Sharplink, Inc. (SBET) Q3 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 third quarter that ended September 30, 2026. By now, everyone should have access to the third 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. [Operator Instructions] 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 this past Friday, November 6, 2026, with the SEC, along with the earnings press release that crossed the wire this morning at 8:30. 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 statements 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 our 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 Chairman and CEO of MetaMask. Joe will comment on key developments and emerging trends within the greater Ethereum ecosystem. Next, Sharplink's Chief Executive Officer, Joseph Chalom, will review our third quarter operating and strategic achievements, highlighting how we are translating Ethereum's growing institutional adoption into tangible opportunities for Sharplink and its stockholders. Finally, our Chief Financial Officer, Bob DeLucia, will recap Sharplink's third quarter financial results, liquidity position and key ETH treasury performance metrics. So with that, I would now like to turn the call over to Sharplink's Chairman, Joe Lubin. Joe, the floor is yours.

Thank you, Dodi, and good morning, everyone. Ethereum continues to evolve from a pioneering blockchain network into foundational infrastructure for an increasingly programmable global financial system. Its combination of security, credible neutrality, composability and next-generation trust infrastructure via rigorous decentralization provides shared financial infrastructure that institutions can build upon without relying on commercial intermediaries. Stablecoins, tokenized real-world assets and decentralized financial applications are increasingly operating on Ethereum, strengthening its already dominant network effects and expanding its role in the global economy. The scale of Ethereum's existing financial ecosystem, including Layer 2 networks, demonstrates its leadership. Approximately $153 billion in stablecoin supply is supported by the broader Ethereum ecosystem, approximately $17 billion in tokenized real-world asset active AUM, representing approximately 55% of the tracked market, more than $58 billion in DeFi total value locked, representing approximately 65% of the global DeFi TVL, and approximately 1.8 million transactions per day on Ethereum mainnet, not counting the large amount of additional activity across its Layer 2 ecosystem. We believe Ethereum's 11-year track record of security, credible neutrality and reliable execution has established a foundation of trust that is particularly important for institutional adoption. Unlike proprietary financial networks controlled by individual intermediaries, Ethereum provides neutral infrastructure that competitive institutions can build upon with confidence. Combined with its deep liquidity and extensive developer ecosystem, these characteristics reinforce Ethereum's position as foundational infrastructure for the next generation of global finance. One of the most significant developments during Q3 and subsequent to quarter end has been the continued acceleration of institutional adoption with some of the world's largest financial institutions deploying live financial applications directly on Ethereum. JPMorgan expanded JPM Coin, JPMD, its institutional deposit token, to Ethereum mainnet on October 19, complementing its existing deployment on the Base network. The bank specifically cited Ethereum's deep on-chain liquidity and established tokenized asset ecosystem as key reasons for the expansion, demonstrating how major financial institutions are moving beyond experimentation and increasingly utilizing Ethereum to support real-world financial activity. Morgan Stanley expanded access to ETH through the July launch of its Ethereum Trust, MSSE, an exchange-traded investment product incorporating Ethereum staking as well as the rollout of direct currency trading on E*TRADE. Revolut, which serves more than 75 million customers globally, introduced phased testing of its euro-backed EURR stablecoin on Ethereum in August, demonstrating Ethereum's expanding role in programmable money and digital payments. ARK Invest announced the tokenization of its approximately $1.3 billion ARK Venture Fund on Ethereum in September, bringing a traditional investment strategy involving private and public growth companies onto blockchain infrastructure. Institutional adoption is also accelerating across other major financial platforms. In August, BlackRock expanded its tokenization initiatives with the launch of Ethereum-based share classes for select European UCITS money market funds alongside 2 new U.S. tokenized money market products, BSTBL and BRSRV. Credit Agricole also introduced EURXT, a euro-denominated stablecoin issued on Ethereum. These developments demonstrate Ethereum's expanding role across institutional asset management, payments and financial market infrastructure with major financial institutions increasingly choosing Ethereum to support real-world financial applications. As more institutions bring assets, liquidity and financial activity on chain, we believe Ethereum's network effects will continue strengthening, reinforcing its position as foundational infrastructure for the next generation of global finance. Alongside accelerating institutional adoption, Ethereum continues to advance its protocol road map to support significantly greater transaction volumes, improve efficiency and strengthen long-term resilience. Following the successful implementation of previous network upgrades, Ethereum continues to advance towards Glamsterdam, its next major protocol update. Glamsterdam is designed to improve Ethereum's ability to process more transactions in parallel and therefore, more efficiently while reducing reliance on trusted third parties outside the protocol that emerged to support the separation of the block proposer and block builder roles. These improvements reinforce one of Ethereum's greatest competitive advantages, its commitment to credible neutrality, decentralization and censorship resistance at scale. By bringing more of the block building process directly into Ethereum's protocol, Glamsterdam will help strengthen the network's neutrality, independence and resilience as adoption accelerates. Ethereum is demonstrating that it can expand its capacity to support global financial markets without compromising the foundational principles of openness, neutrality and protocol-based decentralized trust that have made it the leading platform for institutional adoption. In September, the Ethereum Foundation outlined an ambitious technical road map targeting quantum resistance across Ethereum's execution, consensus and data layers by December 2029. The road map also prioritizes faster finality, privacy enhancements and zero-knowledge execution, reinforcing Ethereum's commitment to scaling while preserving security and decentralization. Together, these initiatives reflect Ethereum's commitment to becoming the foundational infrastructure for global finance, delivering greater speed, capacity and efficiency without compromising the security, credible neutrality and decentralization that distinguish the network. We believe Ethereum's continued ability to evolve technologically while maintaining its core principles will be an important differentiator as institutional adoption accelerates. Ethereum's expanding institutional adoption and ongoing technological advancements strengthen our conviction in its long-term role as foundational infrastructure for the global digital economy. As financial activity increasingly moves on chain, ETH remains integral to securing the network, facilitating transactions and supporting the broader ecosystem of programmable financial applications. Sharplink is strategically positioned to participate in Ethereum's next phase of growth through its actively managed ETH treasury, institutional expertise and commitment to supporting the ecosystem's continued development. Before I hand the call over to Joseph, I also want to briefly address the recent sale of Sharplink shares by Consensys Software Inc. While Consensys/MetaMask sold approximately 5.7 million common shares in October to better support its operating business, I want to emphasize that I did not sell any of my personal holdings. I have not sold any shares and continue to own over 5 million Sharplink shares personally, and Consensys and its affiliates retain significant additional equity interests in the company. As one of Sharplink's largest shareholders and its Chairman, my conviction in our strategy and in the long-term Ethereum opportunity is as strong as ever. I'm fully committed to supporting Sharplink's continued growth and believe we are exceptionally well positioned to create meaningful long-term value for our shareholders. With that, I'd like to turn the call over to our Chief Executive Officer, Joseph Chalom, to discuss how Sharplink is translating this opportunity into disciplined execution and long-term shareholder value. Joseph?

Thank you, Joe. Good morning, everyone, and thank you for joining us. The third quarter represented an important turning point for the Ethereum ecosystem and Sharplink, highlighted by a meaningful recovery in the price of ETH, strong financial performance and continued execution of our long-term strategy. ETH appreciated approximately 72% during the third quarter, increasing from approximately $1,563 at the end of June to $2,681 as of September 30, 2026. Sharplink delivered double-digit revenue growth and materially higher net income compared to Q3 2025, benefiting from the appreciation of ETH and continued execution of our treasury strategy. The combination of growing staking revenue and a disciplined operating cost structure reinforces the operating leverage inherent in our treasury platform. Beyond the financial results, Sharplink has made meaningful progress advancing several strategic initiatives designed to strengthen Ethereum's ecosystem, generate additional ETH and create long-term value for our shareholders. During the quarter, Sharplink continued to expand its leadership role within the Ethereum ecosystem, supporting initiatives designed to accelerate institutional adoption and strengthen the infrastructure underpinning Ethereum's next phase of growth. In addition to our previously announced support for EthLabs, Ethereum Institutional and EthSystems, we made a strategic equity investment in Blockspace, an Ethereum infrastructure company focused on validation and staking infrastructure. This investment further reinforces our commitment to supporting innovation and long-term growth across the Ethereum ecosystem. Collectively, these organizations help establish the technological, institutional and operational foundations necessary for Ethereum to support a substantially larger share of global financial activity. Sharplink's involvement extends beyond providing financial support. It leverages our relationships, institutional expertise and broader ecosystem connectivity to support their development. Given our scale and position, Sharplink has an important opportunity to serve as a bridge between traditional finance and the Ethereum ecosystem, helping advance adoption while remaining focused on creating long-term value for our stockholders. Ultimately, our objective is to position Sharplink to benefit from Ethereum's expanding economic activity while identifying opportunities to grow ETH per share. A central component of Sharplink's strategy is utilizing our ETH holdings as productive operating assets rather than simply maintaining passive exposure to Ethereum. A key advantage is our access to permanent capital, which enables us to pursue longer-term structured ETH deployments that may fit other investor mandates. Unlike capital that requires frequent withdrawals or rapid turnover, we can commit our ETH for multiyear periods, providing emerging on-chain protocols with the patient liquidity needed to establish and scale their operations. In return, we can negotiate differentiated economics designed to generate incremental ETH for our stockholders while supporting the development of the broader ecosystem. We're focused on identifying these differentiated opportunities to deploy our treasury, generate additional ETH and enhance long-term stockholder value. During the quarter, we made meaningful progress activating several previously announced initiatives. In August, Sharplink announced a $200 million ETH allocation staked through Lido, further expanding our liquid staking capabilities. This deployment enables us to earn ETH staking rewards while maintaining flexibility to utilize tokenized staking positions across Ethereum's broader financial ecosystem. The allocation further diversifies our staking infrastructure and enhances our ability to evaluate additional on-chain opportunities, including using a portion of our Lido wrapped staked ETH as collateral to capitalize our Galaxy Sharplink On-Chain Yield Fund commitment. In August, the Galaxy Sharplink On-Chain Yield Fund launched with $125 million of initial commitments, including $100 million from Sharplink and $25 million from Galaxy Digital. In Q3, the fund began deploying capital into on-chain investment opportunities, representing an important milestone in activating this strategy. We are in the beginning of a new phase we call On-Chain Finance 2.0. As more assets become tokenized, we expect RWA protocols to emerge to provide liquidity for trading and lending these assets. Additionally, new protocols continue to emerge as improved on-chain liquidity venues. However, these protocols will often have a cold start problem and need quality initial liquidity to ensure users have a good experience, enabling asset growth on their platforms. By offering what we think of as jump-start capital out of the Galaxy Sharplink Fund, we can help solve this problem as more stablecoins and tokenized assets move on chain. This is part of how we want to put our ETH to work. Turning to broader capital allocation. Growing ETH per share continues to be our North Star, and we evaluate opportunities based on their ability to enhance stockholder value. As we disclosed on our last earnings call in June, Sharplink completed a $75 million registered direct financing at a premium to NAV with attached warrants, providing additional capital to acquire ETH and repurchase shares. During the third quarter, Sharplink did not issue shares through its ATM program, reflecting our disciplined approach to raising capital and commitment to avoiding transactions that would dilute ETH exposure per share. We remain focused on maintaining flexibility across capital markets activities, including opportunistic financing, share repurchases and additional ETH acquisitions when market conditions support stockholder accretion. Our capital allocation decisions will continue to be guided by the economics of each opportunity and their potential to drive long-term value per share. Looking ahead, Sharplink is evaluating strategic opportunities across the digital asset ecosystem that could further expand our capabilities and take advantage of both our operating platform and permanent capital. These could include operating businesses that address important industry needs, create additional sources of revenue or enable us to deploy our balance sheet better. We intend to remain selective, prioritizing opportunities that complement our ETH treasury strategy, meet our disciplined financial criteria and offer compelling potential for long-term stockholder value creation. The third quarter also brought meaningful developments across the global regulatory landscape, further supporting the institutional adoption of digital assets. While comprehensive market structure legislation in the United States remains unfinished following the Senate's failure to advance the CLARITY Act, we believe it's highly unlikely to be reintroduced given the results of last week's election. That said, the SEC has advanced critical initiatives addressing tokenized securities, digital asset custody and pathways for broader institutional participation. Most notably, it has published an innovation exemption allowing for tokenization of U.S.-listed stocks and their trading on chain through SEC supervised venues built on public blockchains such as Ethereum. The SEC also proposed updating its transfer agency rules so that a blockchain can serve as a company's official record of stockholders. U.S. federal regulators continue its work in implementing the GENIUS Act stablecoin regulatory framework. On October 21, the Office of the Comptroller of the Currency issued its final rule for the stablecoin issuers it oversees. The rule sets clear standards for the reserves behind each stablecoin, how holders can redeem them and how issuers manage risk. The GENIUS Act and the OCC's rule both take effect on January 18, 2027, when payment stablecoins in the U.S. come under federal framework for the first time. That gives banks, payment companies and asset managers the clarity they need to issue and use stablecoins at scale. The CFTC has also continued efforts to provide greater clarity around oversight and the operation of digital asset markets. The CFTC has continued to open U.S. derivative markets to digital assets and tokenization. On November 3, it cleared perpetual futures on individual stocks to trade for the first time on exchanges registered with both the CFTC and the SEC. That builds on its approval of the first crypto perpetual futures contract in May. The CFTC has also made it easier to use digital assets as collateral. We believe these U.S. developments are increasingly important for banks, asset managers and other financial institutions evaluating how to incorporate blockchain technology into their operations. Greater regulatory clarity can reduce uncertainty and help institutions move from exploring digital assets to implementing practical on-chain financial applications. Although there is additional work to complete, the direction of regulatory progress is encouraging. Sharplink's strategy does not depend on any single legislative or regulatory outcome. We continue to operate within existing regulatory frameworks while positioning our business to benefit from the continued institutional adoption of Ethereum. Moving beyond the U.S. regulatory landscape, I recently participated in Korea Blockchain Week in South Korea and TOKEN2049 in Singapore, which reinforced the growing momentum behind institutional adoption of Ethereum and digital assets globally. Having visited Asia 5 times over the last year, I've witnessed a notable shift in the conversation from retail trading towards institutional adoption and real-world financial applications. Throughout my travels in Asia, there was a clear impetus to not fall behind the U.S. from a digital asset innovation perspective. In each country I visited, the priority is establishing the necessary regulatory foundations, including for local denominated stablecoins, tokenized assets and trusted interoperable infrastructure and clear rules for market participants. I had the opportunity to engage with sophisticated financial institutions, regulators and policymakers, and it was encouraging to see the growing interest in Ethereum and its Layer 2 ecosystem as foundational infrastructure for this next phase of financial innovation. These observations reinforce our conviction that Ethereum's credibly neutral infrastructure is well positioned to support the next generation of global finance, further strengthening Sharplink's long-term investment thesis and commitment to advancing the ecosystem. We continue to believe Ethereum is uniquely positioned to benefit from the convergence of 4 transformative trends. First, stablecoins are bringing programmable money on chain. Second, tokenization is enabling traditional financial assets to operate on blockchain infrastructure. Third, on-chain finance is creating new opportunities for assets to be traded, financed and utilized in continuously operating markets. And fourth, AI agents bring automation and continuous attention on behalf of individuals and institutions. We believe agentic finance represents one of the most compelling opportunities emerging at the intersection of artificial intelligence, blockchain technology and global financial services. We've seen meaningful progress in the adoption of AI agents and the development of the infrastructure needed to support autonomous financial activity. AI agents are moving beyond simple information retrieval and becoming part of our everyday lives, helping consumers manage schedules, book travel, compare products and make purchases. On-chain activity is also beginning to demonstrate the potential scale of this emerging agentic economy. As an example, hundreds of millions of agent-to-agent transactions have been recorded through the x402 micropayment protocol, which enables AI agents to pay for services, such as data, computing power and access to AI models. These developments provide early evidence of a shift towards autonomous systems capable of executing transactions and managing financial activities on behalf of both individuals and institutions. As financial activity becomes increasingly automated, these AI agents will require access to programmable money, tokenized assets, deep liquidity and interoperable financial applications. We believe Ethereum is particularly well positioned to support this infrastructure given its established ecosystem and ability to facilitate financial activity across competing institutions and applications. Building on this thesis, in September, Sharplink published research exploring the potential scale of agentic finance, including a long-term scenario in which approximately $4 trillion in annual financial services revenue could be reshaped by 2035. While the timing and scale of adoption remains uncertain, the research underscores the potentially significant economic opportunity emerging at the intersection of AI, blockchain technology and global finance. These developments are laying the foundation of what could become a multiyear institutional adoption cycle for Ethereum. Ethereum's established liquidity, developer ecosystem, security and credibly neutral infrastructure position it as compelling infrastructure for a more open and interconnected financial system. Its ability to support interoperable applications and programmable financial transactions offers meaningful advantages as traditional finance increasingly moves on chain. Overall, Q3 represented a strong quarter for Sharplink, driven by Ether's price appreciation, growth in our staking revenue and continued execution of our strategic priorities. We expanded our ETH yield strategies, deepened our engagement across the Ethereum ecosystem and strengthened our position to capitalize on emerging opportunities in institutional on-chain finance. Looking ahead, we're focused on 3 priorities: growing ETH exposure per share through disciplined stockholder accretive capital allocation, deploying our treasury into differentiated opportunities designed to generate additional ETH and enhance the value of our holdings and leveraging our institutional expertise, relationships and strategic positioning to participate in Ethereum's continued evolution as foundational global financial infrastructure. Our conviction in Ethereum's long-term potential is as strong as ever. As institutional adoption accelerates and an increasing share of global financial activity moves on chain, we believe Sharplink is uniquely positioned to capitalize on this transformation. By leveraging our institutional-grade treasury platform, strategic relationships and disciplined capital allocation, we can compound ETH per share and create sustainable long-term value for our stockholders. Before I hand it over to Bob to take us through our Q3 financial results, I'd like to directly address the recent crypto exchange hacks. Sharplink has had no direct or indirect exposure to these incidents. Sharplink's crypto assets are stored with U.S.-based qualified custodians in hardware isolated systems, the same principle as cold storage. Incidents like these underscore the importance of continuously strengthening industry safeguards, reinforcing institutional-grade practices and building the trust necessary to support broader institutional adoption and on-chain finance. With that, I'll turn the call over to Bob for a more detailed review of our third quarter financial results.

Thank you, Joseph. I'll begin by encouraging everyone to review our quarterly report on Form 10-Q for the period ended September 30, 2026, which we filed on Friday, November 6, 2026, with the SEC. The 10-Q provides detailed disclosures and footnotes that complement today's discussion, offering stockholders, analysts and investors a comprehensive view of Sharplink's financial position, liquidity and its treasury performance. We will now go through the financial results for the quarter ended September 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 September 30, 2026, Sharplink held 602,361 native ETH with a net fair value of $1.6 billion. In addition, we held 121,163 LsETH or liquid staked ETH, 66,379 weETH or wrapped ether.fi ETH and 57,393 of wstETH or Lido wrapped staked ETH with a combined net historical cost value of $482 million. Subsequent to quarter end, our combined ETH holdings have increased to 603,953 native ETH, 135,868 as-if redeemed LsETH, 73,601 as-if redeemed weETH and 81,695 as-if redeemed wstETH for a total of 895,117 ETH as of Monday, November 2, 2026. Total revenue for the quarter ended September 30, 2026 was $13.5 million compared with $10.8 million for the quarter ended September 30, 2025. The increase was driven by our staking and ETH yield generating strategies with staking revenue up 27% to $13.1 million. We recorded a net realized gain of $75.2 million compared with a $6.3 million realized gain in the prior year quarter. The gain in the current quarter was primarily due to $55.6 million from LsETH redemptions, $18 million ETH staked for wstETH and $1.7 million from our contribution of wstETH to the Galaxy Sharplink On-Chain Yield Fund. We also recorded an unrealized gain of $676.7 million compared with a $107.3 million unrealized gain in Q3 of 2025. We also recorded an impairment charge of $1 million compared with a $7 million impairment charge in the prior year quarter. SG&A expenses in the third quarter were $11 million compared with $12 million in the prior year quarter. The decrease reflects the elimination of $3.1 million in quarterly asset manager fees following the termination of our asset management agreements in May 2026. These decreases were partially offset by increases of $1 million in salary and benefits and $1.2 million in stock-based compensation, both primarily attributable to additional personnel hired after the third quarter of 2025 as we were building out our ETH treasury operating team. For the third quarter of 2026, we reported net income of $751.4 million compared to net income of $104.3 million in the prior year quarter. The Q3 2026 results were primarily driven by the previously discussed unrealized fair value gain of $676.7 million and the $75.2 million of realized gains, which were offset by an impairment charge of $1 million. Overall, our third quarter performance reflects the recovery in ETH prices during the quarter from approximately $1,563 per ETH at June 30, 2026 to approximately $2,681 at September 30, 2026. As we've noted previously, the impairment charges and unrealized gains recorded this quarter reflect the current market pricing dynamics and are accounted for under U.S. GAAP. Just as in prior periods, impairment charges do not represent realized economic losses, and this quarter's unrealized gains do not represent actual realized economic gains. Neither of these amounts change the number of ETH units we hold. Our treasury strategy continues to be evaluated on the disciplined ETH accumulation and the long-term productivities of those assets over time. As of September 30, 2026, cash on hand was $47.9 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 with accompanying footnotes, including all required disclosures and management's MD&A analysis are contained in the quarterly report on Form 10-Q for the period ended September 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 question is from Devin Ryan with Citizens JMP.

A question on kind of the progression of RWA on chain. And I know, Joseph, you talked about Sharplink being a potential investor in protocols to accelerate Ethereum adoption. Curious if you would ever look to potentially purchase some of these protocols or be kind of an acquirer of more infrastructure that connects to Ethereum, which would obviously bring in a different type of earnings stream, but potentially more recurring earnings stream and just how you guys are thinking about that over time to accelerate adoption. I guess just a broader question to just other things you're doing with capital to accelerate adoption. I'm not sure if I got cut off here.

Devin, it's Joseph. Sorry, we were on mute. I think, we shared earlier this summer that tokenization and RWA is probably the most exciting use case that institutions are pursuing. And the majority of that activity is happening on Ethereum. And we're approaching it in 2 or 3 different ways. The first is the ecosystem investments -- the first is the ecosystem investments we've made in the Ethereum ecosystems with EthLabs, EthSystems and Ethereum Institutional. They are engaging with hundreds of financial institutions who are going to be the primary issuers and buyers of RWA. So that's number 1. Second is Ethereum is the leading blockchain for tokenization. The last we checked over 50% of all tokenization issuance is happening in that ecosystem. But at the same time, we've shared with you that the Galaxy Sharplink Yield Fund is deploying into Ethereum ecosystem protocols. Some of them will be RWA oriented. The fund started making its first allocations to protocols in late Q3. And there are opportunities either to participate in RWA issuance ourselves by being buyers for yield or potentially to acquire these type of protocols. So I think we're taking a multifaceted approach. Nothing to announce on today's call.

Got it. And then as a follow-up, obviously, now Sharplink has native staking, several liquid staking relationships, the $200 million Lido allocation. We just talked about the Galaxy on-chain fund, strategic access through Consensys. So there's a bit of a portfolio here. And one question we get is you're trying to put this all together and quantify how much incremental ETH -- these activities could generate above kind of the native staking yield. I'm not sure if you can kind of give any sense of that or quantification just as we look out over the next 6 months to 12 months would be helpful.

Sure. So the benchmark we use is the CESR rate. When you take a look back during Q3, the CESR rate performed at a 2.63% rate. And I'm pleased to share that we've again outperformed that benchmark in each of the months in Q3 and for the quarter overall, including rewards from our additional treasury deployments. We're not at this point yet quantifying the premium at this stage as several of our newer strategies, including the Galaxy Sharplink Fund are still in deployment and scaling mode. Our focus remains essentially on generating sustainable additive returns above traditional staking rates while maintaining disciplined risk management. We do continue to believe even more strongly today that there's an opportunity to earn these additional returns above conventional staking through the institutional participation that we've mentioned in on-chain strategies. Again, it includes restaking, liquidity provisioning. Sometimes we receive protocol incentives because we have permanent and strategic capital for these emerging financial protocols. And so at this point, we're not disclosing the actual returns. Only that we've outperformed the CESR rate for the quarter.

Okay. I appreciate it. Is there any way to think about for the Galaxy fund, what the expected return? I know it's strategic as well, but if there's a kind of a targeted return on that capital?

Sure. If you take a step back, the fund is designed to generate steady returns above traditional ETH staking. I would think of those as singles and doubles. We're not looking for triples or home runs here. Importantly, we are contributing our liquid staking tokens from Lido to capitalize the fund, which means we preserve the underlying staking yield while pursuing additional ETH-denominated returns through their selected on-chain opportunities. Again, our goal is to generate incremental ETH on a risk-adjusted basis. And what I would share with you, Devin, is as the fund continues deploying capital and establishes more of a mid- to longer-term performance track record, we expect to be able to provide greater visibility into the incremental returns beyond conventional staking. At this point, there's only a handful of deployments, and we want to make sure we protect the confidentiality of each of those protocols.

Our next question is from Fedor Shabalin with B. Riley Securities.

I did have a question on the Blockspace investment. Sorry if I missed that, but can you size this investment and walk us through the rationale behind this? Specifically, does it kind of lower your validator or custody cost or maybe improve staking yield or give some economics in Blockspace's broader client base. Should we kind of think of it as one-off ecosystem investment or kind of start of vertical integration strategy in staking infrastructure?

Thank you, Fedor. So the way to think about Blockspace, which is a sub-$0.5 million equity investment, it reflects kind of the broader commitment we have at Sharplink to supporting emerging infrastructure that underpins Ethereum's long-term growth. Blockspace, in particular, is focused on a few critical areas of Ethereum's infrastructure. It includes block building, validation and staking. Each of these are fundamental to the network's security, efficiency and continued development. We view our Blockspace equity investment as a strategic investment that complements our core ETH treasury strategy. We are going to be in the business as we've been very vocal in supporting companies that are developing important Ethereum infrastructure because we believe we're both stewards and investors that can help strengthen the ecosystem while potentially participating in the economic value created as more and more institutional adoption and on-chain activity expands. Again, our North Star and priority is growing ETH per share, and we're going to do that through disciplined capital allocation and treasury management. And the investments in private companies, including the one we made in Blockspace provide us not only an ability to fund the ecosystem, but also an additional opportunity to support that objective while maintaining our exposure to the long-term growth of the Ethereum ecosystem. So you can think of it less as a vertical integration play, but helping support really important infrastructure with potential economic upside as an equity investor.

And if you allow the follow-up, it's my follow-up, kind of follow up on Devin's question on Ethereum adoption overall. You know that accelerating institutional adoption positions Sharplink to grow ETH per share. But maybe which adoption milestones near term do you see as most consequential for Ethereum price? Maybe if you can, maybe it's a good time to rehash the -- like this theoretical equation, which variables should move and how much Ethereum in theory should respond, just like a pure quantification question, if it makes sense.

It does. So I think in the short term, you should think of the 2 most important being the growth of stablecoin circulation and the growth of tokenized assets. Both of those primitives are dominated on the Ethereum ecosystem. Over 50% of all stablecoin circulation and transaction is on Ethereum. The same is true on tokenization. I personally believe tokenization is where most of the highest value activity is going to start from, and then it's going to happen on chain. And so DeFi and On-Chain activity was built on Ethereum. It has the predominance of that activity. And as you start combining stablecoins as the money layer, tokenization as the asset exposure layer and third, on-chain execution, I think you'll end up seeing a lot more activity by more and more institutional users. In the longer run, I believe agentic finance will help automate and continuously execute these transactions. But I think in the immediate term, it's mostly going to be stablecoins, tokenized assets on DeFi and on-chain activity. For most of its history, Ethereum has been building and doing the hard work, which is ensuring it has the security, the neutrality, the censorship resistance, that distinguishes it from every other blockchain around. I think you're now going to see the phase of more and more transaction activity. The newest releases coming from Ethereum will significantly reduce costs and increase speeds, and that will inure to the Ethereum price. I also think Ethereum is a store of value, and it's starting to get more and more attention in that regard. So I think the short term, stablecoins, tokenization and on-chain activity in the longer term, it's going to be agentic transactions.

[Operator Instructions] Our next question is from Kevin Dede with JonesTrading.

I just cursory analysis here, but it looked like native staking fees increased sequentially. And I was wondering if you might address that.

So the native Ethereum staking is driven by supply-demand dynamics and the actual yield is dynamic in nature. We've seen periods where it was around 3%. We've also seen periods recently where it was around 2.5%. Right now, if you look back over the last quarter, it's been averaging a little bit closer to 2.65%, but that will change over time. We're less concerned with the actual yield. We're more concerned and focused on making sure that we're deploying our entire balance sheet, and we're doing it in a way that's safe and disciplined. And again, over time, because we have permanent capital, we can outperform the Ethereum staking rate. We've done that for the last several quarters, and we anticipate being able to share more detail on that as our newest deployments go into production, including the Galaxy Sharplink Yield Fund. But it is based on supply and demand dynamics. We saw a period over the last 1.5 years since ETF started staking and more importantly, the digital asset treasury started staking where the percentage of staking rates on Ethereum is now north of 35%, and that will drive both the yield you receive as well as the queue and unqueue time for staking your ETH.

I apologize, Joseph, I think I misframed my question. I was more curious about the validator fees, in fact, that Sharplink is paying. It looked like they were up almost 100 basis points sequentially. And I was wondering how you think we should think about that. I understand the fluidity in ETH staking returns. Just not sure about in light of Fedor's question, too, right, with your Blockspace investments, how you plan on managing native staking?

Sure. Most of our native staking is done on a delegated basis, Kevin, through both Coinbase and Anchorage. And we pay them a fixed percentage of our staking rewards, single digit, low single digits. I can't go into the details for confidentiality. But the amount of absolute fees we share on both custody and staking rewards will depend on the total AUM that's being staked. And as we acquire more ETH or the price of ETH goes up, we will pay more custody fees, we will receive more rewards, and we will pay more rewards in sharing with our validators. But that's managed primarily through our relationships with Anchorage Digital and Coinbase. It's a fixed percentage of our ETH rewards being received, but we'll receive more rewards as the price of ETH expands.

KPMG as your auditors, how much oversight will they actually have over the Galaxy fund and the Linea DeFi activity? Just kind of curious about how auditors are going to resolve the intricacies of decentralized finance.

Sure. I mean, the auditors are involved in auditing and classifying the income and revenue from every deployment we make, whether it's the Linea, ether.fi, Eigen, Lido deployments, they're actively involved. They are independent auditors, and they focus on GAAP standards and issue opinions and audit our financials. With respect to the Galaxy fund, the fund has its own auditors. Galaxy as the manager of the fund publishes accounting and NAV reports. But then how it's classified is -- how the returns are classified is handled by KPMG as our external auditor. I don't think there's anything more to share. We work very closely with them, and we rely on them to help audit our financials.

Our next question is from Brian Kinstlinger with Alliance Global Partners.

This is Kevin on for Brian. Are you having discussions with Galaxy or others about other funds where you can deploy capital?

Just taking a step back, when we started our strategy in June of 2025, we didn't have in-house capabilities to do full asset management. So we had engaged initially on a nonexclusive basis, 2 asset managers to help us on our ETH purchases and staking. As we disclosed in May, for the basic asset management capabilities, we've terminated those external relationships. We have really positive relationships with both those managers, but we've built in-house teams capable of doing these deployments, as you've seen, including the ether.fi and Lido deployments. But when we try to do on-chain deployments in scale, we engaged Galaxy in this fund together, where together, we've allocated 100 -- sorry, we've committed $125 million of assets. Galaxy has unique capabilities to not only source these opportunities, but to deploy and monitor them in scale. That's why in this high value-add engagement, we did it through a fund structure. Kevin, I would tell you, on a weekly basis, we're meeting with protocols, DeFi providers, fund managers to explore opportunities, but we haven't announced anything new. So right now, many of the initial deployments are done in-house. We do our staking oversight in-house, but we have this one fund structure with Galaxy to do on-chain yield and to do it in scale.

Great. And then just a second one. How important do you view Glamsterdam to Ethereum's investment thesis? And are you seeing any developments from the upgrade that could materially improve Ethereum's economics or the institutional adoption?

Joe Lubin, I'll turn this one over to you.

Sure. Thank you. So Glamsterdam is certainly important to the evolution of the Ethereum platform. In terms of institutional adoption, I think it's relatively immaterial. It certainly does provide some benefits in reducing our reliance on centralization in the proposer-builder separation construct. It will increase throughput. It is adjusting pricing. But the institutions are coming anyway. And I think from what we're seeing, institutional adoption is effectively independent of the advancements of Glamsterdam.

Our next question is from Joseph Vafi with Canaccord Genuity.

Nice progress on a bunch of fronts. I was just wondering at a high level, if we think about GENIUS Act being fully implemented here early in the year, along with some of the RWA, how do you see it kind of maybe at a high level, how that may ultimately move spot, how there may be a bit of a decoupling effect from other correlated assets and how those trends help the underlying native staking yield? And then I have a quick follow-up.

Sure. When I think about the CLARITY Act, which didn't pass cloture in the Senate, we were actually quite happy with what the SEC and CFTC have done since. The 2 most important green lights we have for institutions are GENIUS. And I had mentioned in my opening remarks, the OCC guidance around stablecoins and the fact that the GENIUS Act will take effect in January of 2027. That will unlock the world's largest institutions to start participating in stablecoins. The second is the SEC's innovation exemption, which is providing a 5-year ramp and clarity to tokenization to allow certain venues that are not necessarily national stock exchanges to do automated market making and support U.S. equity tokenization. We're going to start seeing that on NASDAQ, New York Stock Exchange, but we're also seeing important developments on the DTCC front, the ability to dematerialize collateral in accounts and allow them to be tokenized so that members can move them from one account to another in a very, very rapid intraday manner. What both of these things are going to do is stimulate stablecoin circulation and use cases as well as tokenization of U.S. equities. And when those 2 things happen, we believe the activity over 50% historically will happen in the Ethereum ecosystem. We'll see more users come online. We'll see institutions go from experimentation to production. And then the interesting element is when you have these tokenized assets for the first time, we have an ability to see them borrowed against, lent against on chain, whether you call it DeFi or on-chain 2.0, that's where you're going to see a lot of the composability. And we see Ethereum being at the forefront of that activity, and it's going to benefit the price of Ether. I won't make short-term price predictions, but this is the exact thesis we've been talking about since last June, and we're seeing it play out live in real time. And we're quite encouraged by the fact that the SEC, CFTC and OCC are providing the guidance needed for the world's largest institutions to come on chain. While it's starting in the U.S., we're very encouraged by what we're seeing in Asia as well.

Great color, Joseph. And then quickly on the registered direct during the quarter. Obviously, you have a lot of liquidity with your balance, and I understand it was accretive to ETH per share. Just -- maybe just a few extra thoughts on kind of the strategic use here of the registered direct in the quarter.

Sure. I think we've said publicly that when our multiple to NAV is below 1, we are not in the business of raising capital through the ATM because it could be dilutive for shareholders. We used the ATM last year when it was accretive to shareholders. But the interesting thing about running an Ethereum treasury company is we have every day the flexibility across multiple investment opportunities. Obviously, we own ETH directly, and that gives our clients and our investors an opportunity to get the capital appreciation. But when we think of disciplined capital allocation, we are opportunistic. There are moments where it doesn't make sense to raise. I would tell you it's very sentiment oriented. When the price of ETH in Q3 expanded, the number of calls coming in from institutions, whether they were hedge funds or banks, interested in buying our shares through registered directs increased, but we're going to be very, very careful. And where it makes sense, we've done it twice. We will do the premium to NAV financing. At the same time, you've seen our cash on hand has expanded. It's just shy of $50 million, which gives us every day an opportunity to make a decision around share repurchases or ETH acquisitions. You would have seen in June when we raised the $75 million, we did both. We raised capital accretively. We did some share repurchases, and we also bought ETH. So we have a team who's able to do that. We're not in a rush, and we're not here to accumulate ETH for the sake of accumulation. We're going to do things that make sense for our long-term investment thesis and grow ETH per share. That is how we think about it. It doesn't change in an upmarket or a down market. We have the flexibility, and that's the beauty of an Ethereum treasury strategy. We are seeing a lot of inbounds, but we're going to be very careful and thoughtful to do financing when it makes sense, to do stock repurchases when it makes sense and to buy ETH when it's accretive for investors.

We have reached the end of the question-and-answer session. I would like to turn the floor back over to Joseph Chalom for closing comments.

Thank you, operator, and thank you to everyone who's joined us today. I believe Sharplink is entering an exciting new phase of its evolution and strategy. We've established a strong institutional foundation. We've assembled an experienced team and built one of the world's largest ETH treasuries. And we're leveraging that scale every day to pursue new opportunities to deepen our strategic relationships and to generate additional ETH through disciplined capital allocation and innovative on-chain deployments. And while market conditions continue to evolve day by day, we are relentlessly focused on compounding our ETH per share and creating sustainable long-term value for our stockholders. Thank you again for your continued support, and we look forward to updating you again on our next earnings call. Have a great day, everyone.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.