Nasdaq-listed company GameSquare Holdings has announced a strategic pivot. The company’s board of directors has approved a phased investment of up to $100 million to set up an Ethereum treasury. GameSquare’s new Ethereum-focused treasury vehicle, in partnership with Dialectic, may also incorporate additional yield-generating strategies across the Ethereum ecosystem.
The company also announced the pricing of its previously underwritten public offering of 8 million shares at $0.95 per share, with the majority of the gross $8m proceeds channeled into its ETH treasury. On reacting to the news, GAME stocks soared 58% to $1.54 per share, indicating that shareholders welcomed the move. The decision could reshape GameSquare’s corporate strategy, but experts wonder why the company chose Ethereum over Bitcoin.
Ethereum Treasury Will Strengthen Balance Sheet
GameSquare’s CEO, Justin Kenna, said the announcement reflects investors’ confidence in decentralized finance. “We’ve partnered with one of the world’s top crypto investment firms to generate real on-chain yield while deepening our expertise in decentralized finance.”
Justin said setting up an ETH treasury with Dialectic will strengthen the company’s balance sheet, as they pursue more revenue streams. He further added that the new treasury strategy enhances flexibility, allowing them to allocate capital towards additional ETH asset purchases and future share repurchases. According to Justin, the ETH treasury may also incorporate additional yield-generating strategies, potentially utilizing assets such as stablecoins and NFTs to diversify and amplify returns.
Dialectic’s proprietary platform, Medici, will be used for the ETH treasury. It utilizes machine learning models and multi-layered risk management controls to generate best-risk yields. Medici generates a yield of up to 14%, exceeding the current DeFi ETH staking benchmark of 4%.
GameSquare Opts for Ethereum, Not Bitcoin
The company’s decision to opt for ETH instead of Bitcoin left some crypto enthusiasts baffled, given the trend of Bitcoin treasuries. However, the company has its reasons for opting for ETH, and experts can guess why.
First, ETH offers yield-bearing options, like staking, unlike Bitcoin. GameSquare explicitly intends to generate returns through DeFi instruments, a model that doesn’t favor Bitcoin. BTC is a store-of-value asset with limited yield potential, which doesn’t align with the company’s objectives.
Secondly, GameSquare aims to create innovative products in the future through smart contract functionality. Opting for Ethereum is more ideal since the L1 chain powers most DeFi protocols. Hence, GameSquare’s strategic alliance with Dialectic.
Furthermore, GameSquare intends to get involved in the play-to-earn gaming segment and Web3. It aims to tap into Ethereum’s rich gaming and NFT ecosystem while launching its strategic treasury.
Impact of GameSquare’s Ethereum Treasury Announcement
By announcing plans to establish an ETH strategic treasury, the company joins the growing list of companies, such as MicroStrategy, Metaplanet, and Marathon, with a crypto treasury. While other companies base their treasury on Bitcoin, GameSquare focuses on ETH, validating Ethereum as an institutional-grade asset beyond DeFi and NFTs.
Also, entering into the DeFi space marks a turning point for corporate entities. DeFi isn’t just a word for retail traders, but a legitimate tool that public firms can leverage for yield-generating opportunities. Demand for ETH-centric products could rise tremendously, with more strategic partnerships expected in the DeFi space.
