The ambitious initiative to create a $1 billion Ethereum Digital Asset Trust (DAT) has been officially abandoned, a decision influenced by recent market instability. This project, championed by Li Lin, the founder of Huobi, aimed to serve as a significant institutional mechanism for accumulating Ethereum (ETH), but the capital raised has now been returned to investors.
Initially, the DAT garnered support from prominent Asian investors, including influential figures like Shen Bo of Fenbushi Capital and Xiao Feng of HashKey Group. The consortium had successfully raised approximately $1 billion, comprising $200 million from Lin”s Avenir Capital and $500 million from various Asian institutions. However, the downturn in the cryptocurrency market, particularly following the sharp drop observed on October 11, led to the postponement of this project.
Reports from multiple trusted sources, including Wu Blockchain, highlight that the primary catalyst for shelving the Ethereum DAT was the recent volatility that has plagued the market. This situation reflects a broader concern regarding the sensitivity of large institutional ventures to market fluctuations, a reality that has also impacted other entities like SharpLink, which is grappling with significant unrealized losses due to the current conditions.
The Ethereum DAT was envisioned as a corporate treasury vehicle focused on the strategic accumulation and retention of substantial ETH holdings, mirroring the approach utilized by companies that have adopted Bitcoin as a primary reserve asset. Its cancellation underscores the challenges faced by institutional investors in a turbulent market, as evidenced by the slowdown in ETH accumulation activities among various digital asset trusts throughout November.
As the cryptocurrency landscape continues to evolve, the implications of this decision will likely resonate, particularly among institutional players looking to navigate the complexities of market dynamics. The halting of such a significant project serves as a reminder of the inherent risks associated with large-scale investments in the crypto space.
