Yield-Chasing ETH Treasury Firms Face Biggest Risks, Warns Sharplink Gaming CEO

ETH Treasury Firms Enter Risk Zone

Companies holding large reserves of Ethereum (ETH) to maximize returns could be exposing themselves — and the broader industry — to significant risks, according to Joseph Chalom, co-CEO of Sharplink Gaming.

In an interview with Bankless on Monday, Chalom cautioned against “yield ch asing” in ETH treasuries, where firms pursue additional returns without properly accounting for risks.

“There will be people, just like in traditional finance, who want that last 100 basis points of yield and think it’s riskless,” Chalom said.

Double-Digit Yields, Multiple Risks

Chalom noted that while it is possible to generate double-digit yields on ETH holdings, these strategies come with hidden dangers:

• Credit risk

• Counterparty risk

• Duration risk

• Smart contract vulnerabilities

He added that firms arriving late to the ETH treasury space may feel pressure to compensate by taking excessive risks, which could destabilize the broader sector.

“The biggest risk is that people who are far behind are going to take risks that I don’t think are prudent,” Chalom explained.

Related: SharpLink Gaming Plans $1 Billion Ethereum Purchase, Earning Comparisons to Michael Saylor

The top 10 Ether treasury companies by holdings. Source: StrategicETHReserve

Sector Could Be “Tainted” by Imprudent Moves

Chalom also warned that if companies overextend during bull markets without proper safeguards, downturns could trigger structural problems.

“If you overbuild and there is a downturn, how do you make sure your call structure is such that you don’t lock yourself into the highest price of Ethereum?” he said.

Sharplink Gaming currently ranks as the second-largest public ETH holder, with $3.6 billion in ETH, behind BitMine Immersion Technologies’ $8.03 billion. Overall, ETH treasury companies collectively hold about 3.6 million ETH (worth $15.46 billion), according to StrategicETHReserve data.

Comparing ETH Treasuries to 2008-Style Risks

The rise of ETH treasury companies has drawn mixed reactions from industry leaders:

• Josip Rupena, CEO of Milo and former Goldman Sachs analyst, likened the model to collateralized debt obligations (CDOs) — complex financial products that fueled the 2008 financial crisis.

• By contrast, Matt Hougan, CIO of Bitwise, argued that ETH treasuries help solve Ethereum’s “narrative problem” by packaging the asset in ways traditional investors understand, thereby accelerating adoption.

Chalom acknowledged the scalability of ETH treasuries, calling them “almost infinitely scalable,” but stressed that unchecked risk-taking could harm the sector’s reputation.

Growing Scrutiny of Crypto Treasury Models

Concerns about crypto treasuries extend beyond Ethereum.

• James Check, lead analyst at Glassnode, said on July 5 that the Bitcoin treasury model may have a shorter lifespan than expected.

• On June 29, Breed VC predicted that only a handful of Bitcoin treasuries will survive, while many could face a “death spiral” if forced to trade near net asset value.

With ETH currently trading at $4,327 (CoinMarketCap), analysts suggest that while treasuries have brought new legitimacy to crypto, their sustainability will depend on risk management and long-term discipline, not just yield chasing.

Related: Crypto News: US Senate Repeals IRS DeFi Broker Rule, Hyperliquid Delists JELLY Perps, and Polymarket Faces Scrutiny Over Ukraine Deal Bet

Conclusion: Scalable but Fragile

ETH treasury companies may represent a scalable bridge between traditional finance and blockchain, but experts warn that aggressive yield strategies could threaten both investors and the broader market.

The debate underscores a key tension: Are ETH treasuries a safe gateway for institutional adoption, or a potential repeat of past financial excesses?

FAQs

1. What are ETH treasury firms?

ETH treasury firms are companies holding large reserves of Ethereum as part of their balance sheets, often staking or lending assets to generate additional yield.

2. Why are ETH treasuries considered risky?

Risks include credit exposure, counterparty failures, smart contract vulnerabilities, and potential downturns that could lock firms into high ETH entry prices.

3. What did Sharplink’s CEO warn about?

Joseph Chalom warned that firms chasing “the last 100 basis points of yield” may take imprudent risks, which could destabilize the broader Ethereum treasury model.

4. How do ETH treasuries compare to traditional finance risks?

Some analysts liken ETH treasuries to risky 2008-era financial products like CDOs, warning that overleveraging could damage the sector during downturns.

5. Are ETH treasuries good for adoption?

Supporters argue ETH treasuries package Ethereum in a way that traditional investors understand, boosting adoption, but sustainability depends on risk management.