Former BlackRock executive Joseph Chalom: How will Ethereum reshape the global financial system?

Original Title: Ex-BlackRock Exec: Why Ethereum Will Reshape Global Finance | Joseph Chalom

Guest: Joseph Chalom, Co-CEO of SharpLink and former BlackRock executive

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, who discussed how the tokenization of real-world assets, strict risk management, and large-scale intergenerational wealth transfer can push trillions of dollars onto the Ethereum blockchain.

Could Ethereum become one of the most strategic assets in the next decade? Why do DATs provide a smarter, higher-yield, and more transparent way to invest in Ethereum?

ChainCatcher has organized and compiled.

Summary of Highlights

• My focus has always been on building a bridge between traditional finance and digital assets, upholding my principles while enhancing industry standards.
• Holding ETH indirectly through publicly traded equity listed on NASDAQ has its unique advantages.
• Financing must be avoided when truly diluting shareholder equity; it is advisable to wait until the multiples rise again before proceeding with financing, purchasing ETH, and staking operations.
• The biggest risk at present 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 doing just a few key things well.
• If we can earn ETH through operating the business, it will create a powerful growth flywheel.
• I hope that in a year and a half, we can establish one or two businesses that support the transaction closed loop in the Ethereum ecosystem and generate income measured in ETH, thereby forming a virtuous cycle.
• The current global financial system is highly fragmented: assets such as stocks and bonds are traded in specific locations, lack interoperability, and each transaction usually requires a fiat currency intermediary.

(1)From BlackRock to Blockchain: Joseph's Financial Journey

Chris Perkins: Can you talk about your background?

Joseph Chalom: It's been only five weeks since I joined SharpLink as CEO, but my story goes far beyond that. Before coming here, I spent a full twenty years at BlackRock. In the first decade and more, I was deeply involved in the expansion of BlackRock's Aladdin financial technology platform.

This experience taught me not only how to drive business growth but also how to keenly capture pain points in the business ecosystem. The last five years at BlackRock were especially memorable: I led a dynamic 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 energy of this city still drives me forward.

Chris Perkins: It surprised everyone that you returned after your retirement.

Joseph Chalom: I did not jump directly from BlackRock to Sharplink; rather, I officially retired and received a generous compensation. I originally planned to relax and take a break, but unexpectedly received a phone call. It seems that my life trajectory always intersects with that of Joe Lubin.

When we talk about passing on our mission, it may sound cliché, but who isn't working hard to leave a mark?

My focus has always been on building a bridge between traditional finance and digital assets, while upholding my own principles in the process of enhancing industry standards. When I learned about a digital asset vault project that needed a leader, I initially took a cautious attitude.

But ConsenSys's professional strength, 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.

In an ideal situation, everyone should have months to reflect and think. However, at that time, the market was experiencing a critical turning point, not a battle between Bitcoin and Ethereum, but rather Ethereum was entering its own era and should not be attributed with risk characteristics similar to Bitcoin.

To be honest, I oppose the irrational dichotomy in the market. Various assets have value in an investment portfolio. And my decision to come back is rooted in my firm belief in the long-term opportunities of Ethereum.

(2) Why Ethereum is the Core Bet

Chris Perkins: Can you talk about how you understand DATS and its commitment to Ethereum?

Joseph Chalom: If we believe that the financial services industry will undergo a structural transformation lasting a decade or even several decades, and you are looking for long-term investment opportunities rather than short-term trading or speculation, then the key question is: where can you exert the greatest influence?

There are multiple ways to hold ETH. Many people choose to hold it in spot form, or store it through self-custody wallets or custodial institutions, and many institutions prefer ETF products.

Of course, each method has its own limitations and risks**. Holding publicly traded equity listed on NASDAQ to indirectly hold ETH has its unique advantages.**

In addition, through the equity packaging of listed companies, you can not only capture the value growth of ETH itself. Its price has significantly increased over the past few months, and you can also obtain staking rewards. Holding equity in a listed company often comes with the potential for multiples of future appreciation. If you believe the company has growth potential, in the long run, this method of excess returns may far exceed simply holding ETH.

Therefore, the logical order is clear: first ensure that Ethereum holds long-term opportunities; only then choose what tools to use to hold it.**

(3) Driving Growth in Net Asset Value per Share: What Drives the Model?

Chris Perkins: How do you balance financial operations, timely issuance to enhance per share equity, and the relationship with genuinely improving fundamentals and potential returns in the process of driving MNAV growth?**

Joseph Chalom: I believe there are two complementary elements. First is how to finance in a value-added way. Most fund management companies currently primarily raise funds through issuing stocks.

Issuing equity when the stock price is above the net asset value of the underlying asset, that is, financing using the net asset value multiple. At this point, the enterprise value exceeds the actual value of the Ethereum held. Financing methods include market issuance, registered direct issuance, or starting from a pipeline.

The key is that financing must achieve value increase, otherwise early investors and shareholders will think you are merely diluting their rights to increase your ETH holdings.

If financing is efficient, the cost of acquiring ETH is reasonable, and profits are obtained through staking, the value of each share of ETH will increase over time. As long as financing can enhance the value of each share of ETH, it is an appreciation for shareholders.

Of course, the Net Asset Value (NAV) or the Multiple of Main Net Asset Value (MNAV) can be high or fall below 1, which is largely influenced by market sentiment, but in the long run, it will eventually revert to the mean.

Therefore, fundraising must avoid diluting shareholder equity in reality, and financing, purchasing ETH, and staking operations should wait until the multiples rebound.

Chris Perkins: So essentially, you want to monitor the Mean Net Asset Value (MNAV). If the MNAV is below 1, in many cases, this is a buying opportunity.**

Joseph Chalom: ETH attracts the following types of investors:

1.Retail investors and long-term holders who firmly believe in the long-term capital appreciation potential of Ethereum. Even without considering staking rewards, they will actively hold Ethereum through public financial companies like ours, seeking asset appreciation and passive income.

2.Some investors prefer the current high volatility of Ethereum. Especially against the backdrop of Bitcoin becoming increasingly institutionalized and the relative increase in Ethereum's volatility.

3. Investors willing to participate in gamma trading through stock-linked structures to lend funds for returns.

One of the important reasons I joined Sharplink is not only to reach a 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 now is no longer regulation, but rather our way of behaving and the types of risks we are willing to take in pursuit of returns.

(4) Talent and Risk: The Core Secrets to Building an Excellent Team

Chris Perkins: How to find and attract hybrid talents who are proficient in both DeFi and traditional finance (such as Wall Street)? How to deal with security risks such as hacker attacks and smart contract vulnerabilities?**

**Joseph Chalom: Talent is actually relatively easy. I once led the digital assets team at BlackRock, starting with a core member and gradually building a lean team. 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 at a few key tasks.

We only recruit the most outstanding and mission-driven talents, adhering to one principle: rejecting arrogance and negative personalities. What we are looking for are those who genuinely identify with the long-term vision of transformation. It is not merely about being optimistic about the rise in ETH prices or pursuing short-term capital management, but rather a firm belief that the industry will undergo profound and sustained structural changes, and a willingness to be part of it.

Outstanding talents often come from recommendations by trustworthy individuals, rather than from headhunting firms.

The risks are more complex. Overly pursuing extremely high returns, 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. Risks mainly stem from the method of operation, 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 fundamental and secure custody staking to liquid staking, re-staking, cyclical strategies, and even over-the-counter lending. Each method may introduce risks and leverage.

Risk itself may bring returns. However, if one does not understand the risks they are undertaking, they should not venture into this field. It is essential to clearly identify smart contract risks, protocol risks, counterparty risks, term risks, and even the convexity characteristics in transactions, and based on this, construct an effective risk-return boundary.

Our goal is to build an ideal investment portfolio, not to pursue high returns daily, but to consistently win this "game". Truly creating value for investors. Those who blindly chase profits or are unclear about their own operations may instead 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 streamlining the team and a low operating cost model?**

Joseph Chalom: Reflecting on my experience at BlackRock, one thing stands out profoundly: the more successful the product, the more humility is required. Because success is never just 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 custodian.

One of the major attractions of the digital asset business is its high scalability. Although you need to have compliance, accounting, and other specialized teams to meet the requirements of a publicly listed company, the team actually responsible for financing can be very lean. Whether managing 3.5 billion or 35 billion USD worth of 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, careful operation is required to avoid interfering with or questioning the security and stability of the protocol; on the other hand, it is essential to ensure that the staked assets can maintain sufficient liquidity under adverse conditions.

Chris Perkins: How to understand and implement the fundamental principle that "treasures do not exist to lose money" in asset management?

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.

(5) How SharpLink Gains Advantage in Competition

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 fund management approach for ETH is completely different because it has higher yield potential.

I view competitors as worthy subjects to support. 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: holding ETH directly, or generating returns through ecological applications. We welcome this competition; the more participants there are, the more prosperous the industry will be. 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 by institutions. Although we are streamlined, we have gathered 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, operational business. 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 regulatory requirements.

In the future, if we can earn ETH through operational business, it will create a powerful growth flywheel. Staking yields, debt compounding, along with ETH-denominated revenue, will jointly accelerate the expansion of capital reserves. This direction may not be suitable for all ETH fund management institutions.

(6) Strategic Layout: Mergers and Global Expansion Plan

Chris Perkins:** What is your overall view and direction for future merger and acquisition strategies?**

Joseph Chalom: If the scale of ETH debt increases significantly and some of the debt lacks liquidity, it may present opportunities. Currently, 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. However, some companies may find it difficult to secure funding and could trade below their net assets or seek mergers, which is also an innovative way to acquire more ETH.

As the industry matures, the yield may gradually increase from 0.5%-1% of the ETH supply to 1.5%-2.5%. Issuing sister bonds with a similar structure in different regions may be a wise move, for example targeting the Asian or European markets, with the same issuance conditions and sharing core operational costs and infrastructure, thus reaching a wider range of investors.

In the future, we hope to carry out such creative mergers and acquisitions, although the specific timing is still uncertain.

I believe that before the industry enters a consolidation phase, it will first go through an initial differentiation stage; technological development and business evolution often follow this pattern. The stablecoin sector is likely to see similar trends in consolidation and mergers, which will be very worth paying attention to.

Chris Perkins: Why is transparency so important? What is the main motivation for publicly sharing operational details on a daily basis?

Joseph Chalom: Most companies do not frequently issue stocks, usually doing so only once every few years. According to SEC regulations, companies are only required to disclose the number of outstanding shares in their quarterly reports.

In our industry, financing can occur daily, weekly, or at other frequencies. Therefore, to fully reflect the operational status, it is essential to disclose a series of key metrics**.** For example: the amount of ETH held, the total funds raised, the weekly increase in ETH holdings, whether ETH is actually held or only derivatives exposure, the staking ratio, and the returns, etc.

We release press releases and AK documents every Tuesday morning to update investors on this data. Although certain indicators may not be favorable in the short term, transparent operations will enhance investors' trust and loyalty in the long run.

Investors have the right to clearly understand the products they purchase; concealing information is hard to sustain.

(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 primary task is to build a world-class team, but this cannot be achieved overnight. We continue to recruit key talents to form a lean team of fewer than 20 people, where each member excels in their respective field and collaborates harmoniously to drive growth.

Second, continue to finance in a way that does not dilute shareholder equity, flexibly adjust the fundraising efforts according to market rhythm, with the long-term goal of continuously increasing the concentration of each share of ETH.

Third, actively accumulate ETH. If you firmly believe in Ethereum's potential, you should seize the opportunity to efficiently increase your holdings at the lowest cost - even those funds that allocate only 5% to ETH should do the same.

Fourth, deeply integrate into the ecosystem. As an Ethereum enterprise or treasury, failing to leverage the held ETH to create ecological value is indeed a dereliction of duty. We can use our billions of ETH to support protocol development through lending, providing liquidity, and other means, advancing in a way that benefits the ecosystem.

Finally, I hope that in a year and a half, we can establish one or two businesses that support the trading closed loop in the Ethereum ecosystem and generate income denominated in ETH, thus forming a virtuous cycle.

(8) Core Investment Insights: Key Focus Areas for the Future

Chris Perkins:** What additional advice or information do you have for potential investors considering incorporating SBET into their investment plans?**

Joseph Chalom: The current traditional financial system has significant frictions, with low capital flow efficiency and delayed transaction settlements; even at its fastest, it takes T+1. This brings enormous settlement risks, counterparty risks, and collateral management risks. The transformation will start with stablecoins. Currently, the scale of stablecoins has reached $275 billion, and they mainly operate on Ethereum. But the real potential lies in tokenized assets.

As Minister Bezzant stated, the scale of stablecoins is expected to grow from its current level to $2-3 trillion in the coming years. The tokenized assets such as funds, stocks, bonds, real estate, and private equity could reach several trillion dollars and will operate on decentralized platforms like Ethereum.

Some people are attracted by its profit potential, while more believe in its future. ETH is not just a commodity, but also generates income. With trillions of dollars in stablecoins flowing into the Ethereum ecosystem, ETH undoubtedly becomes a strategic asset. We must establish a strategic reserve of ETH because you need to hold a certain supply to ensure the flow 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 biggest unlocks for blockchain. Real-world assets are no longer locked in vaults, but are directly integrated into the ecosystem through tokenization. This is a turning point that is not yet widely recognized, but will profoundly change the financial landscape.

Chris Perkins: The pace of development has far exceeded expectations. The regulation of assets has only just been implemented; as more of these assets continue to flow in, a brand new ecosystem is forming, which will greatly accelerate the development and integration of assets on Ethereum and other blockchains.**

Joseph Chalom: When discussing the reasons for tokenization, people often mention characteristics such as programmability, borderlessness, instant or atomic settlement, neutrality, and trustworthiness. However, the deeper reason is that the current global financial system is highly fragmented: assets such as 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 of "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 venues".

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.