The in-kind DAT model allows crypto firms to build digital asset treasuries by accepting newly launched tokens as funding instead of cash, providing access to capital while pricing illiquid assets. This approach differs from traditional open-market purchases and has gained traction among altcoin-focused companies, though it carries significant risks due to token volatility.
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New firms are raising funds through in-kind token deposits for digital asset treasuries, bypassing open-market buys.
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This method offers fresh capital to public companies and a valuation mechanism for unproven tokens.
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Examples include raises tied to tokens like Canton Coin and 0G, but post-launch price crashes have led to stock declines, with data showing up to 80% token value loss in early trading.
Discover the in-kind DAT model revolutionizing crypto treasuries: firms fund with new tokens, but volatility risks loom large. Learn key examples and expert insights to navigate this trend. Stay informed on digital asset strategies.
What is the in-kind DAT model in cryptocurrency?
The in-kind DAT model involves companies raising capital for digital asset treasuries by accepting contributions of newly issued or illiquid tokens directly from investors, rather than purchasing assets on the open market with cash or debt. This strategy enables public firms to access liquidity for unproven cryptocurrencies while establishing an internal valuation for these tokens. Unlike established Bitcoin or Ethereum treasury approaches, it exposes companies to heightened volatility risks, as seen in recent cases where token prices plummeted shortly after launch.
How risky are in-kind digital asset treasuries for investors?
In-kind digital asset treasuries pose substantial risks due to the inherent volatility of altcoins and the lack of established market liquidity. For instance, tokens like Canton Coin, which began trading on November 11, were valued internally at $0.20 during a $545 million raise by Tharimmune, Inc., but quickly fell to around $0.11, contributing to a 99% decline in the company’s shares since 2023. Similarly, Flora Growth Corp. raised $401 million largely through in-kind deposits of 0G tokens priced at $3, only for the token to drop 60% to $1.24 by November 13, dragging shares to an all-time low of $7.80. Expert analysis from Bloomberg’s Akshat Vaidya, co-founder of Maelstrom, highlights that an 80% in-kind structure acts as a “thin equity wrapper” around a single volatile asset, where a 50% token drop can cause 80-100% share price erosion as investor premiums vanish and selling pressure mounts. This model often targets less-informed investors unfamiliar with the history of failed crypto projects, amplifying potential losses. While Bitcoin treasuries have benefited from the asset’s liquidity and long-term appreciation—mitigating some in-kind risks—the same cannot be said for obscure altcoins like SOL or Avalanche derivatives, where intrinsic value remains speculative and team-held reserves fuel hype without substance. Regulatory scrutiny may increase as these practices offload risks to shareholders, who face dual exposure to token and stock declines without safeguards against insider sales.
Frequently Asked Questions
What are the main differences between in-kind DAT funding and traditional crypto treasury strategies?
The in-kind DAT model differs from playbook strategies used by Bitcoin or Ethereum firms, which raise funds via stock sales or debt to buy assets on open markets. In contrast, in-kind approaches accept tokens directly, often pre-launch, to build treasuries. This provides quicker capital access but introduces valuation uncertainties and higher volatility risks, as evidenced by recent altcoin crashes that eroded company valuations by up to 99%.
Why are altcoin treasuries considered riskier than Bitcoin ones in the DAT model?
Altcoin treasuries in the DAT model are riskier due to lower liquidity, unproven value, and susceptibility to hype-driven pricing from team reserves. Bitcoin’s established market depth and historical growth cushion in-kind deposits, whereas altcoins like Canton Coin or 0G have seen immediate post-launch drops of 45-60%, leading to sharp stock declines. Investors should approach these with caution, focusing on diversified, liquid assets for stability.
Key Takeaways
- In-kind DAT model innovation: Enables crypto firms to fund treasuries with new tokens, offering capital access but reliant on internal valuations that often fail market tests.
- Volatility amplification: Token crashes, such as 0G’s 60% drop post-launch, can trigger 80-100% share price falls, as noted by experts like Akshat Vaidya.
- Risk mitigation advice: Prioritize established assets like Bitcoin over obscure altcoins; monitor for regulatory changes to protect against insider selling and hype-driven schemes.
Conclusion
The in-kind DAT model represents a bold shift in how digital asset treasuries are built, allowing companies to leverage newly launched tokens for funding while navigating illiquid markets. However, as seen in cases like Tharimmune’s Canton Coin raise and Flora Growth’s 0G deposits, the risks of in-kind digital asset treasuries—including rapid token devaluation and share price erosion—underscore the need for caution. With skepticism growing, as reported by outlets like Cryptopolitan, investors must prioritize transparency and liquidity. Looking ahead, refined strategies could stabilize this approach, but for now, thorough due diligence remains essential to capitalize on crypto’s evolving landscape without undue exposure.
