Original Title: Ex-BlackRock Exec: Why Ethereum Will Reshape Global Finance | Joseph Chalom
Guest: SharpLink Co-CEO and former BlackRock executive Joseph Chalom
Host: CoinFund CEO Chris Perkins
Podcast Date: September 10
Compiled & Edited by: LenaXin
Editor’s Summary
This article is compiled from the Wealthion podcast, featuring SharpLink co-founder and former BlackRock executive Joseph Chalom and CoinFund President Chris Perkins. They discuss how the tokenization of real-world assets, strict risk management, and large-scale intergenerational wealth transfer could push trillions of dollars onto the Ethereum platform.
Could Ethereum become one of the most strategic assets of the next decade? Why do DATs offer a smarter, higher-yielding, and more transparent way to invest in Ethereum?
ChainCatcher has compiled and edited this content.
Key Insights Summary
- My focus has always been on building a bridge between traditional finance and digital assets while upholding my principles and raising industry standards.
- There are unique advantages to indirectly holding ETH by owning publicly traded equity listed on NASDAQ.
- Fundraising must avoid truly diluting shareholder equity; it is better to wait for multiples to recover before financing, purchasing ETH, and staking.
- The biggest risk currently is no longer regulation, but rather our behavior and the types of risks we are willing to take in pursuit of returns.
- A small but focused team can achieve significant results by excelling in a few key areas.
- If we can earn ETH through operating businesses, it will create a powerful growth flywheel.
- I hope that in a year and a half, we can establish one or two companies that support a closed-loop transaction system within the Ethereum ecosystem and generate revenue denominated in ETH, creating a virtuous cycle.
- The current global financial system is highly fragmented: assets like stocks and bonds are traded in specific locations, lacking interoperability, and each transaction typically requires a fiat currency intermediary.
(I) From BlackRock to Blockchain: Joseph's Financial Journey
Chris Perkins: Can you tell us about your background?
Joseph Chalom: Although I have only been with SharpLink as CEO for five weeks, my story goes back much further. Before this, I spent twenty years at BlackRock. In the first ten years, I was deeply involved in the expansion of BlackRock's Aladdin fintech platform.
This experience taught me how to drive business growth and keenly identify pain points in the business ecosystem. The last five years at BlackRock were particularly memorable: I led a vibrant elite team to explore the new field of digital assets.
I was born into an immigrant family and grew up in Washington, D.C. I came to New York 31 years ago, and the city's energy continues to motivate me.
Chris Perkins: It surprised everyone when you returned after retirement.
Joseph Chalom: I didn’t jump directly from BlackRock to SharpLink; I officially retired and received a generous compensation package. I initially planned to relax, but unexpectedly received a phone call. My life seems to intersect with Joe Lubin's.
We talked about legacy, which sounds cliché, but who isn’t striving to leave a mark?
My focus has always been on building a bridge between traditional finance and digital assets while upholding my principles and raising industry standards. When I learned about a digital asset custody project needing a leader, I was initially cautious.
However, the expertise of ConsenSys, Joe's involvement on the board, and the project's potential to help SharpLink stand out ultimately convinced me. Thus, my brief retirement came to an end.
Ideally, everyone should have a few months to reflect. But at that time, the market was undergoing a critical turning point—not a battle between Bitcoin and Ethereum, but rather Ethereum was entering its own era and should not be assigned risk attributes similar to Bitcoin.
To be honest, I oppose the irrational opposition in the market. Various assets hold value in a portfolio. And I chose to return because of my firm belief in the long-term opportunities presented by Ethereum.
(II) Why Ethereum is the Core Bet
Chris Perkins: Can you talk about how you understand DATs and your commitment to Ethereum?
Joseph Chalom: If we believe that the financial services industry will undergo a structural transformation lasting a decade or even decades, and you are seeking long-term investment opportunities rather than short-term trading or speculation, then the key question is where you can exert the most influence.
There are various ways to hold ETH. Many choose to hold it in spot form, or store it through self-custody wallets or custodial institutions, while some institutions prefer ETF products.
Of course, each method has its limitations and risks. Indirectly holding ETH by owning publicly traded equity listed on NASDAQ has its unique advantages.
Additionally, through equity packaging of listed companies, you can capture not only the value growth of ETH itself, which has significantly increased in price over the past few months, but also earn staking rewards. Holding shares in a listed company often comes with the potential for future multiple appreciation. If you believe the company has growth potential, this method's excess returns could far exceed simply holding ETH.
Therefore, the logical sequence is clear: first, you must be convinced that Ethereum holds long-term opportunities; only then should you choose the tools to hold it.
(III) Driving Net Asset Value Growth: What Drives the Model?
Chris Perkins: How do you balance financial operations, timely equity issuance to enhance per-share equity, and genuinely improving fundamentals and potential yields in driving MNAV growth?
Joseph Chalom: I believe there are two complementary elements. First is how to finance in a value-enhancing manner. Most asset management companies currently raise funds primarily by issuing stock.
Issuing equity when the stock price is above the net asset value of the underlying asset means financing using asset value multiples. At this point, the company's value exceeds the actual value of the ETH held. Financing methods include market issuance, registered direct issuance, or starting from a pipeline.
The key is that financing must achieve value enhancement; otherwise, early investors and shareholders will think you are merely diluting their equity to increase your ETH holdings.
If financing is efficient, the cost of acquiring ETH is reasonable, and staking yields are obtained, the value of each ETH will grow over time. As long as financing can enhance the value of each ETH, it is an appreciation for shareholders.
Of course, the net asset value (NAV) or main net asset value (MNAV) multiple can be high or fall below 1, largely influenced by market sentiment, but will eventually revert to the mean in the long run.
Therefore, fundraising must avoid truly diluting shareholder equity; it is better to wait for multiples to recover before financing, purchasing ETH, and staking.
Chris Perkins: So essentially, you need to monitor the average net asset value (MNAV). If MNAV is less than 1, in many cases, it is a buying opportunity.
Joseph Chalom: ETH attracts the following types of investors:
Retail and long-term holders who firmly believe in Ethereum's long-term capital appreciation potential. Even without considering staking rewards, they will actively hold Ethereum through public finance companies like ours, seeking asset appreciation and passive income.
Some investors prefer Ethereum's current high volatility. Especially in the context of Bitcoin becoming increasingly institutionalized and Ethereum's relative volatility increasing.
Investors willing to participate in gamma trading through stock-linked structures to lend funds for returns.
One important reason I joined SharpLink is not only to reach consensus as a strategic partner but also because it can attract top institutional talent to conduct business in a risk-adjusted manner. The biggest risk currently is no longer regulation, but rather our behavior and the types of risks we are willing to take in pursuit of returns.
(IV) Talent and Risk: The Core Secret to Building an Excellent Team
Chris Perkins: How do you find and attract hybrid talent proficient in both DeFi and traditional finance (like Wall Street)? How do you address security risks such as hacking and smart contract vulnerabilities?
Joseph Chalom: Talent is relatively easy to find. I once led the digital asset team at BlackRock, starting with one core member and gradually building a lean team of five strategists and seven engineers. Leveraging BlackRock's brand and reputation, we raised over $100 billion in a year and a half. This shows that a small but focused team can achieve significant results by excelling in a few key areas.
We only recruit the most talented and mission-driven individuals and adhere to one principle: reject arrogance and negative personalities. We seek those who genuinely believe in the long-term vision of transformation. They are not merely optimistic about ETH price increases or pursuing short-term asset management but are convinced that the industry will undergo profound and sustained structural changes and are willing to be part of it.
Excellent talent often comes from recommendations by trusted individuals rather than headhunting firms.
Risk is more complex. Overly pursuing extremely high yields, blindly chasing every basis point out of anxiety, or measuring progress over too short a time frame can easily lead to mistakes.
We see ourselves in a long-term opportunity, so we should steadily accumulate assets. Risk mainly arises from operational methods; for every dollar raised, we purchase one dollar of ETH, ultimately forming a portfolio containing billions of ETH. This portfolio needs systematic management, covering various forms from the most basic, safest custodial staking to liquid staking, re-staking, circular strategies, and even over-the-counter lending. Each method can introduce risks and leverage.
Risk itself can bring returns. But if you do not understand the risks you are taking, you should not enter this field. It is essential to clearly identify smart contract risks, protocol risks, counterparty risks, term risks, and even the convex characteristics in trading, and use this to build effective risk-return boundaries.
Our goal is to establish an ideal portfolio, not to pursue high returns daily, but to continuously win this "game." To truly create value for investors. Those who blindly pursue returns or do not understand their operations may bring resistance to the entire industry.
Chris Perkins: Is risk management the key to achieving long-term success? Is there a plan to drive business success through a streamlined team and low operating cost model?
Joseph Chalom: Reflecting on my experience at BlackRock, one thing is very profound: the more successful the product, the more humility is required. Because success is never the result of a few individuals. Our team is merely the "tip of the spear" in the entire system, supported by a strong brand reputation and distribution channels, as well as a trustworthy large trustee institution.
One of the major attractions of digital asset businesses is their high scalability. Although you need to equip compliance, accounting, and other professional teams to meet the requirements of publicly listed companies, the team actually responsible for financing can be very streamlined. Whether managing $3.5 billion or $35 billion in ETH, the scale itself is not the key. If the portfolio you build is efficient enough to handle assets at the billion-dollar level, it should also be adaptable to larger scales.
The core issue is that when the scale becomes extremely large, on one hand, you need to operate cautiously to avoid disrupting or questioning the security and stability of the protocol; on the other hand, you must ensure that the staked assets can maintain sufficient liquidity in adverse situations.
Chris Perkins: In asset management, how do you understand and implement the primary principle that "jewels do not exist to lose money"?
Joseph Chalom: At BlackRock, they often said that if 65% to 70% of the assets you manage are pensions and retirement funds, there is no room for error.
Because once a mistake is made, many people will not be able to retire with dignity. This is not only a responsibility but also a heavy mission.
(V) How SharpLink Gains Competitive Advantage
Chris Perkins: How do you plan to position yourself in the long term to address the multifaceted competition, including ETH and other tokens?
Joseph Chalom: We can learn from Michael Saylor's strategy, but the way ETH is managed is entirely different because it has higher yield potential.
I view competitors as worthy supporters. We have great respect for teams like BM&R. Many participants from traditional institutions recognize this as a long-term opportunity. There are mainly two ways to participate: directly holding ETH or generating returns through ecological applications. We welcome this competition; the more participants there are, the more prosperous the industry becomes. Ultimately, this field may be dominated by a few institutions that actively accumulate ETH.
We mainly achieve differentiation through the following three points: First, becoming the most trusted team among institutions. Although we are streamlined, we gather top experts to manage assets in a professional and rigorous manner.
Second, the partnership with ConsenSys. Their expertise provides us with a unique strategic advantage.
Third, operating businesses. In addition to accumulating and appreciating assets, we also operate a company focused on affiliate marketing in the gaming industry to ensure compliance with SEC and NASDAQ regulations.
In the future, if we can earn ETH through operating businesses, it will create a powerful growth flywheel. Staking yields, debt compounding, along with ETH-denominated income, will accelerate the expansion of capital reserves. This direction may not apply to all ETH asset management institutions.
(VI) Strategic Layout: Mergers and Acquisitions and Global Expansion Plans
Chris Perkins: What is your overall view and direction regarding future merger and acquisition strategies?
Joseph Chalom: If the scale of ETH debt grows significantly, and some of that debt lacks liquidity, it could present opportunities. Currently, publicly listed companies in this field mainly finance through daily market plans. If the stock has good liquidity, this channel can be effectively utilized for financing. Some companies may struggle to raise funds and could trade below net asset value or seek mergers, which is also an innovative way to acquire more ETH.
As the industry matures, yields may gradually increase from 0.5%-1% of ETH supply to 1.5%-2.5%. Issuing structurally similar sister bonds in different regions may be wise, for example, targeting Asian or European markets with the same issuance conditions and sharing core operational costs and infrastructure to cover a broader range of investors.
We expect to engage in such creative mergers and acquisitions in the future, although the specific timing is uncertain.
I believe that the industry will first experience an initial differentiation phase before entering a consolidation period; technological development and business evolution often follow this pattern. The stablecoin sector is likely to see similar consolidation and merger trends, which will be very noteworthy.
Chris Perkins: Why is transparency so important? What is the main motivation for publicly disclosing operational details daily?
Joseph Chalom: Most companies do not frequently issue stock, usually only once every few years. According to SEC regulations, companies only need to disclose the number of outstanding shares in quarterly reports.
In our industry, financing may occur daily, weekly, or at other frequencies. Therefore, to fully reflect operational status, it is necessary to disclose a series of key metrics. For example: the amount of ETH held, total funds raised, weekly ETH accumulation, whether we actually hold ETH or only have derivative exposure, staking ratios, and yields.
We release press releases and AK documents every Tuesday morning to update investors on this data. Although some metrics may not be favorable in the short term, transparent operations will enhance investor trust and stickiness in the long run.
Investors have the right to clearly understand the products they are purchasing; concealing information is not sustainable.
(VII) SharpLink's Growth Blueprint for the Next 12 to 18 Months
Chris Perkins: What are your plans or vision for the company's development in the next year to year and a half?
Joseph Chalom: The top priority is to build a world-class team, but this cannot be achieved overnight. We are continuously recruiting key talent to form a lean team of fewer than 20 people, with each member excelling in their field and collaborating harmoniously to drive growth.
Second, continue to finance in a way that does not dilute shareholder equity, flexibly adjusting fundraising efforts according to market rhythms, with the long-term goal of continuously increasing the concentration of each share of ETH.
Third, actively accumulate ETH. If you believe in Ethereum's potential, you should seize the opportunity to accumulate efficiently at the lowest cost—even those funds that allocate only 5% to ETH should do so.
Fourth, deeply integrate into the ecosystem. As an Ethereum enterprise or custodian, failing to leverage the ETH held to create ecological value is a dereliction of duty. We can leverage billions of ETH to support protocol development through lending, providing liquidity, and advancing in ways that benefit the ecosystem.
Finally, I hope that in a year and a half, we can establish one or two companies that support a closed-loop transaction system within the Ethereum ecosystem and generate revenue denominated in ETH, creating a virtuous cycle.
(VIII) Core Investment Insights: Key Focus Areas for the Future
Chris Perkins: What additional advice or information would you like to provide to potential investors considering including SBET in their investment plans?
Joseph Chalom: The current traditional financial system has significant frictions, with low capital flow efficiency and transaction settlement delays; even at best, it requires T+1, which brings substantial settlement risks, counterparty risks, and collateral management risks. The transformation will begin with stablecoins. Currently, the stablecoin market has reached $275 billion and primarily operates on Ethereum. But the real potential lies in tokenized assets.
As Minister Bezant said, the stablecoin market is expected to grow from its current level to $2-3 trillion in the coming years. The scale of tokenized funds, stocks, bonds, real estate, and private equity could reach trillions of dollars and will operate on decentralized platforms like Ethereum.
Some are attracted by its yield potential, while more see its future. ETH is not just a commodity; it can generate returns. As trillions of dollars in stablecoins flow into the Ethereum ecosystem, ETH undoubtedly becomes a strategic asset. We must build a strategic reserve of ETH because you need to hold a certain supply to ensure the liquidity of dollars and assets within the system. I can’t think of a more strategically significant asset than this.
More importantly, the first on-chain securities issued by Superstate and Galaxy mark one of the largest unlockings for blockchain. Real-world assets are no longer locked in custodial boxes but are directly integrated into the ecosystem through tokenization. This is a turning point that has not yet been widely recognized but will profoundly change the financial landscape.
Chris Perkins: The pace of development is far exceeding expectations. The regulation of assets has just begun; as more such assets continue to flow in, a whole new ecosystem is forming, which will greatly accelerate the development and integration of assets on Ethereum and other blockchains.
Joseph Chalom: When discussing why tokenization is necessary, people often mention characteristics like programmability, borderlessness, instant or atomic settlement, neutrality, and trustworthiness. But the deeper reason is that the current global financial system is highly fragmented: assets like stocks and bonds are traded in specific locations, lacking interoperability, and each transaction typically requires a fiat currency intermediary.
In the future, with the realization of instant settlement and composability, smart contracts will support automated trading and asset rebalancing, almost returning to a flexible exchange method akin to "barter." For example, why can't the S&P 500 index be traded in the form of a Mag 7 combination? Whether through swaps, lending, or other forms, financial instruments will become highly composable, breaking the traditional notion of "trading in specific locations."
This will not only unleash tremendous economic potential by reconstructing the underlying logic of value exchange but will also reshape the entire financial ecosystem. As for SBET, we plan to launch a compliant tokenized version in the near future, prioritizing Ethereum over Solana as the underlying infrastructure.
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