Can crypto treasuries end the VC dump cycle? – Ethena founder explains…
Key Takeaways
Ethena’s Guy Young has hailed crypto treasuries as the solution to VC’s supply overhang and a growth driver for revenue generation projects. But risk still remains.
Ethena [ENA] Labs founder, Guy Young, has defended crypto treasuries as the best shot at solving the infamous Venture Capital (VC) token unlocks and dumping in the space.
Young admitted that even ENA had the challenge of VC sel-offs because of limited liquidity in the crypto sector.
But leveraging traditional markets could offer relief from supply overhang, Young noted.
“You wanted a solution to the overhang of VC unlocks? Well, this is it (crypto treasuries).”
Source: X
Crypto treasuries: A solution or risk?
VC unlocks happen when early backers exit and offload their holdings onto the retail market to recover their investment.
Unfortunately, in most cases, the supply overhang from VCs always drags the price lower, leaving retail with losses.
The sell-off gets even worse during periods of broader negative market sentiment.
For example, Celestia [TIA] price plunged over 90% amid Polychain VC’s consistent dumping worth millions from staking rewards and unlocks. Now, a new firm wants to buy off Polychain’s TIA holdings.
The dump on retail became so infamous that Crypto Twitter (CT) community dubbed VC-backed projects as ‘VC tokens,’ shunned them, and pivoted to memecoins, birthing the ‘memecoin supercycle’ trend seen from 2024.
Real revenue vs “vapourware”
However, Young acknowledged that most altcoins are ‘shitcoins’ and ‘vapourware’, and offering them via an ETF (exchange-traded fund) won’t change anything.
In contrast, Young said that TradFi will gladly back crypto projects with revenue like Ethena.
“But I do think this is an incredibly bullish development for a small handful of tokens where TradFi can underwrite a real business model benefiting from secular growth trends.”
In 2025, several legacy firms have embraced crypto treasuries and gone beyond Bitcoin [BTC] and Ethereum [ETH].
Most have been lured by the windfall from Strategy’s (formerly MicroStrategy) successful BTC bet.
The results? Stock prices of the firms have spiked more than the underlying crypto assets. In a way, it has been a crypto treasury rather than an altcoin season.
But there’s more to it than just dislocation in price appreciation.
Bullish… with a warning label
Critics have warned that the excessive debt leverage deployed by the treasury firms to buy more BTC and altcoins could pose a liquidation risk to the entire sector and TradFi if they go bankrupt.
Source: X
For perspective, Strategy has the largest debt profile of over $8B, while Metaplanet only owes $116 million.
But Galaxy Research’s Alex Thorn downplayed the debt concerns as ‘overblown’, stating that most will begin to mature by 2028.
Overall, crypto treasuries have offered the needed liquidity in the market to cap drawdowns. But their debt leverage remains a risk concern.
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