SBET - NASDAQ

Good morning, everyone, and thank you for participating in today's conference call to discuss SharpLink's Q2 2025 financial and operating results. By now, everyone should have access to the second quarter 2025 earnings press release, which was issued yesterday afternoon at approximately 4:05 p.m. Eastern Time. The release is available in the Investor Relations section of SharpLink's website. This call will also be available for webcast replay on the company's website. Following management's remarks, we'll open up the call for Q&A. I will now turn the call over to SharpLinx's Vice President of Corporate Communications, Dodi Handy, for introductory comments.

Well, thank you, operator. Please see SharpLink's filings with the SEC and the earnings press release this morning, which lists some of the factors that may cause the results of SharpLink to differ materially from what we say today and which identify some of the risks and uncertainties that could affect our business, prospects and future results. SharpLink assumes no duty and does not undertake to update any forward-looking statements made by us during this call. This call is based only on information currently available to us and speaks only as of the date when it is made. In addition, we may be discussing or providing certain metrics today such as ETH concentration that are not GAAP metrics. Please see our earnings press release and SEC filings for further information regarding these metrics. To set the agenda for today's call, we're going to begin with SharpLink's Chairman, Co-Founder of Ethereum and Founder and CEO of Consensys, Joseph Lubin, who will outline the company's mission, vision for Ethereum's role in the future of global finance and the macro trends driving Sharklink's strategy. Next, Co-Chief Executive Officer, Joseph Chalom; will discuss SharpLink's ETH treasury strategy in detail, including how the company will scale its ETH holdings, activate ETH to generate yield and leverage capital markets to accelerate growth and drive stockholder value. Mr. Chalom will be followed by our Co-Founder and Co-Chief Executive Officer, Rob Phythian, who will provide an update on SharpLink Affiliate Marketing business. And then finally, Chief Financial Officer, Robert DeLucia, will review the second quarter 2025 financial results and key performance metrics related to SharpLink's ETH treasury. I would now like to turn the call over to SharkLink's Chairman of the Board, Joseph Lubin.

Thank you, Dodi, and good morning, everyone. Today marks the start of a new chapter for SharpLink, our first earnings call as a company fully aligned around a single powerful mission: To become the world's largest and most trusted Ethereum treasury company. This earnings call represents the very first opportunity for SharpLink's leadership to talk with our fellow shareholders since launching this exciting new journey together just a few months ago. I'd like to share a brief introduction on myself and provide a look back at Ethereum's origin story. In 2014, as part of an extraordinary group of people who cofounded Ethereum, Bitcoin was around 5 years old and starting to show signs of anti-fragility and staying power, and Ethereum big idea was to create a single blockchain that could power all kinds of different assets at the same time. If you could have all kinds of different assets on the same blockchain, then maybe they could interact. You could write programs, we call them smart contracts, to control that interaction and put those on the blockchain, too. The vision was that the Bitcoin was the world's first digital asset, Ethereum would be the world's first digital economy. And that evolution has played out pretty much as we envisioned. Before Ethereum launched, I founded Consensys AG and later Consensys Software Inc. to be a commercial counterpart to the nonprofit Ethereum foundation, Consensys introduced products like MetaMask, which is now the most popular crypto wallet in the world; and Infura, which is the most popular way for developers to access Ethereum and other blockchains. Consensys has been a major builder and operator of the Ethereum protocol since the early days. We catalyzed global adoption of Ethereum, incubated and invested in hundreds of Ethereum native start-ups and helped pioneer new technologies like staking, smart contracts and zero-knowledge proofs that are scaling Ethereum today. On July 30, just 2 weeks ago, I marked the tenth anniversary of Ethereum launch by ringing the NASDAQ closing bell with my friend Dankrad Feist, the protocol architecture co-lead from the Ethereum Foundation; as part of the global celebration of the network and ecosystem that took place around the world. NASDAQ shared with us that this was the largest activation of the year for them, and I'm not surprised. This is another data point indicating that traditional finance is onboarding to decentralized finance. Today, Ethereum secures hundreds of billions of dollars in digital assets, processes trillions of dollars of transactions each year and is home to products from Wall Street titans like BlackRock, Fidelity, Apollo, Franklin Templeton, JPMorgan and many others. What began in 2015 as a bold vision for decentralized computation has grown into the foundation of a multitrillion-dollar opportunity spanning DeFI, stablecoin, tokenized assets and more. From bootstrapping a small developer community to powering trillions in economic activity, Ethereum's growth has been exponential for a decade, and we're still just getting started. For those who are unfamiliar, Ethereum is the technology platform that sits underneath most of the stablecoins and other digital assets in the world and gives them the ability to do what they do. So the fact that they settle in real-time, the fact that they're borderless, the fact that they're programmable; all the things that make digital assets great, that comes from Ethereum. It's a decentralized technology like the Internet that acts like a public utility and does that so well that it's become what CNBC calls, Wall Street's invisible backbone. The beating heart of all this activity is a revolutionary decentralized trust system called proof of stake that allows Ethereum to secure and validate all these different transactions. And that the proof of stake is Ether or ETH, the native digital asset of Ethereum. ETH is an extraordinary asset. It's an excellent store value, it has been deflationary at multiple points in time. When staked, it earns a productive real yield of approximately 3%. And it's also a growth asset. Historically, ETH market cap has grown by about $1 for every $2 of high-quality liquid assets secured on a Ethereum Layer 1 and Layer 2s. ETH macro opportunity is real, and we believe it's still very early in its life cycle. For perspective, stablecoins today have a total market cap of around $240 billion, with the U.S. Treasury Secretary, Scott Bessent, recently stating that $2 trillion is a very, very reasonable market cap for dollar-backed stablecoins by 2028, and he could see it greatly exceeding that. Tokenized security is around $25 billion today, but are projected by Boston Consulting Group and others to reach up to $16 trillion by 2030, We believe SharpLink's ETH treasury strategy positions us at the center of this multitrillion-dollar shift, giving our stockholders exposure to one of the most disruptive trends in capital markets history. This is a structural opportunity on the same scale as the Bretton Woods Accord and Nixon's closing of the gold window in 1971, which laid the foundation for decades of falling U.S. treasury rates and rising bond prices. We're on the same scale as that of Japan's boom and bust in the '80s and '90s, which set up 3 decades of low interest rate yen borrowing for carry trades. At this moment, we're positioned to benefit from a multi-decade progression towards a digitized and decentralized economy, a shift that has accelerated since the inception of Bitcoin and is now gaining meaningful institutional adoption and legislative support. This will put a persistent bid under digital assets like ETH and Bitcoin that are leading the drive to decentralization. This macro shift from intermediated platforms to digital decentralized systems is powering what we believe will be one of the most significant capital market transformations in history. Legislators in the U.S. are writing new rules for Web3, the re-decentralization of the World Wide Web. And Paul Atkins and Hester Peirce just initiated the SEC's Project Crypto to accelerate market structure in this direction. As investors recognize this dynamic and the paradigm shift that is underway, we're seeing a major surge in institutional interest and adoption. ETH is rapidly emerging as the core institutional, functional and productive digital asset and Ethereum as the emerging rails for institutions, asset issuers, builders and even AI agents, with demand accelerating seemingly every day. To further discuss how SharpLink is uniquely positioned to capitalize on this generational market opportunity, I'd like to turn the call over to our newly appointed Co-Chief Executive Officer, Joseph Chalom. Joseph?

Thank you, Joe, and good morning, everyone. I joined SharpLink because I see a powerful opportunity to continue shaping the next generation of financial infrastructure. The world is changing. And SharpLink, through its Ethereum treasury strategy and ecosystem activities, is positioned to lead that change. As Joe mentioned earlier, our mission is to become the world's largest and most trusted Ethereum treasury company. This is a company built on institutional-grade principles for one purpose: To unlock Ethereum's full potential and put it to work for investors. I'm thrilled to be part of it. SharpLink's commitment to aligning its strategic direction with the Ethereum ecosystem reflects a bold and forward-looking vision, one that deeply resonates with my passion for digital assets and scaling innovative financial technologies. Prior to joining SharpLink, I spent nearly 2 decades at BlackRock, where I served in senior leadership roles, helping scale BlackRock's Aladdin portfolio and risk management system, one of the largest platforms for the entire buy-side community, and architecting BlackRock's digital asset efforts. Over the last 5 years of my tenure at BlackRock, I focused on setting the strategy and executing BlackRock's digital asset efforts. I hope to bring institutional-grade crypto strategies to traditional finance and institutional investors. This included several landmark product innovations, notably, the launch last January 2024 of the iShares Bitcoin Trust, IBIT, the world's largest spot Bitcoin ETF with approximately $85 billion in assets; the launch last July 2024 of the iShares Ethereum Trust, ETHA, which is now the world's largest spot ETF and manages approximately $14 billion in assets; and finally, the launch of BUIDL, the world's largest tokenized U.S. treasury fund built on Ethereum. My overarching mission through these efforts was to bridge the world of traditional finance with a crypto ecosystem and its vibrant community. These efforts were built through deep collaboration with industry partners like NASDAQ, Coinbase, Securitize, Anchorage Digital and others, who are building a robust ecosystem to support these innovative digital asset products. At SharpLink, my goal is to provide investors with the smartest way to benefit from the long-term Ethereum opportunity. We are in the early stages of a strategy designed to give stockholders institutional-grade, risk-managed exposure to ETH and its yield. Our efforts are backed by best-in-class transparency and reporting. And we're going to be doing it in a way that strengthens the Ethereum network and create enduring value for our stockholders. We are motivated by the long-term ETH opportunity and not by a short-term ETH trade. Let me now turn into a deeper dive on our Ethereum treasury strategy, a core pillar of SharpLink's long-term value creation plan. We're taking a strategic forward-leaning approach. We're not just accumulating and holding ETH on our balance sheet, we're activating it. Much like how Michael Saylor and Strategy unlocked access to Bitcoin through a treasury strategy, our goal is for SharpLink link to unlock public market access to ETH and Ethereum ecosystem. But we're going a step further. Beyond just capital appreciation, we're transforming ETH into a yield-generating treasury asset through native staking, restaking and participation in DeFi. Simply put, our investment thesis is to raise capital in an efficient manner. We're currently doing this by selectively issuing common equity. We're also exploring the use of equity-linked securities to capture the inherent value in ETH's volatility and evaluating additional capital-raising structures such as preferred securities. All of this is to further our ultimate goal of increasing our ETH concentration, our North Star metric. This metric measures how much ETH we hold per 1,000 diluted shares and serves as the clearest indicator of both the scale and capital efficiency of our ETH accumulation strategy. By focusing on ETH concentration, we give investors a transparent objective way to track how we're building long-term shareholder value. So to recap, we believe SharpLink offers the smartest way for investors to gain exposure to ETH and the Ethereum opportunity. First, we capture ETH and its full yield potential well beyond what's available through passive ETF exposure. Second, even compared to [ stake ] ETH, our active capital market strategy and intelligent treasury management increases ETH concentration over time, putting more ETH behind each share, delivering even more value to our stockholders. And importantly, SharpLink benefits from its unique strategic relationship with Consensys as well as trusted relationships with asset managers Galaxy and ParaFi and with our industry-leading custodians, Coinbase and Anchorage Digital. These relationships help us achieve institutional-grade treasury operations and efficiency. Our approach creates a powerful value proposition for our stockholders, delivered through a highly liquid, fully transparent NASDAQ-listed company, led by a team of world-class experts. Since launching our treasury strategy on June 2 of this year, we have raised more than $2.6 billion in investor capital and purchased more than 700,000 units of ETH. And we've done it in a way that has significantly improved our ETH concentration metric, demonstrating our ability to maximize value for our stockholders. We've raised this capital through a series of strategic transactions that have positioned SharpLink as one of the largest public ETH treasury companies. On May 30, 2025, we closed a $425 million private placement, led by Consensys and supported by other prominent crypto venture capital firms and providers that included ParaFi Capital, Electric Capital, Pantera Capital and Galaxy Digital, to name a few. In addition, we have a total of $6 billion in ATM capacity in place, providing significant flexibility to continue raising capital to build our ETH holdings. And in the last week or so, we've raised $600 million in capital through registered direct offerings with global institutional investors, some of which are among the largest in the world. Our capital markets approach remains opportunistic with a focus on both accretion and cost of capital, with the aim of increasing our ETH concentration metrics. We are frequently asked whether we have set a specific target for the amount of ETH we intend to acquire. Our plan is to continuously and aggressively accumulate ETH over the long term for the benefit of our stockholders. Before I hand over to my partner, Rob Phythian, I want to take a moment to thank our team for their herculean efforts in helping launch our new Ethereum treasury strategy. I also want to recognize our strategic partners at Consensys for their incredible collaboration and depth of expertise that they're bringing to this effort. Both of these are differentiated advantages for SharpLink. I will now turn the call over to Rob to provide an update on SharpLink affiliate marketing operating business. Rob?

Thank you, Joseph. And thank you, everyone, for joining today's call. For those who are new to our company, SharpLink's legacy Affiliate Marketing business is focused on performance-based customer acquisition, connecting leading sports books and online casino operators with high-value players. Through our flagship affiliate network, PAS.net, we enable our partners to drive qualified traffic, conversion and long-term player retention across both U.S. regulated and global iGaming markets. In addition to PAS.net, we operate a portfolio of state-specific direct-to-player websites. These platforms are designed to engage local sports betters and casino players in a highly targeted compliant manner, driving traffic to operating partners licensed in each respective state. This dual approach gives us both scale and precision, making us a valuable acquisition channel for the iGaming industry. Looking ahead, we see meaningful opportunities to evolve this business. As the gaming ecosystem continues to integrate blockchain technologies and digital assets, SharpLink is positioning itself at the forefront of this shift. We're actively exploring partnerships with crypto-focused gaming platforms, enabling us to offer new, innovative marketing solutions tailored to a digitally native tech-savvy audience. With that, I'll turn the call over to our Chief Financial Officer, Bob DeLucia, to take you through our financial results. Bob?

Thank you, Rob. First, please refer to our press release this morning for the Q2 financial highlights and an update on our current ETH treasury strategy metrics. We will now go through the financial results for the quarter ended June 30, 2025. As we review our second quarter financial results, I'd like to remind everyone that all comparisons and variance commentary referred to the prior-year quarter, unless otherwise specified. Please note that these results reflect less than 1 month of activity from our newly implemented ETH treasury strategy, which launched on June 2, 2025. As of June 30, the last day of the second quarter, the company held 24,704 ETH with a net value of $61.5 million. In addition, we held 164,731 LsETH, or liquid staked ETH, with a net value of $382.4 million after factoring in an impairment resulting from our current accounting rules. I'd like to talk about LsETH for a moment because if you aren't familiar with how liquid staking works, there are some counterintuitive accounting factors that investors and stockholders need to be aware of. Under the rules, LsETH is classified as a digital, intangible asset because the LsETH token provides an enforceable right to redeem an underlying amount of ETH deposited in a smart contract. Digital intangible assets must be recorded at their historical costs less any impairment on the condensed consolidated balance sheet. The company performs a test of digital intangible assets for impairment annually or more frequently if events or changes in circumstances indicate that the asset is impaired. The test for impairment consists of a comparison of the fair value of the digital intangible assets with their carrying amount. Impairment losses are not reversible under U.S. GAAP. Increases and the value of LsETH are not recognized until the redemption or sale of LsETH occurs. Following the receipt of LsETH in early June of 2025, the price of LsETH decreased, and it was determined that the carrying amount of the LsETH exceeded its fair value during the quarter ended June 30, 2025. In determining if an impairment has occurred, the company is required to use the lowest price of 1 LsETH quoted on an active exchange at any time during the quarter, which in Q2 was approximately $2,300. As a result, the company recognized an impairment loss of $87.8 million on its LsETH holdings, reducing the carrying value of the LsETH. So there's no confusion for our investors, I want to state plainly that this impairment loss is a noncash loss and as a result of the company following the current accounting practices. Assets like LsETH are relatively new, and we recognized a tremendous effort that is going into updating U.S. GAAP to accommodate digital assets. Over time, we expect further progress to ensure that investors have a clear and consistent information about a company's financial performance across a variety of digital assets. Revenue in the second quarter was $0.7 million compared to $1 million in Q2 of 2024. Gross profit in the second quarter of 2025 was $0.2 million or 30% of revenue compared with $0.3 million or 28.5% of revenue for Q2 of last year. SG&A expenses in the second quarter were $2.3 million compared to $1.5 million in Q2 of 2024. Net loss in the second quarter was $103.4 million compared to $0.5 million in Q2 of last year. The current quarter loss was primarily driven by the $87.8 million noncash accounting impairment and the recognition of a $16.4 million of noncash stock-based compensation expense in conjunction with the strategic advisory agreement with Consensys. As of June 30, 2025, cash on hand was $5.1 million compared to cash on hand of $1.4 million as of December 31, 2024. For additional details, I want to emphasize that today's remarks are only a summary of certain highlights. Our complete official financial statements in the accompanying footnotes, including all required disclosures and management's discussion and analysis, are contained in our quarterly report on Form 10-Q for the period ended June 30, 2025, filed with the Securities and Exchange Commission. This concludes our prepared remarks. We will now open it up for questions from those participating in the call. Operator, back to you.

[Operator Instructions] Our first question today is coming from Devin Ryan of Citizens.

Congrats on the launch and progress on strategy to date. I appreciate you taking the questions. I guess, first of all, I want to dig in a little bit on the points that you made around the opportunity to activate ETH to drive incremental yield beyond staking that we've seen your team has some kind of unique background to do that. So I'd just love to hear a little bit more about some of the areas you're focused on near term to do that. And then how you see it evolving long term? And just what type of yield pickup you think you can generate from that?

For the question. This is Joseph Lubin or Joe Lubin for the purposes of this call. I'll be the air traffic controller for these questions. And I may answer some, but we'll route them appropriately. Joseph Chalom, can you handle that, please?

Sure. Devin, welcome to the call, and thanks for the question. I think when you take a step back, we want to do a few things. We want to accumulate ETH for the long term, and we want to activate it through yield strategies. To date, we've really focused on native staking and the liquid staking protocol that Bob mentioned. I think as we continue to grow we would like to take advantage of all this taking opportunities, whether that is native, liquid, restaking or to participate in DeFI yields. That said, I think it's very important to emphasize that our expectation is we're going to do this in an incredibly risk-managed way. Building a portfolio of ETH staking should be along some risk-return continuum, and we're going to use our institutional-grade experience plus the experience and depth of expertise at Consensys to continually optimize that. But we're doing it in a way that's going to be safe and accretive for our shareholders. And if we do that well, which we will, there'll be a compounding effect as part of our treasury strategy.

Excellent. And just for my follow-up, in the investor presentation, you have a lot of good detail on there, but you kind of frame a valuation opportunity for ETH of $15,000 to $40,000 by 2028, which would obviously be really nice appreciation from here. And I think you probably underlined some of the strategy to buy out as much as you can. So I'd love to just hear about some of the broad strokes around how you're thinking about the valuation for ETH, the type of adoption on Ethereum you think we need to see to get to those types of levels and anything else you would kind of frame in that question as well.

So it's not easy to peg an actual number by a certain period of time for the price of Ether. Ether there is at its mainstream moment or Ethereum is at its means to moment currently in the sense that it's scalable, affordable, usable enough. It's no longer dangerous to be Ethereum company in the United States of America, and it is now open for business to be a company that either use the tokens or issue tokens or makes use of DeFI. So it's on. And that's just going to be a game changer. The Ethereum ecosystem needs more applications, and there are many developers coming into the space that previously were not comfortable coming into the space because of the previous administration's attack on our technology. So the builders are coming, the companies are coming, the applications are coming, the users that are coming in. And there's legislative support. There's support through major financial institutions that have all made it clear that Ethereum is the technology that they're going to build on. It's primarily because it's the largest, most mature ecosystem in the space, and it's also because financial institutions appreciate technologies that haven't gone down once in the last 10 years and Ethereum is in a class of its own. So whether it's 8,000, 10,000, 15,000 by the end of this year or much higher by the end of subsequent years, it's all about Ethereum becoming a new kind of software. We're calling it Trustware that will enable the world to onboard itself in terms of financial applications and really become Web3, the decentralized World Wide Web. And so we do anticipate that as we grow scalability that the world's applications will sit on decentralized rails, and much of that will be on Ethereum.

Our next question is coming from Joseph Vafi of Canaccord Genuity.

Congratulations on the progress so far. And thanks for having me on the call here today. I thought maybe we'd start a little bit, you rapidly achieved a prominent position in broader ecosystem with the treasury strategy. Just wondering, away from the ETH treasury strategy, are there other things you're working on right now to broaden the value use and I guess, the mainstreaming of ETH ecosystem over and above buying and staking? And then I have a quick follow-up.

So I personally am involved with the company called Consensys that has, for around 10 years, been working to build, grow, expand the Ethereum ecosystem. And there are lots of synergies that we're exploring between Consensys and SharpLink. And so we may have a concrete answer to your question at some point soon, but let me throw it over to Joseph, in case has any thoughts on that front.

Sure. So lots of Joseph on this call and answer, but thanks for the question. I think right now, we, on behalf of our stockholders, are really, really focused on doing an excellent job executing on our ETH treasury strategy. We do have an existing Affiliate Marketing businesses -- business, and we believe there are going to be opportunities to find new operating businesses that drive revenue, that are both synergistic and complementary with what we do today. But we'll also leverage the close relationship, the strategic partnership with Consensys. That is a differentiated advantage for SharpLink. No other ETH Treasury has that strategic relationship with the company with the most experience and depth of knowledge Ethereum. So I would ask you to be patient. We are exploring additional opportunities to drive revenue growth. And that revenue growth itself and the earnings could be reinvested in ETH, so we can create a bit of a flywheel and a righteous cycle. But that's something we're exploring. We're early in the strategy, and we're focused on doing it right.

My role -- let me just follow up a little bit. My role is Chairman of the Board at SharpLink. And I don't have day-to-day executive responsibilities. That said, I'm paying very careful attention to what's going on day to day at SharpLink because it's doing important things, and it's moving really fast. Consensys has contributed to top-tier talent to SharpLink and seconded some talent to SharpLink. So the team on the ground at SharpLink has an intimate understanding of what Consensys does and what's going on in the Ethereum ecosystem, and we're constantly sharing information about what we're seeing with our -- all the personnel at SharpLink. So any sort of event or innovation that's going on in the Ethereum space is immediately ingested at SharpLink. And so while SharpLink needs to focus on the core strategy for now, they have the full benefit of the business of Consensys to lean on.

That's great color. And then maybe just really quickly on the treasury strategy itself, clearly off to a very strong start with solid momentum in comparing and contrasting, for example, to Strategy formerly known as MicroStrategy, you do have yield generation capability. How do you think that, that yield generation could, perhaps, form maybe a slightly different way or approach to treasury accumulation relative to the different financial instruments available to you and your balance sheet?

Chalom, all yours.

Sure. I think, first, we have to give credit where credit is due. And Michael Saylor and his team have done an amazing job with strategy in their Bitcoin treasury. And what's interesting is they've demonstrated over the past 4 years that they can create a premium to the NAV in their stock price and they can sustain it. And that is really important. And they've done that largely because they have an ability to drive both earnings and to use financial products to raise capital that are accretive. I think at SBET and in ETH treasury strategy, you have that. You have an ability to have capital appreciation in an efficient public company, highly liquid wrapper, I think what you also have is the ability to create yield and compounded on a continual basis. So that is really, really important. I also think owning ETH through SBET or a public company, you have an ability not just to focus on the accumulation and compounding of these, but you also have the benefit that the revenue that's thrown off from the yield has a forward valuation. And there will be opportunities to grow that revenue. And I think that is why you're going to see this be a successful strategy. But we owe a tip of the hat to Michael Saylor. This just has the additional benefit of compounding yields.

Our next question is coming from Brian Kinstlinger of Alliance Global Partners.

There are several smart blockchains. Ethereum by far has the largest share in terms of total value locked and total assets secured. Can you talk about some of the key developments that will ensure Ethereum can sustain its lead or even increase that share that investors should be tracking?

Sure. Brian, happy to address that. Ethereum term ecosystem did go through a period of doldrums for a while. Well, there was lower activity and lower mood in the broad blockchain ecosystem, and that certainly affected Ethereum more than others. It was partially as a result of the attacks of the SEC that were mostly directed towards Ethereum because it has the most decentralized protocol and because the United States of America, major financial institutions felt that the decentralization and disintermediation that Ethereum enabled was a bit of a threat to way that they like to do business. But fortunately, we're beyond that, and headwinds have turned into gale-force tailwinds at our back. The sentiment inside the Ethereum ecosystem is very high right now. Even during the more malaise period, the builders were just building. We've been heads down building for 10 years, building, enabling infrastructure to scale the technology and get it ready for its mainstream moment. And so as I said before, we're already scalable enough both horizontally and vertically to handle rapid growth. What we're focusing on now is creating greater composability across the Layer 2 networks and Layer 1. So there are various technologies being built and actually in use that will enable synchronous composability across different Layer 2 networks. And so that means within 2 seconds or less, you can get transactions done, even across different networks. And there's a huge effort to beef up the performance of Layer 1, so that's the transaction through per second and reducing the latency. So that involves growing the amount of gas per block, reducing block times and a variety of other techniques, including parallelization of smart contract execution. And so the ambitions of the Ethereum ecosystem, the core developers are to make Layer 1 extremely more performant while still retaining appropriate decentralization. After all, it is decentralization that distinguishes Ethereum from essentially all other protocols. Perhaps Bitcoin and Ethereum are in the same class in that respect.

So I would just add to Brian's question, one of the reasons why we think we are at a moment that matters in a paradigm shift is this Ethereum macro opportunity. You have tailwinds of the GENIUS and CLARITY Act, you have the Circle IPO. But more importantly, you are seeing very significant growth in institutional adoption. And if you take a step back, the expansion of the assets and transactions on Ethereum and the L2 is because Ethereum is a global platform not just for stablecoins and tokenized real-world assets, but also decentralized finance. That drives network value of Ethereum. Our partners at Consensys published a really interesting trustware report that laid out a fundamental way of thinking about Ethereum and its network valuation. And the simplest headline is that ETH market capitalization could grow by $1 for every $2 of assets secured on Ethereum. And right now, if you look at the competition, Ethereum is securing nearly 60% of all stablecoin transactions, 83% of tokenized real- world assets and 72% of high-quality liquid DeFI transactions, and that's 10x the second largest platform. So we think there's not only momentum, but there's mind share and institutional adoption. And that drives Ethereum network value and ETH market capitalization.

And Brian, let me put a timeline to my remarks. On May 7, our core developers landed the most complex hard fork in the history of Ethereum or at least the biggest one. And that was obviously landed flawlessly, as we do, and that had some scalability improvements. The next hard fork for Fusaka is scheduled to land in the October, November time frame. And that will enable greater scalability of the Layer 2 technologies and has a few other enhancements. Soon after that, we have Glamsterdam, is going to be focused on scaling Layer 1. And so we expect Glamsterdam to land sometime in Q2 of next year. And even alongside those improvements, there are things that we can do alongside that, namely increasing gas limits and soon parallelizing the release schedule between essentially improvement of the Ethereum Layer 1 technology versus the Ethereum Layer 2 technology, which depends on a different kind of storage called [ blocks ]. So all of this is happening essentially now and pretty rapidly.

Great. My follow-up would be, thus far, your capital has been raised through equity, but you alluded to evaluating other structures. Can you talk about your approach to debt? Are there maximum debt-to-equity ratios that you look to maintain or any other metrics? And how we should think about them?

Joseph?

To date, we've been really focused on raising common equity. We've done it through a PIPE. We've done it through registered direct offerings. And as we alluded to in our call, we have $6 billion of ATM facilities that are available that are really available to us. Our focus at this point is also, and we've said this publicly, to explore the use of equity-linked securities in order to capture the inherent value in ETH's volatility. And we're also evaluating additional capital-raising structures such as preferred securities. So we are early in our capital raise. We've raised $2.6 billion in under 11 weeks that has resulted in our ETH treasury owning $3.3 billion of ETH. But as we move forward, we're going to make sure we're using every opportunity to raise capital in the most efficient way. To date, it's been common equity, but equity linked is coming in our future at the appropriate time, and we're going to do it in a disciplined way.

Congratulations on the strategy and the success.

Ladies and gentlemen, we're showing time for one final questioner. Our final question is coming from Bill Papanastasiou of KBW.

A bit of a side note, a full-circle moment for me about a decade ago. I recall watching Joe Lubin speak in Toronto during the L4 Venture days. Just two questions for me. First, we can start off with -- maybe you can share your vision of how treasury strategies will evolve over time, as competition seems -- competition across smart contract blockchains seems to become more competitive.

Sure. So I'll start with a longer-range overview and then hand it over to Joseph for a more immediate view. So this is a paradigm shift. We are past the inflection point, and we're fully in the paradigm shift towards a progressive decentralizing of the global economy. That's not just my opinion, that seems to be the opinion of legislators and regulators in the United States, in other places, it seems to be the opinion of major financial institutions. I may be living further in the future than those people, but it's nice to see people catching up pretty rapidly. And the paradigm shift will involve all of us becoming on chain. So in the same sense that interactive companies or web studios in the '90s and the [ ops ] started working with traditional organizations to build websites, you get their information online to build e- commerce sites to bring them on to mobile and social over the last years and essentially transform the global economy by bringing companies and people online. We are doing that in our ecosystem by making it both legal and comfortable and easy for people and organizations to use tokens to participate in the token economy. So as tip of the spear, companies like SharpLink are bringing traditional finance to DeFI by, a, recognizing that there's a deep structural shift going on in a structural trade in place. As I mentioned in my remarks on this call, this is very similar to 30 years of treasury rates going down and bond prices going up, it's very similar to 30 years of the Japanese carry trade. So something structural is going on. And we believe that we and others are going to be well advised to continue to accumulate what we think of as the highest-powered money on the planet right now, which is the Ether and Bitcoin. And they're highest power because they're unsensorable and because they don't admit the exploitation and financial repression of citizens of different nation states. And so we will continue to do this. We will differentiate ourselves because we are deep in the technology and we can bring all the expertise of Consensys and an ecosystem to bear on what SharpLink does. Joseph, my colleague, will do the same for the traditional finance industry. And we are going to eventually make use of an extremely large pool of the highest-powered money to do things that will be societally impactful. That is a later stage of this particular strategy. Let me throw it over to Joseph.

Sure. I would say, from a competitive and evolution perspective, I want to start by just acknowledging that competition is excellent in the space. What do I mean by that? It means that there are multiple market leaders and some of the largest institutional investors in the world, who believe in the thesis of an Ethereum long-term opportunity. That said, there is room for multiple treasuries. We believe, like in many network scale businesses, a few will take the mode assets because scale and liquidity really matters. We're proud to be among the top 50 last week in liquid public stocks, which is a really positive thing for our investors. I also would say, we are taking a long-term view. And as much as we focus on what's happening in the industry, we're actually singularly focused on being the most trusted and the most transparent in this space. Trusted in that we will follow the best risk- managed approach to raising capital, acquiring ETH and then deploying it for yield. And we will also do it in a way that's most transparent, with weekly updates and other means for people to track our core metrics. And that, I think, in the long run, will be differentiating. And institutional capital is looking for not only long-term investment opportunities, but to do it with the most transparent and trusted in the industry, and that's where we're going to keep our focus for our stockholders.

That was a very informative response from both of you. Joe Lubin, you spoke about the world moving on chain. Are there any major infrastructure gaps that need to be solved in order to see this happen? Do you see any potential overhangs today from seeing TradFi move over to DeFI essentially?

As I said in my earlier remarks, we are at our mainstream moment right now in terms of scalability, affordability, usability, legality. And what we anticipate is that more and more demand will come. And like any technology, we're going to have to respond to what that demand does to our ecosystem through our technology. So we've had many moments in the last 10 years, where new uses have come along and they've shown us how we need to improve the technology. So we'll need a lot of that going forward in terms of maintaining scalability of the technology as more and more use cases and companies and people are onboarded. Usability is a very important one. So we've done a pretty good job making wallets and applications more usable, more intuitive. But their -- Consensys and many other projects in our ecosystem are experimenting with artificial intelligence to make the technology delightful and intelligible. People don't read terms and conditions on the web currently, and it's going to be unreasonable to expect that people will understand the intricacies of decentralized finance or the intricacies of decentralized governance in Dow, for instance. And so people will soon have access to what I like to think of as a digital twin AI agent that understands them well, that represents their interests on the web and on chain. And so we will be building that sort of technology that you own and you control, that protects your own personal information and enables you to understand what's going on in a protocol upgrade or some sort of proposal in a decentralized organization or how to position yourself in decentralized finance or in a game or something like that. So the user interface that you can talk to, that you can express your intent and have a network of solvers underneath that go ahead and fulfill your request within 2 seconds. That's the kind of advancement that we're going to need over next 2-plus years in order to make the technology really easy to use.

We actually have time for one more question. Our last question is coming from Kevin Dede of H.C. Wainwright.

Maybe a little sort of back-office housekeeping question, gentlemen. I don't understand whether or not you're running your own validator nodes or intend to continue outsourcing what you might do to extract higher levels of NAV?

Joseph, do you want to talk about the back office and the trajectory?

Sure. I think risk controls are really, really important, Kevin. And that's why when the Strategy was kicked off, we partnered with leading asset managers like ParaFi and Galaxy as well as with Anchorage and Coinbase to build that structure around us to make sure we were doing the institutional grade best-in-class accumulation and staking. To date, we've used delegated staking through those custodians and as I mentioned earlier, through native staking and one liquid staking protocol. As I mentioned, we are going to continually evaluate that to look at what the most efficient way to drive yield is across the full gamut of opportunities, again, staking, restaking DeFI yield opportunities, but we're going to do it in a risk-managed way because at the end of the day, this is a treasury strategy to accumulate and compound but we're going to do it in a way that's best for our stockholders and not take unnecessary risk. That said, our differentiated relationship with Consensys gives us incredible depth of knowledge and access to this community to make sure we are taking in the highest risk-reward way, and I think that's a differentiator relative to our competitors.

As much as you feel free to offer, I'd appreciate understanding the buy triggers. I mean within the context of these ETH worth $15,000 to $40,000, how do you approach your day-to-day buying on the market?

I think I'll take a high-level answer to that, which is as you just described, if there's a long-term ETH opportunity, and ETH today is trading in the mid-4,000s, and you believe there's going to be significant adoption on the Ethereum network therefore, driving the value of the up, and that is the thesis; then you want to buy and accumulate as much ETH as possible early in this mega cycle, and that's simply what we're doing. And we're trying to execute, again, through best-in-class providers. But I think we're very focused on accumulating because that is where we are early in this adoption cycle.

At this time, I'd like to turn the floor back over to Mr. Chalom for closing comments.

Well, thank you, everyone, for joining our first earnings conference call as an ETH treasury company. We truly appreciate your continued support and confidence in our vision. And I want to be clear, we remain focused on executing our strategy, driving growth and delivering value for our stockholders, and we look forward to speaking with you again on our next earnings call. So have a great weekend, everyone.