Key Highlights
- Galaxy Digital partners with Sharplink to establish a $125M fund focused on generating yield through Ethereum DeFi strategies.
- Sharplink allocates $100M in staked ETH while Galaxy provides $25M and assumes management responsibilities.
- Sharplink’s Q1 2026 financials show a net loss of $685.6M, predominantly from unrealized losses on Ethereum positions.
- Ethereum’s price declined from approximately $3,354 in mid-January to $2,104 by quarter-end before partial recovery to $2,339.
- Galaxy Digital shares gained 118.5% year-over-year, with Compass Point analysts increasing their target to $41.
Galaxy Digital has entered into a strategic collaboration with Sharplink to establish a dedicated fund aimed at generating returns from Ethereum assets through decentralized finance protocols. This announcement comes during a period when Sharplink experienced 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 establish the Galaxy Sharplink Onchain Yield Fund. Launch is anticipated within weeks, backed by $125 million in initial capital commitments. Sharplink plans to allocate $100 million from its staked Ethereum reserves, while Galaxy Digital contributes $25 million alongside assuming investment management duties.
Capital deployment will focus on DeFi liquidity protocols and various onchain yield-generation mechanisms. The strategy aims to produce supplementary returns from Ethereum positions while maintaining ownership of the underlying digital asset.
Sharplink maintains over 868,000 ETH within its corporate treasury. These holdings reached a valuation near $4 billion during peak market conditions last October. The company began accumulating its Ethereum position in 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 matured significantly, enabling investors to utilize yield generation, liquidity solutions, and risk management capabilities comparable to traditional financial markets.
Joseph Chalom, CEO of Sharplink, described the collaboration as an approach to enhance the company’s treasury value while supporting the development of the broader onchain financial infrastructure. Matthew Sheffield, Chief Investment Officer, emphasized that the framework maintains the company’s foundational staked ETH position while creating additional shareholder value.
Sharplink Reports $685.6M First Quarter Deficit
Alongside the fund initiative, Sharplink disclosed a net loss of $685.6 million during the first quarter of 2026, equivalent to $3.25 per diluted share.
Approximately $506.7 million of this deficit stemmed from unrealized losses on Ethereum holdings. Ether’s market value fell from around $3,354 in mid-January to $2,104 by March 31, based on CoinMarketCap figures. At announcement time, trading stood near $2,339.
Quarterly revenue reached $12.1 million, representing growth from $700,000 in the corresponding period one year prior, supported by operational business expansion. The company maintained $16.9 million in cash reserves at quarter-end.
Galaxy Digital Shows Market Resilience Despite Losses
Galaxy Digital released its first-quarter 2026 performance metrics as well. The firm recorded a GAAP net loss of $216 million, translating to $0.49 per share, primarily attributable to unrealized losses on digital asset portfolios.
Galaxy’s Global Markets division maintained consistent trading volumes compared to the previous quarter, while broader industry volumes contracted by over 25%. 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 company’s high-performance computing initiatives. Goldman Sachs retained a Neutral stance with a $21 valuation target.
Galaxy’s share price has appreciated 118.5% over the trailing twelve months, trading at $29.01 at announcement time. The company demonstrates a current ratio of 1.7, indicating liquid assets surpass near-term liabilities.
The fund partnership awaits completion of final documentation before achieving binding status.
