Defi Technologies Inc

I'm going to start off by reading the risk and forward-looking statements. So, this presentation given and certain statements made within this earnings call, which are not historical facts such as expectations, anticipations, beliefs, and estimates are forward-looking statements. These statements may include, without limitation, any statements preceded by, followed by, or including words such as target, believe, assume, expect, commit, aim, intend, may, anticipate, foresee, see, estimate, plan, project, will, is to, focus, can have, likely, should, would, could, continue, in other words, in terms of similar meaning or the negative zero. Others can be identified from the context in which statements are made. Forward-looking statements give the company's current expectations and views of future developments in light of its current experience and perception of historical trends. Based on numerous assumptions regarding the company's present and future business strategies and environment in which it will operate in the future. Although the company deems such forward-looking statements to be reasonable, no assurances can be given that they will be proven correct. The forward-looking statements are not guarantees of the future developments or results mentioned herein. Forward-looking statements involve known and unknown risks, uncertainties, and other factors, such as but not limited to general economic and industry conditions, which are, in some cases, beyond the company's control, which may cause actual results to materially differ from the expressed in such statement. The statements are made as per the date of the presentation as this earnings call, and the company does not assume any obligation to review, update, confirm any forward-looking statements contained herein, except to the extent legally required. Great. Welcome, everyone. And first off, what a great 2024. Congratulations here to management and congratulations to our shareholders that have stuck with us for the past few years. And from here, I'm going to hand it off to our CEO, Olivia Rusi-Newton. But first, I'll also introduce the rest of the panel today. Of course, Ali, CEO, Johan Wattenstrom, the co-founder of both DeFi Technologies and Zalor. our CFO, Paul Bozzocchi, and our Corporate Secretary, Kenny Choi. Russell Starr should also be joining us here as well, our Head of Capital Markets. I'm Curtis Schloffman, VP of Marketing and Communications. Ollie, take it over. Thanks a lot, Curtis. I think we, thanks to everyone for being here. I think it's been a transformative year for both DeFi technologies, our subsidiaries, and the overall, I would say, regulatory framework for general assets globally. We've read through this, right, Curtis? Yeah. Yeah, sorry. So overview on DeFi Technologies. We're a publicly listed company, traded on SIBO, OTC Markets, and Frankfurt. And we're, you know, connecting traditional capital markets with a rapidly evolving high-growth world of decentralized finance and Web3. Through our whole deal of subsidiaries, venture portfolio, trading desks, treasury strategy, and industry partnerships, we enable traders in a regulated manner. We have about a four-year operating track record. Velour was, I think, conceived by myself and Yoann in 2017 and took a few years to get regulatory approvals. Today, we have 60-plus listed exchange traded products. for this 2024, $204.3 million Canadian in 2020 for adjusted net revenue. And yeah, to close off the year, we just before kind of the end of the year finalized Neuronomics, so five businesses in total. And, yeah, we're very much a founder-led team. As I mentioned, Velour was incubated by myself and Johan in 2017, and DeFi in 2020, and both of those in Malibu made it in 2021. We have diverse business lines. to the wave of blockchain-based assets, services, and applications. And, you know, going forward, now that we've kind of dramatically increased the strength of our balance sheet, proven our business model in the form of a look to scale that across new geographies, we've also started to make strategic and creative acquisitions that, you know, fuel the growth of our balance sheet and have all been extremely strategic. Here's a bit of an overview, graphically speaking, in terms of the different business segments within DeFi. So, you know, we'll start from left to right. We have reflexivity research that we acquired at the start of last year. Reflexivity has really been kind of a bolt on. value-added service provider to our main and largest subsidiary, holding-owned subsidiary, Velour. So when we go out into the market with new exchange-traded products, we have, you know, cutting-edge research, and it also allows us to, you know, see the emerging trends in the digital asset space and effectively kind of know what products to list next and where the interest lies. Stillman has definitely been an extremely fast-growing company, very sharp team of young entrepreneurs that have definitely carved out a niche market and a very competitive trade in terms of AUM capacity globally and was the first cinema regulated bank in Switzerland. One of the first kind of crypto banks in the world. A fairly new business segment, which we'll touch on a bit later in more detail is DeFi Alpha. DeFi Alpha's sole focus is identifying low risk arbitrage opportunities within the crypto ecosystem. This past year, we did, you know, 133.1 million, just under 100 million USD in revenue. We have a somewhat substantial venture portfolio, you know, just over 50 million CAD, just under 40 million USD. And the idea and premise behind our venture portfolio is similar to reflexivity is is streamlining new ETPs, new products to kind of be invested in and bring to market first within our Velour business. One thing we're very excited about is our kind of majority acquisition of Neuronomics. And we, you know, we believe, you know, artificial intelligence will be ingrained systematically in all kind of facets of digital assets, and we see kind So this is kind of, you know, high-level numerical facts on 2024. So adjusted book value of 192 Canadian. Adjusted 2024 net revenue, 204 million. Earnings per share, 39 cents. Market capitalization of, you know, roughly 1.2 billion. Asset center management A little over a billion Canadian dollars. Adjusted EBITDA is 116 CAD. And, you know, cash and digital asset treasury on balance is 81.3 million. And 2024 return on equity based on adjusted income is 6%. So these are some of the financial highlights of Q4 2024. We reported 22.4 million in cash on hand, up from 6.8 million on December 31st, 2023. As of December 31st, 2024, the company's treasury holdings included 208 Bitcoin, 121 ETH, you know, just under 600,000 ADA, which is Cardano, 131,000 DOT, which is Polkadot's blockchain, 14,000 SOL, 491 UNI, which is the Uniswap token, 433,000 AVAX, which is the Avalanche ecosystem token, and just under 2 million core tokens. The company's venture portfolio investments were valued at $53.7 million as of December 31st, 2024. Total value of cash, treasury, and venture portfolio stands at $135 million as of our year end. Total adjusted revenues were $42.6 million for the three months ended December 31st, and $204.3 million for the 12 months ended December 31st. Adjusted net income was 19.1 million for the three months ending December 31st and 115 for the 12 months ending December 31st. Adjusted EBETA was 20.8 million Canadian for the three months ended December 31st, 2024, and 116.1 million for the 12 months ended December 31st, 2024. On to the LOR. large generated staking and lending income of 12.8 million Canadian and management fees of 2.9 million. AUM grew by 132% since December 2023 to approximately 1.18 billion as of December 31st. Driven by favorable market conditions, obviously kind of, you know, new crypto-friendly administration in the United States and, you know, an aggressive strategic corporate action. Stillman, it's not been with us for a long time. We worked kind of diligently. There was several subsidiaries that had to be amalgamated. Regulatory licenses in the digital asset space aren't always easy to kind of cross over into new entities. So we finalized that acquisition a few months ago. I think it was mid-October. And they generated just under $3 million in revenue and are growing extremely fast. So, you know, once we have a few more months of still on our balance sheet, we're very excited about the synergistic benefits of that business to Velour, DeFi Alpha, and other opportunities we're looking at. DeFi Alpha, specialized arbitrage desk, as I said, we'll touch on that in a bit more detail, generated $132.1 million. We are very careful in terms of not exposing ourselves to losses in that business. Reflexivity, very complementary to the war in the form that they have. that people can review before selecting which, you know, exchange traded products they would like to purchase have just under a million dollars in revenues for the three months ended December 31st and 2 million for the 12 months ended December 31st, 2024. Here is our, you know, kind of AUM, E&M, net sales in USD. As you can see, we've kind of had a, you know, a very robust increase into 2024 as digital asset prices climbed. And Johan, did you want to touch on any specific kind of data indicators pertaining to this slide?

I think the most important bit here is actually we launched 20 new products in November. As you can see, a larger portion of the AUM has actually gone into under the largest assets and the ones we had before. So I think it's around 20% now. It's in mostly these 20 new smaller points, which improved our products mix quite a bit. We've seen healthy inflow for four months or eight months and going on into the start of this year as well.

Yeah, so I think, you know, to touch on that, as Johan mentioned, we've been bringing smaller, I would say smaller or newer coins to market that are definitely a lot popular, a lot more popular than, say, you know, what people might refer to as the blue chip digital assets. People want, you know, exposure to volatility and growth, and we will continue to our clients across incoming geographies. I think another point to add that's really important here is that we haven't had a net outflow month in probably a little over two years. And then, in fact, last month in February when you had billions of dollars in outflows in all the ETFs globally, Valor still saw total inflows over $11 million into our ETPs. So, these products are very sticky. We continually see net inflows month over month and hope to see that trend continue. Yeah, definitely good point, Chris. It's nice to have a demographic of clientele that are risk on. Yeah. So, you know, obviously, we're confined by, you know, some of the things that we can share. But, you know, this has been an ongoing process since 2021 with specifically the FCC. So, you know, just to recap things, mid-September, the company filed a 40F registration statement with the United States Securities Commission. in connection with its application to list its common shares on the NASDAQ stock market. On January 17, 2025, the company filed an amended 40F registration statement with the SEC. The listing of the company's common shares on the NASDAQ remains subject to the approval of the NASDAQ and the satisfaction of all applicable listing and regulatory requirements, including Form 40F, common shares on the NASDAQ. Obviously, there's lots of benefits to being listed on a major US exchange. Most people know and help, you know, DeFi make a name for itself, which I think is, you know, still kind of largely unnoticed in terms of our, you know, profitability and uniqueness of our business model. And so, yeah. And obviously, as we get material information, we're, you know, press releasing it right away in terms of this. I think it was... You know, kind of a jump ball with, you know, the election going into the end of the year. And once we had kind of a, you know, pro-crypto president, the game has definitely, you know, changed in terms of what we're seeing and the optimism across the border from Canada, you Do you want to comment on anything, Russ?

Yeah, I was just going to say one interesting anecdote for everyone is that not that we're Galaxy or, I mean, I guess in a way we're similar to Galaxy in some aspects. But Mike Novogratz was on, I believe it was CNBC, saying that he believed that the SEC was just waiting for annuals to be filed once the annuals were filed. And of course, met whatever the new hurdles or restrictions were that the SEC is putting up, which are completely different today. I believe they're not considering any of these tokens as equities anymore. They would then see, or the SEC would then see uplifts on a far more regular basis. And that was out of a galaxy, not out of us, but just gives you a little bit of context.

And then from my desk, we have a PCOB-compliant auditor. We filed our annuals, so there's nothing holding us back from the financial and reporting point of view. We would be listed in the United States on NASDAQ as what's called a foreign private issuer. It's really just getting effective with the SEC, which management here hopes it's Q2 and hopefully sooner, earlier in Q2 than much later in Q2. so um you know probably one of our biggest endeavors um across the company um has been our strategic and global uh expansion so you know we we have 60 60 etps as of now um targeting 100 plus by by year end um which are some of which include leveraged and warrant products um we've been you know the first mover in a lot of these markets such as Africa, Asia, Middle East, which has its benefits, but also has a process to educate local regulators, exchanges, legal firms in terms of what digital asset offerings mean through a stock exchange and how to keep them secure. Some of our strategic partnerships that we've announced our MOU with the Nairobi Stock Exchange to list our ETPs in Kenya. And one in Singapore with a new exchange that's backed by SBI Holdings and SIX, which is the Swiss Stock Exchange called AsiaNext. And we should be seeing, you know, they're moving at a very – both moving at a very fast pace. And so, yeah, we're using kind of some of these markets as a blueprint to then further aggressively expand, you know, Singapore into other Asian markets, Kenya into other African markets. put in place eligibility letters in the Middle East in both the DFM, the Dubai Financial Markets, and with the Abu Dhabi Stock Exchange. So, asset management outlook for 2025, you know, I think we, you know, being in a highly volatile macro environment, definitely tread on, you know, the side of, you know, optimistic, but also, you know, definitely want to be conservative as, you know, I think the world embraces kind of a new, some, I don't want to say kind of new world order, but a world order where, you know, assets and volatility kind of change and fluctuate on a daily basis. That'll take a little bit of time to kind of smooth things out. But just, you know, some quick kind of factors and highlights. AUM growth is up 900% since market lows in 2022. We already covered kind of some of these. Some of these specific numbers were driven by favorable market conditions, new ETP launches, but we will continue to do. And we're always, you know, from a technical perspective, working on increasing, optimizing, staking the lending fees, making and automating our trading desks to make those more cash flow generating, less human error, and, you know, you know, we gave, you know, conservative guidance of 227 million Canadian, 159 million USD. And Johan, I'm not sure if you wanted to kind of touch on kind of how we systematically came up with these numbers at all.

I think they're mainly derived from the momentum and the trends we see right now, but also Obviously, we have been, as you said, quite conservative in our assumptions. I think we are quite optimistic about the market for the full year, but in these assumptions, we cannot assume the same levels of the market as we see right now, where the core business driven by the AUM monetization will be at a much higher level than last year. We have chosen to be quite conservative on the DeFi Alpha side. We have a quite an aggressive growth of our pipeline of deals and but it's very hard to pin down exactly when they go through uh what we uh we anticipate a strong next quarter within that business and then it is harder to to know exactly how many deals we'll do at what month but These are the different trends we've been taking into this. But we're trying to be quite conservative at the market. At the moment, we don't want to make any optimistic assumptions about the market for the full year, even though obviously we are very bullish on the crypto market as such ahead of the next few quarters. But we haven't actually taken those things into those assumptions and projections for the year.

Yeah, so, you know, just to visually kind of put in place the geographic expansion, we started new products as United Kingdom's FCA regulators opened up the You know, again, there's a lot of regulatory education required, but I think once we can get some of these landmark innovative projects, it's fairly quick to mirror them into new markets. We've announced a joint venture in the U.S. with Anthony Pompliano's PCM. Canada, where we are still assessing the right joint venture partners. Africa, we've signed a MOU with an ROE stock exchange in Kenya. You know, Africa, I think, is a very interesting market. And also, you know, with, you know, treasury-related introductions and basically kind of, you know, starting with United, for their kind of governments and or sovereign wealth funds. African nations and others around the world will be quick to do so and would feel definitely more secure doing so through regulated stock exchanges that, you know, their countries control. UAE, as I mentioned, two eligibility letters have been submitted in Dubai and Abu Dhabi. So we're progressing quickly there. We're also exploring four or five other Middle Eastern countries that are definitely progressive and opening up to digital assets. Again, similar to Africa and UAE and Singapore for that instance, once you're able to kind of list and, you know, provide a benchmark for products working logistically So, you know, this is kind of a slide that just kind of goes over the, you know, the type of digital assets that we're thinking of. And, you know, obviously, you know, the world's changing very rapidly. We've developed a very large clientele of people who definitely want exposure to new innovative asset classes. So we have a whole range of topics that will convert into productization for our end users. And obviously, digital assets is very interesting, but digital assets can also be mixed with various other commodities. We'll see a lot of innovation happening with our recent acquisition of Neuronomics, applying AI, not just to digital assets, And Johan, I'm not sure if I missed anything here or you wanted to touch on anything in more detail.

Yeah, I think the main point here is that obviously we, after the success we had with the new assets listed in the end of Q4 digital assets, we continue to roll out a lot of new ETPs on the digital asset side, for sure, to build on that success and that momentum. What we're going to add to that now, hopefully the first half of the year here, is the active strategies, active demand certificates and so on, on more different types of strategies, alpha-type strategies, including aeronomics strategies in this realm, and not only have the passive type of ETPs. And we also, besides working to expanding the online assets universe, we also, pushing quite hard on broadening the scope of investment vehicles for this purpose. So right now, it's only ETPs, ETN, but also warrants, as mentioned, funds, asset-backed tokens, all in the works. But yeah, we're building on the infrastructure for those vehicles to reach a broader audience or broader audience of investors. And as we also mentioned here, besides the one-on-one practice, we see a lot of also structured products and other types of on these ETPs, ETMs that we see a big demand for, which we hope to roll out now in Q2, Q3, hopefully, very soon, yeah.

So here's our... you know, assets outlook or digital assets outlook, corporate outlook for Stillman in 2025. As I mentioned prior in the call, it took several months to get the regulatory licenses over from their various subsidiaries into, you know, an amalgamated structure. We're forecasting, you know, 12 to 16 million for 2025. Again, you know, always treading on the conservative side, driven by trade volume growth and new business initiatives. Q1 2025 forecasts $2.8 to $3 million in revenue with significant growth potentials as synergies with DeFi technologies and war materialize. Focused in 2025 will be, you know, business development, expanding the team to accelerate institutional client acquisition, focusing on Latin America and Europe. Product and market expansion enhance stablecoin, real-world asset market segment is booming, and we definitely have some inroads to have a seat at the table with Stillman's potentially new product offerings in that regard. Strategic partnerships, expanding global banking relationships. We announced kind of a partnering with one of the largest banks, Lichensheim Bank Frick, some months ago in Fireblocks to broaden client access and streamline fiat transactions and team growth, brand evolution, post-acquisition integration. We're still working on fine-tuning technology and trading technology across all of our subsidiaries. So we're very excited about the potential growth of And I think you'll see kind of more and more new products being launched and, you know, just general growth in terms of being a great business amidst market volatility. Johan, do you want to take this one?

Yeah, yeah, for sure. In general, the main points here I would say is we have two parts of it. One is the larger deals where we built a significant pipeline with deals that we are at high permission that will happen within Q2, Q3, especially two larger deals in Q2 that we have more or less signed. But those, as I say, if you go further out in the timeline here, it is hard to pin down exactly what month they will occur in. We project that this will still be a huge part of the revenue for the year. The other part here, which is more consistent on a day-to-day basis, is the more model-driven type of arbitrage strategies, which are, kind of integrated with our daily flow management and also the management of our balance sheet in terms of monetization of our full balance sheet, including liquidity, digital assets and so forth, which gives us quite a unique position to take advantage of a lot of both arbitrage and other type of model-driven strategies. We continue to build out the infrastructure and models quite a lot in this area. So that's one part of it that we see strong growth in. And the other part is obviously that we're focusing a lot on growing the exposure to and the pipeline of deals similar to what we were able to do last year. And we're really optimistic about the full year and also next quarter in this terms. So, yeah, we believe this will still be probably half of the revenues going forward for the next year, I think, and growing long-term. And also that this is, I would say, these type of trades are more un-correlated to, to the core business cash flow we see from the optimization of the monetization of our AUM and the rest of our assets on the balance sheet. Those are easy to project, but we see that those parts will have a huge impact here continually during the year. uh and uh we have been quite conservative in our estimates for the full year here as uh there might be some volatility in part of this in terms of deal flow uh but um yeah we are super optimistic on this part for sure and just want to emphasize there are two parts to d5 alpha it's the larger traits that we've seen but also

We have the daily systematic arbitrage through our daily flows that we see through our products.

Yeah, for sure. Both for the daily flow and also for the monetization of our liquidity and the balance sheet. So that's one thing. One silo here and the other silo is the kind of series of one-off deals that we see continuously while we're building our relationships with our counterparts and support, which we started last year. And we see a lot of super interesting large deals coming through this year as well. And some of them have taken more time than we thought. We actually thought we would finalized one or two of these in Q4 last year, but they are, those took a few more months. I think some of the counterparts are waiting a little bit because of the dip in the market we saw. But, yeah, those are, we have a high conviction that those will happen now in the near future.

Yeah, I think, you know, we, and just to touch again on DeFi also, I think it definitely struck good two and a half years for us to be able to accurately forecast with data endpoints Allure's revenue in conjunction with the ratio to AUM. So, you know, I know everyone is, you know, very eager to see specific breakdowns of DeFi Alpha's outlook and projections. But, you know, as the market kind of changes, which is what Johan alluded to And with that comes trading opportunities, but also risk-off opportunities, which, you know, kind of delay some of our core strategies. So, hopefully, you know, we're not even a year Given, you know, kind of global uncertainty, we'll always tread with caution and provide conservative outlooks on all these matters. So, to touch on neuronomics, you know, really, you know, kind of rocket science PhD team, March 7th, 2025. Our strategic growth initiatives, expanded model driven AMC program. So we're partnering with Ward, Broadland, an actively managed certificate suite, leveraging proprietary AI for strategy development, proven through their AI platform, Neurofin. Market diversification, extending expertise into new launch AI power rebalancing strategy for the tech sector. So there's, you know, a large pipeline in place, smart crypto AI, Q3 2025, so high, you know, portfolio product that gives you high risk-adjusted returns across cryptocurrencies, crypto alpha AI captures alpha in the digital asset space. And then we'll be rolling out, you know, an equity solution, which we're very bullish on, targeting beneficiaries in the technology stocks. And, you know, with this, there's so many new fund managers and institutional capital entering the space. I just think that every institutional and or fund manager is going to have to have a breakdown of their portfolio and digital assets managed by artificial intelligence as we see, you know, enormous leaps and bounds every day, essentially, towards AGI. So, you know, in the kind of majority acquisition of Neuronomics gives us compliance in TechEdge, products in Switzerland where, you know, there's a huge number of family offices, institutional capital, large banks looking for products of this nature. And we have scalable infrastructure to go along with that. So we're very excited about being able to launch, you know, AI-infused digital asset projects. and then also get into equity products. And Johan, I'm not sure if I missed anything on this.

I think that that captures some interesting points here. And I think, as you said, they have a very long track record of research and have been running actual strategies in the crypto market driven by different forms of AI. And we're also looking forward to to apply this technology across some other parts of the group as well.

And here's just a bit more of visuals on just their AI strategies that are performing general crypto indexes. I think all of this is available on our website as well. So two pure play exposures to Solana and Bitcoin Finance. So we've been pushing forward on, and obviously partners with the team at Core, you know, really love what they're doing in terms of, you know, inventing a non-custodial staking and dual staking for Bitcoin. They definitely have the highest committed amount of Bitcoin to any kind of chain of this nature. and we'll be pushing forward aggressively with kind of all of the changes in the U.S. administration. We're definitely working with legal counsel to figure out and facilitate the most and quickest streamlined approaches to market for both of these companies, which, you know, as we announced, will be distributed to DeFi shareholders. So very excited about this and funds globally. In-house Solana team, we acquired Solana technology proprietary algorithms that maximize the yield when it comes to this. So we'll definitely be, as things become material, press releasing them. And I think just in light of the new administration changes with the SEC, we've definitely been figuring out and optimizing trajectory for the Great, so now we can move to questions for the last half of the call. You can type your questions into the chat if they already haven't been answered and I'll just cycle through them. Let me pull up the Q&A.

We'll start with Michael. I've answered a bunch of them just while we've been on the call just to make sure we could get through them. Awesome, thanks Russ.

We'll start with Michael Kim. a analyst from zacks in terms of the analyzed revenue projection of canadian 227 million for 2025 excuse me is that based on aum as of december 31st 2024 uh johan yeah go ahead yeah i think to break down there there's a few uh inputs uh in in that um where we derived that from but

We have actually assumed the same levels of the crypto market as we have right now. But we have built in a trajectory for the AUM we think we'll get from our new launches in terms of products, which is based on the kind of inflow we've seen in prior launches, both now and now in Q4 last year, but also prior to that. And the new geographies that we will get during the year. The main force there is the growth in our algo strategies, the new product launches, new geographies in terms of the AUM growth. The AUM growth that we have kind of based the monetization numbers on do not assume a higher market, but it's based on the Yeah, on the launches and the development of the business in terms of new products and so forth.

Great. Thanks, Johan. A question from Hal from , what is the best estimate for launches of ETPs in Asia, Middle East, and Africa, given the regulatory commentary and the call today? Yeah, I can take this. We are definitely, I think, in the final strides And I think we'll be coming to market with very innovative, you know, first of its kind product offerings specifically and primarily to target the money market funds that trade in Singapore. 30-day time horizon in terms of Singapore. We are really in kind of like final steps with both Middle East and Africa. And, you know, it's really up to the regulators, you know, similar with the SEC to give us the green light. I think we have some people who drive a lot of influence in these markets. So we're pushing as far as we can on the daily basis. in regards to that.

Another question.

Can you speak to the custody risk of the assets, tokens, cybersecurity issues, how you custody, and is that risk borne by the unit holders as well?

Yes, I can comment on that. We have a short list of custodians we use, including Copper, including Anchorage Bank, including Bisco, and most known names. I Yeah, I would say we have a really low risk in this regard. We have been custodying crypto assets for 10 plus years of this size, and we have a really Our process has developed these 10 years, so it takes a long time for us to actually onboard or allow a new custody solution into what we do. And I would say we feel super comfortable with our process for onboarding new custody solutions. We don't do that often, but we have a very short list of custody counterparties we work with, third-party counterparties we work with. I don't know if someone else wanted to chime in there.

Johan, maybe comment about the fact that we also have several validators of our own, which as a result, you know, with our Solana validator, with our core validator, we actually aren't lending out basically any of those products because they actually sit on our own validator.

yeah yeah yeah yeah obviously the one part of this could be counterparty risk we we basically do not lend tokens at the moment uh so uh we we keep the coins with our custodians and and uh we do staking from those custody accounts uh and that's with our own validators i would say almost with all the underlying so so we have a tech team uh on board that has been both developing customer solutions for a very long time in this space, and who also are part of the process for allowing new custody solutions, third-party counterparties to come on. And we run the validators, obviously, for and within our staking technology teams. So we have that in-house, which also have obviously improved quite drastically our monetization rate during last year. Prior to that, we were using also third-party validators. So custody remains super conservative, but we have, from that delegate, our own validators now. Yeah.

And then I've invited analysts at Northern Capital, Mike Crandall, to ask a few questions. Mike, go ahead.

Hey, guys. Thanks a lot. Can you hear me?

Yeah, we hear you. Thanks.

Hey, so I think you covered the three new geographies pretty well in the Q&A section, but are there any new ETFs or ETPs planned for Europe and the UK in 2025?

Yeah, for sure. We are 60-65, I think, products right now. We're aiming for 100 for the year. So we did the next few weeks, we will launch another batch of product in Europe. And also, in terms of London Stock Exchange, it's up to the regulator. I believe that only Bitcoin and Ethereum are actually allowed in the UK as of now. But for the rest of Europe, for sure, we're going to aggressively go out with a lot more underlying products and more versions of those and types of vehicles as well. So you will see more larger batches of new products coming out during Q2 and Q3.

Okay, so we should understand the 100 ETPs, that's a goal for Europe and the UK. That's what that relates to.

Yes, yes. Got it. The UK only allows for Bitcoin and Ethereum ETPs right now. That's it. Okay. And I think there was a question that, you know, potentially touches on this, which is why we kind of work with smaller exchanges. For instance, Spotlight in Sweden is because, you know, they're more in tune with additional assets where, you know, where things are going and allows those flexibility to list new products. So we can't list more than two products in the UK as of now. We're, you know, we're working on something innovative that I can't really talk about. But we're trying to, you know, push the boundaries everywhere and anywhere, right? But with more, you know, there's definitely like the Middle East, Asia, they're embracing crypto. And once they see all of these 100 plus products on a recognized Euroclear regulated stock exchange, our goal is then to passport all of them subsequently into these new jurisdictions.

Got it. And then embedded in your 227 million Canadian revenue guidance, DeFi Alpha, it sounded like from Johan's comment, that could be roughly half of revenue in 2025. Did I hear that right? I'm trying to understand what's embedded in the 227 for DeFi Alpha.

For DeFi, in total for the company, I think we have the AUM, the monetization rate from the AUM at present levels. it's around 90 to 100 million us i believe for for the year projected and that's the monetization of our our aum based on the trajectory we have a hard conditioning for rolling out these products and there's no kind of nothing stopping us with the exchanges we worked on to actually do this so um yeah it's it's both and i think part of this will be from new products some of these products will be smaller market cap digital assets for sure, but also it will improve our product mix. So we have a higher monetization rate in terms of lending, staking, and flow revenue from the smaller assets. So it's both from new assets we put out there, the continuous growth as a percentage of the total of the smaller higher yielding products, So that's basically it.

Got it. And then just two quick questions. You know, we're sitting here at March 31st. Can you comment on the March quarter? Is it appropriate to take, I don't know, a fourth of the $227 million and say the March quarter is at least a fourth of that or close to a fourth of that? And then secondly, so far year to date, was there any large DeFi alpha trades?

What we can say here is that we have, you know, We have a very strong Q1 here from a core business, for sure. I think it's actually going to be better than Q4 because of the average asset management, the higher monetization rates and so forth that we will have. Only one of the deals, we have a few that we believe will come through next three weeks. We thought they would be in Q1. I don't think you will see those in Q1, but you will see a bigger chunk of that in Q2. So there will be less revenue derived from these, but I think we can probably go out like we did last year and communicate that when these larger significant deals go through. But Q1 is definitely strong from the whole core business. the arbitrage strategies and so forth. So we have seen a good quarter so far. But in terms of the one-off big deals, you will see more of those in Q2 and going forward. But we obviously know much more about Q2 than Q3. So for sure, Q2 will be a good quarter on that side.

Also, Mike, one thing to add to that, and everyone here on the team will agree, The DLOM, which really is just a mark-to-market pain in our, you know what? As those dates occur where portions of those investments fall off, and there was a very big waterfall event on March 31st, not only does the DLOM percentage go down as time goes on, but also a lot of those long positions, which are being arbitrarily marked down by the auditor, despite the fact we're fully hedged, those will come off. And so March will also see, because if Paul correct me, I think it happened on March 31st. So it will be part of Q1.

Is that correct? Well, just for everybody else, we do have, we're in two funds. One of the funds gives us back 25% of our cash. to what Russ said for everybody is the DLOM is linked to the timing of the coin. So coins out in 2028 have a DLOM as high as 42%. The 25% I had at the end of December is on the basket of the entire portfolio. So the coins in March don't have that much of a DLOM on it. So we won't see a big gain pickup particularly linked to that, but we are commercially getting our capital back. If everybody can follow that. It's time value of money. So coins several years out have a bigger DLOM on a portfolio basis. We're at 25 at December and it will come down. But unfortunately, the March 31 trigger of one of the funds just reading back 25% won't give us a big DLOM gain because those coins didn't have a big DLOM on them. Just for everybody. I know it's confusing, but the takeaway is it's non-cash.

It's mark-to-market.

It's non-cash, mark-to-market. And it turns around, and it will reverse to zero by 2028 and grind steadily down.

Got it. Well, guys, best of luck in 25. Thank you.

Thanks, Mike. Thanks, Mike. And then a question from Alan Klee. I think this will be the last one we run a little bit over. What are the factors behind the higher monetization from Ellers? I think, Yohan, if you could explain that. just how the business model for Valor works in a little more detail.

Yeah, for sure. So there's several factors here. If you compare it to last year, obviously last year we paid off all the debts. The debt was held a lot of collateral. That collateral is free and can be monetized now. That's one part of it, which we already touched upon before. Another part is that we actually now run a much higher percentage of our assets under our own validators also with member code and so on on on it so we can monetize it to a much higher degree than prior when we actually outsource a lot of this dating uh that's one part of it the other part is obviously the um the work we've done with monetization of the flow and the arbitrage of our liquidity. That's something also that's maybe a little bit outside of this, but that's something where we have become much more efficient and have more intelligent algos for that purpose. But so it's basically just a few factors. we can lend to much higher rates because of our network nowadays, and only do that opportunistically when we see really, really good deals. On the staking side, we run our proprietary technology right now, which has, in some cases, actually doubled our monetization rate. Another factor is that we have signed more and more deal agreements with lock-ins, with some of the small coins, with with a quite high staking reward that was not part of the product mix earlier. And then, also, obviously, the higher part of the AUM that there are these smaller high yielding coins that's also driving monetization rates. Great.

Thanks, Johan. So, we're going to wrap it up here. I think high level, obviously, very spectacular 2024.

If we're going into 2024, I doubt the market figured that we would produce these results that we have today. So we kind of took the street by surprise. I think we have some surprises up our sleeve, as we've alluded to, for 2025 as well. But thank you to all of you who joined the call. Thank you for all the questions. If we weren't able to answer your call or answer your question during this call, please do reach out to ir.deFi.tech. Curtis at DeFi.Tech or rstar at DeFi.Tech, and we'll be happy to answer via email or even take your call. This recording will be made available as soon as I get it up on Twitter. You can view the presentation that we had today via the link on the press release that we put out this morning. And with that, enjoy the rest of your Monday and have a great week. Thanks, everyone. Thanks, everyone.