Key Highlights:
- SharpLink Gaming now holds over 280,000 ETH and is the largest corporate Ethereum holder.
- The company’s ETH treasury strategy includes heavy staking, which earns it hundreds of ETH in rewards.
- Critics warn that this rising corporate control may threaten Ethereum’s decentralization.
SharpLink Gaming has made headlines lately by becoming the world’s largest corporate holder of Ethereum. As of mid-July, the Nasdaq-listed company now owns 280,706 ETH. It is more than even the Ethereum Foundation’s treasury.
The move is part of the company’s pivot from its roots in sports betting and marketing. More and more companies are now seeing Ethereum as a valid treasury asset, and this is how things are unfolding.
Ethereum Buying Spree of SharpLink Gaming
Between 7 and 13 July, SharpLink Gaming purchased 74,656 ETH at an average price of $2,852. In particular, the total spend for that week alone was $156 million. This boosted its holdings to over $867 million based on current market value.
The company financed the ETH purchase through an at-the-market (ATM) share sale program that raised $413 million. As of writing, SharpLink Gaming still has about $257 million from this raise. That may go toward more Ethereum buys.
Ethereum Staking Brings Extra Rewards for SharpLink Gaming
Nearly all of ETH holdings (about 99.7%) of SharpLink Gaming have been staked on the Ethereum network. This means that the company is actively participating in the blockchain’s security and is earning rewards in return.
Since early June, SharpLink has earned over 415 ETH from doing this, including 94 ETH in just one week.
The company, in a bid to help investors understand its exposure, introduced an “ETH concentration” metric. This metric now stands at 2.46 ETH per 1,000 diluted shares, and is up 23% from a month ago.
From Struggling Firm to Crypto Titan
SharpLink Gaming was founded in 2019 and originally operated as a marketing company in the online gambling space. However, its financial performance was underwhelming. Also, the revenues dropped from $4.95 million in 2023 to $3.66 million the following year.
However, this all changed in May of this year, when the company announced its Ethereum treasury strategy. This treasury was backed by a $425 million private placement led by Consensys. It gained even more attention when Ethereum co-founder Joseph Lubin joined as chairman.
Shares of SharpLink (SBET) surged more than 1,500% soon after the announcement. Some trading days even saw over $1 billion in SBET stock volume.
The Ethereum Foundation Sells, SharpLink Gaming Buys
Another interesting aspect of this accumulation spree is that SharpLink bought 10,000 units of its total holdings. This stands as the first time the Ethereum Foundation sold ETH to a public company.
While the Foundation continues to support Ethereum development, it has gradually reduced its holdings. In March of 2022, it held $1.6 billion worth of ETH. Today, it owns just under 270,000 ETH, worth around $700 million according to Arkham data.
So far, the foundation has come under fire in the past for selling instead of staking its ETH. However, many view the sale to SharpLink as a smart move. This is because sharpLink plans to hold the ETH long-term and use it to support the network through staking.
Concerns Over Centralization and Control
Not everyone is celebrating SharpLink’s acquisition spree. For example, some fear that a single company holding such a large amount could affect the network’s decentralization.
Currently, the top 10 Ethereum wallets control over 35% of all ETH. Of these wallets, entities like Lido and Coinbase already hold major influence over the market. In essence, SharpLink’s massive stake is another factor in the ongoing centralization risk.
Critics worry that this centralization of power could lead to too much voting power in Ethereum’s dominance. Another major fear is related to how vulnerable Ethereum now is to regulatory crackdowns if major holders are targeted.