Two 59%+ winners, four above 25% in Aug – How this AI model keeps picking winners
DeFi Technologies Inc. (DEFI) reported its second-quarter earnings for 2025, highlighting significant strategic advancements despite a notable drop in stock price. The company emphasized its robust financial performance with adjusted revenues reaching $32.1 million and an adjusted net income of $17.4 million. With a current market capitalization of $16.04 million and an InvestingPro Financial Health Score of "GREAT," the company shows promising fundamentals. The stock’s recent volatility reflects broader market dynamics, with a 104.91% return over the past year despite recent price pressures.
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Key Takeaways
- DeFi Technologies launched 14 new exchange-traded products (ETPs), aiming for 100 by year-end.
- The company expanded into new markets, including Kenya, Turkey, and regions in Africa and Asia.
- Assets under management (AUM) increased significantly, reaching $947 million by the end of July.
- The company repurchased 675,900 shares, returning $1.9 million to investors.
Company Performance
DeFi Technologies demonstrated strong performance in Q2 2025, with adjusted revenues of $32.1 million and an adjusted EBITDA of $21.6 million. The company continued to build on its position as a leader in digital asset structured products, benefiting from a diversified portfolio and innovative product launches. The expansion into new geographical markets and the addition of 89 new institutional investors since July underscore its growth strategy.
Financial Highlights
- Adjusted Revenues: $32.1 million
- Adjusted EBITDA: $21.6 million
- Adjusted Net Income: $17.4 million
- Assets Under Management (AUM): $772.8 million at the end of Q2, rising to $947 million by July 31
- Staking and Lending Income: $6.9 million
- Management Fees: $2.1 million
- Cash and Digital Assets: $52.4 million ($26.4 million in cash and $26 million in digital assets)
Outlook & Guidance
Looking forward, DeFi Technologies raised its 2025 annualized operating revenue guidance to $218 million. The company plans to continue its aggressive product launch strategy, potentially reaching 200-300 total products by the end of the year. The launch of a DeFi Advisory business and exploration of digital asset treasury solutions for public companies are also on the horizon.
Executive Commentary
CEO Olivier Roussi Newton highlighted the company’s scalable model, stating, "Our model scales, prints cash, and performs across market conditions." Andrew Forsen, President, emphasized the growing interest from global banks and development banks, reflecting the increasing institutional interest in the company’s offerings.
Risks and Challenges
- Market Volatility: The decrease in Bitcoin dominance poses challenges for monetizing AUM.
- Regulatory Approvals: Expanding into new markets requires navigating complex regulatory environments.
- Competition: As the largest issuer of digital asset structured products, maintaining this position amid growing competition is crucial.
- Market Sentiment: The recent stock price drop indicates potential investor concerns despite positive financial results.
Q&A
During the earnings call, analysts inquired about the challenges of monetizing AUM due to Bitcoin’s market dominance and the potential for higher yields as the altcoin market grows. The company addressed regulatory approvals in new markets and detailed its strategy for DeFi Alpha trading opportunities.
Full transcript - DeFi Technologies Inc (DEFI) Q2 2025:
Curtis Loftman, VP of Marketing and Communications, DeFi Technologies: To the DeFi Technologies twenty twenty five quarter two financials review and shareholder call. I’m Curtis Loftman, VP of marketing and communications. On the call, we have CEO, Olivier Roussi Newton, president, Andrew Forsen, CFO, Paul Bozzocchi, and cofounder, Johan Wattenstrom. I’m gonna read a forward looking statement to get started, and then we’ll get the the webinar rolling. Certain information set forth in this presentation contains forward looking information, including future oriented financial information and financial outlook under applicable securities laws collectively referred to as forward looking statements.
Except for statements of historical fact, the information contained herein constitutes forward looking statements that includes, but is not limited to, protected financial performance of the company, completion of, and the use of proceeds from the sale of shares being offered here on earth, the expected development of the company’s business projects or joint ventures. These statements are not guarantees of future performance or undue reliance should not be placed on them. Such forward looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual performance of financial results in future periods to differ materially from any projections of future performance or result expressed or implied by such forward looking statements. Done with that. I’ll give you a little overview of how this is gonna go.
We’ll, we’ll start with, some statements from the exec team here, starting with Olivier, and we’ll move on with Paul with, an overview of the financials. And then Johan will give, a a brief overview on our 2025 financial guidance. We’ll then open it up and take some retail questions from the q and a and then invite our analysts on live to ask additional questions and wrap it up from there. So with that, I’ll hand it off to our CEO, Olivier Racinewton.
Olivier Roussi Newton, CEO, DeFi Technologies: Thanks, Curtis, and thanks to everyone who’s joined on this Friday in the summer. Q two twenty twenty five and, Curtis, I’ll let you flip onto the Yep. The slide. Q two, twenty twenty five showed us what our platform, specifically all of our business units combined, can deliver in a softer market. We we reported adjusted revenues of US 32,100,000.0, adjusted EBITDA of US 21,600,000.0, and adjusted net income of 17,400,000.0.
The takeaways of all of this, are pretty simple simple. Our model scales, prints cash, and performs across market conditions. As a company, I you know, speaking with kind of Yoann, my cofounder, and the team yesterday, I mean, in detail before we filed our financials, I still believe we’re extremely early in our growth story. But the flywheel of all of our subsidiaries acquired or incubated in each business line and and is reinforcing the others. For Valor, our kind of largest business unit, which is specifically operating in the asset management space, demand continued to build with net inflows every month year to date, totaling US77.4 million dollars for the first half.
AUM ended q two at US 772,800,000.0 and reached US 947,000,000 by July 31. In q two, Vor generated US 6,900,000.0 in staking lending income and US 2,100,000.0 in management fees. We also launched 14 new ETPs, keeping us on track with our target of a 100 listed products by year end, which would make us, you know, the the largest issuer of digital asset structured products on regulated stock exchanges. Outside Europe, Andrew has, you know, done a tremendous job and effort in terms of pushing our global expansion, out outside of Europe. We’re we’re we’re continuously expanding in Europe, but, we are in the final phases of regulatory approval in Kenya and both Turkey and are, targeting other markets in Asia, LatAm, and, we’ll let Andrew elaborate on that further, further into the presentation.
Stoneman Digital, which was acquired, I believe, October of of last fiscal year, has been a great acquisition. Q two revenue was USD 1,900,000.0. Stillman also completed its integration in Talos, deepened capabilities in FX, and a large focus of Stillman has been market making and providing liquidity for stablecoins as that, you know, market segment becomes one of the largest, you know, digital dollar based stablecoins and, the availability for that. So we see that as a a significant, potential growth area. They also added, some great senior trading talent.
In our DeFi Alpha business, we executed a high conviction low risk trade in May with, 17,300,000.0 in returns and maintain a zero loss track record since inception, which was, I believe we’ve been operating for about, a year and three months now that we incubated DeFi Alpha. Neuronomics, which was, recently four or five months ago, acquired, the the majority stake of Neuronomics. We’ve we’ve been shareholder of Neuronomics for around three to four years. We we see them as one of the leading and pioneered pioneering companies in, artificial intelligence and specifically, applying AI to the digital asset sector, which they’ve done for for four to five years now, and traditional equities for almost ten. They completed the development and testing of smart crypto, which we’ll have new more news about shortly, and we’ll open subscriptions for institutional and qualified invest investors in early September.
Neuronomics also secured a validator node on the Canton network, which is a fast growing, blockchain position positioning us to participate directly in institutional grade tokenized assets. Reflexivity, which is our research unit that complements all of our customers at Valor with, you know, leading edge information on all the, you know, alternative primarily alternative crypto coins that that they’re kind of buying and and trading. So that is kind of the main focus, but, they’ve expanded distribution into platforms such as Beluga, Blockwire, and CoinMarketCap, which is, I believe, the largest trafficked digital asset website globally. And we are building new event and newsletter sponsorships along alongside of brand upgrade and institutional clients. So that kind of compromises all of our companies within the DeFi technologies umbrella.
Moving kind of to our balance sheet, we remain well capitalized with US 26,400,000.0 in cash and $26,000,000 in digital assets with a combined $42.52400000.0 as of June 30. We are in the process of renewing our NCIB, which is the, you know, Canadian terminology for share buyback program, that we will utilize to, buy back kind of what we see as, an undervalued share for our financial, performance, as a company. What the rest of 2025 looks like, we’ve raised that book Based on the current performance and market conditions, we raised 2025 annualized operating revenue guidance to US twenty eight, 200,000,000 and $18,600,000. Or more listings in new markets. We expect additional ETPs listings in the coming months with a robust pipeline through 2025 and into 2026.
As I mentioned before, on track for a 100, a 100 products by year end. We’re also expanding into Africa, Asia, Middle East, other regions within Europe, United Kingdom. And as I mentioned, final phases of regulatory approval, Execution will continue. And, you know, all of these new geographies come on stream. It is a bit of a longer, you know, process, but, you know, regulatory approvals in all of these jurisdiction, market making, FX partnerships, make it all happen.
And I’ll let Andrew, as I mentioned, elaborate further on that. And and, yeah, I think that sums up, most of this. We’ve also kind of, I think, we’ll have more information coming shortly on our newest business line, DeFi Advisory, that uses our kind of expertise in trading technology, market making, OTC for public companies that are managing digital assets. So you’ll see more news surrounding that. And to conclude, we’re encouraged to see a structural upgrade in our shareholder base.
Since early July, we’ve welcomed 89 additional institutional investors and funds, bringing us to 95 institutional owners representing over 33,000,000 shares. Despite recent share price action, the register is deepening with longer horizon capital, and, I firmly believe it’s an indicator of quiet rotate a quiet rotation of our shareholder base away from retail, driven towards institutions that are welcome welcoming digital asset companies. And, yeah, to kind of, conclude, you know, put simply, I think we’re we’re delivering now and building sustainable value for the long term. And we’re, you know, keen on being one of the leanest, revenue producing, companies in the digital asset space, listed on on the Nasdaq. I’ll pass it over to you, Paul.
Curtis Loftman, VP of Marketing and Communications, DeFi Technologies: Okay.
Olivier Roussi Newton, CEO, DeFi Technologies: Go into the financials. So
Paul Bozzocchi, CFO, DeFi Technologies: starting with the presentation currency, beginning with the 2025, DeFi changed its presentation currency to the US dollar to better meet the needs of our US investor base following our successful Nasdaq listing in May. In terms of AUMs, DeFi closed June 30 with AUM of 773,000,000. Q two average AUM decreased to 748,000,000 from the $780,000,000 in Q1 due to negative cryptocurrency price movements on our alternative coins. However, cash inflow into our ETPs remained strong with positive Q2 inflows of $27,000,000 bringing total inflows for the six months ended June 30 to $77,400,000 In terms of revenue, our Q2 IFRS revenue of $13,400,000 brought our cumulative IFRS revenues for the six months ended June 30 to 57,100,000.0 Company’s revenue guidance for the six months ended June was $62,500,000 Thus, the actual revenue shortfall was $5,500,000 or 8.7% due to DeFi Alpha trading revenues deferred into the 2025. The minor miss was due to DeFi Alpha revenues being lower than planned in the first half.
The company reminds investors that these trades are opportunistic and may not be realized on a straight line basis, but we reiterate that we do have a strong pipeline. Our IFRS reported revenues also include the effect of a movement in the discount of lack of marketability provision, DLOM. The acquisition of 18,700,000.0 locked SUI tokens as part of our Q2 DeFi Alpha trade and crypto price increases on our existing locked Solana and AVAX coins, the DLOM increased by $18,700,000 in the quarter and brought the total DLOM provision to 74,000,000 I remind everybody that that $74,000,000 DLOM provision will unwind over the lock period of the coins, which goes until 2028. So it will come back into income and increase our equity. Talking about AUM monetization, our Q2 effective realized staking income was 3.6% on the average $748,000,000 AUM.
We stake 72.5% of our AUM during Q2. Staking revenue decline due is due to the notable drop in on chain activity, particularly on the Solana network lower average prices of key assets, Ethereum and Solana, which were both down about 20% quarter over quarter lower protocol reward rates in Q2 versus Q1, protocol inflation and reward reductions across Solana, 4.4 down from 4.6% in Q1, and similar down reductions for Toncoin, Polygon and Near. Inflation reductions lead to lower baseline reward rates, resulting in lower staking yields. We also redeemed 71.6% of our unlocked coins within one of our equity investments in digital assets, which resulted in some of the coins becoming unstaked at the end of Q2. Our effective staking income earned for the full six month period ended June 30 was 4.3%.
Our effective management field yield earned during Q2 was 1.1%, down slightly from the 1.3% earned in Q1 due to positive price performance of Bitcoin and Ethereum, where we earned management fees of nil. People remember, we headline rate of 1.9% on most coins, but Bitcoin Ethereum is zero. So the effective rate, was 1.1 in q two. This brings our total effective AUM monetization being staking income and managing field fees in q two to 4.7%, down from 6.2 in q one due to the factors noted above on lower staking yields. Average AUM monetization for the six months ended June 30 was 5.5%.
Adjusted EBITDA came in at 21.6%, reflecting a strong focus on profitability. Adjusted EBITDA includes adjustments to add back the noncash DLOM and noncash share based comp. In terms of the balance sheet, the company focuses on maintaining balance sheet strength. We ended Q2 with $26,400,000 in cash to provide ample liquidity to meet our obligations. In terms of new investments, the company’s venture portfolio consists of eight private investments with the largest investment being our 5% stake in Aminabank.
Aminabank continues to perform exceptionally well, growing its revenues and AUM while maintaining strong fundamentals. Readers can find additional detail on its performance in our press release and our MD and A. And lastly, to just reiterate what Olivier said, during Q2, we did repurchase 675,900 shares and returned 1,900,000.0 to investors, and we are in the process of renewing our NCIB to continue doing so. I’ll pass it over to Johan.
Johan Wattenstrom, Cofounder, DeFi Technologies: Right. I’ll give some color on the the DeepM monetization for q two. And I would say that absolutely nothing has changed on the downside in terms of rather the opposite. We have strengthened our ability to monetize the AUM to date as of today. The dip during Q2 was due to the composition of our assets and the markets as Bitcoin dominance was up at 65% during Q2.
It’s down since that level, and now we’ve seen the altcoins being stronger and stronger. Obviously, Bitcoin, Ethereum, especially Bitcoin, remains the lowest yields for us, both in terms of management fees and in terms of staking lending yields. And the reason we have upped our full year forecast is that to as the market is today, the strong performance the last few weeks for not the least for Altcoins has put us in a much stronger position to hire the monetization rate to all time highs, hopefully, within this quarter because of the composition of our AUM. So it’s simply a function of the what AUM we have in each of our 50 underlying assets and what assets are driven in and taking what percentage of the portfolio as a function of market prices. And those conditions were at worst, I will say, possible scenario in Q2.
If you look at a few years back, Bitcoin dominance has been between 4060%. It was at 65% during Q2 and has come down below 60% now, and altcoins are performing more and more stronger. This obviously leads to our basket of assets having a much better composition for us and allowing us to have a much higher average yield and monetization on our portfolio. On the full year forecast, there’s obviously two components. We have the core business, we have the AlphaTrades.
And on the AlphaTrades side, that account for, like communicated at last call, for around half of the forecast. And we have even higher conviction of that coming to fruition, not the least as our higher AUM in the assets where we can do these trades, which composed of our pipeline has grown in terms of AUM and our capacity to do these trades. That’s on the DeFi Alpha side. Nothing has changed in our full year forecast for what we will be able to execute. And in terms of the amortization rate, it’s already up significantly from Q2, and we continue to see that trend following through as our assets composition has changed and product mix has changed to the better.
Yes, I think that concludes the change the returns we’ve seen and why we are very optimistic right now. So nothing has changed on the downside. Rather, we believe that this mechanism, will be to our advantage now when the market what we believe is a continuous strong market for the year. So yes, that concludes my color on the forecast for the year.
Curtis Loftman, VP of Marketing and Communications, DeFi Technologies: Yep. Thank you, Johan. And I’d also like to remind folks that over the past six quarters, we’ve raised the guidance. And, initially, we do aim to offer what we view or Johan views as conservative guidance. I believe at the 2023, we offer guidance of around $60,000,000 in revenue.
We ended up at the end of the year at a $144,000,000 in revenue. That’s that you know, if we’re not taking into account all the messiness of the DLOG. So we’ve continually raised guidance, and we’ve exceeded those numbers, and we expect to do that again. And with that, let’s open it up to some questions from our shareholders. If you wanna type in the chat, you can, and we we can I can pick out a few?
And then we’ll, we’ll invite, analysts to come on and and participate as panelists. We’ll have an open, forum for questions for them. Right. I’m not seeing any questions in the chat. K.
Let’s just, I guess I’ll, I’ll just invite Mike on and Ed. If you’re an analyst, please, please raise your hand, and I’ll invite you to become a panelist. Alright. You guys just have There you go. Alright.
Cool. Let’s open it up with, Mike. I think you’re on mute. We can start with, yeah. There we go.
Mike, Analyst: Yeah. Great. Okay.
Curtis Loftman, VP of Marketing and Communications, DeFi Technologies: Thanks. And, Mike, we can start with you. Go ahead and, ask ask what any questions you have questions you have.
Mike, Analyst: Thanks, guys. Hey. My first question is your guidance now of US 218,000,000. Can you help us bridge that? What number are you using for the first six months of the year?
And what are the big drivers to get you to USD $2.18 for the full year? I’ll start with that.
Johan Wattenstrom, Cofounder, DeFi Technologies: Yes. I think the simple answer there is that when we did the guidance last time, our market the portfolio composition was different, which actually projected a lower monetization rate for the rest of the year because of the market action we’ve seen in a lot of the big AUM assets for us. This gives us in a much better position at the moment for generating more yields from our base business. Also, the pipeline for our alpha trades, they are the alpha trades we have are measured for us in coins, and the value has gone up in those prospective trades we have in our pipeline. So given that we can execute the same amount of trades, which we have a high conviction of for the year that we forecasted early on, Those trades will be higher dollar value now if even be the same amount of coins.
And that’s basically it.
Mike, Analyst: Okay. So just paraphrasing that a little bit, but what’s the six month US dollar revenue number? I I just wanna understand the starting point. And then what I think you’re saying, Johan, is most of this is gonna be alpha trades. Like, you know, I think in US dollars, we’re at, like, 6,000,000 or or maybe for the for six months, we’re at, like, 12 or 13,000,000 in staking and 4 and a half million, in management fees.
So maybe that annualizes to about 30,000,000 US. So the rest is really coming from from trading activity.
Johan Wattenstrom, Cofounder, DeFi Technologies: Yes. The if you look at the dip we had in Q2 for fees for management fees and for stake in rewards, I don’t have it on top of my head, but I would think that if I recall correctly, the
Paul Bozzocchi, CFO, DeFi Technologies: average Over 20. It’s over 20.
Johan Wattenstrom, Cofounder, DeFi Technologies: The average daily AUM was at significantly lower level than our AUM is at now. There also has been some developments that we there are assets now that we can monetize from now that we couldn’t monetize historically at all, like for Ripple, for instance, where we will get 7%. We didn’t get anything historically and so forth. So there I would say that at these levels, the staking and management fees rewards would be, yes, 30% higher, just giving the market level and the market composition for at present. So we’ll see a much higher monetization rate if this market continues.
Obviously, that’s the assumption here. And for the alpha trades, it’s the same number of coins for the same trades in the pipeline that we guided on before, but it’s a higher dollar value because of the higher values of those tokens, the higher value where we are exploring those trades. So it’s correct that a big part of this would be, obviously, the alpha trade similar to last year. And as we have discussed, I guess, in a lot of calls historically and also in these calls, Unfortunately, it’s not super easy to pin down when those will occur on a quarterly basis. But on a yearly basis, obviously, we have a high conviction that they will occur.
So and obviously, I realize that from your side, it’s much easier to model and forecast staking yields, management fees and so on. And we also try to look on how we can communicate that better. The AUM composition is more clear because I think that will give a lot of insight in the dynamics of the monetization yield. And you can see, for instance, that if we earn x amount on Solana in staking yields, in MEV yield in MEV fees and transaction and in the management fees and also in market making in those assets because that’s also another revenue generator, then it will be much easier for you to follow, yes, from the levels of the price levels of those assets, what our composition of the AM is and and derive what what what earnings rate we are at.
Curtis Loftman, VP of Marketing and Communications, DeFi Technologies: Yeah. I think it’s important to emphasize that we’re not only with Valor specifically, we’re not only making staking fees and management fees, but also trading fees and market making fees as well. So Johan and team has have monetized effectively that issuance structure from in every asset to where we’re squeezing margin from every area we can.
Johan Wattenstrom, Cofounder, DeFi Technologies: Another line item that I think will will make it easier for for analysts to forecast once we can publish it, and hopefully, that would be quite soon, is the money we generate at liquidity provision market making. And right now, that’s part of the realized and unrealized profit and losses from all trading activities and all positions.
Mike, Analyst: Yeah. It would be great if you could break that out.
Johan Wattenstrom, Cofounder, DeFi Technologies: That’s definitely something that’s easy to model because it’s the our margins, net margins are very stable over time, but they correlate strongly with the turnover on our products on the stock markets, which also is very highly correlated to the turnover on the crypto market. I think then you would get also a lot of super important input for your models as well to increase accuracy.
Mike, Analyst: Well, hey. Just one more question. You know, we’ve been waiting for you guys to expand into Africa, Asia, and The Middle East. What what are still some of the roadblocks to getting into those regions?
Michael Kim, Analyst, Zacks: Andrew? Yeah.
Andrew Forsen, President, DeFi Technologies: If I may, it’s less, it’s not actually a matter of roadblocks. It’s a matter of dotting the i’s, crossing the t’s. As a case in point, this morning, I was on a call at 5AM eastern time with the capital markets authority of a particular jurisdiction. So many jurisdictions for political reasons, for instance, they would like to know where are the underlying assets of the ETPs custodied. And they wanna do something like find out is there a way to get it, for instance, custodied in their country.
And in that regard, since the Allure is tech is vertically integrated, we manage the custody, so we explain this process to them. We have to understand that the digital asset space, while it’s quite advanced in terms of regulatory environments within our countries, Western Europe, Canada, The US, and the others, there’s somewhat of an education process. In all of these markets, we’re more than advanced. In many of these markets, we’re actually in the process of doing I’ll almost call them book generation or presales. But I think it it’s something that I’ve said to Curtis recently.
Going forward, we wanna be very conservative about how we announce and when we announce, and that when we do make announcements, it’s almost like over delivery. So we wanna make sure that all the conditions are right before we talk about what’s going to happen. But the appetite is actually quite strong for our products, not only the digital asset products, but other products that our infrastructure will permit. And the expansion, it does continue, in various regions of the world. Obviously, East Africa is a big one.
With regards to the Kenya digital exchange, the technology there has actually been, assembled and developed, and we’re actually just in some final legal stuff. And it’s sort of unfun to have to have this particular discussion during a q two call because August is a huge holiday month in many parts of the world. So that means governments in particular are not as present in these months, but we are moving right along definitely in East Africa as mentioned. I think there’ll be some pleasant surprises there.
Kevin, Analyst: But
Andrew Forsen, President, DeFi Technologies: Latin America, we’ve had some great progress there. Asia, we’ve had great progress as well. Okay. Thank you. You’re very welcome.
Curtis Loftman, VP of Marketing and Communications, DeFi Technologies: Thank you. And you want to move on to Michael Kim at Zacks.
Michael Kim, Analyst, Zacks: Hey, guys. Hey, guys. Thanks for taking my questions. Just first, in in terms of product development, just curious to get your perspective from maybe more of a broader strategic approach. Seems like you’ve got opportunities to launch existing strategies into into newer geographies, on the one hand as well as coming to market with, you know, newer, more innovative, strategies.
So just curious to kinda get your perspective on, the the broader the broader approach, if you will.
Johan Wattenstrom, Cofounder, DeFi Technologies: I I can give a first comment there on something that has been kind of becoming quite clear the last few months here that the decision we made to be the leading asset manager in this space in regards of number of assets, number of products has shown to have a lot of synergies with other new initiatives we have on products. Because we have such a complete universe of investable securities in digital asset space, We have been approached and had a lot of really deep discussions with major global banks about building products on top of our product portfolio. And that includes usage funds, which are in high demand from institutions in Europe, Latin America and other places of the world. Also on the structured product side, where there’s large banks that use their own distribution, constructive structured products based on our assets because it’s not allowed in most jurisdictions to do these types of products directly on crypto assets. Whilst we can offer a full investment universe to build these products out of.
So that’s also corresponds very well with our initiatives to launch our own usage fund in Europe and also do so with our own structured products for three to five year term structures in some key markets. But we were obviously pleasantly surprised to see a lot of demand from large institutions with their own distribution networks to start building exclusively on our products, which obviously will feed into our AUM. And I think that’s a great receipt for us that we made the right decision in terms of how we build our portfolio and develop the products on top of this. It will not only be our product developments, but also the product developments major banks and new jurisdictions on top of what we already have. So that’s one interesting point, I think.
Andrew Forsen, President, DeFi Technologies: I’d love to add on to this because this is where I really think the strategic future and vision of, Valor and, the founders of Valor and DeFi Tech comes into play. We are, being reached out to by not only global banks, some multilateral development banks, and actual exchanges in on that have a sovereign basis. And what they like about us is that we have the ability to create instruments that hybridize digital assets with traditional assets on the same infrastructure. So whenever people think about Valor, they’re thinking about the limitations of digital assets. But, I mean, notwithstanding the fact that we have the broadest portfolio of digital asset ETPs in the world, people are reaching out because we also currently, today, have a very, very broad distribution of instruments listed on a number of premier exchanges.
So I think that that’s a significant area for expansion. And the fact that more and more in the real world asset space, you’re seeing linkages between digital assets and traditional assets, This is a position that we are already there. We are already leading effectively in the real world asset space, and it doesn’t actually require too much modification of what we already do in order to expand with significant prod products there. And I can say without a doubt, our I’ll call it our r and d initiative as us working with sovereign level exchanges on creating innovative products over the last few months, and we’re I I’m really excited about that.
Michael Kim, Analyst, Zacks: Got it. Super helpful. Appreciate the color there. Just and then maybe just one other question. In terms of the new advisory business, can you frame sort of the the pipeline or the opportunity more broadly just given all the public companies that are seemingly transitioning to to digital assets, treasury strategies?
Just seems like, there’s a lot of pent up demand there.
Andrew Forsen, President, DeFi Technologies: Well, I think I can give a a a quick, take at that. I I think I I was a a recent import from a foundation, from Hedera. And, what you’ll find is DeFi Technologies is uniquely placed to solve a lot of foundation problems. And every single token that you hear of out there has a backing foundation that normally has liquidity related issues. They not only have liquidity related issues, they’re also very interested in figuring out how to get their tokens into the hands of most people, more people, particularly institutions because a lot of institutions can’t touch them.
And they’re actually also really interested in figuring out what are the best revenue generating projects to invest in. Now the one thing that DeFi Technologies has been exceedingly good at doing is actually finding projects in the digital asset space that generate revenue, either in the stablecoin space, either in the liquidity provision space. And a lot of these foundations actually want in on these types of projects. So whenever you combine our ability to bring liquidity to foundations that are somewhat hamstrung in terms of what they can do with their tokens. When you combine the fact that we have a very, very broad exposure, so a foundation can only look at their own token.
I mean, could you imagine if Polygon or some other foundation started dealing in another chains token that would be, politically suboptimal. But in our case, since we have connections and all, it gives us the ability to provide broader solutions and linking them with the capital markets. So in that way, the DeFi advisory isn’t even a service line we had to make. It is something that was more of a demand pull. And I I mean, myself, I I I think this is an okay thing to say.
There have been three foundations that have that are begging us to provide them with particular solutions that I never reached out to. And these solutions are are quite easy for us to deliver on either in terms of provision of liquidity, defining new ETPs, assisting with establishing almost like a corporate venture capital portfolio, and having novel yield generating strategy companies. Because a lot of them have determined that, oh, having a pure buy and hold with no revenue model strategy company is actually suboptimal. So they’re trying to figure out how can they get productive assets together with their native assets to deploy strategy companies that would have more value, and and we’re well positioned for that.
Curtis Loftman, VP of Marketing and Communications, DeFi Technologies: Yep. And I think just touching on just the the brief synopsis of advisory in general, We did announce our first deal a few weeks ago with NVE. This is you know, I call it a digital asset treasury in a box. I think somebody termed that, Matt Siegel from VanEck. I saw him use that.
So we’re we’re we wanna work with partners or or public companies that we can we see as really partners or leverage in a commercial way as well and implement digital asset treasury strategies that we think are sustainable and long term using only tokens that we have high conviction in. As I mentioned, one deal in the pipeline. We have a couple of others that we’ll announce, over the coming weeks and months and looking to add into that, or our way to take advantage of this sort of BOMO catalyst in the industry right now. And we’re taking either we’re taking a percentage of the AUM in either a flat rate in cash or, or equity, from that perspective.
Andrew Forsen, President, DeFi Technologies: I I’d love to add one more thing.
Curtis Loftman, VP of Marketing and Communications, DeFi Technologies: Yeah.
Andrew Forsen, President, DeFi Technologies: I I mean, I’m trying to hide my excitement about this, but, you know, it’s really incredible because it it’s not mutually exclusive. And what I mean by that is a lot of these foundations are looking for multiple options. So the fact that we exist, we can provide but it doesn’t mean it locks out other participants in providing a structure. Where we have a real advantage is it’s soup to nuts. Right from origination, right from token right from the token, we’re able to go directly to the capital markets.
And that’s something that the Web three space I mean, back when I was doing VC in the Web three space, we used to talk about, like, Web three math because their valuations were really, really wonky, and they would have a hard time bringing capital into their projects. Well, this is where DeFi technologies excels. Right? So it’s it to me, it’s super exciting, and it’s definitely useful for the foundations.
Michael Kim, Analyst, Zacks: Great. Appreciate it. Thanks for taking my questions.
Curtis Loftman, VP of Marketing and Communications, DeFi Technologies: Yep. Ed Engel. Hi,
Ed Engel, Analyst: guys. Thanks for taking my questions here. Yeah. And we appreciate all the additional color on the guidance. I just kinda wanted to hone in on, I guess, DeFi Alpha.
You talked about how this year, some of these deals are are are taking a little bit longer than than you usually expect at least the first half of the year. I guess, what kinda gives you conviction that this could all kind of happen in the second half of the year? And I guess, do you see any risk that some of these deals can maybe slip into into next year? Thanks.
Johan Wattenstrom, Cofounder, DeFi Technologies: It’s obviously extremely hard to say if any of these deals will slip into next year. Obviously, we’re working super hard to make sure they happen within this year and sooner rather than later. And I would say each and every of the deals we are working on in our pipeline. There’s different triggers for all of them. There might be some who do not want to execute before the price is at a certain level.
I think we have not really forecasted to be able to do all the trades in our pipeline, but rather, I think, 65% of them because there’s always something that falls off. So I wouldn’t say it’s an overly optimistic forecast. And I wouldn’t say it has necessarily taken longer time with any of these than the trades we already executed. It’s always negotiations and back and forth. And depends also a bit the appetite depends a bit on the market conditions.
In Q2, when the market came down for a lot of these tokens, there was a few of these that wanted to delay a little bit. And I think that was to be expected. But I wouldn’t say that any of these deals have been worked on for much longer than expected or the deals we actually have executed. So it’s yeah. It’s these are deals where we have very strong strong relation to the other the counterparty, and there’s a strong will from both parties to do it.
There might be some technicalities. There might be some incentive for some people to wait because of bad market conditions during Q2. But yes, as I think I mentioned also, I think some of these might be much higher value because of the higher price levels we see now. And we don’t I don’t assume we will do all of them, even though we hope to be do 100%. But if we do 65% of them, we will be able to reach target.
Yes. It’s yes, on an individual basis on each of these trades, it’s I will say we have around 15 of these trades that we could do and hope to do this year. We don’t think we’ll do all of them, but that’s not in the forecast either.
Ed Engel, Analyst: Okay. Really good color. Thank you. Then I wanted to touch on you guys issued a press release about an investigation into share discrepancies, and I think some other details on, like, Canadian listings and and maybe some indiscriminate short selling. Can you just give a little bit more color for those of us that are less aware of of Canadian market structure and, I guess, some of your early findings there, and, I guess, what you think might be going on?
Curtis Loftman, VP of Marketing and Communications, DeFi Technologies: I can touch on just that investigation in general. So, you know, this was at the request of of many different shareholders to look into our trading activity. So, of course, we we obliged because we wanna make sure our shareholders are supported. And the initial few reports did raise some flags in terms of the amount of unpaired shares that were present on on over the course of three specific trading days. So we’ve reached out to the specific brokers in question for additional clarity on why that might have occurred or may have occurred, and we’ll continue to to to to pursue that.
And if we get any actual evidence that there is any foul play involved, then we will take action. But we are still waiting on conclusive evidence before taking any further action. Right now, we’re still looking into it.
Ed Engel, Analyst: Good. And I guess, mean, you guys have made progress, obviously, listing on NASDAQ and and changing your reporting to to US dollars, and and definitely appreciate that that there’s definitely tons of progress going on there. It feels like a lot of this accounting, I guess, confusion and and and even some of this market structure is a bit more related to Canadian markets, and it’s it’s it’s unfortunate because fundamentally, there’s kind of been no change. But it feels like some of these more technical issues have kind of been weighing on things. Any opportunity to either, I guess, focus more on The US, whether that’s, I guess, moving past the Canadian listing or or even domicile in The US?
I’m just kind of curious if there’s an opportunity just to be completely US in terms of the the listing and and some of these, accounting rules. Thanks.
Paul Bozzocchi, CFO, DeFi Technologies: I can touch that. We are a foreign private issuer. It’s an annual test July 1 every year, and it’s a combination of your assets, your directors, and your shareholders. So they’re tests on America. How many US people are in there?
And if you fail, then January 1, the following year, you’re you become a US domestic. So we just passed our July test, so we’re still IFRS and Canadian.
Curtis Loftman, VP of Marketing and Communications, DeFi Technologies: If we fail, we’d have
Paul Bozzocchi, CFO, DeFi Technologies: to adopt US GAAP and become a US reporting issuer under the SEC. If the feedback from the market is we should adopt US GAAP, the board of directors can consider that as a separate matter to just do that. In terms of redomiciling the Canco to The United States to become a Delaware company, we we would we would have a tax issue, right, because Valur is now where if the market cap of the company is essentially driven off of Valur, our cost base of Allure is about 70,000,000. So our market cap is now huge. It it, it would it would be a Canadian exit tax.
But, so it’s unlikely that in the near term, we would redomicile to The United States. But The US GAAP, we either fail FBI or we voluntarily, adopt.
Ed Engel, Analyst: I guess even if you remain a foreign issuer and maybe avoid some of the tax, issues, I mean, what what’s kind of the the the board’s I guess, I know you can’t speak to the board, but what’s kind of the overall view towards just the Canadian listing in general, especially just given that you’ve you have graduated to to a main or to a NASDAQ listing?
Paul Bozzocchi, CFO, DeFi Technologies: Maybe I’ll turn that to Ollie. We we we could drop SIBO and go NASDAQ, but maybe Ollie, if you
Curtis Loftman, VP of Marketing and Communications, DeFi Technologies: wanna or now are correct. I mean, I
Olivier Roussi Newton, CEO, DeFi Technologies: I think it’s it’s actively being explored, and we’ve definitely looked at that that routing scenario. I think as Paul touched on being kind of all American doesn’t suit our bottom line in terms of Canadian exit tax to redomicile towards The United States. I think, you know, obviously obviously, you know, the, you know, the political situation in The US is is not something I I or kind of I think the board would wanna be attached to in the long term, and we’re, you know, developing this company for the long term. But, you know, the capital markets are are great in The US, so we’ll we’ll definitely explore that. But I think we we remain a foreign a foreign listed issuer.
And and that could see us dropping our Cboe Canada, listing, in the not too distant future.
Ed Engel, Analyst: Okay. Yeah. Thanks again for the color, guys. And and, again, the AUM is continues to pace really well, the floors are great. So, operationally, things look look fantastic.
But
Curtis Loftman, VP of Marketing and Communications, DeFi Technologies: Thanks, Ed. And, Kevin, we we get to you, and then we’ll we’ll we’ll we’ll move on to Alan after that. Kevin, you’re on mute if you wanted to to ask a couple questions. Alright. Alan, we’ll let you go first while Kevin yeah.
Alan, Analyst: Thank you. Hello. You mentioned that there’s less activity on altcoins during the quarter and an increase in the value of Bitcoin and Ethereum where you don’t get management fees caused a lower yield on your AUM, but you expect this to improve in the future. Is there a way to think about kind of a range that ’s reasonable of
Curtis Loftman, VP of Marketing and Communications, DeFi Technologies: I
Johan Wattenstrom, Cofounder, DeFi Technologies: think let me just rephrase that. I would say that in the main assets where we stake, the staking yields has not been falling at all. We have gotten more transact there’s a small component called transaction fees that we collect on top of the staking yields and MEV trading. Those are marginal and vary with the activity on chain. So the only reason which is easier makes us easier to model if we can produce more numbers for you going forward is just that the AUM levels sank quite a bit compared to the ones in Bitcoin, for instance, and Ethereum because of how the market was reacting in Q2, obviously, with a Bitcoin dominance up at 65%.
So it’s mainly a function not of falling rewards. It’s a function of the product mix, the composition of our total AUM as it’s as applied to the different underlying assets. SUI, Solana, Avalanche, quite a few of these took a big hit during that quarter and so did our AUM in those assets. That has recovered strongly at this point. And our asset allocation is very much different, as is our average monetization yield.
And that also obviously reflects our management fees. On Bitcoin, most of our I mean, is in our Bitcoin zero product, where we have zero management fee. So it’s mainly a function of the market prices in our portfolio. And then obviously, that leads to what percentage of our daily average AUM they represent and what contribution to our monetization rates that represents. So I think if we can give more clarity in the future on what the AUM is per assets, I think that would make it easier to forecast on your side and see also why the drop occurred in Q2.
And I think it might even be a good thing long term because we obviously we’re we believe that there’s a huge number of the digital assets, which has a lot of unique value added to contribute with in terms of utility and different applications. So we obviously are big fans of Bitcoin, but we’re no terms Bitcoin maximalist, and we’re trying to be the first mover in a lot of these other very interesting technologies. So if one believe that bitcoin will not be the only asset, but actually there will be a strong market for the others as well, then I think what we saw in weakness in Q2 in that regard will be we will see the other side of that coin, which is the upside when Bitcoin dominance falls. And I think still we’re at 58% to 60%, where we’re up at 65%. And historically, we’ve been in a range between forty percent and sixty or so.
So think I there’s a lot of upside in monetization rate when the other technologies will become stronger, and we’ll be able to monetize that to a larger extent.
Andrew Forsen, President, DeFi Technologies: Thank you. I would if I could add on to what Johan is saying, I I think he’s absolutely right. If anytime you hear of an announcement of a stablecoin, you have to understand that the stablecoin is not likely built on Bitcoin. Bitcoin as a blockchain or a token is not really used in a functional way. It is the alt coins that have very high transaction volumes, great smart contract programming languages.
That’s where the action is when it comes to RWA, real world assets, stablecoins, yield generating tokens. And for the investor to gain exposure to that, right now, I I don’t think it’s an exaggeration to say that your like your most likely path to gaining exposure to these nascent technologies that are booming is through Valour because we have the broadest portfolio of these instruments. And in particular, it’s these newer layer one chains that have incredibly high transaction rates. So there’s a distinction between financial transaction in terms of securities and the transaction volumes of the underlying chain. These are the chains that are capturing the imagination of developers, financial engineers in the web three space, and this is where we we really do have a competitive advantage.
Very exciting.
Johan Wattenstrom, Cofounder, DeFi Technologies: Yeah. And we’re obviously very bullish on Bitcoin as well, but but it’s I think what what drove the Bitcoin focus, obviously, in in not least q two, was the hype around the treasury companies, micro strategy and so forth and maybe 100 copies of micro strategies around the world. And those they have obviously been very good at marketing and selling that narrative. We are not big fans of that business model of the treasury companies. I don’t think it’s sustainable.
Might hit back on the market at some point, I would guess. There’s more efficient ways of gaining exposure to all these assets. So I think less of a hype in these bitcoin treasury companies. But also, even if we don’t are we’re not big fans of treasury companies, obviously, we now see that type of entity spreading across other assets as well, which might help in short term, at least, drive those the visibility of those. So it’s a good PR marketing thing maybe, if nothing else.
But I think we will see less of a sole focus on Bitcoin because of that hype. And I think that’s what we see in the market right now, and it will turn out to be a strength for our portfolio rather than a problem like we see so early in Q2.
Curtis Loftman, VP of Marketing and Communications, DeFi Technologies: Let’s let’s we only have a couple minutes left. Let’s let me give Kevin a chance again. Kevin, are you there? You’re you’re still muted, Kevin. Didi, if you wanted to answer or ask questions.
Kevin, Analyst: Thanks, Curtis. Hey.
Michael Kim, Analyst, Zacks: Sorry about that.
Curtis Loftman, VP of Marketing and Communications, DeFi Technologies: Hey. No worries.
Kevin, Analyst: Yeah. No. A little bit of a technical issue on my end, and I apologize. You gentlemen had spoken to, management fees falling from the first quarter to the second quarter. I think the numbers you cited was 1.3 to 1.1.
How how do you see them improving in the second half, and how how much of a quotient is that in in driving your raised guidance?
Johan Wattenstrom, Cofounder, DeFi Technologies: Yeah. I would say that as you might have deducted the that fall was on the average of the portfolio, and it’s driven by the same factors as with the staking rewards and so forth and so forth. Because the we have the BitcoinSERO, which is our largest AUM in product in Bitcoin, has zero management fees. And the bigger part of the overall portfolio, the less the average. So it’s, I’d say, that simple.
There’s no pressure on the any management fees on our products at all. We actually have launched a few products with higher management fees last six months because we think they have been maybe less liquid, maybe a bit more volatile and harder to hedge. And then we’ve taken some precautions and heightened the management We also have a lot of assets where we have, I would say, monopoly at this point. So but we have seen no pressure on the management fees as such. So similar to the staking rewards and MEV fees and transaction fees on our validators.
The management fees are basically a product of the AUM and the composition within our product mix. So we have products with 2.5% management fee. We have products with 1.9%, which is the most common. But then we have Bitcoin, Ethereum ones. We have two big products with zero management fees.
And the less part of the overall portfolio they are, the more the higher the management fee average will be. And so so it’s purely a function of of the composition similar to with the with the other revenue streams.
Kevin, Analyst: Yep. Johan, have you pen have have have you penciled it out at all? And and I guess how much of it function is a function in the calculus of your guidance?
Johan Wattenstrom, Cofounder, DeFi Technologies: I would say it’s a small portion because the staking fees are a much bigger part of our income. So if you for instance, if we take in Solana, we what we’d stake in our own validator, which is more and more, we can make 7%. I think it peaked at seven thirty five. I think we have seven point something now in base staking rewards. We have another 1% in MEV fees.
And on top of that, we have maybe 1% of transaction fees from within that network in the blocks. And then we have 1.9% in management fees. So it’s basically 11% and management fee is 1.9% of that. And so I would say that the management fees as such is a smaller proportion of the driver here.
Kevin, Analyst: So I have a question for all you gentlemen. I think I’ve run it by Andrew and Curtis once before. And I I guess it would be interesting to see how you might address it now. In order to hit your 100 product target for the year, you’ll need to add roughly 25 new products. And I’m wondering based on your history, if you’ve been able to look at what a new product commands in terms of new AUM.
And, if there’s any way to apply any kind of an average to to that.
Johan Wattenstrom, Cofounder, DeFi Technologies: Yeah. I think this chart shows the, if you look at the 2024, that’s the inflow 2024. And what’s going to be 45% of the inflow was November, December, and that was driven by 20 new products launched. And what we’ve seen also, I think the total AUM, we got up to 15%. Those 20 new products were 15% or more, I believe, after two months from launch.
And these are all smaller coins because we already had, I think, 25 products out there covering all the top ones. So and this is something we’re seeing consistently that, obviously, there are trends in sometimes it’s more AI type tokens, sometimes it’s more level one blockchains and so on that are in fashion. But what we see, there’s a big demand from these. And I think a main reason is that we are a first mover. Those are unique in the world.
There’s no other way from for a lot of these investors to gain exposure to these. And if you see in this chart, the white field in the last that’s predominant that’s more pronounced in the last month in this chart, that’s all the small new tokens we launched. So even though these are much lower market cap, much less known, I would say it shows that the our client base are which is loyal and is sticky money. They already have the portfolio. They don’t reweight.
They actually make new investments into these new assets. And a lot of them are very well read up on the technologies and are requesting smaller coins for us to list that they followed a long time. And if they pass our test for eligibility, and we have a conviction that this is a they have a strong team, a strong history, strong technology and fills a market demand, then we will do an ETP on them. And the marginal cost for us to do so is very, very small. But yes, as you see, it’s since we started launching smaller tokens, quite a big portion of our AM now are in these small tokens.
Even though the green blue, the larger fields here are Bitcoin, Ethereum, Solana, and which are much more well known. We didn’t expect this large part of our AIM actually to be composed of this. But I think, as mentioned, it’s part of us providing something unique and our first movers. And what we’ve seen in other coins we launched is that if we are the first mover, even when competition catches on, we will remain in the lead and remain the dominant actor in that asset. Oh, think other a lot of value is derived from from just being the first mover, basically.
Kevin, Analyst: Right. Right. Okay. And and one more if I may, Curtis, please. I Yeah.
I’m I’m just curious of that 20 of the 25 new products you’re rolling out, how how would you characterize them? And are are they primarily gonna be bringing existing products to new geographies? Or as you were just talking about, Johan
Olivier Roussi Newton, CEO, DeFi Technologies: Those those those will all be unique new products. Right? So that’s not our 100 products, by year end is not accounting for potentially kind of,
Curtis Loftman, VP of Marketing and Communications, DeFi Technologies: know, Geographic two overlap.
Olivier Roussi Newton, CEO, DeFi Technologies: 200 products that we would be listing in in Africa. So it could, you know, potentially be, you know, when regulatory approvals are in place, there could be 300 products by year end, theoretically. Right? But we’re we’re characterizing these as independently unique, coins that, you know, we we monitor. We have feedback from our our client base.
You know, we kind of hear things in the community and due to kind of our our regulatory purview in specific European market jurisdictions that we operate in, we have kind of, I would say, kind of a a monopoly globally on smaller coins being rolled out and then passported to other jurisdictions globally that no one else can really do in a in a very quick and efficient time frame. That could obviously change, but for the for the moment, you know, that that’s where we’re we’re kind of, I think, gonna see a large portion of growth. And I think, you know, what we’ve, you know, what, you know, Johan touched on earlier was, you know, similar to kind of equity markets. You have kind of, you know, blue chip, markets that rotate into small caps, Bitcoin and Ethereum being kind of the blue chips of crypto, and then you see kind of rotations into kind of smaller coins, what kind of, you know, I would say the crypto crowd has been calling alt season for, you know, seven or eight years. So that’s where I think, you know, we’re we’re gonna see kind of new adoption, new technologies.
We’re gonna be the first to market in a bunch of different geographies with these new verticals, of coins, and that’s where we’ve seen growth and revenue, historically being the largest driver for Valor and DeFi as a company.
Kevin, Analyst: Perfect. Well, thank you, gentlemen. I appreciate you, letting me tag on the end too, Curtis. Thanks very much. Appreciate it.
Curtis Loftman, VP of Marketing and Communications, DeFi Technologies: Mike, we had to get
Johan Wattenstrom, Cofounder, DeFi Technologies: you in. We missed you
Curtis Loftman, VP of Marketing and Communications, DeFi Technologies: the last couple times, and I apologize
Andrew Forsen, President, DeFi Technologies: for that.
Kevin, Analyst: No no problem. You guys have a great weekend. Thanks very much.
Curtis Loftman, VP of Marketing and Communications, DeFi Technologies: Thanks, Kevin. Alright. I I I think, we answered a lot of the questions from, shareholders, in the conversation. If you do have any follow-up questions, as always, Andrew and myself are always widely available. You can email ir@defi.tech, Curtis@defi.tech, or Andrew@defi.tech.
Bother me first because Andrew is on the road trying to expand our offerings. Thank you all so much for for joining today. I know the share price isn’t a reflection of what we’re how we’re executing currently. But, look at all the institutions that are coming in. We’re we have high conviction that we’re gonna outperform this year.
There’s a lot on the radar for us coming forward, and and thank you for for for your time and for your for your for your loyalty as well. Thanks, folks, and look forward to catching up with you in q three.
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