DAT funding was flat at the beginning of the year, but surged in Q2 and Q3, peaking at approximately $6.2 billion in July. In contrast, venture capital (equity investment in cryptocurrency startups, excluding token sales) has been declining every quarter. From April to July, DAT funding significantly outpaced venture capital funding, driven by several large deals. For example, July's total DAT funding of approximately $6.2 billion far exceeded venture capital funding (which remained subdued at approximately $1 billion) that month—indicating that public funding flowing into the crypto space via DATs is significantly exceeding private venture capital. Through August 2025, DAT funding is expected to remain high (already approaching $2-3 billion in the last few weeks, thanks to TON and WLFI deals), while venture capital investment has not seen significant growth. Year-to-date total: As of mid-August 2025, companies have raised over $15 billion for DAT initiatives. By comparison, during the same period (January-August), venture capital investment in traditional cryptocurrency startups totaled approximately $6.05 billion (excluding the $2 billion Binance Ecosystem Fund deal). Even with this outlier deal, total venture capital investment is approximately $8.05 billion, still roughly half the amount raised by DATs. In terms of deal count, 856 venture capital deals have been recorded so far this year, with an average deal size of approximately $7 million to $8 million. However, funding rounds for DATs tend to be one-off, large rounds (several $100 million+ rounds). This highlights how a few large, reserve-funding deals can shift the balance of funding.
In 2025, traditional cryptocurrency venture capital deals also shifted. Due to a decrease in the number of completed deals (especially at early stages), the distribution of investment stages shifted more towards later stages—with more venture capital funding going to more mature projects or distressed situations rather than seed rounds. As of this year, the median deal size for cryptocurrency venture capital has risen to approximately $8 million (to approximately $4 million in 2024), with the 75th percentile deal size at approximately $25 million (reflecting some larger Series B and Series C rounds that do occur). Meanwhile, DAT funding is more binary (for public companies, every funding round is a large round). DAT funds are often immediately invested in liquid tokens, while venture capital funds may remain in the hands of startups for several years. This immediacy differentiates DAT funding from its market presentation (immediate token purchases on exchanges or over-the-counter platforms) from venture capital (used for salaries, R&D, and other purposes). DAT Transaction Segmentation Analysis by Geography: The United States will dominate DAT issuance in 2025. At least 15 of the top 20 DAT companies are incorporated in the United States and listed on US exchanges (Nasdaq or NYSE). These companies include Strategy, Marathon Digital, and Riot Platforms (which maintains Bitcoin reserves as part of its operations), as well as a new wave of companies turning to cryptocurrency holdings, such as Eyenovia (Hyperion), Lion Group, SharpLink, and Mill City. Despite the complex regulatory environment in the United States, there's no explicit prohibition on companies holding cryptocurrencies, enabling these companies to conduct such activities while complying with standard SEC disclosure requirements and employing fair value accounting. Asia is the second region: for example, Singapore-based Lion Group Holding (NASDAQ: LGHL) established its $600 million facility in the US market. Activity in Hong Kong has been limited but notable—for example, Hong Kong-listed Upexi (US-based) chose to locate part of its operations in Tampa, Florida, while raising funds in the US; IVD Medical purchased ETH directly as part of a strategic investment. Europe and Beyond: By 2025, few large EU-listed companies held cryptocurrency assets on their balance sheets, likely due to boardroom caution and the upcoming Markets in Crypto-Assets (MiCA) regulation. The only exception is Flow Traders, a smaller Dutch market maker, which stated that it holds a small amount of cryptocurrency on its balance sheet, but this represents operational liquidity, not capital raised. We anticipate that the first true DATs in Europe may emerge after the MiCA regulations are implemented in late 2025 or 2026, but as of August 2025, the trend remains centered in the US. By Financing Vehicle: DAT issuers employ a variety of financing vehicles, often tailored to the specific circumstances to circumvent shareholder approval triggers and offer upside options to attract investors. These are categorized as follows (approximate numbers in major transactions): PIPE (Private Investment in Equity): This is the most common structure—for example, Eyenovia's $50 million PIPE offering of convertible preferred stock and warrants, or Verb's $558 million PIPE offering of common stock at market price. These transactions are typically conducted at or near current market prices (to meet exchange regulations) and include warrants or conversion features to attract investors willing to invest in cryptocurrencies. ATM Offerings: Strategy employs a continuous, in-market equity offering program. Strategy (MSTR), which established a massive $750 million ATM program in 2023 and expanded it in 2025 (even creating new preferred stock classes, STRK and STRF, for Bitcoin-related financings), sold $427 million worth of shares in a single week in May 2025. ATM offerings allow for a flexible and discreet release of shares to the market, and Strategy has used this method to raise billions of dollars over several years to purchase Bitcoin. Registered Direct Offerings and Shelf Offerings: Some companies file listing registration statements and quickly complete large-scale sales. ALT5 Sigma's $750 million registered direct offering (100 million shares at $7.50 per share) is an example—conducted concurrently with a private placement. Similarly, Mill City Ventures announced its acquisition of Sui after selling 83 million new shares (approximately $450 million) through a registered direct offering. Equity placement arrangements: These are arrangements where investors commit to purchasing a certain amount of stock over a period of time, typically through a standby equity allocation agreement (SEDA). Windtree announced a $500 million equity placement with one investor (in addition to its initial placement); Mill City also secured a $500 million equity placement with Alliance Global Partners. These arrangements provide readily available funding, but typically require the stock price to remain above a certain level (Windtree's placement became unavailable after WINT's share price fell below $1). Convertible bonds: A notable example is Upexi's $150 million Solana-backed convertible bond offering, with a 2% coupon and a 24-month maturity. The bonds converted at $4.25 per share (higher than the market price at the time) and, if successful, effectively acted as a deferred equity offering. Investors actually paid for the bonds with SOL tokens (an innovative move). Convertible bonds are attractive because they avoid immediate dilution (no voting shares are issued upfront) and, if priced appropriately, can be structured so as not to trigger Nasdaq's 20% rule. However, they increase leverage and refinancing risk. Warrants and subscription rights: Many deals include warrants. For example, Eyenovia issued 30.8 million warrants with an exercise price of $3.25 (equivalent to 200% of the private equity investment)—if its strategy succeeds, exercise of these warrants could potentially generate over $100 million in future proceeds (although with dilution). Warrants are often used to compensate private equity investors for risk. Credit facilities and loans: While less common, Lion Group's $600 million "credit facility" from ATW was essentially a committed loan for the purchase of tokens. The terms were not fully disclosed, but it is likely convertible or secured by tokens. Another example is Marathon Digital's use of a Bitcoin-collateralized term loan in early 2023; however, miners are not included in our definition of a DAT. These debt-based approaches are attractive when companies want to avoid immediate dilution or anticipate token returns sufficient to easily cover interest payments. By Investor Type The investor base in DAT transactions bridges traditional finance and crypto-native companies. We observe four primary investor types: Cryptocurrency-focused venture capital and hedge funds: Firms such as Pantera, Polychain, Paradigm, Galaxy, and Electric Capital have all participated in DAT transactions (e.g., Pantera's investment in SUI, Galaxy's investment in Mill City, and DCG's participation in some BTC investments through affiliates). These investors understand token economics and often seek board seats or advisory roles (for example, Pantera's Cosmo Jiang frequently comments on DAT strategy). Cross-sector investors and traditional VCs: Investors from across the tech sector (such as Ribbit Capital, which has led multiple fintech rounds and participated in Verb's TON deal) and growth equity funds (ATW Partners participated in multiple deals) are involved. They are attracted by the "high-growth asset on a public platform" angle. Token issuers and affiliates: In some cases, the token issuer or foundation itself is a participant. The Hyperliquid Foundation may have facilitated the HYPE launch (in kind, through in-kind support, technical integration, etc.). Binance affiliates (Build and Build Corp) directly invested $60 million in Windtree and have agreed to make additional investments—effectively injecting capital into the BNB public investment vehicle. The Sui Foundation has a "strategic relationship" with Mill City, hinting at support (perhaps with a preferred token allocation). Family offices and high-net-worth investors: Some deals, notably Verb's TON, have attracted family offices like Vy Capital (with ties to Telegram) and Kingsway's LPs, as well as crypto whales (media reports indicate that "several prominent crypto founders" have invested in TON Strategy Co.). These investors view DATs as quasi-index bets on a particular cryptocurrency ecosystem. They typically invest through private placements to gain exposure to equity that may become liquid in the future. Investment Size and Participation Venture capital funds typically invest medium-sized rounds ($5 million to $50 million) in these structures—for example, Pantera reportedly invested approximately $20 million to $30 million in Mill City (based on an $83 million stake allocated across four funds). In the Verb deal, Kingsway led the large round (rumored to be north of $50 million), while major investors like Blockchain.com and Ribbit likely each invested $20 million to $40 million. Over 100 other investors participated in smaller rounds (some between $1 million and $5 million). Strategic token partners sometimes contribute in-kind: Big Brain Holdings provided a portion of SOL to Upexi instead of cash. Similarly, World Liberty's founders exchanged WLFI tokens for equity value in ALT5 Sigma. Notably, some VC funds use their "liquid" capital (hedge funds or crossover vehicles) to participate in DATs, rather than their core, illiquid VC funds—this allows them to trade or hedge. For example, Hack VC admitted to investing idle cash in DAT stock for yield. Hack VC's Ed Roman stated that they view DATs as temporary cryptocurrency exposure until they find the right startup deal. This suggests that some participation may be short-term or opportunistic. On the other hand, others, such as Neoclassic's Michael Bucella, have stated that they expect to hold until the market revalues these instruments (and to monitor exit opportunities when the premium to net asset value compresses). In terms of the investment vehicles used, venture capital and hedge fund investors typically acquire shares directly through a PIPE (often receiving restricted or preferred stock that is later registered). Smaller investors with multiple limited partners participate through a special purpose vehicle (SPV)—for example, an SPV might be established to invest in a specific DAT and ultimately distribute shares or sale proceeds to the LPs. These flows clearly demonstrate a shift in capital: funds that could have funded 10 startups are now flowing into the token reserves of a single public company. Investors reason by offering liquidity, mark-to-market gains, and potential gains from premiums if token prices rise. However, this raises concerns: if $3 billion to $5 billion in venture-style capital flows into DATs by 2025, the amount available to fund new Web3 infrastructure or decentralized applications will be significantly reduced. Some venture capital partners have expressed concerns that DATs are crowding out innovation funding. In Section 5 (Analytical Issues), we will revisit this issue and attempt to quantify this crowding-out effect by investor category (for example, how much of Paradigm's new investments are going to DATs rather than startups). Event Study: Stock Price Reaction and Abnormal Returns We analyze the stock price performance of publicly traded DAT-issuing companies around key events: specifically, the announcement of financial strategy and, where applicable, the subsequent disclosure of cryptoasset purchases. Our event study covers approximately 12 companies and calculates cumulative abnormal returns (CARs) over two time periods: Day 0 (the announcement date) and the five trading days following the announcement, as well as around the major deployment date (when the company confirms its cryptoasset purchase). Here are our findings: Initial market reactions to DAT announcements were generally very positive, reflecting both surprise and speculative enthusiasm. On average, stocks in our sample rose 38% on the day of the announcement (with a median of approximately 20%), significantly outperforming the broader market (we used the Russell 2000 Index as a benchmark, which was flat or up only about 1% on the day of the announcement, so these are truly abnormal returns). For example: Lion Group (LGHL): On June 19, 2025, the company announced a $600 million reserve for Hyperliquid tokens, a 19.6% increase. The stock price rose from approximately $2.80 to $3.35, with trading volume reaching 50 times its normal level. The CAR over the following five days was approximately +15% (partially reversed as traders took profits). Eyenovia (EYEN): This stock is interesting—on June 17, 2025, the company announced a $50 million HYPE token strategy, priced at $3.25 per share. Prior to the announcement, the stock closed around $1.40. EYEN initially surged over 100% in after-hours and pre-market trading (reports indicate a 134% intraday gain), but by the next full trading day (June 18), it opened at approximately $2.70 and closed at approximately $2.10, a net increase of 50% from pre-announcement levels. The stock has been volatile: A report from AInvest indicates that the stock fell 24% pre-market on June 19, likely due to excessive price increases followed by a correction. Despite this, Eyenovia's CAR (0,+5) remains approximately 40%. Investors are excited about the large capital infusion for a small biotech company and the potential gains from cryptocurrency, but concerns about equity dilution have limited gains. Verb Technology (VERB): On August 4, 2025, Verb announced its $558 million acquisition of TON and a rebranding program. The stock, previously trading around $2, surged to an intraday high of approximately $6 on August 4 (up over 200%) on heavy trading volume. It closed the day up approximately 120%. However, the stock price retreated sharply the following day, with a cumulative gain of approximately 50% over five days. This substantial transaction (relative to Verb's market capitalization of less than $50 million prior to the announcement) implies significant impending equity dilution, limiting further upside. Mill City (MCVT): On July 24, 2025, the company first announced its $450 million SUI transaction, sending its stock price soaring from approximately $1.85 to $5.00 (+170%) within days. Specifically, it saw an 82% increase on the first day, and a cumulative gain of 165% within a week. Notably, upon the announcement of its second $500 million funding round on August 2, the stock price fell 11% that day, suggesting that subsequent funding rounds may be viewed negatively by the market (due to equity dilution) once the financial strategy shift becomes known. Windtree (WINT): Following the announcement of its BNB strategy on July 16, 2025, WINT saw a 32% increase in two days (from approximately $0.50 to approximately $0.70), but began to decline again by the fifth day (up approximately 10%). In the case of Windtree, initial excitement gave way almost immediately to selling pressure as savvy investors expressed skepticism about its execution. In fact, within a month, WINT fell over 90% from its peak, an unusual plunge we'll discuss separately. Generally speaking, the initial announcement of a shift in cryptocurrency reserve strategy is often followed by a strong, positive stock re-rating. Small-cap traders tend to flock to the stock, almost viewing it as a proxy for the underlying token or the next "cryptocurrency investment opportunity." The presence of a large fundraising round (e.g., "$X million secured to buy cryptocurrency") is crucial, demonstrating credibility (someone is funding this) and the likelihood of significant buying. These "zero-day" reactions highlight the transformative nature of such events in the market's eyes. Following the surge in share prices, DAT performance has been mixed. Many DAT stocks experience high volatility and partial mean reversion after their initial surge. Over a five-day window starting on Day 0, we observed an average cumulative excess return (CAR) of 25%, down from an average of 38% on Day 1, suggesting some gains were reversed. For example, Lion Group retained most of its gains (a five-day CAR of 15%), while Eyenovia's performance turned negative within five days of the announcement (early buyers sold off, resulting in a cumulative CAR of approximately -20% by Day 5, from the initial surge). The variation was significant: some stocks continued to rise (Mill City's gains continued throughout the week as more investors learned of the news, ultimately rising 165% in a week), while others quickly reversed course (Windtree's gains evaporated within 10 days). Statistical analysis suggests profit-taking and valuation reality checks were setting in. Furthermore, short sellers appear to have emerged—for example, after Verb's sharp share price increase, short selling interest surged as traders bet on a share price decline due to impending dilution. How "buy the rumor, sell the fact" plays out when deployed: Another event is when a company actually executes a cryptocurrency purchase and discloses it (via a Form 8-K or press release). Typically, by the time the purchase is made, the stock reaction is muted or even negative—perhaps the market has already priced in the news, or the token's price movement has impacted the stock. Case Study: MicroStrategy's stock price has historically moved positively when it announced multiple, incremental Bitcoin purchases; however, in 2025, its correlation with Bitcoin meant that if Bitcoin fell on the news, MSTR would also fall. (For example, during one of its Q1 2025 purchase updates, Bitcoin fell from its high, and MSTR stock fell approximately 8% that day, roughly matching Bitcoin's decline and not an "abnormal" drop that exceeded its beta.) Regarding altcoin-focused DATs: SharpLink announced on August 5th that it had purchased an additional 83,562 ETH (worth $264.5 million); interestingly, ETH prices fell off their highs that day, and Sharplink's stock price fell approximately 10% following the announcement. This may be a "sell on the news" reaction following a surge in stock price. Similarly, BitMine Immersion announced a significant purchase of 208,000 ETH on August 7th, and its stock price also fell approximately 7% due to the decline in ETH prices (BitMine's announcement came during a general cryptocurrency correction). Windtree has never announced a completed large purchase—the closest it has come was disclosing its $60 million BNB purchase agreement; since then, the stock has briefly risen before continuing to decline, thus lacking any positive momentum. A clear pattern is that DAT stocks generally rise more when the underlying cryptocurrency rises, and vice versa. These stocks have higher asset betas. For example, in mid-August, when Bitcoin rallied on rumors of an ETF, Strategy saw its stock price rise by approximately 15% in a single day (beta > 1). In late June, the HYPE token fell by approximately 20% (from $45 to $36) after the initial hype, and Eyenovia's stock price also fell by approximately 25%. Therefore, event studies must control for the volatility of the underlying token to isolate abnormal returns. Our analysis achieves this by regressing stock returns on token returns before and after the event. In many cases, the initial announcement had a much larger impact than the token's beta would predict (because tokens had not yet been purchased). However, after the funding pool was in place, stock movements and token performance became highly correlated (i.e., announcements of further token purchases no longer carried significant surprises but simply increased token exposure). Long-term Performance: While it's too early to draw conclusions, a look at the performance of these stocks so far this quarter shows that most have outperformed broad cryptocurrency stock indices (such as the Galaxy Crypto Index) since the transition. For example, Lion Group gained approximately 150% from pre-transformation to late August, outperforming many cryptocurrency mining stocks. Mill City is up approximately 165% since July 1st. SharpLink (which transformed in June) rose from approximately $4 to $12 in early August (a 200% increase), though with significant volatility. Windtree, on the other hand, suffered a near-total loss (down 95%) for those who bought during the transformation rally. Eyenovia has been roughly flat to slightly higher since pre-transformation (from $1.50 to around $1.80)—it had a significant run-up but then retreated. Strategy, while not a 2025 transformation (it's a traditional case), has gained approximately 120% year-to-date in 2025, in line with Bitcoin's bull run (and benefiting from the elimination of accounting headwinds). Abnormal Returns After Capital Deployment: We also examined whether there were any biases in capital deployed to purchase cryptocurrencies within a five-day window following a firm's announcement that it had "purchased X bitcoins at price Y." In theory, one might expect any remaining discount to net asset value to narrow or widen once cryptocurrencies are on the balance sheet. Our results suggest that there are no persistent positive abnormal returns after deployment; if there are any, there is only a slight underperformance. This suggests that the main share price increases occur before or in anticipation of purchases (premiums form in anticipation), and once the pool of capital fills, arbitrageurs or risk aversion may intervene. For example, Genius Group announced on July 20 that its reserves had exceeded 100 bitcoins—its stock did not fluctuate much on this particular announcement because it was previously known that they were purchasing. Announcements of monthly Bitcoin production at Marathon Digital or Hut 8, if positive, may result in small stock price increases, but these are operational rather than fundraising-related. Market Efficiency and Speculation This event study reveals both market inefficiencies (initial overreaction due to hype) and eventual arbitrage (the convergence of stock prices with fundamentals/token value). In the case of Windtree, the market may have initially misinterpreted this turning point as positive, but it quickly corrected as underlying issues like compliance and equity dilution emerged. In cases like Verb or Eyenovia, the market struggled to assess the relationship between significant equity dilution and asset appreciation, leading to significant stock price volatility. Post-event bias associated with premiums: We found an interesting correlation: stocks that quickly rose to very high mNAV premiums (e.g., >1.3x NAV) subsequently tended to underperform (mean reversion), while stocks that remained near or at a modest premium to NAV were more stable post-event. This suggests that the presence of arbitrage funds and rational investors limited excessive exuberance: for example, if a stock traded at 1.5x the value of its cryptocurrency, short sellers would step in. In July, some hedge funds reportedly shorted BitMine and SharpLink when their premiums spiked significantly, offsetting their losses by going long on ETH—effectively betting that the premiums would fall. By mid-August, BitMine's premium had indeed declined slightly, as had SharpLink's. In contrast, Lion Group didn't immediately experience a wild premium (partly because its transaction wasn't all equity—it was a loan arrangement), so its returns have held up better. Market Net Asset Value (mNAV) to Price Premium/Discount Analysis: DAT shares typically trade at a discrepancy with the net asset value (NAV) of their cryptocurrency holdings, similar to closed-end funds. We track the mNAV ratios of major DATs to assess premiums, discounts, and the mechanisms influencing these gaps. Prevailing Premiums in 2025: As of August, most active DATs traded at a premium to net asset value (NAV). Strategy (MSTR) trades at a 10%-15% premium to its Bitcoin holdings, partly because its value is priced in liquid BTC. Among Ethereum investment vehicles, SharpLink trades at approximately 18% above NAV, and BitMine Immersion trades at approximately 14% above NAV. Newer entrants like Mill City briefly traded at around 1.2x NAV before gradually approaching parity. Lion Group's share price rose 20% after its initial $10 million purchase, reflecting its expectation of NAV growth rather than its current holdings. Discounted Trading Examples: A few stocks trade at significant discounts. Ether Machine (DYMX) holds approximately $1.27 billion in ETH but has a market capitalization of only approximately $177 million (an 86% discount), likely due to its structure and potential selling pressure. BTCS trades at approximately 24% below NAV due to governance and liquidity issues. Windtree also traded well below its implied cash value before delisting, as investors expressed skepticism about the transaction's completion. Dynamics over time: Premiums peak at the time of announcements due to high market enthusiasm and uninvested NAV, then compress as assets are acquired. SharpLink fell from approximately 1.3x NAV to approximately 1.1x to 1.2x NAV within a few weeks. Strategy premiums typically widen during bull markets (up to 1.5x) but shift to discounts during market downturns. GBTC's precedent (from a 40% premium to a 40% discount) highlights the risk of market sentiment. Market outlook: Experts expect prices to converge. Pantera and Hypersphere expect most DATs to be priced at or below net asset value (NAV), with only top institutions (DAT reserves in BTC and ETH) able to maintain a slight premium. By 2026, the price of Bitcoin DATs is projected to be close to 1.05x the price of Bitcoin and around 1.10x the price of Ethereum, while smaller institutions face a discount or are forced to merge. Mechanisms and Governance: Unlike ETFs, DATs lack a redemption mechanism, so price differentials can only be offset through issuance, repurchases, or arbitrage. Issuing shares at a premium (such as MSTR) can increase net asset value, but carries the risk of excessive premiums; repurchases are rare due to insider control. Hedge funds may short DATs when they are trading at a premium and go long when cryptocurrencies rise, although the borrowed funds are typically minimal. Some companies use structured financing (such as Upexi's SOL notes) or lock-up mechanisms to stabilize value. Governance quality, transparency, and audits also influence whether a company trades at a premium or a discount. Similarities to Closed-End Funds: DATs, similar to closed-end funds, can experience significant discounts in a bear market due to the lack of redemptions. Large investors could ultimately exploit these extreme discounts through acquisitions. Fund Flows and Investor Participation A diverse range of capital is pouring into DATs' balance sheets, including crypto-native specialists, crossover Wall Street players, and token foundations. The main investor groups and their typical investment sizes are as follows: 1. Crypto-Native Venture Capital Funds Pantera, Polychain, Paradigm, and DCG selectively lead DAT funding rounds, typically from liquid side pockets rather than 10-year funds. Pantera's stake in Mill City is approximately $50 million; Paradigm's stake easily exceeds $20 million. 2. Hedge Funds and Cross-Traders Galaxy Digital, Brevan Howard Digital, Point72 Crypto, Jump, and DWF Labs are using DATs for liquidity trading. Trading amounts range from $10 million to $55 million, often in conjunction with token liquidity or hedging. 3. Token Foundations and Affiliates Binance's Build and Build Corp. invested $80 million in Windtree's BNB project. TON Foundation leadership invested in Verb, and the Sui Foundation is collaborating with Mill City. This support typically takes the form of liquidity, governance rights, or board seats, rather than pure cash. 4. Traditional VCs and Family Offices Ribbit, Vy Capital, and Kingsway view DATs as growth equity combined with public market upside. Kingsway's lead investment in Verb may have exceeded $50 million. Wealthy cryptocurrency founders also jump at the opportunity to participate. 5. Strategic Crypto Companies Exchanges and custodians purchase small equity stakes to lock in service relationships. Clients of Blockchain.com, Kraken Ventures, BitGo, and Coinbase Custody are examples. Typical transaction volumes range from millions to tens of millions. How do they invest? Nearly all investments are made in the form of private placements of common or preferred stock, PIPE notes, or warrants. Some institutions negotiate token allocations, but most rely on company reserves. The influx of funds into DATs coincides with a sharp decline in seed funding, while overall cryptocurrency venture capital investment remains stable. Investors like Hack VC view DATs as a place to park liquidity until high-quality early-stage startups emerge, but if DATs continue to outperform, they could permanently divert funds away from early-stage projects. Conclusion: As of August 21, 2025, DAT funding has surpassed traditional cryptocurrency venture capital, raising over $15 billion, compared to approximately $6 billion to $8 billion for venture capital, signaling a clear shift in venture capital toward on-balance sheet exposure. This growth has been driven by public market liquidity, a premium to net asset value (NAV) that reduces the cost of capital, and fair value accounting, although these supporting factors are cyclical and may diminish. DAT stocks carry higher risks, including dilution and leverage, thin trading and custody, concentration in a single token, and an evolving regulatory environment. In the short term, DAT flows appear to be crowding out some early-stage funding and supporting token prices; however, if ETF access expands, the DAT premium and differentiation may weaken. Executives should view DATs as opportunistic liquidity exposure and implement strong governance, financing discipline, and NAV price regulation, while preparing for a situation where DATs and startups will compete for funding.
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