Bitwise Executive: Ethereum Solves Narrative Problems Through Finance Company

"Ethereum is packaged in a way that traditional financial investors can understand," said Matt Hougan, chief investment officer at Bitwise.
According to a report by Cointelegraph on the 30th (local time), Hogan said in a media interview, "Ethereum
"Until now, Amu has not been able to clearly explain its revenue generation structure to investors in traditional financial markets, and therefore its value has not been fully recognized," he said. "However, ETH has been presented as a 'share structure'.
"Packaging it as a cryptocurrency was a game changer," he said. "From Wall Street's perspective, the value of ETH wasn't clear. Is it a store of value?
Was it because of the exchange mechanism? Was it fee revenue? Was it staking interest? Nobody was sure,” he said. “But if you put $1 billion worth of ETH into one company and stake it, that
"Revenue starts to be generated from the moment the company is established, and investors are used to companies that generate revenue," he explained. This ETH finance company model will transform Ethereum from a mere community asset.
It has played a role in evolving Ethereum from a simple cryptocurrency to an institutional asset, and 10 years after the mainnet release in July 2015, Ethereum has been established as an institutional-grade asset in both name and reality.
However, Hogan said, "If companies that use ETH as their primary asset and accumulate it through bond issuance or equity investments fail to properly manage their excessive debt reliance and interest expenses, they could face excessive leverage and the risk of bankruptcy.
He also stressed that companies looking to deploy small amounts of ETH as an inflation hedge need to maintain a long-term perspective.
He added that companies with short investment horizons can be "crushed" by short-term volatility. He also noted that there are "basis shifts" that arise when assets and liabilities are denominated in different currencies.
He also noted that "basis risk" is a key consideration, as a decline in the cryptocurrency market could mean that companies have to bear more costs than expected.
However, Hogan clarified that a complete liquidation of ETH financial companies, where they would liquidate all their assets to repay debt, is unlikely. Most of the bonds have widely diversified maturities, making the worst-case scenario even more likely.
He explained that even in this case, a gradual and partial liquidation will occur. "The 'total liquidation' that people imagine is not realistic. Rather, a gradual and partial liquidation is a scenario that could actually occur," he said.
Ta.