Ethereum holding company Gamesquare purchases Cryptopunk NFT as treasury asset for $5.15 million in preferred shares - The Block

Ethereum holding company Gamesquare purchases Cryptopunk NFT as treasury asset for $5.15 million in preferred shares - The Block

Ethereum-focused media, entertainment, and technology company GameSquare Holdings, Inc. (NASDAQ: GAME) has made a significant acquisition, purchasing a rare "Cowboy Ape" CryptoPunk NFT from Robert Leshner, founder of DeFi protocol Compound, for $5.15 million in preferred stock [1][2].

The acquisition represents GameSquare's first direct NFT investment and is part of its blockchain treasury strategy that aims for 6-10% annualized stablecoin returns. The "Cowboy Ape" CryptoPunk, one of only 24 Ape CryptoPunks in existence, is valued for its rarity and historical significance, and GameSquare plans to leverage it for marketing activations, community building, and potential licensing opportunities [1][2].

The purchase was made through preferred stock convertible into approximately 3.4 million common shares at $1.50 per share. This move comes as GameSquare expands its digital asset treasury management authorization from $100 million to $250 million, with $45 million already used for Ethereum purchases, bringing its total holdings to approximately 12,913.49 ETH, valued at over $52 million [1][2].

GameSquare's NFT yield program, managed by Ryan Zurrer’s 1OF1 AG, will custody the asset for yield generation purposes. The company's ETH-focused yield strategy, built on Dialectic's Medici platform, targets on-chain yields of 8-14%, significantly exceeding current ETH staking benchmarks of 3-4% [1][2].

The acquisition also reflects GameSquare's broader strategy of leveraging digital assets to enhance brand equity and drive growth. The company's stock, currently fairly valued based on its comprehensive Fair Value model, has seen mixed reactions following the public offering, with a 16% drop in after-hours trading [1].

GameSquare's treasury management strategy aims to generate sustainable on-chain returns while supporting additional ETH asset purchases or reinvestment in growth initiatives. The company continues to explore opportunities to tokenize its shares on leading blockchains, using Superstate's recently announced Opening Bell platform [1][2].

References:
[1] https://www.investing.com/news/company-news/gamesquare-acquires-rare-cryptopunk-nft-from-defi-pioneer-for-515m-93CH-4151112
[2] https://www.prnewswire.com/news-releases/gamesquare-acquires-iconic-cowboy-ape-cryptopunk-from-defi-pioneer-robert-leshner-302513150.html