Assuming the initial collapse of DATs is inevitable, how should investors respond? What strategies should be adopted? What algorithms and standards are in place? Are there any successful cases in the market? What are their core competitive advantages? Reading Guide: 1. For those who haven’t read the previous article, I suggest you read: “ What to do after the cut? Decoding the anti-fragility mechanism and breakthrough code of DAT companies ” 2. If you just want to see the case analysis, you can read on. Part 4: The truth about “moat” and the future of the DAT model After understanding the operating mechanisms and risks of "crypto-equity," a core question emerges: What is the long-term competitiveness and "moat" of DAT companies? Where will they go in the future? 4.1. The truth behind moats: a “capital flywheel” reliant on market sentiment DATs' true moat doesn't stem from their business itself, but rather from a highly contextual and fragile financing advantage . Their core competitiveness lies in the powerful cycle of liquidity and financing costs: "Funding capacity → Purchase more tokens → Increase investor return expectations → Attract more liquidity → Reduce financing costs → Further enhance financing capacity ." This mechanism, known as the "capital flywheel," is essential to understanding their business model. Positive cycle (in a bull market): This flywheel can generate strong positive driving force in a bull market. High premiums are fuel: The company's stock price is traded at a price higher than the net value (NAV) of the digital assets it holds, forming an "equity premium" (mNAV Premium). This premium is the key fuel to start the entire flywheel. Financing capabilities are activated: With high premiums, companies can conduct "accretive" financing by issuing new shares or low-interest convertible bonds. That is, they can use highly valued shares to exchange funds for more digital assets, thereby expanding their balance sheet without diluting or even increasing the value of each share. Liquidity and low cost: When market sentiment is high and stock liquidity is excellent, companies can easily sell a large number of new shares on the open market without causing too much impact on the price, which greatly reduces the friction cost of financing. "Buy, buy, buy" strengthens the narrative: the company will use the funds raised to continuously buy more digital assets, which not only increases the company's net asset value, but also strengthens its market narrative as a "growth engine", attracting more investors, further pushing up stock prices and premiums, and forming a powerful positive feedback loop. Reverse destruction (in a bear market): However, this powerful engine has a fatal weakness: it is completely dependent on continued bull market sentiment and high stock premiums. Once the market turns, the flywheel will quickly reverse and turn into a "death spiral": Premium disappears and fuel is exhausted: When the underlying coin price falls, the share price of the "coin stock" will fall even more sharply, causing its mNAV premium to shrink rapidly or even turn into a discount. Financing is frozen: Once the premium disappears, any financing through additional stock issuance becomes dilutive. At this point, the company can no longer raise value-added financing, and its core growth story collapses. Financing—its only moat—is instantly dried up. Negative feedback loop: The depletion of financing channels and the collapse of the growth narrative will trigger panic selling among investors, further suppressing stock prices, forming a vicious cycle, and may eventually lead to a collapse of stock prices. Therefore, DATs’ moat is extremely narrow and unstable, as it is completely dependent on the fickle capital market sentiment. Once market sentiment reverses and the premium disappears, this moat will dry up in an instant, and the company will lose its only competitive advantage. 4.2. Comparative case studies: Strategy in practice and variation Despite the similarity of the basic model, different DATs exhibit significant differences in the specific strategic execution, which reflects their different understandings of their own positioning, market environment and regulatory constraints. Strategy Inc. (MSTR) - Radical Pioneer As the pioneer of this model, MicroStrategy's strategy is the most radical. Not only does it make extensive use of various debt instruments (such as convertible bonds) to maximize leverage, but its founder, Michael Saylor, has also built a "soft moat" for the company through his powerful personal brand and persistent evangelism. He has successfully tied MicroStrategy to Bitcoin, making it the most recognizable Bitcoin proxy stock among global investors. This brand recognition has, to a certain extent, solidified its mNAV premium. Metaplanet Inc. (3350.T) - A nimble international adapter Metaplanet’s case study demonstrates how the DAT model can be innovated and adapted to specific country or regional market conditions. Its strategy cleverly leverages Japan’s unique macro and regulatory environment: Yen Carry Trade: Against the backdrop of the Bank of Japan maintaining ultra-low interest rates for a long time, Metaplanet borrows yen at near-zero cost and converts it into BTC, which is expected to appreciate in the long term, thereby engaging in macro arbitrage. "Moving Strike Warrants": Because Japanese regulations prohibit the ATM (Automated Transaction Management) issuance mechanism common in the US stock market, Metaplanet innovatively utilizes warrants with a strike price tied to the previous day's closing price. This design ensures that the warrants are exercised only if the stock price rises, achieving a dilutive financing effect similar to an ATM, even at a high stock price. Tax Advantages: Japan imposes a high, progressive tax on gains from direct cryptocurrency holdings, while capital gains tax rates on investments in stocks are much lower (approximately 20%). This tax differential makes it more tax-advantaged for Japanese investors to indirectly hold BTC through the purchase of Metaplanet shares than to directly purchase BTC, creating localized demand for its shares. Semler Scientific (SMLR) - Cautious Business Integrator Semler Scientific represents a more conservative strategy—a "slow money" model. The company plans to leverage the stable cash flow generated by its core healthcare business to gradually and prudently acquire Bitcoin, aiming to accumulate assets that are more "accretive" to shareholders. This model is theoretically more sustainable because it doesn't rely entirely on external financing. However, the challenge is that the company's core business is facing growth bottlenecks and regulatory pressure, complicating its narrative of generating sufficient cash flow to support large-scale Bitcoin purchases. Tron Inc. (TRON) - Reverse Merger vs. Hybrid Model The case of Tron Inc. illustrates an unconventional path to going public and business structure. Formerly SRM Entertainment, the company entered the public markets through a reverse merger with TRON DAO and changed its name to Tron Inc. This strategy enabled it to quickly become a Nasdaq-listed company and focus on building a treasury reserve of TRX tokens. Its uniqueness lies in its hybrid business model: it retains its original business of designing and manufacturing custom merchandise for major entertainment venues such as Disney and Universal Studios, while also pioneering a blockchain treasury strategy. In addition, the company actively uses its TRX reserves for staking, generating annualized returns of up to 10% through platforms such as JustLend, which provides non-dilutive cash flow to its operations. (From a bird's eye view, the $TRX token does not leave the Tron network.) BitMine Immersion Technologies (BMNR) - Aggressive Ethereum Whale BitMine (BTMR) represents a radical expansion of the DAT model into assets beyond BTC. The company has transitioned from BTC mining to focus on becoming the world's largest enterprise holder of Ethereum (ETH), with an ambitious goal of holding 5% of all ETH in circulation. Its strategy is characterized by an astonishingly rapid fundraising, amassing a multi-billion dollar ETH reserve in a short period of time through large-scale private placements (PIPEs) and equity financing. This aggressive accumulation strategy has attracted high-profile investors including Peter Thiel's Founders Fund and Stanley Druckenmiller, and is chaired by Fundstrat's Tom Lee. However, BMMR's stock price performance has been extremely volatile, experiencing surges of thousands of percentage points followed by sharp corrections, highlighting its high-risk, high-reward nature. Because its core mining business generates minimal revenue and is loss-making, its valuation is almost entirely driven by market expectations of ETH prices and confidence in its ability to raise capital. Comparative Analysis of Major DATs Strategies 4.3. The next evolution: “productive finance” Faced with the inherent fragility of passive holding strategies, the DAT model is undergoing an important evolution, namely, from "passive treasury" to "productive treasury". Traditional Bitcoin treasury strategies are essentially passive "digital gold" strategies, where the asset itself does not generate any cash flow. The "productive treasury" model, on the other hand, focuses on holding digital assets that can generate income through network-native mechanisms, primarily public blockchain tokens that use the POS consensus mechanism, such as ETH and SOL. By staking their ETH or SOL holdings, companies can earn token-denominated rewards directly from the protocol. This staking income is an endogenous, crypto-native "interest" that is independent of traditional credit markets and provides companies with a stable, non-dilutive source of cash flow. The emergence of this model signals the potential for DATs to transition from pure financial engineering vehicles to operating companies with genuine crypto-native businesses. For example, companies like DeFi Development Corp. (DFDV) are focusing on accumulating SOL and generating staking income by operating validator nodes. (TRON Inc. is also at the forefront of this era.) This evolution toward "productive finance" is a strategic response to the reality that the moat of the passive holding model is too fragile. By generating endogenous cash flow that is decoupled from capital market sentiment, these companies are attempting to build a wider and deeper economic moat, thereby reducing their extreme dependence on financing capabilities during bull markets and providing a more solid foundation for their long-term survival and development. Part 5: Summary - Seeing the Essence Through the Fog Investors looking to invest in such companies must move beyond viewing them as simple "crypto-asset stocks" and instead evaluate them as highly speculative, actively managed leveraged funds. Their ultimate performance depends on the complex interaction of four core variables: Price performance of the underlying crypto asset: This is the basis for determining the company's net asset value (NAV). Management's financial engineering capabilities: how quickly, cheaply, and with minimal dilution the company can raise capital and convert it into assets. Stock market sentiment: This is the key to determining the company's mNAV premium level, which directly affects its financing ability and the strength of the "flywheel effect". Net crypto asset holdings per share : This determines the level of crypto assets allocated to each share. Taking Strategy InBTC as an example, when evaluating crypto-equities, it’s important to monitor the following key indicators, rather than just focusing on the company’s announced total BTC holdings: Cryptocurrency content per share (fully diluted): This is the most important metric for measuring shareholders' true exposure. Investors should closely track its historical trends to determine whether a company's financing activities are accretive or devaluable over the long term. Analysis of Dilution and BTC Per Share for Strategy Inc. (MSTR) Trends in the mNAV premium: Is it expanding or contracting? A continued contraction in the premium is a clear sign of weakening market confidence and increasing risk. Comparing it with peers and related ETFs can help assess whether its valuation is reasonable. Financing/Secondary Offering Terms: Carefully examine the specific terms of each bond issuance or secondary offering, including the conversion price and interest rate of convertible bonds, as well as the size and price of any ATM program. These details reveal the company's future dilution risk and financial pressures. Know that it is so, and know why it is so. The "capital flywheel" that drives DATs' stock prices soaring during bull markets is also the fundamental reason for their accelerated decline during bear markets. Their core business model—leveraging high stock price premiums to finance the purchase of more assets—is inherently a double-edged sword. This extreme reliance on capital market sentiment means their fate is closely tied to cyclical market fluctuations. May we always maintain a sense of awe for the market.Assuming the initial collapse of DATs is inevitable, how should investors respond? What strategies should be adopted? What algorithms and standards are in place? Are there any successful cases in the market? What are their core competitive advantages? Reading Guide: 1. For those who haven’t read the previous article, I suggest you read: “ What to do after the cut? Decoding the anti-fragility mechanism and breakthrough code of DAT companies ” 2. If you just want to see the case analysis, you can read on. Part 4: The truth about “moat” and the future of the DAT model After understanding the operating mechanisms and risks of "crypto-equity," a core question emerges: What is the long-term competitiveness and "moat" of DAT companies? Where will they go in the future? 4.1. The truth behind moats: a “capital flywheel” reliant on market sentiment DATs' true moat doesn't stem from their business itself, but rather from a highly contextual and fragile financing advantage . Their core competitiveness lies in the powerful cycle of liquidity and financing costs: "Funding capacity → Purchase more tokens → Increase investor return expectations → Attract more liquidity → Reduce financing costs → Further enhance financing capacity ." This mechanism, known as the "capital flywheel," is essential to understanding their business model. Positive cycle (in a bull market): This flywheel can generate strong positive driving force in a bull market. High premiums are fuel: The company's stock price is traded at a price higher than the net value (NAV) of the digital assets it holds, forming an "equity premium" (mNAV Premium). This premium is the key fuel to start the entire flywheel. Financing capabilities are activated: With high premiums, companies can conduct "accretive" financing by issuing new shares or low-interest convertible bonds. That is, they can use highly valued shares to exchange funds for more digital assets, thereby expanding their balance sheet without diluting or even increasing the value of each share. Liquidity and low cost: When market sentiment is high and stock liquidity is excellent, companies can easily sell a large number of new shares on the open market without causing too much impact on the price, which greatly reduces the friction cost of financing. "Buy, buy, buy" strengthens the narrative: the company will use the funds raised to continuously buy more digital assets, which not only increases the company's net asset value, but also strengthens its market narrative as a "growth engine", attracting more investors, further pushing up stock prices and premiums, and forming a powerful positive feedback loop. Reverse destruction (in a bear market): However, this powerful engine has a fatal weakness: it is completely dependent on continued bull market sentiment and high stock premiums. Once the market turns, the flywheel will quickly reverse and turn into a "death spiral": Premium disappears and fuel is exhausted: When the underlying coin price falls, the share price of the "coin stock" will fall even more sharply, causing its mNAV premium to shrink rapidly or even turn into a discount. Financing is frozen: Once the premium disappears, any financing through additional stock issuance becomes dilutive. At this point, the company can no longer raise value-added financing, and its core growth story collapses. Financing—its only moat—is instantly dried up. Negative feedback loop: The depletion of financing channels and the collapse of the growth narrative will trigger panic selling among investors, further suppressing stock prices, forming a vicious cycle, and may eventually lead to a collapse of stock prices. Therefore, DATs’ moat is extremely narrow and unstable, as it is completely dependent on the fickle capital market sentiment. Once market sentiment reverses and the premium disappears, this moat will dry up in an instant, and the company will lose its only competitive advantage. 4.2. Comparative case studies: Strategy in practice and variation Despite the similarity of the basic model, different DATs exhibit significant differences in the specific strategic execution, which reflects their different understandings of their own positioning, market environment and regulatory constraints. Strategy Inc. (MSTR) - Radical Pioneer As the pioneer of this model, MicroStrategy's strategy is the most radical. Not only does it make extensive use of various debt instruments (such as convertible bonds) to maximize leverage, but its founder, Michael Saylor, has also built a "soft moat" for the company through his powerful personal brand and persistent evangelism. He has successfully tied MicroStrategy to Bitcoin, making it the most recognizable Bitcoin proxy stock among global investors. This brand recognition has, to a certain extent, solidified its mNAV premium. Metaplanet Inc. (3350.T) - A nimble international adapter Metaplanet’s case study demonstrates how the DAT model can be innovated and adapted to specific country or regional market conditions. Its strategy cleverly leverages Japan’s unique macro and regulatory environment: Yen Carry Trade: Against the backdrop of the Bank of Japan maintaining ultra-low interest rates for a long time, Metaplanet borrows yen at near-zero cost and converts it into BTC, which is expected to appreciate in the long term, thereby engaging in macro arbitrage. "Moving Strike Warrants": Because Japanese regulations prohibit the ATM (Automated Transaction Management) issuance mechanism common in the US stock market, Metaplanet innovatively utilizes warrants with a strike price tied to the previous day's closing price. This design ensures that the warrants are exercised only if the stock price rises, achieving a dilutive financing effect similar to an ATM, even at a high stock price. Tax Advantages: Japan imposes a high, progressive tax on gains from direct cryptocurrency holdings, while capital gains tax rates on investments in stocks are much lower (approximately 20%). This tax differential makes it more tax-advantaged for Japanese investors to indirectly hold BTC through the purchase of Metaplanet shares than to directly purchase BTC, creating localized demand for its shares. Semler Scientific (SMLR) - Cautious Business Integrator Semler Scientific represents a more conservative strategy—a "slow money" model. The company plans to leverage the stable cash flow generated by its core healthcare business to gradually and prudently acquire Bitcoin, aiming to accumulate assets that are more "accretive" to shareholders. This model is theoretically more sustainable because it doesn't rely entirely on external financing. However, the challenge is that the company's core business is facing growth bottlenecks and regulatory pressure, complicating its narrative of generating sufficient cash flow to support large-scale Bitcoin purchases. Tron Inc. (TRON) - Reverse Merger vs. Hybrid Model The case of Tron Inc. illustrates an unconventional path to going public and business structure. Formerly SRM Entertainment, the company entered the public markets through a reverse merger with TRON DAO and changed its name to Tron Inc. This strategy enabled it to quickly become a Nasdaq-listed company and focus on building a treasury reserve of TRX tokens. Its uniqueness lies in its hybrid business model: it retains its original business of designing and manufacturing custom merchandise for major entertainment venues such as Disney and Universal Studios, while also pioneering a blockchain treasury strategy. In addition, the company actively uses its TRX reserves for staking, generating annualized returns of up to 10% through platforms such as JustLend, which provides non-dilutive cash flow to its operations. (From a bird's eye view, the $TRX token does not leave the Tron network.) BitMine Immersion Technologies (BMNR) - Aggressive Ethereum Whale BitMine (BTMR) represents a radical expansion of the DAT model into assets beyond BTC. The company has transitioned from BTC mining to focus on becoming the world's largest enterprise holder of Ethereum (ETH), with an ambitious goal of holding 5% of all ETH in circulation. Its strategy is characterized by an astonishingly rapid fundraising, amassing a multi-billion dollar ETH reserve in a short period of time through large-scale private placements (PIPEs) and equity financing. This aggressive accumulation strategy has attracted high-profile investors including Peter Thiel's Founders Fund and Stanley Druckenmiller, and is chaired by Fundstrat's Tom Lee. However, BMMR's stock price performance has been extremely volatile, experiencing surges of thousands of percentage points followed by sharp corrections, highlighting its high-risk, high-reward nature. Because its core mining business generates minimal revenue and is loss-making, its valuation is almost entirely driven by market expectations of ETH prices and confidence in its ability to raise capital. Comparative Analysis of Major DATs Strategies 4.3. The next evolution: “productive finance” Faced with the inherent fragility of passive holding strategies, the DAT model is undergoing an important evolution, namely, from "passive treasury" to "productive treasury". Traditional Bitcoin treasury strategies are essentially passive "digital gold" strategies, where the asset itself does not generate any cash flow. The "productive treasury" model, on the other hand, focuses on holding digital assets that can generate income through network-native mechanisms, primarily public blockchain tokens that use the POS consensus mechanism, such as ETH and SOL. By staking their ETH or SOL holdings, companies can earn token-denominated rewards directly from the protocol. This staking income is an endogenous, crypto-native "interest" that is independent of traditional credit markets and provides companies with a stable, non-dilutive source of cash flow. The emergence of this model signals the potential for DATs to transition from pure financial engineering vehicles to operating companies with genuine crypto-native businesses. For example, companies like DeFi Development Corp. (DFDV) are focusing on accumulating SOL and generating staking income by operating validator nodes. (TRON Inc. is also at the forefront of this era.) This evolution toward "productive finance" is a strategic response to the reality that the moat of the passive holding model is too fragile. By generating endogenous cash flow that is decoupled from capital market sentiment, these companies are attempting to build a wider and deeper economic moat, thereby reducing their extreme dependence on financing capabilities during bull markets and providing a more solid foundation for their long-term survival and development. Part 5: Summary - Seeing the Essence Through the Fog Investors looking to invest in such companies must move beyond viewing them as simple "crypto-asset stocks" and instead evaluate them as highly speculative, actively managed leveraged funds. Their ultimate performance depends on the complex interaction of four core variables: Price performance of the underlying crypto asset: This is the basis for determining the company's net asset value (NAV). Management's financial engineering capabilities: how quickly, cheaply, and with minimal dilution the company can raise capital and convert it into assets. Stock market sentiment: This is the key to determining the company's mNAV premium level, which directly affects its financing ability and the strength of the "flywheel effect". Net crypto asset holdings per share : This determines the level of crypto assets allocated to each share. Taking Strategy InBTC as an example, when evaluating crypto-equities, it’s important to monitor the following key indicators, rather than just focusing on the company’s announced total BTC holdings: Cryptocurrency content per share (fully diluted): This is the most important metric for measuring shareholders' true exposure. Investors should closely track its historical trends to determine whether a company's financing activities are accretive or devaluable over the long term. Analysis of Dilution and BTC Per Share for Strategy Inc. (MSTR) Trends in the mNAV premium: Is it expanding or contracting? A continued contraction in the premium is a clear sign of weakening market confidence and increasing risk. Comparing it with peers and related ETFs can help assess whether its valuation is reasonable. Financing/Secondary Offering Terms: Carefully examine the specific terms of each bond issuance or secondary offering, including the conversion price and interest rate of convertible bonds, as well as the size and price of any ATM program. These details reveal the company's future dilution risk and financial pressures. Know that it is so, and know why it is so. The "capital flywheel" that drives DATs' stock prices soaring during bull markets is also the fundamental reason for their accelerated decline during bear markets. Their core business model—leveraging high stock price premiums to finance the purchase of more assets—is inherently a double-edged sword. This extreme reliance on capital market sentiment means their fate is closely tied to cyclical market fluctuations. May we always maintain a sense of awe for the market.

 Comparative Analysis of Major DATs Strategies

Analysis of Dilution and BTC Per Share for Strategy Inc. (MSTR)