Layer One: The Rise of the DATs

Welcome to Layer One: the newsletter and podcast on the intersection of crypto and the real world. Hosted by Steven Gates and Kelvin Sparks, Layer One brings you inside the conversations driving blockchain forward.

This week we’re joined by guest co-host John Wu, president of Ava Labs, and Anthony Scaramucci, founder of SkyBridge Capital and chair of the advisory board for AVAX One Technology. Together they discussed DATs, regulatory regime change and the major adoption milestones to expect in the near future.

In this edition of the Layer One newsletter, we’re taking a closer look at how the DAT trend has shaped the markets and what to expect from these companies as we look towards the new year.

DATs peak at $176 billion, but is their time up?

Just over five years ago, Michael Saylor partially converted his Nasdaq-listed company Strategy (previously MicroStrategy) into a vehicle for the accumulation of BTC. And so began the era of the DAT.

Over the past few years, hundreds of publicly traded firms have followed suit, either adding substantial BTC holdings to their balance sheets, or founding new entities solely to stockpile cryptoassets. As a result, we saw the combined market cap of DATs skyrocket from just $15 billion in July 2023 to a peak of $176 billion two years later. However, the evidence shows that this flurry of activity has peaked. 

Since the July high, the combined DAT market cap has dropped by around 40%. Some individual firms saw their shares drop 80-90% from the peak to the November low, trading below net asset value. Earlier this week, analysts at Standard Chartered posited that "Bitcoin buying by DATs has run its course," and a period of quiet consolidation is on the cards for the foreseeable future. It seems that the hype surrounding DATs has come to a whiplash-inducing stop.

There are, however, some counterexamples to the trend. Just last week, major Ethereum DAT BitMine added $150 million in ETH to its balance sheet; BNB treasury firm CEA Industries likewise continued to accumulate throughout November; and Michael Saylor’s Strategy spent the first week of December purchasing almost $1 billion in BTC.

This conviction among some of the major DATs is partly being driven by the belief — shared by Scaramucci — that 2026 will see a market resurgence, driven by the passing of the Clarity Act in the US.

This cautious optimism is also reflected in the steady stream of new DATs being formed. The conversion of small Nasdaq-listed companies into vehicles for the accumulation of altcoins has been one defining trend of 2025. These novel DATs are often directly supported by the foundations behind major bluechips, with discounted tokens sold from their treasuries. In exchange, the projects gain broad exposure to institutional investors.

Solana is at the vanguard of this movement, but other major L1 foundations are moving to keep pace. Just last week, shareholders of Nasdaq-listed medical company Sonnet BioTherapeutics voted to convert the firm into Hyperliquid Strategies: a HYPE token treasury which began trading on December 3.

And earlier this year, Scaramucci himself led the fundraising for the creation of the AVAX One DAT (Nadsaq: AVX). With the backing of the Avalanche Foundation, the firm aims to buy over $700 million in AVAX tokens, which it will stake to generate revenue and dividends. Scaramucci told the Layer One team that “the goal is to use the operating income to buy accretive companies [...] that help the overall ecosystem,” later cycling profits back into new AVAX purchases. Active strategies like this will theoretically allow the new generation of DATs to maintain their inherent value, even if their core holdings depreciate in price.

Despite short-term uncertainty, novel DATs are continuing to fundraise and continuing to launch. Meanwhile, the balance sheets of some long-established treasury firms continue to grow, even if the net value of their holdings has taken a hit.

Rather than an end to the DAT trend, the current moment could instead be interpreted as a hard reset: a shakeout during which hype-driven copycats and cash grabs will fall out of favor. On the other hand, DATs which have a clear reason for existing, and revenue-generating strategies more sophisticated than the old buy-and-hold model, will persevere.

Podcast Recap: Anthony Scaramucci on tokenizing Wall Street and why it's '1998 for Crypto' 

In this week’s edition of Layer One, we invited on veteran financier Anthony Scaramucci (SkyBridge Capital) and guest co-host John Wu (Ava Labs) to talk tokenization, the massive strides made with regulators and the frontrunners to be the next chair of the US Federal Reserve.

Subscribe to Layer One on Youtube, Apple, Spotify or wherever you get your podcasts.

In the Headlines: The stories driving the conversation this week

• Hyperliquid Strategies this week announced a $30 million stock buyback program. This initiative — coming less than one week after the HYPE DAT officially started trading on the Nasdaq — is part of a broader trend among treasury firms seeking to normalize mNAVs and support share prices. Though not inherently negative, last month The Block's Yogita Khatri wrote of the dangers such programs could pose, should firms begin selling assets to fund them.
• AVAX was added to the Bitwise 10 Crypto Index Fund, the largest multi-asset crypto fund with $1.26 billion AUM. Bitwise's flagship index fund — which was the first of its kind when its original incarnation launched back in 2017 — officially started trading on the NYSE this week. Avalanche joins a lineup of familiar bluechip L1 coins tracked by the fund, including BTC, ETH, SOL and XRP.
• SEC Chair Paul Atkins signalled that regulatory developments are primed to come thick and fast in the new year. Speaking at a policy summit in Washington DC, Atkins outlined an expedited timeline for 2026 which could see "innovation exemptions" granted to blockchain companies as early as January.

Top of the Charts: DATs claim a substantial share of token supply

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Layer One is brought to you in collaboration with Avalanche.