Chinese Web3 hardware and infrastructure company Nano Labs has put the crypto and equity markets in overdrive, announcing a $500 million convertible notes deal to start a billion-dollar Binance Coin (BNB) treasury program. The deal, which could see Nano Labs acquiring up to 10% of all outstanding circulating BNB supply, pushed its shares listed on Nasdaq over 100% higher in a day. Deal Structure: Convertible Notes and Daring Treasury Shift Nano Labs begins its strategy with the offering of $500 million of unsecured convertible promissory notes that will come due in 360 days with no interest. Convertible note investors may convert their holdings into Nano Labs' Class A ordinary shares at a conversion price of $20 a share—nearly twice the stock's close before the news. Unless converted, the principal is paid at maturity. The company will fund the balance of its $1 billion BNB war chest through private placements, one of the largest altcoin treasury plans ever undertaken by a public company. The deal is not done but will settle on standard terms, with several investors already pledging to subscribe. Nano Labs' management confirms the deal is a major milestone in its strategic growth, with BNB now at the centre of its digital asset reserve. Why BNB Over Bitcoin? A Strategic Shift Nano Labs' move is the anomaly in an ocean of corporate treasuries that have been focused on Bitcoin. The company, which had $5.5 million in BTC beforehand, now looks to BNB, relating to the token's visibility as a leading asset on the Binance platform and its growing applicability to Web3 and DeFi. Executives believe BNB's utility, network effects, and entrenchment among Binance's $14B daily trade volume make it a reserve asset that is future-proof. This play is an altcoin adoption bet too. As one analyst speculated, ”Institutions have been overexposed to Bitcoin—Nano Labs is signaling a new era of diversified crypto treasuries.” The play tracks increased institutional demand for BNB with other hedge funds rumored to be establishing reserve plays. BNB Liquidity and Price Outlook Nano Labs' aggressive accumulation could have profound implications for BNB's liquidity and price. The business plans to accumulate 5% to 10% of all outstanding supply of BNB—up to 9.4 million tokens, worth billions at current prices. Such accumulation can strangle supply, drive prices higher, and increase volatility, especially if other corporates follow suit. BNB picked up by 2.7% on the news, while Nano Labs' shares doubled, rising to $29 before settling close to $15. Market players are now awaiting to see if this will trigger a cross-the-board altcoin treasury move, as companies seek something other than keeping reserves in Bitcoin. Though the arrangement has charged markets, it has risks attached to it. The notes are not secured, and the completion of the deal is not certain. Regulator scrutiny may increase, particularly as more public companies move towards altcoin treasuries. Nano Labs states it will undertake a complete evaluation of BNB's security and worth before scaling up its holdings, in an effort to alleviate the concerns of investors as well as regulators. Bottom Line Nano Labs' $500 million convertible notes move is an altcoin treasuries watermark and institutional crypto onboarding. If successful, it has the potential to shake up the BNB market, encourage other firms to diversify out of Bitcoin, and mark the beginning of a new age for institutional crypto reserves—one where the world's largest tokens compete for a spot on the corporate balance sheet.
