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Today’s Menu

• OpenAI offers frontier AI models to federal agencies for $1 in competitive gambit

• Standard Chartered endorses Ethereum treasury stocks over spot ETFs

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TODAY IN AI

OpenAI offers frontier AI models to federal agencies for $1 in competitive gambit

OpenAI has made an unprecedented offer to provide its frontier AI models to federal agencies for just $1 over the next year, attempting to undercut rivals and secure crucial government integration opportunities. This aggressive pricing strategy follows recent deals worth hundreds of millions between Anthropic, Google, xAI, and the Department of Defense, indicating intense competition for government AI contracts.

The near-free pricing represents a significant departure from OpenAI's typical commercial model, suggesting the company views government integration as strategically valuable beyond immediate revenue generation. By establishing relationships with federal agencies at minimal cost, OpenAI positions itself to influence how AI is deployed across government departments.

The move aligns with the White House's broader initiative to accelerate AI innovation throughout federal agencies, creating opportunities for AI companies to demonstrate capabilities while agencies explore implementation possibilities. Government adoption could provide valuable validation and reference cases for broader enterprise sales efforts.

OpenAI's willingness to essentially donate its most advanced AI capabilities indicates recognition that government contracts often lead to long-term relationships and larger future commitments. The $1 pricing removes budget barriers that might prevent agencies from experimenting with frontier AI systems.

The competitive pressure from rivals' success with defense contracts appears to have motivated this dramatic pricing strategy. By offering superior technology at token cost, OpenAI attempts to displace competitors who may have secured initial government relationships through different approaches.

Government integration also provides OpenAI with valuable feedback about AI deployment in sensitive, high-stakes environments that could inform future product development and safety measures. Federal agencies often have unique requirements that push AI systems beyond typical commercial applications.

The strategy risks commoditizing AI services while setting expectations for low government pricing that could be difficult to reverse once agencies become dependent on these tools.

TODAY IN CRYPTO

Standard Chartered endorses Ethereum treasury stocks over spot ETFs

Standard Chartered has declared Ethereum treasury companies "very investable" and potentially superior to U.S. spot ETH ETFs, citing their ability to generate staking rewards and deploy capital into DeFi protocols that ETFs cannot access under current regulations. The endorsement comes as treasury firms have accumulated 1.6% of total ETH supply since June—matching the exact accumulation of U.S. spot ETH ETFs during the same period.

According to Geoff Kendrick, Standard Chartered's global head of digital assets research: "I see the ETH treasury companies as a better asset to buy than the U.S. spot ETH ETFs. They provide regulatory arbitrage opportunities and offer access to ETH staking and DeFi - unlike ETFs."

The key advantage lies in treasury companies' ability to actively deploy their Ethereum holdings rather than simply holding static positions. While spot ETFs provide pure price exposure, treasury firms can earn staking rewards, participate in DeFi protocols, and increase ETH-per-share ratios through active management strategies.

NAV multiples across treasury companies are normalizing from previously frothy levels, with SharpLink Gaming's multiple declining from 2.5 to just above 1.0. This normalization makes treasury stocks more attractive compared to the premiums investors previously paid for Ethereum exposure through public companies.

SharpLink Gaming, backed by Consensys and Ethereum co-founder Joe Lubin, represents one of the sector's early leaders, while BitMine has emerged as the largest player with stated goals of holding 5% of all circulating ETH. These companies are pioneering corporate Ethereum strategies that mirror MicroStrategy's Bitcoin approach.

The treasury model provides investors with leveraged Ethereum exposure while accessing yield-generation capabilities that traditional ETFs cannot offer. As regulatory frameworks potentially evolve to allow ETF staking, treasury companies maintain first-mover advantages in active Ethereum management.

With SharpLink's earnings report due August 15 and new players entering the space, momentum appears to be building around the treasury stock model. Standard Chartered's $4,000 ETH price target by year-end adds conviction to the investment thesis.

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Until next time,

Damon James