r/ethereum • u/dsk83 • 7d ago
Does purchase of eth by Treasury companies provide any value to the ecosystem?
Can someone explain if there's any value to the eth ecosystem from Treasury companies buying a ton of eth. ETH is talked about as being the babackbone of defi, but it's confusing to me how any utility is being provided by people hoarding it.
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u/samsuh 7d ago
price impact of people buying eth in large amounts, and reducing circulating supply
they will almost certainly stake the eth they buy, which helps add a lot of stakers, which ultimately back the network
drives awareness of eth and acts as marketing/signaling for eth's legitimacy/place in the market for people who dont know bitcoin from xrp.
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u/Advanced-Comment-293 7d ago
Number 2 is a disadvantage in disguise. We already have more than enough stakers, adding more does not increase the security of the network. On the contrary, too many stakers slow down attestations, which is why we've reduced the rate at which stakers can be added to buy more time until that problem can be solved in some fashion. In addition, if these additional stakers all belong to one central entity, they reduce decentralization. That has the potential to be be far worse than the problems we've had with Lido, since these treasuries would not be accountable to any holders of LSTs or governance tokens and unlike Lido they would probably run staking completely centralized with a single provider.
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u/RexWhiteIII 6d ago
Lido was involved in over 30% of staking activity at one point. There is no way any one treasury company will hoard more than 15% of supply. And that % is likely not to happen.
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u/Advanced-Comment-293 5d ago
Yes, but Lido spreads their ETH over many commercial providers who run the validators. No it's not optimal and I'm fully on board calling Lido out for being a problem, but it would be much worse if Lido was a corporation who actually owned that much ETH and staked it themselves, as a treasury likely would.
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u/ElRiesgoSiempre_Vive 6d ago
Frankly eth doesn't have the same problem as bitcoin and - for example - Microstrategy.
There are a bunch of eth treasuries popping up. Sure some are accumulating faster than others, but when you have hundreds of millions of dollars distributed through 12+ different companies, the centralization issue isn't as acute.
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u/Ngain24 5d ago
You're right buying large amounts of ETH and staking them reduces circulating supply, which could drive up the price. It also strengthens the network and increases legitimacy, acting as a signal to the broader market that ETH is here to stay.
However, with XRP, it's still influenced by ripple’s decisions, and its value isn't as driven by organic network growth or adoption. If you're looking for something more decentralized and with long term stability, IOTA’s focus on real world use and adoption could make it a more reliable choice.
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u/Stobie 7d ago
They increase the value of ether. The economic security of ethereum is entirely dependent on ether being valuable. Ether is the safest asset in ethereum and the best collateral, we need an extremely high price for ether to allow it to provide the economic bandwidth we need in applications. If we want something like BOLD to have a meaningful scale ether needs to be more valuable. There really is positive feedback, Ethereum becomes more valuable as ether does.
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u/Advanced-Comment-293 7d ago
I don't know about "extremely valuable", but you're right that everything in Ethereum hinges on ETH having value and increasing that value is good for the network. That's the only positive effect of these treasuries.
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u/EchoEnclosure 7d ago
Eth folks need to learn to take the W - yes, obviously the price going up is good for the ecosystem
In case it needs to be spelled out:
- It brings more attention, which brings more talent, to the space
- It recursively enhances the utility of DeFi because ETH is the base asset in so many protocols - e.g. net borrowing capacity on Aave is now a lot higher given that ETH is worth more and has deeper liquidity
- It helps to validate the thesis that DeFi is in fact useful; much easier to convince people there's real utility here if NGU
- Equally, the utility/narrative of ETH being a SoV is enhanced if people actually start treating it like a SoV (and are financially rewarded for doing so)
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u/ElRiesgoSiempre_Vive 6d ago
The eth community is so freaking weird about this. It's like talking about the token price is somehow beneath them.
Reminds me of working in biotech where everyone was in a constant race to prove how much smarter they were.
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u/MariachiArchery 7d ago
The thing is, that hording helps to secure the network. Assuming at least some of it ends up in the staking contract, you know?
In general, hoarding these assets, BTC and ETH, can be bad. What I suspect will happen over the next like decade, is we'll see these big hoarders pop up, the price will tank, then we'll see a dramatic redistribution of the asset. Which, is kind of the point. Unlike the dollar, when these big entities just get bailed out, that can't really happen with crypto, and that is good.
This isn't a problem, for the network, but it will be a problem for the price if any one hoard gets too big. Which, is fine. We want that to be a problem, that is kind of the point. When any one entity gets too big to fail, well... it will fail. And that, is good.
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u/SurprisedByItAll 7d ago
Tom Lee's Approach (Bitmine Immersion Technologies):
Lee is leading Bitmine to raise capital through private placements (e.g., a $250 million offering) to acquire ETH, which is then staked for yield. The company aims to become an ETH-native reserve institution, leveraging cash flow from mining and financial instruments like ETH options to deepen its treasury. Bitmine tracks an "ETH-per-share" metric, mirroring MicroStrategy’s model, to transparently demonstrate the value of its ETH holdings relative to its equity. This strategy helps increase ETH demand and provides a stable, long-term holder base.
Joseph Lubin's Approach (SharpLink Gaming):
Lubin has guided SharpLink Gaming to amass over 280,000 ETH, worth over $1 billion through at-the-market equity offerings and direct purchases. The company stakes all its ETH, earning yield, and publishes an "ETH-per-share" metric to bridge public markets with DeFi. Lubin has also explored using leverage, such as convertible equity and low-rate bonds, to further expand the treasury without increasing risk. His approach is seen as a major step toward establishing ETH as a yield-generating reserve asset for public firms.
The rivalry and collaboration between these two figures, highlighted by Lubin’s public call of “Game on,” underscore a broader paradigm shift toward decentralization, where corporate treasury accumulation is not just speculative but strategic, enhancing Ethereum’s economic resilience and market adoption
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u/tilttovictory 7d ago
The answer is no and yes.
Yes in that there are more agencies potentially staking.
No because this doesn't add utility.
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u/Hitechakias 6d ago
When governments ban crypto for any reason, only 1 will survive... the one and only real decentralized. Everything else is noise.
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u/BorkBorkIAmADoggo 5d ago
holding eth in treasuries mostly adds credibility and scarcity, real utility comes when they stake or use it in defi
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u/togilvie 6d ago
I think it's a net-negative. Every dollar of ETH demand that goes into an ETH treasury company is buying less than a dollar of spot ETH. So it artificially holds down the price vs if that same demand was buying an ETF or ETH directly. It's just a cash grab by the sponsors.
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u/physalisx Desk Destroyer 💩 7d ago
It doesn't provide value to the "ecosystem" per se. It doesn't do anything for "DeFi".
But it helps with the security of the network by strenghtening the value of the ETH token. Every blockchain's security depends on its L1 token value. So even if they don't stake themselves (which they likely do), they help security.
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u/IcyDragonFire 7d ago
It does not.
$Eth was portrayed as "sound money", but without sustained demand to L1 usage the token clearly is not sound.
Current p/e is ~200, and the ratio will only get worse as competing chains secure larger volumes of user activity.
The roll-up roadmap was a monumental waste of time and value.
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u/harpocryptes 7d ago
Where do you think all the L2 activity would be without rollups? I don't think we could have a decentralized L1 with that capacity today.
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u/IcyDragonFire 7d ago edited 7d ago
I don't think we could have a decentralized L1 with that capacity today.
Solana, Sui, Aptos and others prove we could.
And even if we run out of capacity after exhausting all L1 scaling opportunities, users should still be motivated to remain in the network while using rapid-settlement sub-networks, rather than being told they should move to other networks.
Rather than rollups built on top of Ethereum, the team should have built scaling solutions that are embedded into the network.
Giving up the user base is extremely misguided; no sane business ever does that.
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u/harpocryptes 7d ago
Solana, Sui, Aptos and others prove we could.
They achieve that by having much higher validator costs, to the point they cannot really be called decentralized.
It's not hard to do: just increase the gas limit 10 or a 100 times. You gain that much capacity, but you lose decentralization and credible neutrality, which is the whole point and value proposition.
The current state of rollups is not the final stage. Based rollups, native rollups and enshrined zkevm will improve UX and capacity without compromising decentralization.
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u/IcyDragonFire 7d ago
much higher validator costs, to the point they cannot really be called decentralized.
Running an Aptos validator node costs $1k monthly, Sui costs $200. Hardly a limit to decentralization.
The current state of rollups is not the final stage.
Yes, and other networks keep innovating as well. They'll will keep accumulating activity while Ethereum tries to figure it out.
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u/harpocryptes 7d ago
Running an Aptos node costs $1k monthly, Sui costs $200. Hardly a limit to decentralization.
How much upfront cost?
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u/IcyDragonFire 7d ago
Doesn't really matter. To be sustainably decentralized, nodes should run as businesses and be economically incentivized.
Upfront costs can be financed by pooling, hedging, or investing.
Soundness means tradeoffs. Eth's choice of tradeoffs means a low-activity network, while others chose to provide a valuable platform to users.
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u/Scrippycorn 5d ago
you raise a valid point about Ethereum’s scaling issues and high P/E ratio. While it’s marketed as "sound money," its reliance on Layer 1 usage for value isn’t sustainable long term, especially with competition from other chains.
IOTA, though, is focused on scalability without the same bottlenecks. It’s built to handle real world use cases and doesn’t depend on the same Layer 1 congestion, offering a more decentralized and long term viable solution.
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