Dissecting Public Chain Pharos Capital Game: 9.5 Billion Dollar Valuation Propped Up by Photovoltaic Assets, Hollow Transactions Under Layers of Betting?

Author: Gu Yu, ChainCatcher

After months, the Layer 1 public blockchain sector has recently seen another $1 billion+ funding round. Pharos, a high-performance parallel Layer 1 blockchain, announced a new capital cooperation upgrade with GCL New Energy Holdings, a listed company on the Hong Kong Stock Exchange. GCL New Energy invested in Pharos at a valuation of $950 million, with a subscription amount of $24.73 million.

GCL New Energy is a well-known private photovoltaic power generation company in China, mainly engaged in the development, construction, operation, and management of solar power plants. This aligns closely with Pharos’s focus on RWA (Real-World Assets) development, making this a strategically significant deal for both parties.

However, this transaction has raised many questions in the market. In the current sluggish secondary market, can Layer 1 and RWA projects still achieve valuations of $1 billion or more in the primary market? Will listed companies easily invest in such high-risk assets?

Interlinked Betting Deal

Many details hidden within complex announcements reveal that this is not a typical direct financing transaction. Instead, it is a bundled deal involving mutual investments, phased deliveries, and market cap betting, with all core conditions tightly controlled by GCL New Energy. If any condition is not met, the entire deal becomes a non-binding document with no substantive effect.

Specifically, Pharos’s subscription for GCL New Energy shares is a pre-commitment investment, allowing it to subscribe for up to 183.48 million new shares at HKD 1.05 each, worth about HKD 150 million. This price is approximately 15% below GCL New Energy’s current price of HKD 1.23.

While this looks like a bargain for Pharos, GCL New Energy is clearly experienced in financial maneuvers. The share subscription is subject to five strict delivery thresholds, and if any of these are not met, all subsequent deliveries will be terminated. The entire agreement is valid for only 18 months. The investment is split into five tranches, with unlocking conditions tied to the listing performance of Pharos Token:

• First tranche (50%): Only if Pharos Token is successfully approved for listing on a relevant Web3 exchange and the opening price is not below the agreed investment price (based on a $950 million valuation) will this tranche be delivered. If listing fails or the opening price drops below the threshold, GCL New Energy can refuse to proceed.

• Second tranche (12.5%): Only if the average FDV (Fully Diluted Valuation) over the first three months post-listing is at least $760 million.

Subsequent tranches have similar unlocking conditions, with the average FDV calculated over different periods (months 4-6, 7-9, 10-12).

Once Pharos Token meets the delivery conditions, the subscription for GCL New Energy shares becomes effective, and GCL New Energy’s subscription for Pharos Tokens also becomes effective, with proportional unlocking.

In other words, if Pharos Token successfully lists, Pharos will immediately deliver HKD 75 million worth of shares to GCL New Energy, and GCL New Energy will acquire Pharos Tokens valued at approximately HKD 96.73 million at the initial $950 million valuation.

For GCL New Energy, this is nearly a risk-free deal—receiving HKD 75 million in share subscription funds and potentially tokens worth nearly HKD 100 million if the Pharos Token performs well, with significant profit potential.

Market response has already reflected this optimism. Although GCL New Energy announced the partnership with Pharos on January 8, its stock price had already surged from HKD 0.8 to HKD 1.3 a week before, reaching a high of HKD 1.8 before declining. This pattern resembles typical “pump and dump” behavior.

Another concern is that Pharos previously disclosed only $8 million in total funding, roughly HKD 62.61 million. Even if the pre-conditions are met, this funding gap could pose a challenge for Pharos.

How Was the $950 Million Valuation Derived?

Another interesting detail is GCL New Energy’s explanation of why it valued Pharos at $950 million. According to the agreement, this valuation is mainly based on the on-chain total locked assets (TVL). In the Layer 1 sector, the average ratio of fully diluted market cap to total locked assets for Ethereum, BSC, Hyperliquid, Tron, and Avalanche is 10x, with a median of 6x. Similar projects like Monad have a ratio of 10x.

Therefore, the parties decided to set Pharos’s valuation coefficient at 4.75x. Currently, Pharos’s total locked assets are valued at $250 million, discounted by 20%, resulting in an initial valuation of $950 million.

Regarding the types of assets locked on-chain, the agreement discloses that 51% of Pharos’s assets come from distributed photovoltaic operators and centralized power plant operators, while 49% come from fund management companies and credit asset issuers.

This means Pharos’s total locked asset value includes physical assets—power stations and photovoltaic assets—closely related to the involved parties. This approach sets a precedent in the Layer 1 industry.

In fact, Pharos has not yet officially launched its mainnet, and the professional on-chain data platform DeFillama has not recorded any locked assets for Pharos. The reported $250 million is solely disclosed by the project team.

The market’s early price movements, combined with the layered betting conditions and inflated valuation, suggest the real purpose of this deal: for GCL New Energy, it may be a financial maneuver to hype the stock price and boost company valuation using crypto concepts; for Pharos, it might be an attempt to leverage the physical assets of a listed company to create high valuation hype and generate momentum for future token listings. Both sides benefit, but the risks are left to the market and future investors.

When an industrial company injects physical assets into a Layer 1 project and calculates the valuation as multiples of those assets, is this kind of capital game too outrageous? Does the crypto market really need such RWAs?