefactor of traditional financial markets moving onchain. Some 70 corporations and organizations – mostly US-based – are quietly leading what some analysts are calling one of the most consequential shifts in corporate finance; these entities have been stockpiling ETH and together hold close to 10% of ETH’s circulating supply. Already, a number of blockchain innovators are offering tokenized versions of stocks, while recently Nasdaq has sought SEC approval to tokenize all of its equities on the Ethereum blockchain.
As we reported earlier in the week, the world’s largest ETH digital asset treasury, BitMine, just scooped up another 104,336 ETH worth around $417 million, taking advantage of a market correction.
Apart from its appeal and onboarding potential as traditional finance moves onchain, Ethereum also forms the backbone of the rapidly growing decentralized finance ecosystem with utility for lending, borrowing, and payments – bypassing traditional banks.
BitMine’s Tom Lee is calling ETH the biggest macro trade “for the next 10 to 15 years as Wall Street financializes on the blockchain.”
ETH as a yield-bearing asset
Apart from Ethereum’s investment appeal as the blockchain becomes the one of choice for traditional finance, holding ETH produces passive income through staking (staking is like putting money in a savings account, but instead of a bank paying you, the Ethereum network pays you for helping to keep it running). Thus, Ethereum treasuries are yield-bearing assets.
According to Mati Greenspan, founder and CEO of Quantum Economics, who was quoted in a recent Forbes article:
“Liquid staking captures the true magic of internet money and delivers it to asset managers on a silver platter. Institutional funds can now hold Ethereum that grows in value while staying liquid, a combination that traditional finance has never been able to offer. It is no wonder this strategy is spreading like wildfire across the globe.”
This strategy is now taking hold in Asia with this recent $1 billion trust backed by Avenir Capital and a number of partners set launch in the coming weeks.