A new wave of firms is using the DAT model based on in-kind funding with newly launched tokens. Unlike playbook companies buying assets on the open market, those companies propose to build the treasuries with existing reserves of tokens or altcoins.
New companies are trying to raise funds for digital asset treasuries (DAT) by supplying the digital tokens in kind. This approach allows public firms access to fresh capital and a pricing model for their illiquid tokens.
Digital asset companies come in several tiers, starting with Strategy and 17 other BTC ‘playbook’ companies, which raise funds through a mix of stock sales and debt and buy BTC on the open market. Ethereum companies have a similar approach, also fueling their ETH purchases with fresh funding.
Altcoin treasuries, however, are much riskier. At best, SOL is seen as reliable enough, but companies are trying to build treasuries for even more obscure tokens, some of which are not even launched for trading. Others, like Avalanche, used team reserves from idle tokens to create hype around building a treasury. Overall, the intrinsic value of those altcoins remains highly questionable.
Canton Coin uses in-kind DAT model
One recent example for an in-kind treasury building comes from the Canton Coin ecosystem. Canton Coin (CC) only started trading on November 11, but was already included in a DAT company before that.
Tharimmune, Inc. raised $545M based on the sale of CC coins. The raise hinged on an internal valuation of CC at $0.20, a price which was presented to investors as viable.
Unfortunately, right after the start of trading, CC crashed and hovered around $0.11, still in early price discovery.
Tharimmune, Inc. (THAR) also sank to an all-time low, trading at $3.01. The shares were already down by 99% since 2023, and the DAT model was a way for the company to pivot. This time, not even a DAT announcement could spark a stock rally.
An in-kind treasury essentially offloads risk to eventual stock buyers, who later lose both on their stock and token valuations. Moreover, holding tokens in a treasury does not prevent them from being sold by other early buyers or insiders.
As Cryptopolitan reported earlier, there is more skepticism about DAT companies after a few months of peak enthusiasm.
In-kind treasuries recognized as a risky model
Other examples of in-kind DAT raises include Flora Growth Corp., which reported a $401M raise for 0G tokens. The raise was partially funded by fresh capital, but the bulk of the sale was in-kind deposits of 0G tokens, internally priced at $3.
Soon after the launch, 0G crashed, trading at $1.24 as of November 13. Flora Growth Corp. shares also lost value, with FLGC trading at an all-time low of around $7.80.
‘An 80% in-kind DAT is effectively a thin equity wrapper around one single volatile token,’ said Bloomberg’s Akshat Vaidya, who has overseen investments in crypto treasuries as co-founder and managing partner of Arthur Hayes’ family office Maelstrom.
‘If the token drops 50%, the share price falls 80%-100% because the premium evaporates at the same time that forced sellers hit the bid.’
A DAT also targets investors who are unaware of the long history of failed crypto tokens, essentially bringing liquidity to untested new assets.
Some BTC treasury companies have also received in-kind deposits from long-term whale holders. However, the liquidity of BTC and the price expansion over the years have mitigated the risk.
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