Alts DAT Investment Pitfall Guide

Author: Timothée, DAT research analyst; Translation: Golden Finance xiaozou

“I will offer terms that the other party cannot refuse.” - Alt DAT enters at a discounted mNAV and offers immediate unlocking terms to PIPE investors.

This article is a DAT investment guide (pitfall manual) prepared for everyone.

The DAT market from now until the fourth quarter will be dominated by Alt DAT using the PIPE issuance mechanism, as it has the fastest listing speed and can create an immediate scale effect on the underlying tokens. The BTC/ETH track is now crowded, SOL行情 is about to fully unfold, and the altcoin sector is ready to take off.

Abstract:

Key DAT Elements - Refer to the exquisite investment banking benchmarking table.

Additional question - Self-question: Who is the ultimate owner?

DAT panic concerns – some are reasonable while most are baseless, please read the filing documents yourself!

Fourth Quarter Outlook – The issuance feast has come to an end, and the true winners are about to emerge.

Why are Alt DATs laying out in the DAT field? Simply put, it is driven by multiple factors.

New listing path: not Binance, but Nasdaq!

Buyback and burn mechanism, but can achieve monetization!

Here is a share of the Alt DAT data I have organized.

Some Alt SPACs (such as TLGY targeting ENA tokens and ETHM targeting ETH) aim to go live by the end of the year. While I personally have more confidence in TLGY, its funds cannot be utilized until the deSPAC is completed at the end of the year, making it unreasonable to promote media coverage before then.

Listed companies have added Bitcoin strategies (not purely speculative). The premium trading window for these entities (such as SMLR) is from the third quarter of 2024 to the third quarter of 2025; I believe that in the long term, these targets will trade at a discount to net asset value, as investors currently have more/better options for expressing risk exposure.

The DAT project initially adopted ELOC (Emergency Line of Credit) instead of PIPE (cash cannot be immediately available).

Key Matters to Focus On

RDO stands for Immediate Unlocking. Unregistered shares mean that they will need to be unlocked after registration takes effect (expected 30-45 days), but according to new Nasdaq regulations, if the PIPE portion is completed in physical form, it may now require a shareholder vote (specific guidance to be released).

Pre-funding warrants are typically used to avoid exceeding a specific shareholding threshold in order to circumvent reporting obligations.

Although warrants are often used as a credit enhancement tool, this helps DAT lock in the ability to finance in the future at a specific price - for example, when mNAV turns into a discount.

You can assume that 99% of PIPE investors will sell when unlocked.

Some operators obtain WKSI (Well-Known Seasoned Issuer) status through large-scale financing and high liquidity, thereby immediately launching the ATM (At-the-Market) mechanism and monetizing premiums (we have seen this model in the cases of BMNR and SBET, and OCTO is likely to follow suit).

Structure is crucial: Pay attention to the net asset value (NAV) per share and whether it faces future dilution risks such as warrants.

Pay attention to the specific amount of investment banking fees for DAT payments. DAT, with a current scale of less than 100 million USD, often struggles to launch smoothly due to excessively high fees. The effectiveness of investment banks varies from person to person - some excel in brand building and are skilled in structural design, while others specialize in shell resource acquisition.

Data Dimensions to be Supplemented / Key Due Diligence Questions

Key Spokesperson (Attention Return Rate): Who has the ability to drive market perception? While having distribution channels is important, being able to tell the right story is equally crucial. Not everyone can be Tom Lee (founder of Fundstrat Capital), but grassroots growth does not require such heavyweight figures. For example, the DAT project SHOT of BONK has a core contributor named Nom.

Treasury Management: What is the amount of this expenditure and does it affect cash flow?

Liquidity: The percentage of circulating volume and trading volume relative to the fundraising scale.

Buying Pressure: The proportion of net new fundraising amount to the circulating market value of the token—what constitutes excess? What is the minimum requirement for a substantial impact? 10%? 20%?

Target Company's Business: Before DAT completely divests its traditional business, does the target have any liabilities or long-tail risks?

Foundation Participation: Does this DAT receive support from the foundation, or is it just one among many similar projects?

Repurchase Mechanism: Will this DAT use part of the raised funds for defensive repurchases? Is there a separate warrant or convertible bond fund pool set up for this purpose?

Future Strategy: If DAT adopts a one-time cash harvesting strategy against PIPE, it is necessary to be alert to proactive communication from the target company or the successor team (or foundation). This is not a game in the crypto space; it will lead to real-world consequences.

Public Relations/Investor Relations for Retail Investors: If DAT places data metrics before narrative logic, then its strategy is flawed. Please refer to its tweets; who do you think the author and the target audience are? Alt DAT must first compete at the level of awareness, and the primary target is retail attention.

Core Questions and Counterarguments

mNAV is compressing – Indeed, it is reasonable that a lack of competitiveness cannot make it a leading project. The situation ETH faces stems from excessive dilution of the ATM mechanism + overall market dynamics. But one must ask: do you believe that a certain DAT can achieve an increase in per-share value (compared to holding spot) within a few months? If so, the discounted mNAV is your opportunity. DAT projects inherently have differences – there should be one top winner in the BTC/ETH/SOL track, while the Alt track depends on the storytelling ability of each project.

This is a Ponzi scheme – We have yet to see a crazy influx of leverage into these DAT projects (as most of them are funded through equity financing). Even if it happens, it is unlikely to trigger a frenzy of chain reactions; rather, it is more likely to result in a slow stagnation similar to indigestion – inefficient DATs may need to sell tokens to buy back shares, thereby putting downward pressure on token prices.

They are selling to retail investors—you need to believe that Nasdaq has stricter listing standards. Projects that forcibly inject locked-period tokens will perform poorly. The market has seen this phenomenon (thanks to everyone's contributions!), and I am confident that the price at the time of listing will be determined by the market arbitration mechanism.

My views on the fourth quarter

The BTC/ETH/SOL track is basically saturated; unless there are regional gameplay innovations, one should not expect too many excessively competitive new projects to emerge.

We will see several TOP 50 DAT projects supported by various foundations, with the total fundraising amount (including in-kind contributions) expected to remain in the range of $250 million.

The potential restrictions on physical contributions due to mNAV compression and stacking mean that traditional VCs may no longer participate in such transactions, leading to a depletion of funds. This will inadvertently cause the prices of shell companies to decline synchronously.

Structural design determines success or failure - we will soon witness which aspects of the DAT project, launching in July and August, have long-term success potential (reflected in Q4 performance): Will it gain substantial media attention? Will it be able to sustain operations under the capital structure after unlocking?

I am not very optimistic about the SPAC model—unless there is an all-star team and a highly differentiated story to tell. One can refer to the competitive landscape led by BMNR in the ETH DAT space, and the BTC carrier projects will be similar: if challenging the king (MSTR), it must be a decisive hit.

I still believe that DAT will be beneficial for the overall crypto space, provided that it can raise net new capital from the equity market and use it to create a flywheel effect for its own ecosystem.