The Pros and Cons of SharpLink and Upexi: DAT Under Different Models

Author: Prathik Desai, Source: Token Dispatch, Compiled by: Shaw Jinse Finance

Recently, I really don't know how I've managed to get through it. The overwhelming financial reports almost drowned me. I’m starting to doubt my love for numbers. Not because I’ve analyzed too much, but because the last six earnings analysis reports I've written over the past three weeks have revealed rare situations in the company's financial statements.

Digital Asset Treasury (DAT) The financial condition of a company is intricately intertwined with decentralized finance (DeFi) strategies, making the analysis of a company's financial performance quite challenging.

Upexi and SharpLink Gaming recently announced their quarterly earnings, and they are the companies I have recently conducted in-depth research on regarding their financial status.

On the surface, they seem like ordinary businesses: one selling consumer brands and the other engaged in sports betting affiliate marketing. But it is only after delving deeper that one realizes that what truly influences their valuation, determines their profitability, and shapes their overall image is not warehouses or e-commerce platforms, but cryptocurrency.

Upexi and SharpLink have entered a realm that blurs the lines between corporate financing and cryptocurrency fund management.

This article will take you through the interesting aspects I found in the reserves of Ethereum and Solana, as well as the considerations investors need to be aware of before venturing into cryptocurrency through these avenues.

SharpLink's ETH Trading Platform

Less than a year ago, I would have described SharpLink as a niche sports league marketing company, the kind of company that only comes to mind during the Super Bowl. Its financial situation looked no different from that of other mid-sized peers: modest revenue, performance affected by the seasonal fluctuations of sports event schedules, and often poor profitability.

There is no indication that there is $3 billion on its balance sheet.

Everything changed in June 2025 when the company reshaped its image through a decision: it designated Ethereum as its primary treasury asset and became one of the leading companies holding Ethereum.

Subsequently, the company restructured its Ethereum management business, led by Ethereum co-founder and Consensys founder and CEO Joe Lubin (Joe Lubin). He joined SharpLink at the end of May as chairman of the board.

In the past few months, SharpLink has directly invested funds into native staking, liquid staking, and DeFi protocols, shifting its business focus towards Ethereum. Three months later, this transformation has begun to show results.

SharpLink's quarterly revenue was $10.8 million, an 11-fold increase from $900,000 in the same period last year. Of this, $10.2 million came from staking income from its ETH reserves, while only $600,000 came from its traditional affiliate marketing business.

SharpLink's total assets increased from $2.6 million on December 31, 2024, to $3 billion on September 30, 2025.

At the end of the quarter, Sharplink held 817,747 ETH, which increased to 861,251 ETH by early November. It is now the second-largest enterprise holding ETH. This reserve of funds alone has driven its revenue growth by 11 times.

In this quarter, nearly 95% of SharpLink's revenue came from the earnings obtained from its Ethereum staking. Although its net profit skyrocketed 100 times to $104.3 million, there was a net loss of $900,000 in the third quarter of 2024, but there is a hidden issue within this. Like most other DATs, all of SharpLink's profits come from the unrealized gains of its held ETH.

This is because the U.S. Generally Accepted Accounting Principles (GAAP) require companies to value assets at market fair value at the end of the accounting period. The contribution of affiliated companies to profits is minimal.

So, all these unrealized gains are essentially non-cash. Even the income that SharpLink earns from staking rewards is paid in ETH, rather than being regularly converted into fiat currency. This is exactly what I am concerned about.

Although non-cash income is still considered revenue in accounting, the company consumed 8.2 million dollars of operating cash within nine months to pay for salaries, legal and audit fees, and server costs.

Where did this US dollars come from?

Like most other DATs, SharpLink funds its ETH buyback by issuing new shares. The company raised $2.9 billion this year through stock issuance and then authorized a $1.5 billion stock buyback to offset equity dilution.

This is a reenactment of the DeFi flywheel effect, which is becoming increasingly common in DAT.

SharpLink issues stock and uses the proceeds to purchase ETH. It stakes ETH to earn returns, realizing unrealized gains as the price of ETH rises, and reports higher accounting income, which enables it to issue more stock. This cycle continues.

As I mentioned in other DAT cases, this model performs well during bullish cycles. Even after experiencing several bearish cycles, as long as the company's cash reserves are sufficient to cover expenses, the model can operate normally. An increase in ETH prices will enhance the balance sheet, with the value growth rate of treasury reserves exceeding operating costs, and the market can also gain a robust and richly structured liquidity public agent for Ethereum.

When prices have been consolidating sideways for a long time (which is not new for Ethereum holders), coupled with high corporate costs, this vulnerability becomes apparent.

We have also seen similar risks in the case of the Bitcoin treasury reserve giant, Strategy.

I expect that almost all DATs will face these risks, regardless of which cryptocurrency they invest in, unless they have strong cash reserves and healthy profitability to support their DAT reserve strategy. However, we rarely see profitable companies fully commit to the cryptocurrency space.

We can see that this is the case when Strategy chases Bitcoin while SharpLink bets on Ethereum. The situation with Solana's treasury reserves is quite similar.

Upexi's Solana Factory

SharpLink has almost completely transformed from a consortium gaming company into an Ethereum treasury, while Upexi, even though it still retains the old appearance of a consumer brand company, has already adopted a Solana reserve strategy.

I have been following Upexi for a while. From an operational perspective, they have achieved profitability in four out of the last five fiscal years. Their brand acquisitions and revenue growth have been quite good, and their gross margin is also satisfactory. However, overall, Upexi has reported net losses every year for the past four years.

Perhaps it is this point that has prompted the company to include digital assets in its financial statements. In the past two quarters, this shift has been subtle but has become evident. In this quarter, digital assets have taken a dominant position in the company's financial statements.

In the third quarter of 2025, Upexi generated revenue of $9.2 million, of which $6.1 million came from SOL staking, and the remaining $3.1 million came from its consumer brand business. For a consumer goods company that had zero revenue from cryptocurrency business in the previous quarter, the fact that two-thirds of its revenue comes from staking digital assets is undoubtedly a significant leap.

Upexi currently holds 2.07 million SOL, worth over 400 million USD, of which approximately 95% has been staked. In just this quarter, they have earned 31,347 SOL in staking rewards.

The difference between Upexi and other DATs lies in its strategy for acquiring locked SOL.

The company purchased approximately 1.05 million locked SOL at an average price 14% below the market price, with unlock periods ranging from 2026 to 2028.

The locked tokens cannot be sold at the moment, resulting in a lower trading price. As these locked SOL are unlocked, their value will naturally rise to the same level as normal SOL, allowing Upexi to earn staking rewards while also benefiting from the built-in price appreciation of these SOL.

This strategy typically appears in funds rather than in general DATs. However, when you examine Upexi's cash flow, you will find the same issues as with SharpLink.

Despite Upexi achieving a net profit of $66.7 million with $78 million in unrealized gains, its operating cash flow was negative $9.8 million. Since the staking yields from SOL have not been converted into fiat currency, they remain non-cash gains. Therefore, the company adopted the typical funding-first approach of DAT: raising funds.

Upexi raised $200 million through convertible bonds and secured $500 million in equity financing. Its short-term debt increased from $20 million to $50 million.

The same flywheel, but the risks are similar. What would happen if SOL cools down for a year?

SharpLink and Upexi are both creating some clever products. However, this does not mean that they will necessarily achieve sustainable development.

There is no simple answer

There is a pattern here that I cannot ignore: both companies are operating financial systems that make sense when the economic situation is favorable. They have both established treasuries that can scale with network activity; they have both developed revenue structures that can supplement income sources; and through these initiatives, they have become the top public proxies of the two most important Layer-1 blockchains in the world.

However, nearly all of the profits of these two companies come from unrealized gains, the symbolic income earned lacks liquidity, and there is no indication that they will monetize their held assets to achieve systematic profitability. Their operating cash flow is negative, and they rely on the capital markets to pay their bills.

This is not just a criticism, but a reality and trade-off that every company adopting the DAT architecture must face.

In order for this model to continue, one of the following two conditions must occur: either staking must become the cash flow engine for companies to continuously raise funds to purchase digital assets; or companies must incorporate the planned sale of digital assets into their digital asset trust strategy to achieve systematic profit.

This is not impossible. Sharplink earned $10.3 million by staking ETH, while Upexi earned $6.08 million by staking SOL.

These are not small amounts. Even if some of them are reinvested into fiat currency to support operations, the situation may change.

Before that, both Upexi and Sharplink faced the same dilemma: the balance between extraordinary innovation and capital market liquidity.