Welcome to the institutional newsletter, Crypto Long & Short. This week:
- ZIGChain’s Abdul Rafay Gadit writes that as venture capital funding dwindles, digital asset treasury companies (DATCOs) are reshaping corporate finance by transforming balance sheets into engines of active capital, proving that the future of institutional crypto lies in productivity, transparency, and on-chain governance – not speculation.
- Andy Baehr of CoinDesk Indices offers a “Vibe Check,” providing feedback on crypto rates and insight into signs of strength as the country emerges from the government shutdown.
- In the “Chart of the Week” we look at Ethereum DEX volumes and UNI token price.
– Alexandra Levis
The Rise of DATCOs: Active Treasuries Replace Venture Capital in Crypto
– By Abdul Rafay Gadit, co-founder, ZIGChain
For years, crypto company treasuries were little more than speculative balance sheets. The strategy was simple: buy bitcoin, hold it and hope. This passive model, popularized by MicroStrategy, is now being replaced by a new class of players: digital asset treasury companies (DATCOs), which behave more like venture capital firms than custodians.
This shift is happening because the traditional crypto funding model has stalled. Venture capital investments fell 59% in the second quarter of 2025 to $1.97 billion, their lowest level since 2020. Yet the amount of crypto held on company balance sheets has never been higher: public companies now own more than a million bitcoins, or about 5% of the supply. What began as a store of value has become a pool of productive capital.
DATCOs show how this transformation works in practice. Instead of simply holding digital assets, they actively deploy them in staking, validation, and ecosystem development. In Europe and Asia, publicly traded DATCOs are allocating a significant portion of their treasuries to blockchain participation, thereby achieving on-chain yield while supporting network infrastructure. This move not only diversifies exposure, but also generates returns and strengthens the networks that support the digital asset economy.
This approach reflects a broader redefinition of corporate finance in the blockchain era. Using programmable assets, DATCOs can automate treasury participation, distribute returns transparently, and measure risk in real time – functions that once required entire departments of traditional finance. It also creates a new feedback loop between networks and their investors: when Treasuries stake, validate, or provide liquidity, they not only generate yield, but also contribute to the resilience and scalability of the ecosystem itself.
The implications extend beyond balance sheets. By managing validators and funding ecosystem growth, DATCOs gain both influence and insight into emerging protocols – advantages once reserved for venture capital.
Regulators and institutions are starting to realize this. An active treasury model combining transparent on-chain operations with yield generation could mark a turning point in how public companies interact with digital assets. For auditors and compliance teams, the appeal lies in traceability: every transaction, validator reward, and allocation is verifiable on-chain. This visibility provides a framework for regulated participation, structuring a space previously defined by opacity.
As venture capital funding dwindles, DATCOs are quietly becoming the new backbone of the crypto industry – less speculative, more participatory, and potentially much more sustainable. The era of passive balance sheet exposure is coming to an end. In its place is a model in which capital works alongside code – where the most successful treasuries will be the ones that help build the networks they own.
While we wait
– By Andy Baehr, CFA, Head of Product and Research, CoinDesk Indices
When the Bitcoin perma-bulls recalibrated, we knew the bottom was near, right? On November 5, Galaxy’s Alex Thorn posted a note dropping his year-end price target from $185,000 to $120,000. The next day, Cathie Wood lowered her 2030 goal from $1.5 million to $1.2 million. Bitwise’s Matt Hougan maintained his call for a fourth-quarter rally into the first quarter, but not one that rings the $200,000 bell he previously predicted. NB: We do not announce a floor or make price forecasts. Yet the prospect of government reopening (really…it takes so little to get us excited) causes prices to thaw and our thoughts turn to…what’s next?
We can start with a few observations on pricing. The Fed recently delivered its largest liquidity injection since the 2020 pandemic: $125 billion in total, including a record single-day operation of $29.4 billion on October 31 via the Standing Repo Facility. Bank reserves had fallen to $2.8 trillion (4-year low) due to QT and exacerbated by the shutdown. SOFR fell, but not without drama. CDOR, our CoinDesk overnight rate, which pulls blockchain information from Aave pools, changed, but remained within its local range (the USDC rate is shown below). It was only at the last observation that the divergence emerged: SOFR fell while CDOR surged higher. Since CDOR rates (and the variable Aave borrowing rates on which they are based) depend solely on the use of Aave’s loan pools, higher rates generally mean one of two things: 1) lenders are pulling out because better opportunities exist and/or 2) borrowers are moving in quickly, sensing, again, good opportunities. It is interesting – but completely understandable – to see SOFR falling and CDOR rising at the same time.
CESR, the Composite Ether Staking Rate, is a benchmark for Ethereum validator rewards that we have been calculating for over two years. Its stability reflects the maturity of the post-merger, Layer 2-enabled Ethereum ecosystem. This stability, however, masks the steady increase in daily transactions on the Ethereum mainnet (stablecoins, tokenized assets) that are at the heart of this year’s crypto support narrative. The stability of CESR also rises above the hubbub of lengthening validator exit queues, which serve as ETH’s equivalent to the “OG bitcoin whale sale!! » alarms.
What these rate observations remind us is that for the next stage of crypto to maintain the quality we saw in Q2 and Q3, the major growth blockchains (ETH, SOL, etc.) must lead the way. (Inflows into SOL ETFs in soft band form were a good sign here.) More and more crypto ETFs will soon hit the market, delighting token loyalists and traders alike. In this (exciting, exciting) noise, we will look for other signs of allocation to the asset class, with fast money chasing slow money.
Chart of the week
This week we look at Ethereum DEX volumes and UNI token price – in the context of Uniswap’s proposal to enable the fee switch for the protocol. Essentially, the protocol seeks to reduce LP fees and use that revenue to buy back and burn the UNI token. CoinDesk Research estimates that, based on current projections, the protocol is likely to bring in $300 million in annualized fees, placing it just behind HYPE and PUMP in terms of token buybacks. UNI/USD price is largely correlated with Ethereum DEX volumes – the recent divergence provided an interesting opportunity, but it appears to be closing given the UNI price surge. Uniswap as a proxy bet on Ethereum, this proposition could continue to be prevalent, but there are concerns about increased competition, as CoinDesk Research covers here.
Listen. Read. Watch. Get involved.
