The Funding: Crypto VCs discuss the next phase of DATs amid rising buybacks

Crypto VCs are analyzing the next phase for Digital Asset Treasury (DAT) firms, noting that consolidation is already occurring following warnings about compressed Net Asset Value (NAV) multiples. A key focus is the increasing use of share buybacks to narrow NAV discounts, exemplified by ETHZilla selling $40 million in ETH to fund a repurchase, which VCs generally view as a rational, albeit uncommon, move to arbitrage value back to shareholders when stock trades at a deep discount.

Experts caution that selling core, liquid assets for buybacks is risky for smaller tokens, potentially leading to a "death spiral." A true crisis would involve prolonged sub-NAV trading leading to accelerated treasury selling; however, VCs are more concerned about over-leverage leading to forced sales to repay dollar-denominated debt. The key test for investors is management's capital discipline and communication.

The future direction for successful DATs involves becoming more active, moving beyond passive NAV tracking. This includes utilizing assets efficiently to earn yield, building infrastructure, or generating dollar income through utility token activities, ensuring their asset basis is not eroded by fees.

(Source：The Block)