Sharplink, Inc. (SBET) Q2 2026 Earnings Report, Transcript and Summary

Good morning everyone and thank you for participating in today's conference call to discuss Sharplink's Financial and Operating Results for the Second Quarter ended June 30th, 2026. By now everyone should have access to the second quarter 2026 earnings press release which was issued this morning at approximately 8:00 a.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 Sharplink's website. Following management's prepared remarks, we will open the call for questions. I will now hand the call over to Sharplink's Vice President of Business and Legal Affairs, Dodi Handy, for introductory comments.

Thank you, Operator. Please see Sharplink's quarterly report on Form 10-Q filed on Friday, August 7, 2026 with the SEC, along with the earnings press release that crossed the wire this morning. These documents list some of the factors that may cause the results of Sharplink to differ materially from what we say today and 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. Any forward-looking statement made by us during 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 per share and other treasury-related performance metrics that are not GAAP measures. Please see our earnings press release and SEC filings for further information regarding these metrics. To set the agenda for today's call, we will begin with Joe Lubin, Sharplink's Chairman of the Board, co-founder of Ethereum, and Founder and CEO of Consensys. Joe will discuss Ethereum's evolution into foundational infrastructure for programmable financial and economic activity, including networks technological roadmap, expanding institutional adoption, and an ecosystem that grows increasingly capable of supporting global finance at scale. Next Sharplink's Chief Executive Officer, Joseph Chalom, will discuss the Ethereum institutional super cycle, Sharplink's ecosystem initiatives, recent capital allocation activity, and how Sharplink is putting its ETH treasury to work through staking and active treasury management. Finally, our Chief Financial Officer, Bob DeLucia, will recap Sharplink's second quarter financial results, liquidity position, and key ETH Treasury performance metrics. At this time, I'd like to turn the call over to Sharplink's Chairman of the Board, Joseph Lubin. Joe, the floor is yours.

Thank you, Dodi, and good morning, everyone. As a co-founder of Ethereum and CEO of Consensys, I have had the privilege of helping build the ecosystem from its earliest days. For much of the first decade, Ethereum was often evaluated through the narrow lens of diverse waves of innovation, crypto market cycles, and short-term asset prices. Those forces remain visible, but they are increasingly incomplete measures of the progress taking place visibly and beneath the surface. Ethereum is transitioning from technology once viewed as experimental into core infrastructure for programmable financial and economic activity. Stablecoins, tokenized assets, decentralized markets, and automated commerce are operating today, settling meaningful value and attracting increasingly sophisticated users, human, corporate, and machine. It's clear that this market is unique compared to others. Ethereum now benefits from more mature custody, security, and compliance infrastructure, deeper institutional expertise and a more constructive regulatory framework. Major financial and technology companies are moving beyond proof-of-concept projects towards production systems. Technological adoption, regulatory development, and asset prices will not always move on the same timeline. But the direction of travel is increasingly clear. Ethereum is foundational infrastructure for the programmable global economy. Many factors and stakeholders are increasingly aligning around this inevitable outcome. The momentum is not exclusively top-down. Alongside accelerating institutional participation, we are seeing renewed excitement and engagement from retail users, developers, and entrepreneurs. Institutional adoption brings scale, capital, and credibility, while grassroots participation continues to drive experimentation, applications, and community growth. Together, they reinforce our belief that we are entering a new Ethereum era, supported by broad-based conviction rather than any single category of participant. The Ethereum economy is becoming an increasingly intrinsic part of the diverse global economy. Ethereum's defining advantage is a credibly neutral, censorship resistant, programmable infrastructure that is guaranteed to execute properly formed transactions or programs. It enables institutions and other participants to transact and coordinate through automated transparent rules without surrendering control to a single commercial intermediary, thus eliminating or reducing exposure to counterparty risk and other forms of risk. The Ethereum Foundation has described this as shared, neutral digital infrastructure for governments, institutions and communities. It's applications extend beyond payments to asset issuance, trade settlement, identity registries, attestations and tokenized markets. Over time, we expect ETH's value proposition to become increasingly aligned with the amount, quality, and strategic importance of activity across the network. Robinhood's decision to build its blockchain infrastructure on Ethereum is one recent proof point. In its Q2 results, Robinhood described Robinhood Chain as a Permissionless AI native financial grade Ethereum Layer 2 blockchain built to institutional standards. A platform with 28 million customers and $369 billion in assets, choosing Ethereum Rails for its next generation of products. The institutions that hold the world's assets are moving in the same direction. Just last week, BlackRock, the world's largest asset manager, expanded its tokenized cash platform with new products built on Ethereum. Building on the continued growth of its BUIDL fund. JPMorgan, a bank whose CEO once publicly dismissed digital assets, has also deepened its Ethereum footprint, filing for a second tokenized money market fund on the network. And expanding institutional use of its JPM coin deposit token on the Ethereum base network. The Ethereum ecosystem is also evolving to support this next stage of adoption. Ethereum Foundation continues to play an essential role in protecting the protocol's core properties and long-term resilience, while additional specialized steward organizations are emerging to add focus and execution across important areas of the ecosystem. We are supporting that evolution directly through investment in ETH Labs, Ethereum Institutional, and EthSystems, which Joseph will discuss in greater detail. These organizations are designed to address protocol development, institutional engagement and privacy infrastructure while preserving the independence and credible neutrality that differentiates Ethereum from other blockchain ecosystems. This diversification of specialized steward organizations will greatly strengthen, accelerate and broaden the Ethereum ecosystem. The protocol roadmap is advancing in parallel. The upcoming Glamsterdam hard fork marks the first concrete step in the broader lean Ethereum roadmap that Vitalik recently outlined. A 3 to 4 year effort to rebuild Ethereum's core around lean consensus, lean data, and lean execution. Its two headline changes, ePBS, enshrined proposer-builder separation, and BAL, block-level access lists, provide the technical foundation for subsequent upgrades, including the next hard fork, Hegota. For institutions, the significance is that Glamsterdam is not a one-off upgrade, but the next major move in a multi-year evolution towards a much faster, more private and quantum resistant Ethereum, with capacity and performance improvements expected to powerfully compound across each successive fork. Ethereum's first decade proved the technology. The next will be defined by its adoption at massive scale as the network moves rapidly from experimentation to real-world implementation. That transition has significant implications for the company's positions to participate in Ethereum's growth. That is why we, are building Sharplink to be an active participant in this new Ethereum era. Our objective is to provide public market investors with disciplined, productive exposure to Ethereum's long-term growth while supporting the ecosystem that underpins our treasury asset, Ether. As Ethereum's role in the global economy expands, we intend for Sharplink to grow alongside it. I would now like to turn the call over to Sharplink's Chief Executive Officer, Joseph Chalom, to discuss how Sharplink is putting that strategy into place. Joseph?

Thank you, Joe, and good morning, everyone. Thank you for joining us. Joe briefly described the new Ethereum era taking shape. From my perspective, we are well underway in the institutional super cycle. This new era is a crucial part of making sure the network is ready for the coming of the new era demand. Importantly, we're not just observing this new era take shape, we're actively building it. We deploy ETH capital back into the ecosystem through staking, our DeFi deployments, and the Galaxy Sharplink Onchain Yield Fund. We're also funding new institutions to accelerate institutional adoption, including ETH Labs, Ethereum Institutional, and EthSystems, which I will go into more detail on later in my remarks. We are proud to be one of Ethereum's most active stewards and have taken a deliberate approach to building relationships, supporting critical infrastructure, and creating new ways to make our ETH productive. We are genuinely energized by the momentum we're seeing and the caliber of engagement it's generating. We believe our efforts have helped shift the narrative on Ethereum from one defined by short-term price swings to one grounded in long-term value creation, reinforcing our conviction that this is the moment to lead with the discipline and ambition this Ethereum opportunity deserves. This turnaround reflects real work by real people. Joe Lubin, myself, Tom Lee of Bitmine, and a number of other ecosystem stakeholders have been actively investing directly in Ethereum's infrastructure. We are telling its story more effectively than we have in the past, and it's working. Sentiment has turned very positive. Ethereum is winning. During the month of July, ETH appreciated 22% compared to 11% for Bitcoin, while Solana declined 5%. That price performance is being matched by capital flows. According to Blockworks, U.S. spot Ethereum ETFs pulled in approximately $349 million in net inflows in July, outpacing Bitcoin's ETFs at roughly $281 million and Solana ETFs at approximately $25 million over the same period. Short-term asset prices do remain volatile, but ETH's price performance and the capital flowing in are signals reinforcing our belief that a new Ethereum era is taking shape along alongside continued progress across institutional adoption, network development, and on-chain activity. We spent the last year building for this exact environment. This past June marked our first anniversary since launching our Ethereum treasury strategy. In that time, we raised over $3.3 billion in capital and became the world's second largest corporate holder of ETH. We recruited a world-class team spanning traditional finance and digital assets expertise. We have been among the most active companies putting that ETH to work, establishing institutional custody and staking infrastructure to make our treasury productive from day one. Just as importantly, we've built a culture of institutional risk management and governance from the outset, which has kept us disciplined and resilient through a volatile crypto cycle. The market is validating the institutional character of the platform we have built. As part of the Russell Index June 2026 reconstitution, Sharplink was added to the Russell 2000 and the Russell 3000 indices. According to FTSE Russell, approximately $12.2 trillion in assets are benchmarked against Russell U.S. indices. We view our inclusion as an important milestone that broadens institutional visibility and eligibility for index-linked ownership, providing external validation of Sharplink's scale, liquidity, and strategy. I now want to turn to capital allocation. We have been consistent from day one about our framework to compound ETH per share and grow net ETH over time. We pursue those objectives through two complementary engines. The first is disciplined public market capital allocation, including issuing equity when terms are attractive and accretive, purchasing ETH when doing so improves long-term shareholder economics, and repurchasing Sharplink shares when they trade below our assessment of its intrinsic value. We demonstrated that optionality during the second quarter. On June 23, 2026, we completed a $75 million registered direct offering, issuing roughly 10 million shares and accompanying warrants at a combined purchase price of $7.49 per share and warrant. Importantly, the transaction was completed at a premium to Sharplink's net asset value, providing capital on attractive terms. We used a portion of that capital to acquire approximately 10,000 ETH at an average price of approximately $1,611 per ETH. We also purchased 2.1 million shares during Q2 at an average price of approximately $4.70 per share for an aggregate purchase price of approximately $10 million. Since initiating our repurchase activity in August 2025, we have repurchased purchased approximately 4 million shares at an aggregate cost of approximately $41.7 million. Together, these actions show how we can raise capital on attractive terms, acquire ETH during market dislocations, and repurchase shares when our equity is undervalued. All in support of long-term shareholder value. The second engine is treasury productivity. We stake and selectively deploy our ETH to earn incremental returns above the composite Ethereum staking rate, or CESR, a market benchmark for the average annualized yield earned by Ethereum validators. Our most recent example of this was our announcement of the Galaxy Sharplink On-Chain Yield Fund. The fund has $125 million in committed capital, including $100 million from Sharplink and $25 million from Galaxy Digital. Sharplink will fund its investment through a contribution of ETH or liquid-staked ETH. We're very excited to share that the initial investment opportunities have already been identified. Actual deployment timing will depend on finalizing those opportunities in line with the fund's risk and return standards. We are actively evaluating additional productivity strategies, including other funds, on-chain vaults, direct deployments, and structured ecosystem opportunities. Inbound demand has been strong, but access alone is not a reason to deploy capital. We proceed only when the expected incremental ETH return appropriately compensate shareholders for the risk, liquidity profile, and operating burden. That productivity mindset extends beyond our own balance sheet. Our scale, market presence, and connectivity also enable us to serve as an institutional steward of the Ethereum ecosystem. As I mentioned earlier, we provided anchor funding to ETH Labs, Ethereum Institutional, and EthSystems, three organizations we believe are already generating real momentum and driving the next stage of Ethereum's institutional development. These three independent organizations serve different functions. First, ETH Labs, founded by former senior Ethereum Foundation contributors, is focused on advancing the core protocol, scaling, ecosystem growth, usability, and interoperability. Its work is designed to prepare Ethereum for the next wave of institutional DeFi and agentic finance adoption, while reinforcing the network's credible neutrality, security, and resilience. Second, Ethereum Institutional serves as a dedicated institutional front door and help desk to the Ethereum ecosystem, assisting banks, asset managers, custodians, and market infrastructure providers move from evaluation to deployment. The organization has built more than 500 institutional relationships and convened over 150 senior executives representing approximately $250 trillion in combined assets. Third, EthSystems is an engineering and research company founded by the team behind the Ethereum Foundation's Institutional Privacy Task Force. It is building privacy and compliance infrastructure that enables banks, asset managers, and other regulated institutions to transact on Ethereum at scale without exposing sensitive information such as trade details or client identity. Together, these organizations serve as three coordinated accelerants of adoption for protocol scalability, institutional engagement, and privacy for regulated financial activity. I am pleased to serve on the board of Ethereum Institutional, where my experience across asset management and financial market infrastructure can help traditional organizations understand how Ethereum is uniquely suited to fit their business needs. We believe stronger protocol, institutional participation, and privacy infrastructure can accelerate Ethereum adoption and strengthen the ecosystem underlying and powered by the ETH on our balance sheet. The growing market engagement around these initiatives reinforces our conviction that investors are increasingly recognizing Ethereum's institutional opportunity. The opportunity set is expanding alongside Ethereum itself. The network has the deepest developer base in the blockchain sector and hosts more than half of global stablecoin supply. The majority of tokenized real-world assets and approximately approximately 62% of DeFi total value locked. That depth of activity creates liquidity, resilience, and an innovation base that is difficult to replicate. One of the most important emerging categories is agentic finance. As AI agents increasingly make purchases, manage financial positions, and transact with other agents, they will require programmable money, verifiable identities, enforceable rules, and permissionless settlement infrastructures. Early indicators are already meaningful. Based on the last 30 days, Coinbase's x402 protocol is showing a run rate of approximately 225 million payment transactions across tens of thousands of active agents. While still early, this activity demonstrates that autonomous software agents are beginning to participate directly in economic activity and should increase demand for stablecoins, collateral, smart contract execution, and secure verifiable settlement. In summary, we have built scale, and now we are putting that scale to work. We are allocating capital dynamically, combining foundational staking with selective active return strategies. We are supporting infrastructure that strengthens Ethereum and evaluating additional ways to use our operating platform to generate long-term shareholder value. We are relentlessly focused on our North Star, compound ETH per share and net ETH earned over time through disciplined capital allocation, productive treasury management, and rigorous risk controls. We have also taken a proactive strategic role in telling the Ethereum story alongside a broader community of stakeholders and we believe that work has helped turn the tide on how the market perceives the Ethereum opportunity. We intend to keep showing up not just as one of Ethereum's largest holders but as one of the most active champions. With that, I'll turn the call over to our Chief Financial Officer, Bob DeLucia, to review our second quarter financial results. Bob?

Thank you, Joseph. I'll begin by encouraging everyone to review our quarterly report on Form 10-Q for the period ended June 30, 2026, which we filed on Friday, August 7, 2026, with the SEC. The 10-Q provides detailed disclosures and footnotes that complement today's discussions, offering stockholders, analysts, and investors a comprehensive view of Sharplink's financial position, liquidity, and its ETH Treasury performance. We will now go through the financial results for the quarter ended June 30, 2026. I'd like to remind everyone that all comparisons and variance commentary refer to the prior year quarter unless otherwise specified. As of June 30, 2026, Sharplink held 632,784 native ETH with a net fair value of $989 million. In addition, we held 162,083 of LsETH or Liquid Staked ETH and 66,267 of weETH or wrapped ether.fi ETH. With a combined net cost value of $369.2 million. Subsequent to quarter end, our combined ETH holdings have increased to 634,255 native ETH, 181,748 as-if-redeemed LsETHs, and 72,935 as-if-redeemed weETH for a total of 888,938 ETH as of Monday, August 3rd, 2026. Total revenue for the quarter ended June 30, 2026, was $11.5 million compared with $0.7 million for the quarter ended June 30th, 2025. The increase was driven by our staking and ETH yield generating strategies. We recorded a net realized gain of $1.4 million compared with a $5.4 million realized gain in the prior year quarter. The gain in the current quarter was due to the derecognition of LsETH. We also recorded an unrealized loss of $321 million compared with a $2.4 million unrealized loss in Q2 of 2025. We also recorded an impairment charge of $76.1 million compared with a $87.8 million charge in the prior year quarter. SG&A expenses in the second quarter were $9.1 million compared with $2.4 million in the prior year quarter. The increase reflects our ETH treasury strategy operating for a full quarter in 2026 versus only a partial period following its launch in early June 2025. The additional expenses included personnel, custody, insurance, legal, accounting, and other public company infrastructure costs. For the second quarter of 2026, we reported a net loss of $394.3 million compared to a net loss of $103.4 million in the prior year. The Q2, 2026 results were driven primarily by the previously discussed unrealized fair value loss of $321 million and an impairment charge of $76.1 million, which was partially offset by the $1.4 million of realized gains. Overall, our second quarter performance reflects the broad decline in crypto asset prices experienced across the market during the quarter. As we noted previously, the impairment charges and unrealized losses recorded this quarter reflect current market pricing dynamics and the accounting requirements of U.S. GAAP. These accounting measures do not represent realized economic losses on our ETH position, nor do they impact the number of ETH units we hold. Our Treasury strategy continues to be evaluated on discipline, ETH accumulation, and long-term productivity of those assets over time. As of June 30, 2026, cash on hand was $56.2 million compared to cash on hand of $28.5 million as of December 31, 2025. Between our cash position, our unencumbered ETH holdings, and the flexibility of our capital allocation framework. We believe Sharplink maintains ample liquidity going forward to execute on its strategy across a range of market conditions and opportunities. For additional details, our complete financial statements and accompanying footnotes, including all required disclosures and management's MD&A analysis, are contained in our quarterly report on Form 10-Q for the period ended June 30, 2026, filed with the SEC. This concludes our prepared remarks. We will now open it up for questions from those participating on the call. Operator, back to you.

[Operator Instructions] Our first questions come from the line of Devin Ryan with Citizens Bank. Please proceed with your questions.

Thanks so much. Good morning, Joe, Joseph, and Bob. I want to start with a question on the agentic opportunity, obviously, tracking a lot of activity. I think I just read somewhere where in recent months, the majority of traffic on the internet is now non-human. So AI agents are obviously scaling pretty rapidly, but we're also early days. So I'd love to just hear a little bit more about how you all see that playing out on blockchain. I know you mentioned stablecoins, we're seeing good activity there, but just kind of the evolution with agents from where we are now, do they care which chain they use? Why is Ethereum well-suited? How much share can Ethereum win? And then just more broadly, what Sharplink is doing to position for that opportunity. I know ETH Labs is maybe one example, but just love to hear a little bit more about how you're thinking about the opportunity.

Good morning, Devin. Great question. It's one actually that gets me quite excited. So I want to set the context. Agentic finance and commerce is really about giving individuals and their agents, some people will refer to them as digital twins, something that only institutions have ever had before. An individual, you could say, in the future is going to have a treasury desk or a CFO in their pocket. And for listeners, every large asset manager employs people whose job it is to make sure that no dollar sits in a portfolio idle. Every security is being lent or borrowed to earn yield. Every share gets voted. And most individuals globally have never had access to that. And so an autonomous agent with the will of an individual is what's going to make that possible. Think of it as always on autonomously executing your preferences at basically zero marginal cost with massive scale. And the gap that it's going to close for retail investors is actually enormous. American households, the last time we checked, hold around $6 trillion in checking accounts, around $15 trillion if you count savings account. Most of it is earning a fraction of prevailing market rates. And that's not a problem with the banks or a product problem. It's actually a labor and intentionality problem. No one's going to manually sweep their cash every night and rebalance their portfolios and lend their stocks, but agents and software can and will. And your second point about why Ethereum, it's really for two reasons. There's an open source protocol called x402. You can think of it as a micropayments capability that lets agents pay one another in stablecoins on Ethereum without asking a card network or a proprietary permission network for any permissions. And that is already crossing hundreds of millions in transactions. On top of that open source micropayments network and protocol, you have Ethereum's ERC-8004. It actually gives agents guide rails and a registry so that they can establish identity and trust with no intermediary sitting in between. Nobody has to convene a consortium to make that happen. It's live, it's shipped, and Ethereum is already leading the agentic finance underlying infrastructure. The second element is I think the underrated part. Neutrality is a financial feature, not an ideological one and not a product defect. Look at who's racing to own these rails. Stripe did about $1.9 trillion in payments last year, launched its own online chain. Visa, Mastercard, Google, all shipping agent payment standards. These are really good company, but if your rails and your agent are owned by a payments company, they're the ones who are going to decide what yield your product gets swept into, what products they recommend, and will take a fee along the way. Ethereum is the only architecture where no one sits in that seat in between agents and users. It's had a decade of uptime. It has no individual owner or concentrated foundation. Nobody can change the rules underneath you. And so the way I'll put it is, if the rails are proprietary, that agent in your pocket will answer to whoever built it. If they're neutral and Ethereum is the lead leading chain in terms of maturity, liquidity, trust. Your agents will essentially answer to you. So we believe very strongly the stablecoin layer is dominated on Ethereum and their layer twos, the tokenized asset rails and DeFi. And we believe the agentic layer will just automate that activity largely on Sharplink, largely on Ethereum.

There are so many aspects to agentic activity on decentralized rails. I'll keep it fairly simple. As you suggested, autonomous AIs are going to want the best infrastructure that smart companies will choose and that's a credibly neutral guarantee to execute risk minimized. All right and so that is Ethereum, it can't be layer twos on Ethereum that didn't inherit the security guarantees of layer one on Ethereum. If you think about DeFi, in a sense, blockchain and DeFi were not made for the bulk of humanity to interact with directly. Sort of similar to the evolution of the automobile. So it's complex machine, mechanical and electronic, and it has been protected by engineers so that with the use of automated transmission and in full self-driving even, people are able to wield this incredibly complex and even dangerous technology relatively effortlessly. And so you can imagine that the engineers, researchers of Ethereum and DeFi systems are putting together essentially the automated transmission and the full self-driving of finance. And you'll see that as agents and the enable all the heavy lifting and all the automated activities that make sure that your money is always working for you and is safe. In particular my favorite wallet MetaMask has a system that does exactly that.

Really fascinating. Appreciate the responses, Joseph and Joe. A follow-up here, kind of maybe say big picture, a little bit over a year into the Treasury strategy, so maybe a good time to revisit kind of big picture on why Treasury versus passive ownership. And I think, you know, it's obviously been a volatile backdrop for prices. And I think that can obscure kind of the value sometimes at least optically from the value created by active management. So we would love to hear in your words kind of how you would frame Sharplink's treasury performance relative to passive ETH ownership as an alternative. And then just looking ahead, I suspect maybe one of the silver linings to a difficult price backdrop is just there's less capital chasing opportunities. And so if you can just maybe add some context on maybe how much incremental yield you think you've kind of stacked for the future, if you will, or just been able to kind of negotiate ahead of the next phase of the adoption cycle, obviously, we see all these partnerships. And so it seems like the firms you're probably getting today would be better than when things were really hot from a price perspective. I'd love some context there.

Sure. So, Devin, owning Sharplink instead of simply buying ETH in the spot market or an ETF is kind of a fundamental investment question. Owning ETH directly provides exposure to the asset, and our objective is actually to provide exposure to both the asset and additional value we can create uniquely through disciplined institutional capital allocation. We believe that we can create value beyond just passive ownership through three basic capabilities that, when combined, are compounding. The first is just disciplined capital allocation. We raise capital when attractive, we can repurchase shares when appropriate, and we are continuously evaluating how to maximize ETH per share. Second is our treasury management is productive. Rather than simply holding ETH or staking part of it, we're actively putting our treasury to work through both staking and carefully selected institutional strategies that take advantage of, frankly, our comparative advantage, which is having permanent capital. Many funds and ETFs cannot do that. They have to provide daily liquidity. They cannot do virtually anything beyond staking and our goal is to earn incremental ETH over time in a way that an ETF cannot, or most users holding spot cannot either. And the third is we provide access to ecosystem participation. We are helping build the infrastructure that we believe will accelerate Ethereum's long-term adoption while having access to differentiated investment opportunities for our shareholders. And I really want to emphasize that. The deal flow that is coming to us is tremendous. I think in the last several quarters, we saw over 100 opportunities. We diligenced only about 12 of them, and you've seen the deployments we're making. So if we execute well and we're doing it in a very disciplined fashion, investors aren't simply buying ETH exposure. They're investing in a company who has a mission to compound that value through active institutional grade management. So I think it is highly differentiated and you will see over time that our competitive advantage of scale, liquidity, a public wrapper, and permanent capital will actually give us opportunities not to chase yield, but essentially to be rewarded for deploying in the long run and for long term. So Devin, thanks for those questions.

Our next questions come from the line of Fedor Shabalin with B. Riley Securities. Please proceed with your questions.

Thank you very much, operator, and good morning, everyone. Mike, it was a great discussion from Devin and your answers, but my question is less, like I said, more granular, less strategic. First one is on the $125 million fund with Galaxy. Do you have like a mini target return profile and risk budget, maybe split between DeFi lending and liquid stake yield versus more structured exposure? And how does capital in the fund interact with the core Ethereum treasury? Is this being redeployed out of existing ETH holdings or funded somehow separately. Thank you very much.

Fador, great question. So we aren't going to actively disclose yield guidance. You can think of it as our success in this fund as another sleeve in a portfolio is going to be measured by long-term risk-adjusted incremental ETH earned above the native staking rate. So again, incremental ETH returns above the native staking rate. We are capitalizing the fund with ETH. So we are continuing to get staking rewards on the ETH we deploy. The fund will borrow against that to do deployments. I believe most of the deployments are going to be on-chain, highly collateralized yield opportunities. I don't believe this is going to be another sleeve of liquid staking or restaking. We're going to commit to support the cold start problem we've talked about in the past, which is new protocols needing to have a solid base of capital on which they can attract additional capital. And if you do that right, you will end up getting better returns for your investors while still staying directionally exposed to ETH. We chose Galaxy in this format because they have capabilities to do even greater sourcing at scale, diligence at a level that as a public company with years of experience, very few institutions have, and importantly, a risk management framework that we've agreed with them to continue to monitor these investments and to adjust them in real time as needed. We can do these deployments 1, 2, 3 at a time. They're going to do this deployment in much more scale. So for the day-to-day management of our portfolio, the strategic allocations, we've built the strongest in-house team and capability, but for specialized deployments in scale, we'll benefit from the value and the partnership with Galaxy. So again, we're not providing yield guidance, but we are seeking to outperform the long-term incremental ETH we can earn above the native CESR staking rate.

Thank you very much for this. And my follow up is, if you can talk a little bit more in details about funding to ETH Labs, Ethereum Institutional and EthSystems and an expected duration of this. Is this kind of a short-term granting or ongoing annual commitment? And does it come out of treasury, ETH or cash and what would be expected, call it payback for SBET shareholders specifically? Is the thesis that this drives broad ETH price appreciation, which every ETH holder benefits from, or does Sharplink get kind of differentiated commercial access maybe early access to institutional flow through ETH traditional relationship or kind of privacy infrastructure from EthSystems. So that kind of other treasury vehicles don't get.

Sure. I think you should think of these as a very, very intentional and strategic allocation. They're intended to strengthen the overall infrastructure that supports our thesis, which is long-term Ethereum adoption by the world's largest institutions. These institutions who've spun off from the Ethereum Foundation needed longer-term funding, and we're supporting them not through charity or philanthropy. We're making 1, 2 multi-year funding commitments alongside the ecosystem, including Joe Lubin personally, Tom Lee at Bitmine, and in some of the cases, over 100 distinct anchor and additional supporters. They are fully economically aligned with what our shareholders expect because a stronger Ethereum ecosystem and narrative and storytelling and infrastructure can enhance long-term utility and the value proposition of ETH. Again, this is a strategic support investment, not philanthropy. Our treasury strategy continues to remain focused on increasing ETH per share, and these ecosystem investments are a complementary way to help accelerate that adoption and the drivers that underpin our entire strategy. They don't provide us with any unique capability, profit sharing. They're meant to be run as independent, neutral companies. That is the beauty and the benefit of Ethereum. We are not controllers of these companies. That said, we'll have voices along with other ecosystem participants and their objectives are going to be public, they're going to be open source, and they're going to be fully auditable. And so we'll have much more visibility into what they're doing but also opportunities that's spin out from these institutional adoption capabilities, and it'll be very accretive, we believe, in the long run for our shareholders. You've already seen the sentiment shift from earlier this summer around Ethereum Foundation, some of the subtraction they were doing by getting more focused. And you've seen the Ethereum narrative and actual token price of Ether decouple and outperform at only almost exactly the same time that the ecosystem was doubling down into these spinoffs. So we think it's really good for shareholders. It's been good for the price of ETH. And we are being very supportive as institutional stewards, but not controllers of these organizations.

One way to think about the investment that Sharplink has made into these organizations is that it is not very large in monetary terms, but it has been an enormous is enormously powerful in terms of the coordination, the support that Sharplink personnel have provided and the role of catalyst in decentralizing the stewardship of the Ethereum ecosystem into multiple, credibly neutral and other stewards. So a lot of hard work went into it. And the gains have, as Joseph indicated, already been quite large in terms of sentiment, but tremendous efficiency of investment from my perspective.

Thank you. Our next questions come from the line.