Treasury and holding companies have solved Ethereum’s narrative problem by packing digital assets in a way that traditional investors include, pulling more capital and accelerating adoption, according to Matt Hougan, director of investments in Bitwise.
Hougan told Cintelegraph that Ethereum had struggled to define income -producing characteristics for traditional financial investors until its native token, ETHER (ETH), is packed in a “capital drape”. Hougan said:
If you think about the challenge that ETH has taken up from the point of view of the evaluation in the past two years, it is that Wall Street had no response to the reason why it had value. Is it a reserve of value? Is it the burning mechanism? Is it income? Is it the yield on the development? Who knows?
“But if you take $ 1 billion dollars of Eth and put it in a company and put it, all of a sudden, you generate profits. And investors are really used to companies that generate profits,” he said.
https://www.youtube.com/watch?v=bwzodbdbiuw
The growing institutional interest in Ethereum highlights the evolution of the Blockchain of intelligent contract of the layer 1 of a community of internet niche to an asset of institutional quality 10 years after the online of its MAINET in July 2015.
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Potential risks for the Eth Treasury model
Hougan warned that the Holding Holding companies, those who accumulate ETH through sales of bonds and equity of companies as a main business model, should carefully manage their debt and their interests to avoid overbidding and explosions.
Hougan also advised cash companies adopting ETH in small allowances such as coverage against inflation to have a long -standing horizon, adding that short -term volatility could “crush” those who have lower times.
He said the basic risk, or the risk of having assets and liabilities labeled in different currencies, is also a problem with which these companies must face, because slowdowns on the cryptography market can affect the capacity of a business to meet expenses.
However, he clarified that the risk of “catastrophic takes place”, in which cash or ETH portfolio companies are forced to liquidate their whole crypto to comply with debt obligations, remains low due to the spaced deadline of business debt.
“I think the image of people of a catastrophic unfold is wrong, even in a bad scenario. A slow and partial relaxation is what would really happen,” said Hougan.
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