By Yetta (@yettasing), Primitive Ventures Investment Partner Sean Tan, Primitive Ventures Liquidity Partner, Former Tower Research Macro Portfolio PM Foreword

This article was written in May 2025. In May, we completed our investment in SharpLink's PIPE, a milestone in our focus on studying the PIPE market since the beginning of the year. Primitive Ventures has been active since the beginning of this year, capturing CeDeFi integration trends from a forward-looking perspective, and pioneering the focus on Digital Asset Treasury PIPE (Digital Asset Treasury PIPE) transactions. Under this framework, we have systematically studied all representative transaction cases, and SharpLink is undoubtedly the most critical and representative one we have participated in so far

.

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We're excited to announce that Primitive Ventures participated in SharpLink Gaming, Inc. (NASDAQ: SBET)'s $425 million PIPE (Public Company Targeted Private Placement) transaction. This investment provides us with a unique investment exposure — investing in native enterprises whose strategy is to reserve Ethereum. The investment structure combines options

attributes with long-term capital appreciation potential. It reflects our strong belief in the strategic position of Ethereum in the US capital market, and is in line with our overall judgment on the development trend of institutional crypto assets.

Why do we invest in

ETH vs BTC: The field of productive value
Compared to BTC, which lacks native earning capacity, Ethereum, as an interest-bearing asset, naturally has the

characteristic of producing pledged income. BTC-based strategies, such as MicroStrategy, mainly rely on financing to buy coins, have no return from self-generated assets, and have higher leverage risk. SBET, on the other hand, has the potential to directly utilize the staked earnings of ETH and the DeFi ecosystem to achieve compound interest growth on the chain and create real value for shareholders

.

Currently, no ETH-backed ETF has been approved under the current regulatory framework, and the open market is largely unable to capture the economic potential of the Ethereum revenue layer. We believe SBET provides a differentiated path: with the support of Consensys, the company has the opportunity to implement a protocol-native strategy to obtain significant returns on the chain,

and its model is expected to even outperform future ETH-staked ETFs.

Furthermore, the implied volatility of Ethereum (69) is much higher than that of Bitcoin (43), introducing asymmetric rising options to the equity-linked structure. This is particularly appealing to investors implementing convertible bond

arbitrage and structured derivatives strategies — in this framework, volatility becomes an asset that can be monetized rather than a source of risk.

Consensys' strategic engagement
We're very proud to partner with Consensys

, which is the lead investor in this $425 million PIPE funding. As the most effective implementer of Ethereum commercialization, Consensys has unique advantages in terms of technical authority, depth of product ecosystem, and scale of operation, making it an ideal investor

to promote SBET as an Ethereum native enterprise carrier.

Founded by Ethereum co-founder Joe Lubin in 2014, Consensys has played a key role in transforming Ethereum's open source foundation into scalable real-world applications: from EVM and zkEVM (Linea) to MetaMask wallets, which have brought tens of millions of users to Web3. Consensys has raised more than $700 million from top investment institutions such as ParaFi and Pantera

, and has a series of successful strategic acquisitions. It is the most deeply embedded commercial operator in the Ethereum ecosystem.

Joe Lubin as chairman is more than just symbolic. As one of the co-architects of Ethereum's core design and one of the most important infrastructure company leaders today, Joe has a unique and comprehensive understanding of Ethereum's product roadmap and asset structure. His early experience working on Wall Street also gave him a proficiency in managing the capital market, which was enough to guide SBET's smooth integration into the institutional financial system.

At SBET, we saw a unique combination of assets and the most capable investors. This synergy forms a powerful forward flywheel: driven by agreement-native reserve strategies and protocol-native leaders. Under Consensys' leadership, we believe SBET will be a

flagship case showing how Ethereum productive capital can be institutionalized and scaled in traditional capital markets.

Market valuation comparison

To understand SBET's investment opportunities, we analyzed the crypto reserve strategies of different listed companies: MicroStrategy: Pioneer of crypto reserve strategies MicroStrategy has set an industry benchmark for crypto reserve

strategies. As of May 2025, it has been accumulated

Holds 580,250 bitcoins, which is approximately $63.7 billion in market capitalization at the time. MSTR's strategy is to buy Bitcoin by issuing low-cost debt and equity financing. This model has inspired a wave of companies to

follow suit, fully demonstrating the viability of crypto assets as reserve assets.

As of May 2025, MSTR holds 580,250 bitcoins (approximately $63.7 billion), and its shares are traded at 1.78 times mNaV (market capitalization/net asset value), highlighting investors' strong demand for regulated, leveraged exposure to crypto assets through listed stocks. This premium is the result of a combination of factors, including upward potential from leverage, eligibility for index inclusion, and ease of access

compared to direct coin holding.

Looking at historical data, between August 2022 and August 2025, MSTR's mNaV fluctuated between 1 and 4.5 times, reflecting the significant impact of market sentiment on valuation. When the multiplier hits 4.5 times, it is usually accompanied by a Bitcoin bull market and MSTR's large purchases, showing a high level of optimism; when the multiples drop to 1x, it often occurs during the market consolidation phase

, revealing cyclical fluctuations in investors' confidence.

Comparing similar companies, how many of us

have adopted a BTC reserve strategy Listed companies conducted a horizontal analysis:

• Judging
  from BTC net assets (BTC NAV), that is, the total value of bitcoins held by the company, MicroStrategy led with 580,250 BTC (approximately US$63.7 billion), followed by Metaplanet (7,800 BTC, approximately US$857 million) and SMLR (4,264 million dollars) BTC, ~$468 million), ALTBG (847 BTC, ~$93 million), and SWC (59 BTC, ~$6.4 million)
.

• In terms of market capitalization to BTC NAV (mNaV), SWC has the highest premium of 27.06 times, mainly due to its small BTC holding base and being enthusiastically sought after by the market. ALTBG has an MNaV of 8.32 times and Metaplanet of 5.29 times; in comparison, MSTR is 1.78 times and SMLR is 1.25 times, and the valuation premium is moderate due to its large asset size and
debt.
In
• terms of the year-to-date BTC yield (BTC Yield YTD%) (percentage increase of BTC per share after dilution adjustment), small market capitalization companies showed higher BTC growth rates per share due to continued increases in holdings, with ALTBG reaching 431% and SWC of 300%. These earnings data reflect its capital efficiency
and compounding capacity.

• Based on the current rate of BTC reserve growth (Days/Months to Cover MNaV), ALTBG and SMLR can theoretically accumulate enough BTC within 5 months to cover their current mNaV premium, which provides potential alpha space for NAV convergence transactions and relative error pricing.


• At the risk level, MSTR's and SMLR's debt accounts for 15.7% and 21.3% of their BTC NAV, respectively, so they face a higher risk when the BTC price falls; while ALTBG and SWC have no debt, the risk is more manageable.

Japan's Metaplanet Case: Valuation Arbitrage in Regional Markets

Valuation differences often stem from differences in the size of asset reserves and capital allocation frameworks. However, regional capital market dynamics are also critical and an important factor in understanding these differences in valuation. One prominent example is Metaplanet, a company often referred to as “Japan's MicroStrategy

.”

• The

  valuation premium reflects not only its Bitcoin holdings, but also structural advantages associated with the Japanese domestic market: Advantages of the NISA tax system: Japanese retail investors are actively allocating Metaplanet shares through NISA (Japanese Personal Savings Account)

  .
  The mechanism allows capital gains of up to about $25,000 to be exempt from tax, which is significantly more attractive than directly holding BTC, which is subject to a maximum tax rate of 55%. According to Japan's SBI Securities data, for the week ending May 26, 2025, Metaplanet was the most purchased stock of any NISA account, driving its share price up 224% over the past month.


• The Japanese bond market is misaligned: Japan's debt accounts for 235% of GDP, and the yield on 30-year treasury bonds (JGB) has risen to 3.20%, indicating that the Japanese bond market is facing structural pressure. In this context, investors increasingly view the 7,800 bitcoins held by Metaplanet as a macro-hedging tool to deal with the risk
of depreciation of the yen and domestic inflation.

SBET: Laying out the world's leading ETH asset when operating

in the open market Regional capital flows, tax systems, investor mentality, and macroeconomic conditions are as important as the underlying assets themselves. Understanding the differences between these jurisdictions

is key to unlocking asymmetric opportunities in combining crypto assets and public equity.

As the first publicly traded company with ETH capital at its core, SBET also has the potential to benefit from strategic judicial arbitrage. We believe SBET has an opportunity to further unlock regional liquidity and mitigate the risk of narrative dilution through dual listing in Asian markets such as the Hong Kong Stock Exchange or Nikkei. This cross-market strategy will help SBET establish its position as the most representative Ethereum native listed asset in the world and gain recognition and

participation at the institutional level.
The

trend of institutionalization of crypto capital structures

The integration of CeFi and

DeFi marks a key turning point in the evolution of the crypto market, meaning that it is becoming more mature and gradually integrated into the broader financial system. On the one hand, protocols such as Ethena and Bancebit expand the utility and accessibility of crypto assets by combining centralized

components with on-chain mechanisms, reflecting this trend.

On the other hand, the integration of crypto assets with traditional capital markets reflects a deeper macro-financial transformation: that is, crypto assets are gradually being established as an asset class that is compliant and has institutional-grade quality.

• This evolution can be broadly divided into three key stages, each of which represents a leap in market maturity: GBTC: As one of the earliest BTC investment channels for institutions, GBTC provides regulated market exposure, but lacks a redemption mechanism, causing prices to deviate from net worth (NAV) for a long time.
  Although pioneering, it also revealed the structural limitations of traditional packaging products.


• Spot BTC ETF: Since receiving SEC approval in January 2024, spot ETFs have introduced a daily creation/redemption mechanism that allows prices to closely track NAV, significantly increasing liquidity and institutional participation. However, since it is essentially a passive tool, it is unable to capture critical parts of a crypto asset's native potential, such as staking, yielding, or actively creating value.


• Enterprise treasury strategy: Companies such as MicroStrategy, Metaplanet, and now SharpLink, have further advanced their strategies by incorporating crypto assets into their financial operations. This stage went beyond passive coin holding and began using strategies such as compound interest income, asset tokenization, and on-chain cash flow generation to improve capital efficiency and drive shareholder
returns.

From the rigid structure of GBTC, to institutional breakthroughs in spot ETFs, to the rise of today's reserve model guided by yield optimization, this evolutionary trajectory clearly shows that crypto assets are gradually being embedded in the architecture of modern capital markets, bringing greater liquidity, higher maturity, and more opportunities for value creation.

Risk warning

• Despite our full confidence in SBET, we remain cautious and focus on two major potential risks: the risk of premium compression: if SBET's stock price falls below its net asset value for a long time,

  it may cause subsequent equity financing dilution.
  


• ETF substitution risk: If an ETH ETF is approved and supports a staking function, it may provide an easier compliance alternative and attract some capital outflows.

However, we believe SBET can still outperform ETH ETFs in the long run and achieve a healthy combination of growth and earnings with ETH's native profitability.

In summary, our investment in SharpLink Gaming's $425 million PIPE is based on a strong belief in the strategic role of Ethereum in corporate reserve strategies. With Consensys' blessing and Joe Lubin's leadership, SBET is expected to represent a new stage in crypto value creation. As the integration of CeFi and DeFi reshapes the global market, we will continue to support SBET, achieve long-term excellent returns, and carry

out the mission of “discovering high-potential opportunities.”