Welcome to the institutional newsletter, Crypto Long & Short. This week:
- ZIGChain’s Abdul Rafay Gadit writes that as venture funding wanes, Digital Asset Treasury Companies (DATCOs) are reshaping corporate finance by turning balance sheets into active capital engines, proving that the future of institutional crypto lies in on-chain productivity, transparency and governance — not speculation.
- CoinDesk Indices’ Andy Baehr provides a “Vibe Check,” providing a look back at cryptocurrencies and a look ahead at signs of strength as the country emerges from the government shutdown.
- In the “Chart of the Week” we examine the Ethereum DEX volumes and the price of the UNI token.
– Alexandra Levis
The Rise of DATCOs: Active Government Bonds Replace VC in Crypto
– By Abdul Rafay Gadit, Co-Founder, ZIGChain
For years, corporate government bonds in crypto were little more than speculative balance sheets. The strategy was simple: buy bitcoin, hold and hope. The passive model popularized by MicroStrategy is now being supplanted by a new class of participants: Digital Asset Treasury Companies (DATCOs) that behave more like venture capital firms than custodian banks.
This shift is happening because crypto’s traditional funding model has stalled. Venture capital investment fell 59% in the second quarter of 2025 to $1.97 billion, the lowest level since 2020. Still, the amount of crypto on corporate balance sheets has never been higher: Public companies now own over a million bitcoins, 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 having digital assets, they actively deploy them in staking, validation operations and ecosystem development. Across Europe and Asia, publicly listed DATCOs are allocating significant portions of their treasuries to blockchain participation, earning on-chain dividends while supporting network infrastructure. The 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 in traditional finance. It also creates a new feedback loop between networks and their investors: when government bonds deploy, validate or provide liquidity, they not only earn returns, but also contribute to the resilience and scalability of the ecosystem itself.
The consequences go beyond balance sheets. By running validators and funding ecosystem growth, DATCOs gain both influence and insight into new protocols—advantages once reserved for venture capital.
Regulators and institutions are starting to take notice. An asset-treasury model that combines transparent on-chain operations with return 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, validation reward and award can be verified in the chain. This visibility provides a framework for regulated participation, bringing structure to a space once defined by opacity.
As VC funding retreats, DATCOs are quietly becoming the new capital backbone of the crypto industry – less speculative, more participatory and potentially far more durable. The age of passive balance sheet exposure is coming to an end. Instead is a model where capital works alongside code – where the most successful treasuries will be those that help build the networks they own.
While we wait (ed)
– Off 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 5th, the Galaxy’s Alex Thorn posted a note that took his year-end price target to $120K from $185K. The following day, Cathie Wood lowered her 2030 goal from $1.5 to $1.2 million. Bitwise’s Matt Hougan maintained his call for a Q4-in-Q1 rally, but not one that would ring the $200,000 bell he had previously predicted. NB: We neither call bottoms nor make price predictions. Still, the prospect of the government reopening (really… it takes so little to get us excited) has prices thawing, and our thoughts turn to… what’s next?
We can start with a few remarks about rates. The Fed recently conducted its largest liquidity injection since the 2020 pandemic: $125 billion in total, including a record $29.4 billion one-day operation on October 31 through the Standing Repo Facility. Bank reserves had fallen to $2.8 trillion (low in 4 years) due to QT and exacerbated by the shutdown. SOFR moved lower, and not without drama. CDOR, our CoinDesk Overnight Rate, which pulls blockchain information from Aave pools, shifted but remained in its local range (the USC rate is shown below). Only in the last observation did the divergence show itself: SOFR sank lower, while CDOR jumped higher. Since CDOR rates (and Aave’s variable loan rates, on which they are based) are driven solely by the utilization of Aave’s lending pools, higher rates usually mean one of two things: 1) lenders pull out because there are better options, and/or 2) borrowers come in quickly and sense good opportunities again. It’s interesting – but completely understandable – to see SOFR dart lower and CDOR dart higher at the same time.
CESR, Composite Ether Staking Rate, is a benchmark for Ethereum validation rewards we have been calculating for more than two years. Its stability reflects the maturity of the post-Merge and layer-2 endowed Ethereum ecosystem. However, this stability masks the steady increase in daily transactions on Ethereum’s mainnet (stablecoins, tokenized assets), which is at the heart of this year’s crypto-supporting narrative. CESR’s stability also looks past the clamor of extended validator exit queues, which act as ETH’s equivalent of “AND bitcoin whale selling!!” alarms.
What these rate observations remind us is that for crypto’s next stage to maintain the quality we saw in Q2 and Q3, large growth blockchains (ETH, SOL, etc.) must lead the way. (Inflows into SOL ETFs in a soft band were a good sign here.) More (and more) crypto ETFs will soon hit the market, which will delight token loyalists and traders. In the (exciting, exciting) noise we will look for more signs of allocation to the asset class, the fast money chases the slow.
Chart of the week
This week we examine Ethereum DEX volumes and the price of the UNI token – in the context of Uniswap’s proposal around enabling the fee switch for the protocol. Essentially, the protocol seeks to reduce the LP fees and use these revenues to buy back and burn the UNI token. CoinDesk Research estimates that with current projections, the protocol is likely to earn $300 million in annual fees – placing it just behind HYPE and PUMP in terms of token buybacks. The UNI/USD price correlates broadly with Ethereum DEX volume – the recent divergence presented an interesting opportunity, but it appears to be closing up given the rise in the UNI price. Uniswap as a proxy bet on Ethereum after this proposal may continue to be widespread, but there are concerns about increased competition, as covered by CoinDesk Research here.
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