SharpLink Gaming's $425 million financing: A new chapter for Ethereum-native enterprises

Introduction

In May 2025, we completed our PIPE investment in SharpLink, marking a milestone in our in-depth research into the PIPE market since the beginning of the year. Since the start of this year, we have been actively positioning ourselves to capture the trend of CeDeFi integration from a forward-looking perspective, focusing on PIPE transactions related to digital asset reserves. Within this framework, we systematically studied all representative transaction cases, and SharpLink is undoubtedly the most crucial and representative one we have participated in so far.

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We are pleased to announce our participation in SharpLink Gaming, Inc. (NASDAQ: SBET) in a $425 million PIPE transaction. This investment provides us with a unique investment exposure—investing in a native enterprise that reserves Ether as a strategy. The investment structure combines option attributes with long-term capital appreciation potential, reflecting our strong belief in the strategic position of Ether in the U.S. capital markets, as well as aligning with our overall judgment on the institutional development trend of crypto assets.

Why do we invest

ETH vs BTC: The Division of Productive Value

Compared to BTC, which lacks native earning capabilities, Ethereum, as an earning asset, naturally possesses the characteristic of generating staking rewards. Strategies based on BTC mainly rely on financing to purchase coins, lacking self-generated asset income, and carry higher leverage risks. In contrast, SBET has the potential to directly utilize ETH's staking rewards and the DeFi ecosystem to achieve compound growth on-chain and create real value for shareholders.

Currently, there are no ETH-staking ETFs approved under the existing regulatory framework, and the public market is basically unable to capture the economic potential of the Ethereum yield layer. We believe SBET offers a differentiated path: with the support of a certain platform, the company has the opportunity to implement the protocol's native strategy, thereby achieving substantial on-chain returns, with its model expectations even surpassing the performance of future ETH-staking ETFs.

In addition, the implied volatility of Ethereum (69) is significantly higher than that of Bitcoin (43), introducing asymmetric call options linked to equity structures. This is particularly attractive for investors executing convertible bond arbitrage and structured derivative strategies---in this framework, volatility becomes a monetizable asset rather than a source of risk.

Strategic participation of a certain platform

We are very proud to collaborate with a certain platform, which is the lead investor in this $425 million PIPE financing. As the most effective executor of Ethereum commercialization, this platform has unique advantages in technical authority, product ecosystem depth, and operational scale, making it an ideal investor to promote SBET as a native enterprise carrier of Ethereum.

A certain platform was founded in 2014 by the co-founder of Ethereum and has played a key role in transforming Ethereum's open-source foundation into scalable real-world applications: from EVM and zkEVM (Linea) to a well-known wallet, which has introduced tens of millions of users to Web3. The platform has raised over $700 million from several top investment institutions and has a series of successful strategic acquisition experiences, making it the most deeply embedded commercial operator in the Ethereum ecosystem.

A core architect of Ethereum's design serves as the chairman, which holds not just symbolic significance. As one of the co-architects of Ethereum's core design and a leading figure in one of the most important infrastructure companies, he has a unique and comprehensive understanding of Ethereum's product roadmap and asset structure. His early experience on Wall Street also equips him with the proficiency to navigate the capital markets, enabling SBET to smoothly integrate into the institutional financial system.

At SBET, we see a unique combination of assets and the most capable investors. This synergy creates a powerful positive flywheel: driven by the protocol's native reserve strategy and the protocol's native leaders. Under the leadership of a certain platform, we believe SBET has the potential to become a flagship case, demonstrating how Ethereum's productive capital can achieve institutionalization and scale in traditional capital markets.

Market Valuation Comparison

To understand the investment opportunities of SBET, we analyzed the cryptocurrency reserve strategies of different listed companies:

A certain company: Pioneer of the crypto reserve strategy

A certain company has set an industry benchmark for its cryptocurrency reserve strategy. As of May 2025, it has accumulated a total of 580,250 Bitcoins, valued at approximately 63.7 billion USD based on market value at that time. The company's strategy is to purchase Bitcoin through the issuance of low-cost debt and equity financing, a model that has sparked a wave of corporate imitation and fully demonstrates the feasibility of cryptocurrency assets as reserve assets.

As of May 2025, the company holds 580,250 bitcoins (approximately $63.7 billion), and its stock trades at 1.78 times the mNAV (market value/net asset value), highlighting the strong demand from investors for regulated, leveraged exposure to crypto assets through listed stocks. This premium is the result of multiple factors, including the upside potential from leverage, eligibility for index inclusion, and the convenience of access compared to directly holding the coins.

From historical data, between August 2022 and August 2025, the company's mNAV fluctuates between 1x and 4.5x, reflecting the significant impact of market sentiment on valuations. When the multiple reaches 4.5x, it is usually accompanied by a Bitcoin bull market and substantial buying operations by the company, indicating a high level of investor optimism; when the multiple falls back to 1x, it often occurs during market consolidation phases, revealing the cyclical fluctuations of investor confidence.

Comparison of Similar Companies

We conducted a horizontal analysis of several publicly listed companies that adopt a BTC reserve strategy:

• In terms of BTC net assets (BTC NAV), which is the total value of Bitcoin held by the company, a certain company ranks first with 580,250 BTC (approximately $63.7 billion), followed by Metaplanet (7,800 BTC, approximately $85.7 million), SMLR (4,264 BTC, approximately $46.8 million), ALTBG (847 BTC, approximately $9.3 million), and SWC (59 BTC, approximately $6.4 million).
• In terms of the ratio of market value to BTC NAV (mNAV), SWC has the highest premium at 27.06 times, mainly due to its small BTC holdings and strong market enthusiasm. ALTBG's mNAV is 8.32 times, and Metaplanet is 5.29 times, both maintaining a relatively high level; in contrast, a certain company is at 1.78 times, and SMLR is at 1.25 times, which is moderate due to its large asset scale and debt.
• Year-to-date BTC yield ( BTC Yield YTD % ) (diluted adjusted, the percentage increase per share of BTC) shows that small-cap companies exhibit a higher per-share BTC growth rate due to continuous accumulation, with ALTBG reaching 431% and SWC at 300%. These yield data reflect their capital efficiency and compounding ability.
• Based on the current BTC reserve growth rate (Days/Months to Cover mNAV), ALTBG and SMLR can theoretically accumulate enough BTC within 5 months to cover their current mNAV premium, providing potential alpha space for NAV convergence trading and relative mispricing.
• In terms of risk, a certain company's debt to SMLR accounts for 15.7% and 21.3% of its BTC NAV, respectively, thus facing higher risks when the BTC price declines; while ALTBG and SWC have no debt, making their risks more manageable.

Japan Metaplanet Case: Valuation Arbitrage in Regional Markets

Valuation discrepancies often stem from differences in asset reserve sizes and capital allocation frameworks. However, the dynamics of regional capital markets are equally critical and are an important factor in understanding these valuation divergences. One particularly representative example is Metaplanet, a company often referred to as "a certain company in Japan."

Its valuation premium not only reflects the Bitcoin assets it holds, but also reflects the structural advantages related to the domestic market in Japan:

• Advantages of the NISA tax system: Japanese retail investors are actively allocating Metaplanet stocks through NISA (Nippon Individual Savings Account). This mechanism allows for capital gains of up to approximately $25,000 to be tax-free, which is significantly more attractive compared to a maximum tax rate of 55% for directly holding BTC. According to data from a Japanese securities firm, as of the week ending May 26, 2025, Metaplanet was the most purchased stock in all NISA accounts, driving its share price up by 224% over the past month.
• Japan's bond market dislocation: Japan's debt-to-GDP ratio has reached 235%, and the yield on 30-year government bonds (JGB) has risen to 3.20%, indicating that the Japanese bond market is facing structural pressures. Against this backdrop, investors increasingly view the 7,800 Bitcoins held by Metaplanet as a macro hedging tool to cope with the depreciation of the yen and domestic inflation risks.

SBET: Layout of Global Ether Leading Assets

When operating in the public market, regional capital flows, tax systems, investor psychology, and macroeconomic conditions are as important as the underlying assets themselves. Understanding the differences between these jurisdictions is key to uncovering asymmetric opportunities in the integration of crypto assets and public equity.

SBET, as the first publicly listed company with ETH capital at its core, also has the potential to benefit from strategic judicial arbitrage. We believe that SBET has the opportunity to further unlock regional liquidity and mitigate the risk of narrative dilution by achieving dual listings in Asian markets such as the Hong Kong Stock Exchange or Nikkei. This cross-market strategy will help SBET establish its position as one of the most representative Ethereum-native listed assets globally, gaining recognition and participation at the institutional level.

The institutionalization trend of encrypted capital structure

The integration of CeFi and DeFi marks a key turning point in the evolution of the crypto market, indicating its growing maturity and gradual integration into a broader financial system. On one hand, certain protocols exemplify this trend by combining centralized components with on-chain mechanisms, thereby expanding the utility and accessibility of crypto assets.

On the other hand, the integration of crypto assets with traditional capital markets reflects a deeper macro-financial transformation: that is, crypto assets are gradually establishing themselves as a compliant asset class with institutional-grade quality. This evolution can be roughly divided into three key stages, each representing a leap in market maturity:

• GBTC: As one of the earliest investment channels for institutions to access BTC, GBTC provides regulated market exposure but lacks a redemption mechanism, leading to a long-term deviation of its price from net asset value (NAV). Despite being pioneering, it also reveals the structural limitations of traditional packaged products.
• Spot BTC ETF: Since receiving SEC approval in January 2024, the spot ETF has introduced a daily creation/redemption mechanism, allowing the price to closely track NAV, significantly enhancing liquidity and institutional participation. However, due to its inherently passive nature, it cannot capture key aspects of the native potential of crypto assets, such as staking, yield, or actively creating value.
• Corporate Treasury Strategy: Companies such as a certain company, Metaplanet, and now SharpLink, have further advanced the evolution of strategies by incorporating crypto assets into their financial operations. This phase goes beyond passive holding of coins and begins to employ strategies such as compound returns, asset tokenization, and on-chain cash flow generation to enhance capital efficiency and drive shareholder returns.

From the rigid structure of GBTC to the mechanism breakthrough of spot ETFs, and now to the rise of a reserve model oriented towards yield optimization, this evolutionary trajectory clearly demonstrates that crypto assets are gradually embedding themselves into the framework of modern capital markets, bringing stronger liquidity, higher maturity, and more value creation opportunities.

Risk Warning