Original title: PURR's HYPE Bid Is Not What You Think

Original author: @ericonomic

Compiled by: Peggy, BlockBeats

Editor's Note: In discussions about the DAT PURR of HYPE, the market often focuses on only one question: how much "ammunition" it has left to buy HYPE? But this article attempts to point out that the key is not the balance, but the mechanism. By interpreting the S-1 document and the issuance logic of DAT, the author reveals a generally overlooked fact: given the existence of mNAV premium and real liquidity, the issuance of ATMs allows "firepower" to expand dynamically with trading volume, rather than being consumed linearly.

This redefines the motivation behind PURR (Purchasing, Receiving, and Investing) – buying is not merely about consuming funds, but may be about maintaining momentum and amplifying future financing capabilities. The article further explains why most DATs fail, while HYPEs avoid typical pitfalls in asset attributes and structural design.

The following is the original text:

Most people pay attention to PURR (formerly known as Hyperliquid Strategies or HSI) for one reason only: it is one of the DATs of HYPE (and currently the largest one), continuously accumulating HYPE.

Therefore, everyone's mental model is very simple: "PURR still has several million in quota, which can be used to continue holding or to push up the price."

This model is useful. But it's not complete.

Because in the background, there exists a mechanism that can silently convert "remaining firepower" into almost unlimited ammunition.

Once you understand this, you'll stop seeing PURR as just a "wallet with a balance." You'll start to see it as something else entirely.

Before proceeding, if you would like to gain a deeper understanding of PURR and its relationship with HYPE, I suggest you read my previous article , especially point 3, where I specifically discussed this issue. Some of the data in that article is slightly outdated, but we will return to that point later.

As before, all information in this article comes from the official S-1 document . In addition, I will also incorporate some interview content and make some reasonable assumptions in the article.

Let's get straight to the point.

Besides the fact that "PURR may still have more than $100 million in funds to buy HYPE", what else do you need to know?

The core issue is simply this: their "firepower" may not just be over $100 million; it is not necessarily limited to a fixed-size vault; rather, it can be dynamically amplified by mNAV and market liquidity.

To understand this, we need to start with the basic mechanism of DAT.

DAT's basic mechanism

Digital Asset Treasury (DAT) companies are those whose core objective is the continuous accumulation of crypto assets. Their funding sources typically come from three main sources:

Investors who want to gain exposure to crypto assets at a discount provide cash, and DAT issues shares to them in exchange, instead of giving them crypto assets directly;

Holders who wish to "exit" their crypto asset positions surrender their crypto assets, and DAT pays them cash, but the transaction price is usually lower than the current market price.

Issuing and selling new shares (this is crucial).

The situation of PURR is slightly more complicated because it is the result of the merger of multiple companies; but to simplify the discussion, we can assume that it mainly raised funds through two methods (1) and (2).

One point needs to be made clear: their core objective, at least in theory, should be to maximize shareholder returns, rather than to "pump and dump" a particular crypto asset.

In reality, most DAT stocks followed the old path of "pump and dump," ultimately failing almost like a rug.

This is where the Market Net Asset Value (mNAV) comes in. mNAV is an indicator used to determine whether a company's stock is trading at a discount or a premium.

To give a simple example: Suppose there is a DAT whose core asset is HYPE: it holds HYPE worth $1 billion; it has no debt and no additional cash; it has issued a total of 500,000 shares at a price of $2,000 per share.

Therefore, its mNAV is calculated as: (500,000 × 2,000) / 1,000,000,000 = 1

mNAV = 1 means that the company's stock price is reasonably priced.

If the stock price is higher and mNAV > 1, it indicates that the company is trading at a premium.

If the stock price is lower and mNAV < 1, it means a discounted transaction.

Now, let's return to point (3) mentioned earlier, which is also the most crucial and easily overlooked aspect of the DAT mechanism: where and how the DAT issues new shares. This is where the story truly diverges.

Fork in the road: How DAT issues new shares

Some DATs will choose to issue new shares and sell them to specific buyers at a discount through the OTC market, while setting a shorter vesting period.

This often triggers the classic "death spiral": once the lock-up period expires, buyers sell off in a concentrated manner; the stock price falls; if they want to continue financing, they can only offer a larger discount; mNAV falls further; and the cycle repeats itself.

Another type of DAT chooses to issue new shares via ATM when mNAV is at a premium.

ATM (At-The-Market) issuance refers to a company gradually issuing and selling new shares in the public market while strictly adhering to liquidity and trading volume constraints.

The pricing of these new ATM shares is not a discount to OTC prices, but rather anchored to market prices (usually based on VWAP, volume-weighted average price).

There is a subtle but very important difference in the mechanism here, which is especially crucial in actual operation.

Because ATM issuance references VWAP (Very Low WAP) rather than the latest transaction price, the current price often briefly exceeds VWAP during a strong upward trend. In this situation, the new shares can be absorbed by the market at a price slightly below the current price without any explicit discounts or special terms.

For example, if PURR jumps rapidly from $10 to $12 within a day, while VWAP remains at $10.80, then the new ATM shares are effectively sold at approximately 10% below the current price, even though, according to the rules, they are still "issued at market price."

As trading volume accumulates at higher price levels, VWAP will naturally rise and catch up with the current price.

As you might expect, PURR chose the second path. And it was here that things started to get really interesting.

The next questions are: When will PURR be implemented, and how many new shares will it issue?

According to part of the interview, David Schamis (@dschamis) mentioned that when the trading price of PURR is higher than 1 times mNAV, they will consider launching an ATM issuance.

According to @Keisan_crypto's calculations, PURR's current mNAV is approximately 1.10, which means that if they wished, they would already be able to issue new shares.

Keisan's mNAV calculated based on 03/02 prices

But the question is: how much can you actually generate? Most people stop here. But the real advantage begins right here.

The S-1 mechanism that most people didn't understand

According to the S-1 filing, Chardan's beneficial ownership cap as an intermediary acting on behalf of others in the market is 4.99%. At current prices, this means it can only temporarily hold a maximum of approximately $50 million worth of PURR stock.

But this does not mean they can only issue a maximum of $50 million in new shares.

What it really means is that at any given time, Chardan cannot "hoard" more shares than this amount. As long as shares continue to be sold on the market and distributed, more new shares can be issued.

In addition, in practice, Chardan is also subject to trading rules and market manipulation restrictions. Typically, this limits the daily trading volume of ATMs to less than 20% of the total daily trading volume.

For example, on the most recent trading day, PURR's trading volume was approximately 7 million shares (about $42 million); at this rate, Chardan could sell approximately $8.4 million worth of shares per day via ATM.

Key Conclusion (The punchline)

In other words, if trading volume can be maintained at the current level, PURR could add approximately $8 million in "firepower" per day to buy HYPE.

To reiterate, this does not mean they will blindly buy at the top; however, the incentive structure here is completely different from PIPE.

PIPE financing: Funds are available in one lump sum, there is no urgency, and you can hold the cash and wait for a sell order to appear.

ATM issuance: The incentive structure will change.

If issuance capacity expands with trading volume and momentum, and higher PURR trading volume can continue to open the ATM window, then maintaining the strong momentum of HYPE may actually expand future issuance and financing capacity.

In this structure, aggressive buying during an uptrend is no longer irrational. It can be a means to maintain liquidity, increase trading volume, and maximize the amount of funds that ATMs can raise over time.

This is not about "blindly placing orders." It means that under certain conditions, quickly absorbing selling pressure, and even adding to positions in line with the trend, is a rational strategic choice.

This is precisely where most people overlook it.

They modeled PURR as a buyer with a constantly decreasing balance; but if the ATM is open (mNAV premium) and liquidity is real, then the real constraint is no longer: "How much money is left?", but rather: how much liquidity can you continuously inject into the market while maintaining momentum and trading activity without turning yourself into "the entire market"?

If almost all DATs have failed, why might this time be different?

The failure of most DATs stems from structural problems and poor asset selection, rather than from the idea that "DATs are inherently flawed."

They fail, usually because:

1. Poor distribution mechanism

Discounted OTC products with short unlocking periods essentially create a situation where sellers are forced to sell themselves.

2. The underlying assets lack self-supporting capabilities.

If an asset has no (or almost no) endogenous returns, it must rely on price increases to maintain the cycle; once prices stagnate, the narrative immediately collapses.

3. Inflationary Supply Narrative

If the underlying assets are inflated (or heavily polluting), it's like fighting against a systemic headwind.

4. The disastrous perception at the shareholder level

Issuing additional funding when mNAV < 1 is self-destructive: it severely dilutes and destroys sentiment, and makes the next round of financing even worse.

HYPE avoids most of the aforementioned failure paths: protocol revenue will eventually translate into demand for HYPE and value capture; supply is deflationary rather than structurally inflated given continued use; and there are no large holders or VCs still unlocking their holdings.

This combination is crucial because it determines whether this is a story that "only Numba can go up" or a structure that "can continue to function even in a volatile market as long as the fundamentals are sound."

Of course, there are still paths to failure: mNAV is compressed, trading volume dries up, ATMs (asset transfers) stop, or the HYPE narrative weakens. But structurally, HYPE is one of the few assets in the DAT cycle that is not a natural "fraud machine".

I've also used this "middle curve" before.

Finally, some people might argue that PURR is a bad investment because of its continuous share issuance, and that the issuance will suppress the share price.

I used to think that way too (a typical midcurve). But remember: things can get really dramatic when traditional finance really understands how this "barbell structure" works.

Historical Cases:

MSTR: 3.3 × mNAV

Metaplanet: 8.3×

BMNR: 5.6×

And frankly, none of these targets are very good. Imagine what a "good" one can achieve.

Turn on the printing press, Bobby.

Hyperliquid.

The official WLFI multisignature wallet transferred out 166.6 million WLFI, equivalent to approximately $23.74 million.

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