Invest in SharpLink: Seize the Opportunity of Ethereum Reserve Strategy

In May 2025, we completed our PIPE investment in SharpLink, which is a milestone achievement in our focus on the PIPE market this year. Since the beginning of the year, we have been actively positioning ourselves to capture the CeDeFi integration trend from a forward-looking perspective, concentrating on PIPE transactions related to digital asset reserves. Within this framework, we systematically studied representative trading cases, and SharpLink is undoubtedly the most critical and representative investment we have participated in so far.

We participated in the $425 million PIPE transaction of SharpLink Gaming, Inc. (NASDAQ: SBET). This investment provides us with a unique opportunity to invest in a native enterprise that reserves Ether as a strategy. The investment structure combines options attributes and long-term capital appreciation potential, reflecting our strong belief in the strategic position of Ether in the U.S. capital markets, and aligns with our overall judgment on the institutional development trend of crypto assets.

Investment Reasons

ETH vs BTC: The Division of Productive Value

Compared to BTC, which lacks native earning capabilities, Ethereum, as an income-generating asset, inherently possesses the characteristic of producing staking returns. Strategies based on BTC mainly rely on financing to purchase coins, lacking self-generated asset income and bearing higher leverage risks. SBET, on the other hand, has the potential to directly utilize ETH's staking returns and the DeFi ecosystem to achieve compound growth on-chain, creating actual value for shareholders.

Currently, the public market is basically unable to capture the economic potential of Ethereum's yield layer. SBET provides a differentiated path: with professional support, the company has the opportunity to implement the protocol's native strategy, thus achieving substantial returns on-chain, with its model expected to even outperform the future performance of ETH staking ETFs.

In addition, the implied volatility of Ethereum is much higher than that of Bitcoin, introducing asymmetric call options for equity-linked structures. This is particularly attractive for investors executing convertible bond arbitrage and structured derivatives strategies—within this framework, volatility becomes a monetizable asset rather than a source of risk.

Strategic Cooperation

We are very proud to collaborate with industry-leading investors, who are the lead investors in this $425 million PIPE financing. As the most effective executor of Ethereum commercialization, this investor has unique advantages in technological authority, product ecosystem depth, and operational scale, making it an ideal investor to drive SBET to become a native enterprise vehicle of Ethereum.

The investor was founded in 2014 by a core figure of Ethereum and has played a key role in transforming Ethereum's open-source foundation into scalable real-world applications: from EVM and zkEVM to the widely popular Web3 wallet, which has brought tens of millions of users into Web3. The company has raised over $700 million from top investment institutions and has a track record of successful strategic acquisitions, making it one of the most deeply embedded commercial operators in the Ethereum ecosystem.

With SBET, we see a unique combination of assets and the most capable investors. This synergy forms a powerful positive flywheel: driven by the protocol's native reserve strategy and the protocol's native leaders. Under professional leadership, we believe SBET is poised to become a flagship case, demonstrating how Ethereum's productive capital can achieve institutionalization and scalability in traditional capital markets.

Market Valuation Comparison

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

Pioneer of the Crypto Reserve Strategy

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

As of May 2025, the company holds Bitcoin worth approximately $63.7 billion, with its stock trading 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 publicly listed stocks. This premium is the result of various factors, including the upside potential brought by leverage, eligibility for index inclusion, and the convenience of access compared to directly holding the coins.

From historical data, the company's mNAV fluctuated between 1x and 4.5x from August 2022 to August 2025, reflecting the significant impact of market sentiment on valuation. When the multiple reaches 4.5x, it is usually accompanied by a Bitcoin bull market and large buying operations, showing a high level of optimism among investors; while when the multiple falls back to 1x, it often occurs during a market consolidation phase, revealing the cyclical volatility of investor confidence.

Comparison of Similar Companies

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

• In terms of BTC net assets (BTC NAV), which is the total value of the company's held Bitcoin, the holdings of the top-ranking companies range from 580,250 BTC (approximately $6.37 billion) to 59 BTC (approximately $640,000).
• In terms of the ratio of market capitalization to BTC NAV (mNAV), the highest premium reached 27.06 times, while the lowest was 1.25 times, reflecting the market's varying recognition of different company strategies.
• Since the beginning of the year, in terms of BTC returns (adjusted for dilution, the percentage increase per share of BTC), small-cap companies have shown a higher per-share BTC growth rate due to continuous accumulation, reaching a maximum of 431%.
• Based on the current growth rate of BTC reserves, some companies could 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, some companies have a high proportion of debt relative to their BTC NAV, facing higher risks when BTC prices decline; while some companies have no debt, making their risks more controllable.

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 crucial and are an important factor in understanding these valuation divergences. One highly representative example is a company referred to as the "Japanese version of MicroStrategy."

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

• Tax system advantages: Retail investors in Japan are actively allocating this company's stocks through specific savings accounts. This mechanism allows a certain amount of capital gains to be tax-free, making it significantly more attractive compared to the high tax rates required for directly holding BTC.
• Japanese bond market misalignment: Japan's debt-to-GDP ratio is high, and long-term government bond yields are rising, indicating that the Japanese bond market is facing structural pressures. Against this backdrop, investors increasingly view the Bitcoin held by the company as a macro hedge 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 combination 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 release regional liquidity and mitigate the risk of narrative dilution by achieving dual listing in Asian markets (such as the Hong Kong Stock Exchange or Nikkei). This cross-market strategy will help SBET establish itself as the most representative Ethereum-native listed asset globally, gaining recognition and participation at the institutional level.

Institutionalization Trends of Crypto Capital Structure

The integration of CeFi and DeFi marks a critical turning point in the evolution of the crypto market, signifying its increasing maturity and gradual incorporation into a broader financial system. On one hand, emerging protocols are expanding the utility and accessibility of crypto assets by combining centralized components with on-chain mechanisms, reflecting this trend.

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

1. Early closed-end funds: They provided regulated market exposure but lacked a redemption mechanism, resulting in prices deviating from net asset value (NAV) for extended periods. Despite being pioneering, they also revealed the structural limitations of traditional packaged products.

2. Spot ETF: Introduced a daily creation/redemption mechanism, allowing prices to closely track NAV, significantly enhancing liquidity and institutional participation. However, due to its nature as a passive instrument, it cannot capture key aspects of the native potential of crypto assets, such as staking, yields, or actively creating value.

3. Corporate Treasury Strategy: The company has further driven the evolution of its strategy by incorporating cryptocurrency assets into its financial operations. This stage goes beyond passive holding of tokens, beginning to utilize 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 early closed-end funds, to the mechanism breakthroughs of spot ETFs, and now to the emergence of reserve models oriented towards yield optimization, this evolutionary trajectory clearly demonstrates how crypto assets are gradually embedding themselves into the framework of modern capital markets, bringing stronger liquidity, higher maturity, and more opportunities for value creation.

Risk Warning

Despite our confidence in SBET, we remain cautious and pay attention to two potential risks:

• Premium compression risk: If the SBET stock price remains below its net asset value for an extended period, it may lead to subsequent equity financing dilution.
• ETF substitution risk: If the ETH ETF is approved and supports staking features, it may provide a more convenient compliant alternative, attracting some funds out.

However, we believe that SBET, with its native earning capabilities in Ether, can outperform ETH ETFs in the long term, achieving a healthy combination of growth and returns.

In summary, our investment of $425 million in SharpLink Gaming's PIPE is based on a strong belief in the strategic role of Ethereum in corporate treasury strategies. Under professional support and leadership, SBET is expected to represent a new phase of value creation in crypto. As the fusion of CeFi and DeFi reshapes the global market, we will continue to support SBET to achieve long-term exceptional returns and fulfill our mission of "discovering high-potential opportunities."