Which Types of Crypto Assets Make for Good Treasury Companies? - Ep. 885
🎯 Summary
Podcast Summary: Which Types of Crypto Assets Make for Good Treasury Companies? - Ep. 885
This episode of Unchained, featuring Guy Young (Founder of Athena Labs) and Rob Hader (General Partner at Dragonfly), dives deep into the emerging trend of corporate treasury vehicles structured through traditional finance (TradFi) wrappers, specifically focusing on the SPAC merger involving Athena Labs and TLGY Acquisition Corp. to form Stablecoin X Assets.
1. Focus Area
The primary focus is the strategic rationale, structure, and investment thesis behind using public market vehicles (like SPACs/PIPEs) to provide TradFi investors access to specific, high-growth crypto-native businesses and digital assets, particularly stablecoins and infrastructure plays, rather than just Bitcoin or Ethereum ETFs.
2. Key Technical Insights
- Distinction in Access: The conversation highlights that while Bitcoin and Ethereum have established ETF access, other valuable crypto primitives (like high-growth protocols such as Athena) lack efficient public market entry points for institutional capital.
- Product Differentiation: The key technical/structural difference between vehicles like MSTR (MicroStrategy) and a stablecoin treasury vehicle is the reliance on financial alchemy (leverage) versus access and distribution. MSTR uses debt to create leverage on BTC; stablecoin treasuries aim to distribute exposure to a specific narrative (digital dollars).
- Vaporware vs. Real Business: A strong emphasis is placed on avoiding wrapping “vaporware” in an equity structure. Sustainable vehicles must represent real businesses generating real revenue, mirroring the “Mag 7” phenomenon in traditional equities.
3. Market/Investment Angle
- Rejection of Premium to NAV: Both guests explicitly state they are not interested in vehicles that trade at a significant premium to Net Asset Value (NAV). The purpose of these structures is access and distribution, not financial engineering based on inflated premiums.
- The Need for Connective Tissue: The thesis posits that for the crypto segment (currently ~$1T in altcoin market cap) to grow to $3T-$10T, robust “connective tissue” must be established between these digital assets and the massive pools of capital in TradFi equity markets.
- Dispersion and Maturation: The market is maturing, leading to dispersion. Assets with real cash flows (like Athena or Hyperliquid) will decouple and compound as winners, similar to the Mag 7 in equities, while projects lacking product-market fit will struggle.
4. Notable Companies/People
- Athena Labs: The crypto-native business seeking public market access via the SPAC merger.
- Stablecoin X Assets: The resulting entity, intended to function as a validator and infrastructure business supporting the Athena ecosystem.
- MicroStrategy (MSTR): Used as the primary case study for a financial alchemy vehicle, leveraging debt to increase BTC exposure per share, appealing to sophisticated hedge funds and investors comfortable with complex capital structures.
- Circle: Mentioned as a key player whose IPO signaled the clear demand for digital dollar exposure.
- Vanguard: Ironically noted as a major holder of MSTR, despite the firm’s historical bearishness on Bitcoin and refusal to offer Bitcoin ETFs to its clients.
5. Regulatory/Policy Discussion
While not a deep dive into specific regulation, the discussion implies that TradFi wrappers (SPACs, public equity) are being utilized precisely because they offer a familiar, regulated structure (share registers, established custodians like State Street) that large pensions and sovereign wealth funds are more comfortable with than direct crypto custody.
6. Future Implications
The conversation suggests the industry is moving toward a bifurcation:
- Sophisticated, Revenue-Generating Protocols: These will attract institutional capital through various equity structures, leading to compounding growth (the “crypto Mag 7”).
- Vaporware/Hype Projects: These will be left behind, as the era of easy capital based purely on “hopes and dreams” is ending. Founders are advised to focus on building utility first, then tokenizing.
7. Target Audience
Crypto/Web3 Strategists, Institutional Investors, Venture Capitalists, and Corporate Finance Professionals interested in the intersection of digital asset infrastructure and public market capital formation.
Comprehensive Narrative Arc
The episode centers on the strategic shift from purely token-based fundraising to utilizing public equity wrappers to bridge the gap between crypto innovation and TradFi capital pools. Guy Young explains that Athena chose this path because the demand for stablecoin and infrastructure exposure among TradFi investors far outstrips the current supply of investable vehicles. He strongly contrasts this with the MSTR model, arguing that while MSTR is a successful “financial alchemy” play built on leverage for Bitcoin, vehicles for newer assets should focus on access and distribution rather than leveraging debt, especially given the volatility of altcoins.
Rob Hader reinforces this from the venture perspective, noting Dragonfly’s focus on protocols where direct access is difficult. He details how different institutional mandates lead investors to choose different capital structures: ETFs for simple BTC/ETH exposure (with custody comfort), MSTR for leveraged BTC exposure appealing to hedge funds (via converts/debt), and protocol-specific vehicles (like Stablecoin X) for exposure to high-growth, utility-focused businesses.
A key theme is the maturation of the crypto market. Both speakers agree that the speculative frenzy of 2021 is over. The market is now demanding fundamental underwriting, leading to greater dispersion. They explicitly condemn wrapping poor business models (“vaporware”) in equity wrappers, asserting that only assets with real revenue and utility will survive and compound
🏢 Companies Mentioned
💬 Key Insights
"the way that these investors are looking about things is stablecoins kind of represent 1% of money supply in the world right now. And if you look at payments companies and the aggregate equity value that sits within those, it's well north of like a trillion, between one and one and a half trillion dollars."
"Month-over-month, the supply is up around 70% from like $5.5 billion to just under $10 billion right now. And so you don't actually often see things growing quite as quickly as Athena is right now at the scale that it is at, multi-billions..."
"I say that to mean that these are actually very complicated financial capital structures that are hard to understand, and people need to do deep diligence on before they invest in these things early on."
"there was a significant amount of warrants at a bunch of different very low strike prices that people didn't really understand. And so what you saw in that vehicle was on day one it traded up to $18 a share. I think it is sub-$3 a share today... without understanding that there was going to be significant dilution at $1.25 per share, which is where the warrant strike was."
"And so there are a lot of these capital markets games that are happening, and that's going to be a big deal. And so the games that are happening in the equity markets, which actually look very, very similar to the stuff we see in crypto, and so they're not actually that different."
"So I think it's not too dissimilar from what you see on the low-float, high-FDV token complaints that we've seen over the last few years."