Defi Technologies Inc

For joining us today, my name is Jamie Frawley, Vice President at IR Labs, and it's my pleasure to moderate this webinar on behalf of DeFi Technologies. We're here and fortunate to have Olivier Roussy-Newton, CEO and Director, and Russell Starr, Head of Capital Markets, on the panel today. and I'll turn it over to them shortly to present a review of the Q1 financials. If at any point you'd like to ask a question, please do so using the Q&A function. Questions will be answered after the presentation concludes. And before I turn it over to Olivier and Russell, I'd like to remind everyone that certain statements made during today's presentation may contain forward-looking information within the meaning of applicable securities laws. Such statements may include estimates, projections, goals, forecasts, or assumptions that are based on current expectations and are not representative of historical facts or information. We want to be clear that such forward-looking statements represent the company's beliefs about future events, plans, or objectives, which are inherently uncertain and are subject to numerous risks and uncertainties that may cause the actual results performance. Yep.

There's someone on the screen that claims they're me. They're not me. Just so you can see it. They just dropped off. Don't know who it was.

Okay. Thank you. And with that, I'm going to turn it over to Ollie to kick us off. Over to you, Ollie.

Thanks, Jamie, and thanks, everyone, for tuning in to our Q1 financial call. So I'll get things started here. So starting with our financial highlights of Q1 2024, the company reported a cash balance of $9.4 million compared to $6.7 million last year. In December, on December 31st, year end, the company's venture portfolio investments were valued at $41.8 million as of AUM grew 78.7% to approximately $908 million as of March 31st, 2024, up from $508 million as of December 31st, 2023. Total operating revenues were $13.4 million for the Q1 2024 period. This is a significant improvement from the operating revenues of $3.6 million for the same period in 2023. Total revenues for 4.9 million for Q1 2024 compared to 11.3 million for the same period in 2023. Operating general and administration costs for Q1 were 3.3 million up from 2.1 million for the same period in 2023. The company's annualized operating revenue approximately 119 million equivalent to just under 90 million USD for 2024. Here is a visual of our AU app and net sales. Stockholm. So just to reiterate, you know, our AUM is just close to the quarter, just driving up a billion at $908 million, up just under 80% from December 31, mostly attributed to, you know, new product launches. And, you know, as we're seeing, you know, today and And for the last few months, a more robust digital asset price discovery that we're seeing. So for our 2024 outlook, 800% increase in AUM from market lows in late 2022, to touch on that kind of last visual, we've really seen that net new inflows on our AUM pretty much every trading day. So that shows kind of the robustness in our business model. As of March 31st, 2024, Velour's AUM stood at approximately $908 million, with daily trading volumes exceeding $20 million. Given the current AUM, price of digital assets, and activity level in the digital asset market, the company's annual operating revenues is forecasted to be approximately $119 million for 2024. Growth in AUM is expected to lead to proportional increases in revenue. you know, right kind of before this call, we were discussing some kind of AUM targets and predictions. I think with two of our larger subsets of products, Bitcoin and Solana with, you know, Bitcoin at around 100,000, a BTC and Solana at 225, we would be looking at about a 1.12. 1.35 billion in AUM USD, which I think is just under 2 billion CAD. In addition to the company's existing business units, a new alpha generating business, DeFi Alpha unit was formed in Q2 2024 in order to generate yield on the company's excess liquidity. exploring for some time now due to kind of our cash reserves and unique opportunities that get presented to us. We decided to formalize our alpha trading desk to work on proprietary trading strategies and kind of you know, interesting ideas from the trading team. The focus is on arbitrage trading opportunities in the general asset space with low risk in both centralized and decentralized markets with, you know, minimal or no protocol exposure, thereby minimizing downside and revenue volatility. DeFi Alpha has, you know, started exceptionally well generating, you know, just under $60 million CAD or just over $40 million thus far in 2024. The ETP business aims to maximize AUM through increased ETP long-term business and geographical expansion. Our plan is to launch about 15 to 20 new ETPs with and 30 more in 2025. And we're actively working on expanding to new markets in the Middle East, which we've restfully started opening our trading desk in the United Arab Emirates. And we'll be kind of hopefully doing similar things shortly within the Asian geographies. So here is a list of some of our single asset ETPs. We were excited about being kind of a market first leader in launching in the last few weeks, the 20 ETP polygrams native token, which we're quite excited about. And we'll have adjoining research coverage from our newly acquired subsidiary reflexivity research to coincide with new product launches going forward. Other new ones, ICP, Hedera, HBAR, our short Bitcoin product, and lots more in the works, along with the Chainlink ETP. So these are some of our joint venture ETPs, physically backed, product in collaboration with Core. We'll also be announcing, hopefully very shortly, a Core ETP, specifically in collaboration with the foundation and great overviewers at the Core Foundation. So we wanted to include a bit of a concise overview on reflexivity engagements, clients including Padera, ThorChain, AdWord and Fantom. We hosted our first ever kind of maiden conference, Bitcoin Investor Day in New York. Sold out proud, very overwhelmingly positive feedback. Sponsored ship deals included Franklin Templeton, Coinbase, and Copper. Had a great lineup of speakers and attendees. Reflexivity also hosted Twitter space with all L1 blockchain clients. And it was co-hosted by CoinMarketCap's official Twitter with 7 million followers. So kind of over, I would say the next few quarters, we will start to combine forces with reflexivity to one, drive research on new product launches that we have going out into the lore so that all of our clients can have market leading research on new products that we're posting and reflexivity as a standalone business will continue to grow and be covering leading foundation quarterly reports and hope to also plan further conferences in the future. So this is a slide that we're working on that kind of comes underlying prospectuses associated with the regulatory approvals to make those happen, thematic ones, as well as active strategies, which we've been working on for some time. So the idea kind of behind also growing our digital asset exposure is we have a sticky customer base. that comes to us, looks to us for new products and innovations. So why wouldn't we give them more exposure to interesting investment theses that we see in this kind of new world that we're entering into?

And Ollie, let me just interject a little bit. So everyone listening to this, you know, Ollie's given you some really major data points here. And I always try to just simplify this down to math for everyone. So Bitcoin 100,000, Solana 225, that's 1.35 billion US in AUM. And as our product offerings diversify, our yield grows. So we've given you sort of guidance towards a 7.2% yield on these products, but that's assuming that we were sort of almost pulled down a Now that our Bitcoin offerings can be staked on the core network, we can actually generate substantial revenue from there. So you could actually see $1.35 billion in AUM with closer to 8%, 9% yield, depending on how our staking goes on our own validators. And, you know, if you just really simplify it, 1.35 billion US at 10%, that's 135 million US in revenues. And our costs due to, you know, exemplary management by Ollie and the team are now in and around that 10 million US because of the debt we paid down. So, yeah. you know, if you guys are looking for some sort of forward looking guidance, you kind of have it. 135 million US in revenues, less 10, that's 125. Add in the 40 million on the desk, that's 165. Assume if you just look at Galaxy, And Galaxy generates a lot of their pro forma valuation off of their trading desk revenues. And even if you just model out 10 or 15 million in trading profits per quarter for us, maybe not the robust 40, you can see this company in and around a 150 million range. US in profits. And our market cap, even at the share price today, is only two, three times that. So I'd almost say to you, even though our stock's done quite well, we're actually cheaper today than we were before because our trading desk now has really meaningful alpha in front of it. And I would argue that Bitcoin has reassumed its positive trajectory as well as the altcoins. And so this company, the future is very, very bright. I know there's questions about the Middle East. I know there's questions about Hong Kong, but the reality is The trading desk is a global effort all the time, no matter what. So you don't really need to think of the trading desk as are there Middle Eastern opportunities or are there Hong Kong? It's a 24-7 business in this industry. But you can think of assets growing in our ETPs substantially once we get the ball moving. in those new jurisdictions. So apologies for interceding there, Ali, but I just think it's really important that people understand that we're already on a $55 to $60 million run rate in two quarters for this company, not for the year. You annualize that, then you're getting to that $120, $130 in net income, if not just pure profits. And that's why I keep on harping on, yeah, the stock's doing well, but if you were to talk to Ali and I off the record, someone could pay us 300% premium for the company right now and it would be a take under based on our profits. People need to start really thinking about not just trading and making 10 or 20%, but actually what the fundamental valuation of this company is. I'll stop there.

Yeah, no, I think all good points.

I think that's the last slide.

Yeah. So I think, yeah, just to encapsulate, off to a great start to the year. You know, great, great to see a rebound in digital assets, especially kind of going into this week. I think we'll we have a strong foundation for the future. And as you touched on really robust, you know, revenues with, you know, just that great fixed costs that we've been working hard on, you know, maintaining. So excited for the future. And I think we can start taking some questions.

Do you want to just alternate, Ollie? You start with Mike and I'll do Fab and then you do Boris. Sure.

So Michael Kim asks, can you provide some color on the new arbitrage trading desk in terms of your capabilities and the opportunity going forward and your perspective on the revenue? I look particularly in the context of the 40 million that also has already been generated thus far. So, yeah, we've been, you know, myself, Johan, Russ, and the team have been, you know, for I would say quite a long time looking at opportunistic trading strategies that present themselves. You know, as prices have rebounded, we've been able to, you know, secure a treasury and basically assess opportunities as they come in. So I think, you know, for the next few quarters, providing more revenue guidance in terms of what that looks like, contextualized over a year period. And we should be launching a website that presents the business overview of DeFi Alpha in a more specific context. So more information coming soon in terms of us alpha trading desk for more business and the specific parameters about what that business pertains to. Second part of the question was curious if you would expect to see an uptick in flows into your Ethereum ETPs assuming the SEC approves ETH ETFs. Do you see a similar trend playing out following SEC approval of BTC ETFs? So yeah, great question. The Ethereum ETF approvals I think have you know, gone from a 25% chance of being approved to 75 last time I checked. When the Bitcoin ETFs got approved, we saw, you know, a ton of inflows into our Bitcoin products. I think, you know, it's safe to assume, well, see something similar to our Ethereum products. If the SEC approves the Ethereum ETF, I would think it would be extremely bullish for the price and people and our clients would want to double down and see more exposure.

And one addition to that, everyone, everybody, I think, at some point thought, cannibalize our products but but again everybody needs to remember we have a zero fee structure on our bitcoin and ethereum so why you know when you have perfect tracking which we do in our products and you and you're paying less management fees for those two products why switch to a product where you have to pay management fees so i think that as people learn more and more and more about what we're doing and what our what our cost structure is you actually might see even greater growth into our products as a result of zero management fees. Question is, what's the status of the trading desk in the Middle East and can you report any numbers? I mean, we have a trader in the Middle East. We are actively looking at migrating and passporting all of our products to the Middle East, to Asia and even more immediately London as the LSE is now permitted crypto ETP trading in London. But from a trading desk perspective, like I said, I mean, like Johan is one of the most sophisticated long-lived crypto traders out there. His team and Ollie are excellent at what they do. And all you really have to do is look at kind of Galaxy's revenue structure where actually the bulk of their revenues tend to come from trading profits. which are really hard to model out quarter over quarter. But because of the industry and how nascent it is, you do see these arbitrage opportunities appear very, very regularly where you can take low risk, our positions and capture meaningful gains. So I think as we, As we continue to hit more and more of those profits, guidance will be a lot easier. I don't know what all these thoughts are on repeating 40 per quarter. I think that might be a little bit generous, but there are, I mean, you never know. There might be a quarter where it's 50 or 60 and then another quarter where it's 12. You can't really predict market inefficiencies other than taking advantage of them. Ollie, you got anything to add?

I think, yeah, I mean, one in terms of the Middle East trading desk, obviously, you know, for hiring new talent, you know, a lot of, you know, younger traders and things are setting themselves up in the Middle Eastern demographics, specifically in the UAE. So we want to, you know, foster kind of an environment to, to provide employees with a great place to live and work. So that's also part of the focus of the Middle East. And yeah, also to support our upcoming the least. Yeah, as I kind of mentioned, we'll have more information coming online in regards to DeFi Alpha, the opportunities and positioning of our training desk there. And we are constantly assessing new opportunities kind of every day as they come in. And I think kind of as it's kind of fairly new um you know give us a few months and we should have some you know better ideas on on guidance and and potential um opportunistic kind of revenue opportunities as they present themselves this one's for sure in your realm there ollie by boris any plans for You know, I at least, I'm not sure about Russ's world, but at least in my kind of history in public traded equities, you know, I think you typically see anywhere from a, you know, 15 to 30x multiple on revenue in, you know, a technology space. Crypto sometimes sees outsized returns in terms of that. So I think, you know, us sitting at a two or three for longer and we'll, you know, as we see kind of undervalued and we have a large, you know, cash treasury, we might make plans to initiate what we previously had installed as NCIB program or share buyback program. We are in discussions with several stock exchanges globally in terms of uplisting and requirements, satisfactory crypto regulation. We did have NASDAQ approval. in 2021 and kind of ran into what I would see as a, you know, very fast-paced changing environment of the SEC. So we're, you know, we remain committed to, you know, extracting as much shareholder value and realize that that will happen on a global stock exchange. So that is definitely a top priority for management. With continued revenue prowess, I would say we will definitely explore as a board the potential for shareholder dividends if that is a suitable scenario balanced out with the potential for growth opportunities in this space. Where did the 19.5 million USD come from for the outstanding loan pay down? Yeah, we used that from our revenue generation across the last few quarters and freed up a considerable amount of collateral. So we're excited about that. And yeah, I think we touched on what we're doing systematically to generate revenue for DeFi Alpha.

And everyone really, really needs to take a minute to think through what Ali said, in my opinion. 99% of the world's companies trade at 20 times profits. We are trading at three times profits. If you're not getting reasonable valuation from the market on your stock, of course you look at ways to... to improve that. And if you're trading it three times, like I mentioned, someone could pay a 300% premium to us and it would be a take under relative to any other stock trading in the US. Therein lies the opportunity from an ownership perspective and why you should be buying the stock. But it creates a lot of fear in our heads, at least it doesn't mine, because like, I'm not we all like I've said this repeatedly between, you know, all the Johan friends, family, me, friends, family and, you know, very, very closely related parties. We control probably 100, 120 million shares. We're not we're not looking for three dollars on this stock or four dollars, especially in an environment that we're looking at now. We're looking at, you know, eight to 10, which is. Sounds far-fetched, but 5, 6, 7 is where we should be trading just on a reasonable comp basis. And that's not me making things up. Just go look at what all of the other crypto companies are trading for. And I'm not sure any of them are profitable. They're trading on revenue multiples.

I would also kind of interject and say the only other comps you have are mining companies that I'm fairly familiar with. The great thing about our business model is we have fixed costs, so we have no asset depreciation of machines that need to be constantly upgraded and dilutive financings to continually buy new equipment. That doesn't fit within our purview. So, yeah, historically... You know, I think when the market gets frothy and, you know, people have used Bitcoin miners as proxies for trading equities, we're going to see kind of a new world where people start understanding our business model and give us, you know, the valuation multiple that is deserving of a company such as ours.

Yeah, so it looked huge upside for shareholders, everyone. And it's our job, Ollie's and mine and the rest of the team to get this to a reasonable valuation. And obviously, an uplist as quickly as possible will be part of that. I mean, obviously, the US would be our primary objective, but we're looking at multiple opportunities and options just because Clearly, for whatever reason, in Canada and the way we currently trade it, we're just not being given comparable, reasonable value to, as Ollie mentioned, the miners or even the galaxies of the world. So I believe that's it for Boris. The other question is, do you have an estimate for AUM in the Middle East and Asia? I mean, that's kind of a holy grail type question. You know, like we mentioned, just Bitcoin appreciating and us launching no other products and Solana going to 225, which it sure looks like it's going to be doing here, you know, soon. That's a 1.35 billion US in AUM, assuming everything else stays static. The Middle East is the fastest growing crypto ecosystem in the world in terms of headcount adopting crypto as an investment. So if we could theoretically get to anywhere just close to what we're doing now, despite the fact that it's growing faster than any other jurisdiction, you're looking at one, two billion, maybe three, four, five. And then similarly in Asia, Even if you're just extremely conservative and think we replicate what we've done here in a relatively short period of time, those two jurisdictions would get you to $3 billion if you just put a billion in each of them. And everybody's also forgetting about the London Stock Exchange where we're passporting all of our products. That could be an immediate another $1 billion. And everyone, the math gets really quite crazy at that point. Assuming $4 or $5 billion, that's crazy. That could conceivably be 500 million in US in revenue and 490 million in profits. And you strap on your 20 times multiple and you may have a market darling, a unicorn here and a return that would rival many other companies. Ollie, you got anything to add to that?

Yeah, no, I think just to reiterate on Chris's question, obviously, we are looking to replicate our business model that we've achieved super well in the Nordics and other niche markets where people want exposure to new products paired with groundbreaking research, which we can deliver. So, you know, we're assessing those markets and have filed prospectuses and are working with, you know, legal on passporting those prospectuses so that we carve out, you know, our business model and other niche market opportunities. And obviously if we can mirror, you know, similar kind of similar addressable markets with larger, you know, the London Stock Exchange UK is probably, you know, the the largest market in Europe outside of Germany. So we're fairly excited about some of these market opportunities that are presenting themselves. A question from Joseph, are we partnering with anyone in the Middle East? Yes, we have several partners that will soon to be announced in helping in the form of marketing, distribution, legal, market making, exchange providing services. So similar to what we do in Europe, we have basically a chain of partners that help us with everything from village to distribution and everything within the stack of our business verticals.

Why are most of the crypto funds listed in the Swiss Stock Exchange? So they're actually predominantly listed on the Nordic growth market. We've thought long and hard. And again, they're migrating to all different markets. jurisdictions in europe right they're starting to trade in germany they're starting to trade more on euro next um everybody needs to remember that um eight nine months ago bitcoin was at 16 to 20 000 and no one cared about this universe it's only in this recent um new bull run where where everyone is starting to pay attention to them and and exchanges have watched and seen how successful we've been in Scandinavia. And my logic for Scandinavia is Johan, who is one of the founders, along with Ali, the XBT provider, which is now CoinShares, which was the first Bitcoin ETP in the world, that started in Scandinavia. And if you look at CoinShares, CoinShares is listed as a Scandinavian entity, trades in Swedish kronor. and has an ADR on the NASDAQ. And so for whatever reason, that tends to be the jurisdiction where the vast amount of liquidity is generated. But my suspicion is with London and us passporting all of our prospectuses to London, that liquidity will probably go pretty gangbuster. That's just me speculating, but London is obviously a very meaningful exchange. Similarly in the Middle East, similarly in Asia, you're seeing ETFs being permitted in global jurisdictions everywhere. So I would speculate, and again, this is just me looking at the price and seeing what's happening, but we're in inning one or pitch one of inning one of what could be a very, very meaningful situation. uh crypto move uh especially with what we're seeing uh bitcoin doing right now um and i'll leave it at that ollie you want to do uh yeah so uh spencer i think you can stay tuned for our you know uh website launch of uh the

some of our information that we would disclose publicly in terms of opportunities we're looking for, partners we're working with, and, you know, types of reference kind of, you know, business models to kind of, you know, point and, you know, we'd like nothing more than to provide kind of transparent information you know, guidance and more information. Some of the stuff we are doing is proprietary. So to keep a competitive advantage, we're, you know, keeping a lid on some things, but we will definitely have more information in the next few weeks.

And one thing I can add to that, Spencer, 20 years ago, 30 years ago, in the traditional capital market, spreads were far greater. And you were seeing... The original hedge funds capturing 10, 20% profits just on new issues. Where I'm going with this is the crypto trading universe is like those historical days in the equity markets. As liquidity increases and as crypto becomes more household adopted, those spreads will change and those opportunities will change. But for the time being, you can just go look at what galaxy's done off their trading desk on a quarter over quarter basis um you know we realized we were crazy not to be trying to do the same thing because like like i mentioned johan thomas ollie these are these are crypto pioneers who know this stuff inside and out and and have the relationships to capture meaningful profit um so it it it It's not something that I think is going to be there for a decade, but for the near term, it's something that you can and I hope will expect and will see meaningful returns for us, especially for a company that really only costs, like we've said, about $10 million to generate. If we can do that in one quarter consistently, that's $30 million in profit just off of our trading. That's not to mention just the liquidity revenues we're generating um you know which we haven't even talked about we're but we're making close to 50 million us just providing liquidity uh for people buying our products daily um ollie can you do you want to do the up list just because the next james james is a buddy and i wouldn't mind answering his his question yeah i mean up list i think we've we've touched on that and um you know i think in the in the coming kind of you know weeks you'll see more more news in terms of our

strategy and visibility there. So, so it's staged.

And I'll do, uh, you know, I'll, I'll do both of your questions here, obviously. Thanks for, for joining in and glad to have you as a, as a shareholder. Um, really appreciate your support. What are the barriers to entry in our business model? They're, they're regulatory. Um, And, you know, the way I think about it is how long did it take us to get this company permitted? And that's Ollie and Johan. And if I misspeak this, Ollie, you can tell me. But you're basically looking at a three to four year regulatory moat. It's not easy to go through the process of getting all of this approved, making sure your systems work, having the wherewithal to stick with all the regulatory questions. And why that's so important is literally just as recent as nine months ago, I don't think anybody was looking at getting into this industry because Bitcoin was hovering at $16,000 to $20,000. And there were people speculating that the ecosystem was dead. The question about our yields and margins, I think, follows from that three to four years. But the way I think about it, Jim, is, and Ollie, if you have a different thought for sure, get in here, but because of the moat and because of our revenue model, and you're seeing how difficult it is just even in the US, You know, the SEC is permitting these products, but they're not allowing staking. They're making it very hard to even get the products approved. You know, that's due to political issues, not due to the viability of the ecosystem, in my opinion, because the rest of the world is adopting it. In my opinion, if you think of it just logically, the U.S. is hurting themselves because they could be owning and really embracing this ecosystem. But the yields and margins... You know, they've held up for a decade already. So even if it's just another three or four years or five years, we become a very appealing acquisition target because other folks such as the Black Rocks, the Fidos, the Vanguards, everyone else who are launching these ETFs, their revenue model is managing fees. Ours is far more substantial than that. um and then the next question is where we break even i mean we did the math on that i think it was 12 000 bitcoin ollie um it's obviously changed now because of all of our other products and and jim it will continue to change because as we launch more products we become more diversified and so that break even drops lower and lower and lowers so it protects us more and more and more ollie have you got any

Yeah, I think, you know, with the majority of our debt erased off of our balance sheet, I think that goes considerably lower. And, you know, I think we'll always be in a way, you know, where we can also, you know, make money off of our products like short Bitcoin. Yeah. possibly will be, you know, coming out with new products like, you know, short Solana, leverage Solana and all of these things. So I think, you know, the more products, the more robust we'll have in terms of our profitability matrix for, you know, both scenarios of volatility up and down and, and be able to unlock value in, in both market movements.

Yeah. I think we already nailed this next one, right? So let's get rid of that. You want to try that one?

As far as you mentioned, Middle East and Singapore, have you considered Sharia compliance products, knowing that on essence, growing ETFs that are adopting Sharia compliance can be built specifically for cryptocurrency similar to normal ETF manager movements? I mean, about 50%. Three, I would say three and a half, four years ago, I met with one of the governors of the Central Bank of Sharjah. Sharia compliance products, something that we're, you know, actively, you know, working on with stakeholders, obviously with kind of, you know, Muslim-centric populations in Singapore, specifically in both the Middle East, we want to appeal to as a diverse crowd as possible. And I think there's other opportunities in the Middle East, Qatar, and other innovative markets. And we'll do everything we can to ensure that our products are accommodating to the most diverse range of people and accessibility parameters. So definitely a topical question that we're definitely addressing.

And then Dave is asking what percentage of the trading profit or trading revenue is a profit. I think everybody needs to look at the company as a whole. So we basically did 10 million US in revenue in Q1. Q2, the math is really easy and I'm using US numbers here, but our AUM is basically 50% higher in Q2. So multiply 10 million US in Q1, which is basically break even for the year just in Q1. So you have 15 million US, call it in profits for Q2, and you have 40 million in profits off of the trade. So we're already at a 55 million profit run rate in the first six months. 55 million should be trading at 20 times profits, because we're not even talking revenues, we're talking profits. That's a billion dollar AUM company. And if you look at our US market, that's a four bagger from our current share price. So there is a massive valuation disconnect here, which we're obviously gonna be working on aggressively to change. There are broker dealers all over in Canada and the US that are reaching out to us now that they're seeing what this company is doing. And this is the irony, everyone. And people always ask, why don't more companies cover us? Well, I helped build a company called Echelon. And when you're talking to the Canaccord, Stifles, Echelons, Morgan Stanleys, you name it, anyone, the reason why they love the miners and the reason why they love the galaxies of the world is because they always need money. They're always diluting shareholders. We don't need to raise money. And as a result... fewer and fewer broker dealers want to cover us because they can't pay their staff. So it's almost like a double-edged sword where people need to be, you know, asking, um, Asking why broker-dealers don't want to cover uber-profitable companies? Well, I just gave you the answer. So I'll leave it at that and let Ollie talk about, I guess, Joseph's question here.

Yeah, I think also just to touch on that, it's been, I think, you know, my third or fourth, you know, bear market and obviously over the course of the last kind of two years, I like bear markets because you clamp down on costs, you cut out excess, focus on core fundamentals, but now that the market is back, robust, I think you'll see a lot of other product launches, things coming out of our venture studio. Now that the market's back, we have a sizable war chest to opportunistically roll the dice and make bets. where there's tons of opportunities. So I think DeFi Alpha is just kind of one of those opportunities. To move to Joseph, offering product on Bitcoin seems like it could be a real game changer. How are you approaching marketing the core chain ETP product and getting it in front of explaining to your existing and new customers? So yeah, we definitely think it's a game changer to offer yield and not just a small amount of yield, just under 6% for the world's largest digital asset. We see it as a complete game changer for retail and institutions. We're working with the core foundation directly on marketing campaign and you'll see more initiatives in the format of short form videos, research coverage out of reflexivity around the product and a lot more marketing to educate customers what it means to receive such a high amount of yield on an asset class specific to Bitcoin that obviously a lot of people want to hold almost generationally, like gold. So you'll see a lot more Joseph coming out of our marketing department around the core yield Bitcoin product, as well as our core ETP that will be coming out shortly.

And then Chris asks, do you have any direct competitors? I mean, really, the only competitor I think of as direct is 21Shares, Ali. Do you agree? I mean, there's a couple of smaller guys out there.

Yeah, I think there are, you know, 21 shares, which was, you know, essentially kind of created by Johan, my co-founder at Volor. I think really what it comes down to in this space is being there's so much innovation involved. uh happening in the in the crypto ecosystem that is you know just really staying um up to date up to speed with um you know foundations and the innovators building these these new protocols the you know the next solanas that are coming out making sure that we accommodate listing venues for them and um as as long as we're at the forefront of that i i see it you know that that we're that we're rowing you know our own canoe

Yeah, look, competition will come eventually. It's just that there is a large regulatory hurdle to get there.

I think we also have a dedicated, loyal customer base that trusts our technology infrastructure and our product would hopefully like the products that we're introducing to the market. Yeah.

All right, anonymous question, US listing. Look, we just need to get to a reasonable share price. And again, like the amount of questions I get on, well, why are you trading so cheaply? My answer to that is always the same thing. Well, why aren't you buying it? Like, I don't understand... It's almost like people look at a valuation opportunity as a weakness. People have made money over a century in the capital markets, finding mispriced equities, getting long them and making a lot of money. The question you should be asking yourself is, why am I not adding as much as possible to this stock in my portfolio? Because we were trading at 60 cents, 50 cents, 40 cents. And I was very, very adamant. I was very, very bold. And I just said, look, you guys, eventually valuation will always trump valuation. mispricing in the markets. We're still there. I would argue based on where we're guiding and based on what we've told you, we're actually cheaper now at $1.10 or $1.20 than we were at 80 or 60 cents when we had a different revenue model because we hadn't started DeFi Alpha. Our revenues and our profits are growing faster than our share price is maybe the best way to look at it, which provides a massive opportunity. So to answer the question about the US listing, we just need the stock to be at $2 US and we're moving there closely. And we can engage an up listing or look to pursue an up listing onto a relevant US exchange. That is absolutely at the top three of our priorities in terms of getting reasonable pricing. Because of you guys who are listening to us and funds and individuals, aren't going to take advantage of this mispriced opportunity, then we have to find other people to do so. And you can do that through, obviously, uplistings to other major exchanges. But don't just think only U.S. You know, the Middle East is a massive opportunity. Europe is a massive opportunity for us to uplist our stock. That's our primary market right now. If people aren't going to recognize this opportunity, this meaningful opportunity and this this divergence between profits and valuation we will look to to go elsewhere for opportunities to do so molly anything to add or you want to just take fab's It's the same question actually. So I'll get it. I might as well. Look, we're going to do this as soon as possible. Do I think an uplisting is possible by the year end? I think an uplisting is possible in the next two months based on our guidance and what we've just shown you as the opportunity in our share price. You want to take Mark, Solly?

Sure. Hey, Mark. The question is, can you enumerate for the audience the ETPs on our shelves for which we are the sole issuer of in the marketplace globally? So, yeah, we have quite a few, you know, Uniswap, ICP, Hedera, the new one that we just launched, Ton, also Chainlink specifically. Core. which will be coming shortly. And, and like I said, my, my kind of, you know, our, our, I would say our largest growth factor for, for Velour's business was being timely in our product launch for, for Solana and the ecosystem. So for us to work with foundations and innovators directly in, in the form like we're doing. So with core of launching these products, um you know before they reach you know multi-billion dollar market capitalizations and working with regulators to make them comfortable and ensure that our you know technical and risk parameters are sufficient to you know give exposure to our clientele at earlier stages is really kind of you know a significant amount of of time so you know we definitely have world first we'll continue to have more world firsts and And, you know, I think that that will remain as one of our major competitive advantages is working directly with foundations. We've done so, you know, this really only started a few months ago, but, you know, we've directly worked with ICP, Hedera. core foundation now, and we'll continue to work with foundations directly, which makes it obviously a lot easier for us to market the products and have a mutually symbiotic relationship with us as a company, and it also attracts other foundations to reach out to us organically. So we're excited about being the leader in a bunch of different new ETPs going forward.

Jim, always happy to answer your questions again. So why are top line revenues negative? This is kind of the bane of my and Ollie's existence on a quarterly basis. There are mark-to-market adjustments that the regulators force us to make. For example, sometimes we have a very large FX loss. It's actually not our loss. It's that the average price of the Bitcoin we bought for our clients to hedge out the ETP exposure and the Bitcoin or Solana or ICP or whatever, if that happens to be below the average price, there's an FX mark to market loss, which isn't actually a loss, which will skew those revenue numbers. But in this particular case, it was due to a Genesis exposure. And if everybody's following Genesis very similarly to what happened with FTX, there's now about 130% coverage on the Genesis loan we had. So we believe, and all the lawyers are still going through it, but you would have seen recent news saying that, you know, Genesis is going to pay back everyone. We believe that we should have a zero on that. But we had to make a non IFRS adjustment, which I still feel strongly otherwise, but to satisfy the regulator, even though at the date of Genesis bankruptcy, we already took a hit, the regulator asked us to take another hit, which then subsequent to that, Number, literally three days, four days afterwards, there was news out that Genesis was not only going to pay everybody back, but they actually had the ability to pay everybody back and then some. So we're still waiting on the ultimate outcome. I would argue that it's not even a mark to market. It was a contingent. But again, if you just do the math on Q2 and our trading profit, even if you include that, we're still at $45 million in profit. So that's not to say it's not meaningful. It's simply to say that we do fall, unfortunately, underneath a regulator that despises crypto, similar to the US. And sometimes there are what I would consider to be accounting measures taken that are erroneous and incorrect. But unfortunately, that's the world we live in. And I do believe that as this ecosystem becomes more and more and more accepted, and retail, you know, adopts it, institutions adopt it, that this whole regulatory dislike for this business will change. So hopefully that answered it, Jim. And if not, I'm happy to talk off this call just because we're at 2.57. We've only got three more minutes. Ollie, you want to hit the next one?

Yeah. This one's from Fab. With miners having limitations on them, do you ever see the day that Hive and DeFi can get strategically closer? You know, we're Happy to have, you know, Hive is one of our largest shareholders and, you know, I've had, you know, discussions about, you know, optimization of, you know, using our trading desk technologies with, you know, miners and things of that nature. So I definitely think that, you know, the nature of miners, you know, a lot of them have diversified into, you know, artificial intelligence and other use cases for other revenue streams. So, you know, I would definitely think that, you know, miners will kind of need to continually diversify their business models.

Is the company plan to make a share buyback immediate? Look, guys, if our share, Ali already answered this, but if we continue to be If people can't figure out how cheap this is and how much of an opportunity it is to buy it, we would not be a good or smart management team not to buy our stock back at one-sixth the reasonable valuation that any other company would be trading at. And that's miners, Galaxy, any of these other crypto entities that are trading at many, many, many multiples higher than we are.

Um, all you want to take this one from an anonymous, how are you modeling the new BTC interest product or analyst? Um, I would assume that's for analysts. Um, yeah, we, we have, um, you know, all of the information, um, available online and analysts have already started to cover information on those new product launches. We're fairly transparent with all of our product metrics and I would assume that'll get picked up in analyst coverage going forward. I can take the next one from Richard. they deploy significantly more capital into the DeFi Ventures line of business. You know, Richard, great question. We're absolutely assessing, you know, a large number of potential deals and opportunities. One, you know, DeFi Ventures was set up to take stakes in early stage protocols that can then be listed in the form of ETP Ventures. So kind So we're looking at opportunities like that. And then we're also looking at opportunities that would complement our DeFi Alpha trading line of business. And having stakes in some of these earlier stage protocols benefits us. We'll definitely do that, but we'll definitely look to invest more going forward. And I think you should be seeing some of those announcements quite shortly.

Greg wants to know why the market's not valuing us adequately. Well, we're in Canada, we're on the OTC and we don't have a household name like Galaxy, Hive, Hut, Marathon. But again, the question you should be asking yourself is why you're not buying more with the opportunity pretty much as obvious as it is right now. As more analysts cover us and there are more looking at us, as more brokers want to take us marketing, there are brokers who want to take us marketing, this valuation discrepancy will disappear. And just like when we were trading at $0.60 and I was committed wholeheartedly to telling people that this will be trading higher, we're trading at $1.20 Canadian now and I am very, very confident that in two, three, four months, this will be trading at $3, $4, $5 because valuation discrepancies like this never, ever, ever stay. Basically, funds figure it out, people figure it out, and it disappears. So you guys have it. I think this will be much higher very, very shortly. I don't know if we want to give price targets, Ali. I think they can do the math unless you want to.

I think we have covered that.

I'll just hit Jim quickly just because I do know him really well. Jim, we're already sitting on excess capital. We have 9 million at the end of Q1 and 40 million less 20 we paid down for debt. So 20 million US times 1.35, that's... 26, 27 million plus nine, that's 36 million in cash sitting on the balance sheet today, not including monthly profits that we're generating currently.

Yeah, Bobby, there will be a copy of this posted online, I would imagine, and emailed out to everyone who subscribed. Spencer, yeah, I think we've covered both. Unless you wanted to try that again, Russ.

It's just, you know, we get to $4 or $5 billion in AUM. That's $400 or $500 million in revenue, minus $10 million for costs. You guys can do the math. That's $16 billion valuation. That's crazy numbers, but it's possible. No, Mike, our revenue guidance includes the revenue from DeFi Alpha, but no revenue projections going forward. So we're just assuming a one-time gain for DeFi Alpha. But as I've walked you through, Mike, we're already at 55. Even our guidance, in my opinion, is low, but it's better to be safe than sorry. Okay. And, Ollie, it's 3.04. I know there's some more questions. Do we want to keep going or should we?

Yeah, I'm looking at them. I think we've pretty much, you know, covered all of them. Buyback program, we've covered Jeff. If there's an up list, will there be a symbol change? We'll probably, you know, keep our symbol in Canada and drop the F on DFT, our U.S. symbol. And I think that covers it.

All right, everyone. Thank you very, very much.

Russell, Ollie, thank you guys very much. That was a great webinar. Really well done.

Thanks, everyone.

That concludes today's webinar. Thanks, everybody who's joined the call today. As Ollie mentioned, a replay will be available shortly. And keep an eye out on social media channels and eBlast. If you have any follow-up questions, please reach out to me anytime. It's jamie at irlabs.ca. And thank you, everyone, and have a great day ahead. Thanks, guys. Thanks, everyone.