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Can the DAT flywheel be reinvented?
With so many digital asset treasury (DAT) firms starting up with their eyes on making the most of different cryptocurrencies, it can be easy to believe one could replicate the success of firms like Strategy, formerly known as MicroStrategy.
But according to Bart Smith and Laine Litman, the CEO and COO of Avalanche Treasury Company, the DAT flywheel has limits.
While there’s been a wave of treasury companies trying to imitate Strategy’s flywheel to generate enthusiasm, sell stock at a premium to net asset value, and use the proceeds to buy more tokens, Smith says Strategy’s success is a unique phenomenon.
"I don't know if that is a sustainable business model for a lot of companies. Maybe like one per asset, tops,” he said recently on the Talking Tokens podcast.
That skepticism was what prompted Smith to pitch Litman, who was formerly president at Hidden Road, a digital prime brokerage acquired by Ripple, to build AVAT, the Avalanche Treasury Company.
Litman says she was initially skeptical of Smith’s idea, but within two days, she felt she “had to do this.”
Smith claims AVAT’s approach to the space is directionally different because it’s aiming to achieve something else. Unlike the traditional corporate treasury arms of companies like Apple, Microsoft and Berkshire that park excess capital generated from revenues, AVAT works in reverse by first buying crypto assets, then using the yield and capital to build, buy or invest in businesses operating in the Avalanche ecosystem.
"If you just owned Ethereum since 2018, you've done pretty well. But you didn't get exposure to the lending protocols, DeFi platforms and stablecoins. All of those gains were held by private investors in hard-to-access funds," Smith said.
“We're hoping to provide exposure to the whole ecosystem’s growth, not just the underlying token."
AVAT stakes its AVAX holdings while hunting for businesses that could gain a competitive edge by implementing Avalanche's infrastructure. The firm targets companies with high double-digit revenue growth, positive EBITDA, and cross-border commerce that would benefit from faster and cheaper settlements, the co-founders said.
They also noted that many institutional investors are at different stages of the journey. "If you go talk to someone who's been in crypto since 2014, they are so dour. Then you go over and talk to someone in a suit from a bank or a brokerage, and they've never been more excited."
And the questions institutions ask today have changed in line with their sophistication. Litman noted that many projects that tried early proof-of-concepts are now hitting walls. "With some of those pseudo-blockchains, they've hit a little bit of a dead end. They aren't getting the efficiencies that they can be getting from an actual blockchain." Investors who are more tuned in, she said, are asking longer-horizon questions about verifiability, interoperability, and whether the technology they're choosing today might require a painful migration in five years.
For those on the sidelines, Smith echoes hockey player Wayne Gretzky’s famous piece of advice: Skate to where the puck is going.
"When meaningful things happen, try to draw back to: what was the origin of that? Is it repeatable? Because as far as implementation and actual adaptation go, it's very early,” he said.
Check out the next section for more details and the full episode.
The latest Talking Tokens podcast 🎙️
For today’s episode, I interviewed Bart Smith and Laine Litman, CEO and COO of AVAT, the Avalanche Treasury Company, two traditional finance veterans who both spent years watching institutions talk about crypto before finally deciding to go all in themselves.
Bart and Laine get into what makes AVAT different from the pile of treasury companies trying to copy the MicroStrategy model, and why their bet is on giving investors exposure to the whole Avalanche ecosystem rather than just stacking the token. Institutional conversations almost always start as investment discussions and quickly turn into implementation discussions, but the Clarity Act might be the unlock most people aren't paying close enough attention to.
TIMESTAMPS
02:49 From ETFs to Crypto
05:48 Laine's Path from Voice Trading to Blockchain
09:00 Why AVAT Is Not Another MicroStrategy
13:40 The Private Market Problem
14:57 What Institutional Conversations Look Like Right Now
28:43 The Role of Debt Structure in a Bear Market
35:39 AI, Agentic Payments, and What to Watch in 2026
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Please note this content is for informational and educational purposes only. Any views shared should not be considered financial advice, nor should it be used to make investment decisions. Cryptocurrencies are high risk and you should consult a financial professional before making any financial decisions. Make sure you do your own research. We may have a direct or indirect financial interest in content mentioned in this newsletter.