Key Highlights
- Galaxy Digital and Sharplink are establishing a $125 million fund focused on generating returns through Ethereum DeFi protocols.
- Sharplink plans to allocate $100 million in staked ETH, while Galaxy contributes $25 million and assumes management duties.
- Sharplink disclosed a $685.6 million net loss for Q1 2026, predominantly from unrealized depreciation on Ethereum assets.
- Ethereum’s price declined from approximately $3,354 in mid-January to $2,104 by March 31, with a modest rebound to $2,339.
- Galaxy Digital shares have surged 118.5% year-over-year; Compass Point analysts increased their target price to $41.
Galaxy Digital and Sharplink have entered into an agreement to establish a specialized fund designed to generate yield from Ethereum assets through decentralized finance protocols, even as Sharplink weathered substantial quarterly losses linked to cryptocurrency market volatility.
Sharplink and Galaxy Digital just launched a $125M on-chain yield fund backed by Sharplink’s staked $ETH treasury.
This comes the same day Sharplink reported a $686M Q1 loss, nearly all of it from unrealized ETH losses. pic.twitter.com/hPbWQBjAXr
— Token Metrics (@tokenmetricsinc) May 11, 2026
The partnership involves a non-binding agreement to create the Galaxy Sharplink Onchain Yield Fund, anticipated to commence operations within weeks with initial capital commitments totaling $125 million. Sharplink intends to deploy $100 million from its staked Ethereum reserves, while Galaxy Digital will contribute $25 million and serve as the investment manager overseeing fund operations.
Capital from the fund will be allocated across DeFi liquidity mechanisms and various onchain strategies designed to generate yield. The objective centers on producing additional income from Ethereum positions while maintaining exposure to the underlying digital asset.
Sharplink maintains a treasury exceeding 868,000 ETH. When cryptocurrency markets reached their October peak, this holding approached $4 billion in valuation. The firm has systematically accumulated Ethereum since June 2025 and has generated approximately 18,800 ETH through staking rewards during this period.
Mike Novogratz, CEO of Galaxy, noted that institutional appetite for onchain financial products has expanded significantly, enabling investors to access yield generation, liquidity provision, and risk management capabilities comparable to conventional finance systems.
Joseph Chalom, Sharplink’s CEO, characterized the collaboration as a mechanism to enhance the company’s treasury value while simultaneously supporting the development of decentralized financial infrastructure. Matthew Sheffield, Chief Investment Officer, emphasized that the fund structure preserves the company’s fundamental staked ETH position while creating supplementary returns for equity holders.
Sharplink Reports $685.6M First Quarter Loss
Notwithstanding the fund announcement, Sharplink disclosed a net loss of $685.6 million for the opening quarter of 2026, translating to $3.25 per diluted share.
Approximately $506.7 million of this deficit stemmed from unrealized losses associated with its Ether portfolio. Ethereum’s price plummeted from roughly $3,354 during mid-January to $2,104 by the conclusion of March, based on CoinMarketCap figures. At the time of the fund disclosure, Ether was valued at approximately $2,339.
Quarterly revenue increased to $12.1 million, compared with $700,000 during the same period last year, propelled by expansion in operational business segments. The firm concluded Q1 with cash reserves of $16.9 million.
Galaxy Digital Shows Losses but Market Outperformance
Galaxy Digital similarly released first-quarter 2026 financial results, disclosing a GAAP net loss of $216 million, equivalent to $0.49 per share, primarily attributable to unrealized depreciation on digital asset portfolios.
Transaction volumes within Galaxy’s Global Markets division remained stable compared to the previous quarter, despite industry-wide trading volumes contracting by over 25%. Equity analysts from H.C. Wainwright and Rosenblatt maintained Buy ratings following the earnings release. Compass Point elevated its price target from $40 to $41, highlighting advancement in the firm’s high-performance computing initiatives. Goldman Sachs maintained a Neutral stance with a $21 valuation target.
Galaxy’s equity has appreciated 118.5% during the trailing twelve months and was priced at $29.01 when the fund announcement was made. The company maintains a current ratio of 1.7, indicating liquid assets surpass near-term liabilities.
The fund partnership awaits finalization of definitive documentation before becoming legally binding.
