DeFi Technologies Inc.

Everyone, thank you for joining us today. My name is Jamie Frawley, Vice President at IR Labs, and it's my pleasure to moderate this webinar for DeFi Technologies.

We're fortunate to have Olivier Roussy Newton, CEO and Director, and Russell Starr, Head of Capital Markets, on the panel today. And I'll turn it over to them shortly to present an overview of the Q4 financials.

If at any point you'd like to ask a question, please do so using the Q&A function. Questions will be answered at the end of the presentation.

Now, just before I turn it over to Olivier and Russell, I'd like to remind everybody that certain statements made during today's presentation may contain forward-looking information with the meaning of applicable securities law. Such statements may include estimates, projections, goals, forecasts, or assumptions that are based on current expectations, and they're not representative of historical facts or information.

We want to be clear that such forward-looking statements represent the company's beliefs about future events, plans, or objectives, which are inherently uncertain and are subject to numerous risks and uncertainties that may cause the actual results or performance to differ materially from such statements. Okay, with that, I will now turn it over to Olivier and Russ to kick us off.

Over to you guys.

Well, thank you for that, Jamie, and thanks for everyone who's joining our webinar. Just to start off on the financial highlights of 2023, the company reported cash balance of $6.7 million compared to $4.9 million in December 2022.

Revenues were $10.4 million compared to $14.2 million for fiscal 2022. The company's financial portfolio investments were valued at $44.1 million by the end of the year.

Our AUM growth from our subsidiary, fully-owned subsidiary Valour grew just under 500%, reaching just over CAD 0.5 billion. Current AUM stands just under $900 million at $880 million.

We've seen significant revenue growth in Q4, especially in December, as digital asset prices started to spike. We've taken corporate governance and operating costs down considerably to $10 million from just under $15 million in 2023.

Our total expenses for fiscal 2023 stood at $13.5 million, a decrease from 41% year-over-year, and is broken down into our operating G&A at $10 million, share-based comp at $3 million, monetization at $2 million, interest costs on debt at $4.2 million, transaction on ETP insurance and digital asset trading fees at $1 million, and mark-to-market FX loss at $10 million.

I'm going to move this forward here for you, Ollie.

Thank you.

There we go.

Our highlights for 2023, as stated, $6.7 million compared to $4.9 million at the end of 2022. Revenues were $10.4 million compared to $14.2 million.

Sorry, Ollie, this is not advancing.

Sure. I think you might need to put it to full screen.

There we go.

In our wholly-owned subsidiary, Valour, our asset management business that runs our ETP business, we've seen tremendous growth in our underlying AUM, a 476% increase from the end of fiscal 2022, which ended at $106 million in AUM. As I mentioned earlier, we're just under $900 million in AUM.

The company's management fees increased in Q4 2023 driven by an increase in the company's exchange-traded products. And net asset values with October, November, December 2023 management fee revenue being $114,000, $240,000, and $402,000 respectively.

You can see here in the graph, I think if you can go back, this is our basically inflows on specific products, our various products listed in jurisdictions in the Nordics and around Europe. An important thing to note is, I think only on two days since inception have we seen net outflows of our products.

So our buyers of our certificates and other products continue to average into these products and are bullish on long-term growth [indiscernible] prospects of the digital asset class. So for our 2024 outlook, we're continued and excited about the underlying digital asset class and especially its institutionalization that has come into effect with the approvals of Bitcoin ETFs and hopefully more asset classes to the largest capital market in the world being the U.S.

So as of March 24, our AUM stood at $880 million with robust daily trading volumes exceeding over $20 million. So we're seeing lots of trading activity and volumes across all of our products.

Continued revenue growth with an annualized forecast of approximately $63.3 million on the basis of our current AUM. Our growth in AUM is expected to lead to proportional increases in revenue accordingly.

The ETP business aims to maximize AUM through increased ETP launches and geographical expansions that we're planning. So we plan to launch around 15 ETPs in 2024.

We have a lot more traded, double that in 2025. And we have various joint ventures and partnerships that we're announcing in various geographies such as the Middle East and Asia to match our growth prospects of what we've been carrying out successfully in Europe, specifically in the Nordics, to match essentially niche markets and geographies where crypto regulation is friendly, specifically the Middle East where regulators are very forthcoming to digital assets as an asset class.

And we will see similar regulatory frameworks enabling our products to succeed in new geographies. So this is our overview of our product roadmap.

So we have lots of new digital asset classes in the pipeline that we're excited about. We're exploring other sorts of products given we have a very sticky customer base in the markets that we operate.

So we're exploring other thematic baskets and products across emerging technology trends in AI and things of that nature. We've also announced a partnership with Neuronomics that we're hopefully launching very shortly, an AI-leading digital asset product to the market.

And we will continue to explore derivatives associated with digital assets primarily. We will be coming up quite shortly with market-first products to give people more efficient exposure to the myriad of digital assets coming on stream.

So this is an overview of our corporate structure. So I'll start with the labs.

We recently acquired a research business led by a friend, Anthony Pompliano, who's been spearheading and initiating coverage on leading blockchain protocols. So we're aiming to basically combine forces with reflexivity and cover more extensively the protocols and foundations that we're partnering with on our ETPs and the tokens that we launch into markets with cutting-edge research on these projects and also bringing institutional and retail awareness to the space in general.

Reflexivity just held their first institutional Bitcoin day in New York that was extremely well attended, sold out, and hosted a number of thought leaders from the space. We also hold just over 5% of Amina Bank, formerly Seba Bank, which has seen a large growth in underlying AUM to a few multi-billion dollars of AUM as digital asset classes continue to rise.

And they were one of the first crypto-licensed banks in Switzerland. So we continue to hold that.

We continue to explore strategic investments in our venture portfolio, which was set up to take stakes in leading companies in the digital asset space with the primary objective of helping our subsidiary, Valour, come across and streamline new ETPs that can be market-first products. So we've seen tremendous growth in Solana as of recently.

We're listening to what our customers want in terms of accessing new digital asset classes. So we'll continue to push the frontier on developing cutting-edge and innovative blockchains in our ETP format across different geographies to give our clientele exposure to new blockchain assets as they come to fruition in the market.

So we're seeing that there's a lot more education and research culminating from the digital asset space. Our investors and certificate holders are very knowledgeable in the space and want access to cutting-edge blockchain asset classes.

And we will hopefully continue to spearhead and innovate and launch new products for them. We also have our infrastructure arm, which we've been working very actively on over the last year.

We acquired a portfolio of Solana intellectual property that helps us maintain Solana nodes, validators, to optimize our revenue generation from our AUM. We're also one of the initial node providers for [Place Network] [ph], which has recently surpassed a multibillion-dollar valuation, which is an Oracle data aggregation, Oracle authentication provider for the Solana network.

And we've also formally set up infrastructure with Bison Trails, which was acquired by Coinbase. On the joint ventures, we have Neuronomics, a Swiss-based AI company that has been applying artificial intelligence to digital asset products, which we're working with Valour to route into our ETP structures.

And we recently, I believe a few weeks ago, rang the bell in Frankfurt on our joint venture with Bitcoin Suisse, where we came out with an innovative basket approach and we'll be doing more collaborative efforts and product launches with Bitcoin Suisse in the European market landscape.

And just to add to that a little bit, everyone, and Olli, when we gave our guidance off of the $650 million that we basically currently sit at and guided to $46.8 million in revenue for this year, that was exclusive of what you see in Amina venture portfolio and infrastructure. When we made our investment in Amina Bank, which at the time was Seba Bank, I think they had close to $1 billion in AUM.

They're now sitting with almost $3 billion. And just by virtue of the way our regulators approach crypto, and just so everyone's aware, it's not in a friendly fashion.

It's a very, very difficult process filing your financials and audits. But we are effectively marking Amina Bank at cost and similarly with our venture portfolio.

But as you guys can all imagine, everybody who's listening, as Bitcoin goes, so generally does this sector, call it the high tide that's floating all the boats. So really, please appreciate that that $46.8 is, in our opinion, a very conservative estimate because we fully anticipate Bitcoin going into the halving, continuing to appreciate.

Obviously, no one has a crystal ball and can tell. But effectively, that's a valuation guidance based off of a fixed amount of assets, not including very important parts of our valuation.

Yes, that's a good point. I think Reflexivity is generating strong cash flow.

We'll see AUM growth come out of Bitcoin Suisse joint venture and hopefully have some new numbers shortly with our Q1 out, I believe, within a month.

Everyone, that's basically the end of the presentation. It's a simple presentation.

Everybody has access to the press release and our deck. One point that one of our listeners caught that was quite correct, 2023 was a gain of 10.4.

2022 was a loss of 14.1. Ollie and I sometimes we make little mistakes, but that was a loss.

Ollie, a question from the crowd is, how do we see our margins continuing to scale as well as expenses and operating leverage?

I think as we saw in 2021 in the digital asset space, we saw kind of an implosion of centralized exchanges and [indiscernible) materially dissolving to our company name, DeFi, which stands for Decentralized Finance. We have been spearheading the decentralization of our technology infrastructure to create more meaningful returns from our AUM, our exponential AUM growth, but bringing all of that technology in-house and leveraging the best of blockchain technology essentially helps us continually bring our margins of operating higher without relying on centralized parties.

So we'll continue to innovate that. We've made great hires on our development and engineering side where we essentially don't need to rely on centralized third parties for a lot of our in-house technical revenue generation, which attributes to stronger balance sheet and net revenue performance.

So that I think would be the largest attributable factor to our growth as a company, and obviously to our thesis of why we created this.

And just a little bit of thought on my end. The most exciting part of this company is in our Ethereum and Bitcoin products.

A reason why Pomp, who, as everyone probably knows, wrote us up today but also took equity is because the leverage of this company to the altcoin or call it the DeFi coin space is substantial. And what's important about that is all of those altcoins generate substantially higher yield or lending rates than Bitcoin and Ethereum.

And so from a margin perspective, as everyone knows based off of conversations and whatnot, our operating expenses are basically flat. I mean, debt servicing and operations are effectively U.S.$12 million a year, and those shouldn't change.

They could go down a little bit. They might go up a little bit, but ostensibly they're going to stay right around that level.

And so as our AUM goes up, our revenues go up, but with fixed costs, that means that your margins increase as your business grows, which is counterintuitive to many other businesses, but it's fantastic for us and investors because it basically means increasing margins with increasing revenues and hence more profitability. And so, yes, launching our products is not expensive.

What is it, Ollie, about 50 grand a cert?

Yes. It's coming down even less, right?

Yes. So this is a cheap business to run with massive scaling potential.

And again, going back to sort of that 650 number and the guidance, I mean, if Bitcoin goes to 100,000, we're without even launching new products, we're at 1.2 billion by my math in AUM. So this is early days.

This stock has tremendous potential. And as long as we focus on continuing to build out our product suite and expand into those jurisdictions, people should be very, very excited about the prospects for not just revenues but profits.

I think one thing to note is when we launched Valour, we were basically scanning digital asset files for attractive crypto products to launch to our end users and buyers of our products. I think in the last three or four months, we've announced two direct basically deals with ITP and Hedera, which is traded under the ticker HBAR, so two of the largest cryptocurrencies that we've basically done deals with directly with the foundations to bring those products to market.

And that's something we'll continue to spearhead and do. So searching for the next Solanas that people want exposure to that bring different efficiencies.

So for example, ITP has been focusing on bringing decentralized artificial intelligence to the market through their blockchain. So as these kind of new themes emerge for what blockchain can be used for, we intend to partner directly with these leading foundations and bring their products to the market.

So next question was, how is our partnership with Seba Bank now, Amina Bank evolving? Do you want me to go for it, Ollie?

Yes, we've spent the better part of our last year focused primarily on our strategy at Valour. To Joseph's question, they did receive a license in Hong Kong, which is a jurisdiction that we're looking at.

There are different jurisdictions around the world that are a lot more friendly for digital assets than the U.S. and are actually looking at them as growth catalysts for the economy.

So as the Hong Kong Stock Exchange and other jurisdictions in Asia and the Middle East, also Europe, for instance, the London Stock Exchange recently approved certificates for Bitcoin and Ethereum. As these new kind of geographies open up, we'll continue to explore.

We essentially have a process that's called passporting our prospectuses. So the prospectuses that are regulated in the European Union, we can work with other regulators around the world and basically replicate our prospectus and issuance and subsequent offerings of our products in these new geographies.

So I think with Amina kind of spearheading regulatory environments in these different geographies, we're seeing regulators open up. So affected there, but we have really been focused on our internal growth strategy at four.

Yes. And just a little more color.

The Amina bank relationship has largely now become an investment versus a partnership. Is that fair to say, Ollie?

Yes, I think when we had planned a new vision for Amina, we see kind of better resources spent growing our own kind of proprietary brands, which it's a financial decision to grow our own ETP markets, which attribute more bottom line to DeFi as a company.

And then the next question is, with a billion coming up, what's the marketing plan? And I've got my thoughts, you've got your thoughts, but go for it, Ollie.

Yes. So when I think it was around 2016, I took a company called [Tithe] [ph], a product that is a large shareholder of DeFi.

And since then, I think there hasn't been much disruption to the public equity landscape of digital asset companies. You have a bunch of miners that are listed that, have very differentiated business models to a company like DeFi.

You have micro strategy point-based, but that's Galaxy as well. But that's really it.

So I think in terms of us amplifying our visibility for people looking at the digital asset class and publicly traded securities, we're in a very unique position. Specifically to what Russell is alluding to, our fixed cost basis and our upside on our AUM makes it very attractive for us to be, a very efficient proxy to, you know, Web3 and blockchain protocols as we capture the revenue of the upside from these new products in a form factor that I think is very palatable for institutional and retail investors looking for a proxy without having to play within all of these different coins and the security risks associated with interacting with all of these exchanges.

So I think we've built a very robust business in the form of Valour to capture the upside of what we think will be a very substantial crypto bull run and an extremely profitable business that all gets kind of encapsulated in a public equity. So I think, you know, as kind of we continue to grow our business, I think that you'll be seeing more marketing efforts and visibility on our underlying business, how unique it is and how well positioned we are in the space.

And I think a lot of the big names, the Black Rocks, the Fidelities, who are coming out with these ETFs in the U.S., they are marketing our business case for us because, I co-founded Floor with Johan Wallenström who essentially invented the Bitcoin ETF in the form of an ETP form factor in 2014 with a product called XPT Provider. So in terms of, you know, business models and, every day you're seeing records of Bitcoin ETFs in terms of AOM growth and, you'll, I assume, start seeing revenue attributable to these large, behemoth companies like Black Rock.

But we're operating a very similar business model. The differentiator is that we're working in more regulatory-friendly environments that are conducive to new product offerings, innovation on those product offerings, which will allow us to capture the growth of the crypto upside.

Obviously, Bitcoin and Ethereum are primed to have large and substantiated growth. But I think, a large portion of our clientele are very attracted to the alternative cryptocurrency space.

And that's what we want to encapsulate within our product strategy, which is bringing, you know, the newest and greatest protocols directly to our end users and capitalizing on the underlying revenue of our business model.

And only a tiny bit to add to that. Everybody needs to appreciate that, you know, we were in survival mode in the downturn in the market and we're finally, well, legitimately printing money right now.

And so, everything we've seen thus far is largely word of mouth and absolutely will be marketing more. We will actively look to uplist to a senior U.S.

exchange. Our share price should get to that level on its own organically just by virtue of our guidance we provided.

Everybody needs to appreciate just even with the move today, just how cheap the stock is on a revenue or a profit perspective. And, uplisting to the NASDAQ or one of the senior U.S.

exchanges will also give us a lot more visibility amongst the masses without necessarily having to spend a ton of money on marketing. But we're obviously prepared to do that in a sensible fashion.

Regarding the product roadmap, most are not out yet. Yes, that's correct.

We only have 17 ETPs. And like you heard Ollie mention, we're planning on launching another 45 in the next two years.

And, we can do ETPs in anything. Sorry, Ollie, I just stole that one because it was a pretty easy one to answer.

Right now our focus is Web 3.0 and crypto, but we have the ability to do anything that's really cool. Neuronomics, AI, Ollie, anything to add?

Yes, I think I'm seeing one question here from Boris in terms of, unfortunately the ETPs launched are not currently driving crypto narratives, e.g. AI, new meme coins.

How long for time to market for new ETPs? So I think what I touched on, I think ICP is in the top 20 coins.

They've been working on AI integration within their blockchains for several years now. In terms of new meme coins and themes that are popular within crypto natives, we're constantly evaluating these things.

One thing we need to also be cognizant of is these meme coins are usually launched by anonymous people. They're extremely volatile, so we have to also be sensitive in terms of our regulatory framework and guidance of not bringing, for lack of better words, dog **** to the markets.

So as these kind of larger meme coins that have only been around for weeks or months stabilize and we feel confident that they will be able to be approved and correspond with our regulatory environment. We will definitely address and our goal is to bring what's trending and hot in the crypto market to our customer base.

Next question. Do you own a position in Solana and enable node management?

Everyone should know we have the third biggest Solana ETP ETF in the world. Ollie, do you want to comment on the node management and whatnot?

We hired an individual early on specifically to leverage Solana at its utmost. So, yes, go for it.

Yes. So we're operating our own Solana validator that gives us more efficient revenue dynamics on our underlying product.

And we're continually, you know, working and operating within the Solana technical ecosystem to experiment with new technologies. You might see some interesting kind of product launches outside of our ETP business.

In that sense, there's just so much growth that's happening in the Solana ecosystem that we're exploring, different opportunities there. But our primary focus is using the open source Solana technologies to contribute to our underlying revenue growth.

Yes. And everybody should be aware that Solana has been a major part of our growth this year.

And no one knows what the next protocol will be. But DeFi, unlike any other company out there, gives you the ability to not have to do that.

We launched another 15 products this year, another 30 the next. You cover a lot of new opportunities in the crypto space.

Any potential on listing in the United States? Ollie, you want me to do that?

Or you want to?

Yes. I think we had NASDAQ approval in '21.

It's something that is definitely topical and something to be discussed as a board and a company. The Canadian exchange that was previously called NEO, now CBO Canada, was acquired by the CBO U.S.

So they permitted for basically kind of a, I would call it a fast track or an amicable way to uplist their listed companies to the main board of the CBO as well. The one kind of factor that has been a prohibitor to us entering has been the SEC.

So we're constantly evaluating kind of our entry approach to larger capital markets around the world and not just the U.S. But it's definitely something that we're constantly working with Council on figuring out when the time is right from a regulatory perspective.

And just, I mean, very little to add to that, everyone. It's clearly a strategy that we will embrace.

The only thing stopping us right now is our share price. And as I commented trading at three times, even with today's move, three times earnings or four times profits, those are multiples you never see in the capital markets.

The stock has a long way to run before it's trading at fair value. And once we get to the minimum hurdle price for a U.S.

senior listing, we'll obviously look and embark upon that. But as Ollie mentioned, while the U.S.

is amazing and the largest capital market in the world, the rest of the world is a really big oyster that we can clearly leverage and have a huge first mover or second mover advantage against 21 shares moving forward. Next question is sort of on our thoughts of Middle East or, and I would presume the next one would be Asian expansion.

Yes. I mean, like, as I said previously on the call, specific geographies in Asia, as well as the Middle East that are very conducive to digital assets.

They're very hospitable to the companies like ours. So we've been in touch with multiple regulators across these jurisdictions to see how we can pioneer our business model in new and emerging markets that see digital assets and companies like ours as growth opportunities for their economies.

So we'll continue to explore those and we should have, you know, news on those topics shortly. But we have a great, you know, regulatory framework.

You could refer to it as a template which we can essentially copy and paste with other regulatory bodies around the world. And just given that Johan and myself, when we started setting up for 2017, he was operating ETPs in 2014.

You could argue, we have the most experienced team in the world when it comes to digital asset securities that are listed on traditional stock exchanges. So we've had very positive discussions with multiple regulatory bodies on leading the charge of pioneering their markets.

I'm just seeing a question here from Michael Donovan. What sort of mix are you seeing between retail versus institutional interest in Europe?

What are your thoughts on [Mika's] [ph] impact when it comes to onboarding institutional clients? Are you providing ETP strategies in addition to passive ETP products?

You mentioned interest in Solana. Are you seeing interest in specific tokens within the Solana ecosystem?

So I'll just take these one by one. So we are seeing our products as of now are primarily, I would say, kind of driven by retail interest.

I would say there's kind of maybe a 60-40 makeup, but we're definitely seeing, and you can notice by kind of how the bids and the products are kind of being recognized by our trading desk, that there's definitely more institutional activity occurring that we definitely saw in Solana products. In terms of kind of Mika's impact, it's fairly kind of straightforward and friendly for institutions to be onboarded.

I would say that's one of the differentiators of our products for institutional investors, is that they don't have to pass through any new hoops that they would, say, if you're a fund in Europe and you want to buy through a cryptocurrency exchange, that's where you're going to run into costs and trouble, e-engineering regulatory measures to basically take into account other currencies and form factors and digital assets. That's where you're going to run into issues where any fund can buy our products just like a stock and it doesn't impact the regulatory structures whatsoever.

We are looking at various different strategies, actively managed passive ETP products that you hopefully should see on the shelf relatively shortly. In terms of growth within the Solana ecosystem, you're seeing, you know, hundreds of millions and I think, you know, over this year, billions of dollars that are going to be forwarded to venture capital, backed and decentralized Solana tokens and protocols.

One which I mentioned, which is in our infrastructure column height, which we were one of the first node operators on, recently surpassed a billion-dollar market cap. We have a good relationship there with the team.

They're doing very, very innovative things. People might be familiar with Chainlink, but they've essentially come up with their own kind of Oracle provisioning system on the Solana blockchain.

So there's definitely huge amounts of growth in the Solana ecosystem and we'll definitely, we have an internal process that we're managing and tracking these projects and when they reach a certain level of robustness, stability, that's when we look to either directly partner with these, the foundations behind these tokens or take them to market on our own.

You want to do the next two from Ed? Or you want me to?

Yes. So is there an opportunity to monetize JV minority investments given default evaluations and reflect these?

Yes, as I indicated, our venture portfolio was set up, obviously, to kind of reap the rewards of having deal flow access and being early in these protocols, but also being early in these protocols to cultivate relationships and ultimately be the first to market in terms of bringing them into our main cash flow business, generating business, which is more. So we'll definitely continue to spearhead these initiatives and, potentially what you might not see directly on the balance sheet from our venture portfolio, if we're cutting checks directly into these tokens, developing relationships and bringing them first to the market in the form factor of Valour products, you will see that benefit in our underlying revenue, being first to market with innovative products and next game changer protocols that are constantly emerging.

And I think you answered the next one just by...

Yes. So I think, yes, another one from Ed, so I'll repeat it, how the AUM inflow has been consistently positive throughout year-to-date So, yes, like I said, since inception, I think we've had one or two days of outflows.

I'm enthusiastically surprised when I look at our trading data that I think, and this goes back to how much information is out there and how much historical data people are correlating their trading activities with the growth of the crypto ecosystem. So I think people definitely look at, you know, happening cycles, our understanding that bear markets are when, you know, there's time for accumulation.

So our customer base is extremely bullish long-term on digital assets, which, you know, helps us with stickiness and retention of our AUM and as you see kind of catapults our AUM substantially higher in terms of percentage gains in the hundreds of percents when we have these aggressive moves, that digital asset classes is obviously famous for.

And I'll crush this next one easy. Next, someone's asking what is a marked market FX loss?

Why is it so high and why is it equal to your operating G&A? Everyone, all of those operating expenses that totaled 30 million, basically 28 million or sorry, 18 million of those are all marked to market.

And what that means is when we started this business, there's an average cost associated with the price of Bitcoin that we were buying. While Bitcoin was lower than that average cost, you take a mark-to-market loss, which never gets realized because you're never ever exiting it.

That actually has now flipped to a positive and you should see a substantial mark-to-market FX gain in Q1. But it's largely irrelevant to modeling out the business because it's basically a fictitious loss and a fictitious gain based on average prices that we either buy Bitcoin, sell Bitcoin or similarly any of our other ETPs.

So, while it looks large, it's actually nothing. And this is just part of the accounting standards that we have to deal with on a day-to-day basis with the Canadian regulators.

Why should someone choose, sorry, go ahead, Oli.

Yeah, I can take this one from Shree. So the question is why should one choose DeFi ETPs over others?

The differentiation factor, I think historical track record. Our team has created the digital ETP space.

So track record of, you know, not going down, the security of the products, resiliency of our trading desk and technical chops that keep our products extremely efficient. And I think that's what people kind of look for and keep on coming back to us for in our products, which I think, you know, speaks to our growth in AUM and, you know, underlying kind of robustness of our technology frameworks that we've developed over the years.

Russell Star Also, in some instances, we're the only one who has the product. So like the Uniswap, I'm not sure if there's another Uniswap product out there.

I haven't seen it. But for a long period of time, we were and may still be the only trading company with a Uniswap ETP, right?

And one other one is, yes, our Bitcoin and Ethereum products, everyone in the U.S. is talking about race to zero management fees.

We already have zero management fees on our Bitcoin and Ethereum products.

So they're actually called Bitcoin Zero and Ethereum Zero, which we launched them with in 2020.

Do you mind if I grab this one? It's addressed to me.

Mark's asking, can you expound in greater detail on how a billion in AUM might shift our forward-looking one-year guidance? What might our operating incomes look like?

And actually, the next question also fits into this, so I'll kill two birds with one stone, and that is the total expenses in Q1 remain similar to Q4. So at a billion AUM, everyone [indiscernible].

Part of the reason why we gave the $650 million AUM and the $46.8 million guidance is so people can actually calculate how much money we're actually making across all of our products, which is about 7.2% yield. You go to a billion dollars U.S.

in AUM, that means we're making $72 million U.S. in revenues, and it's a little bit higher than that because we're not including trading flows.

It's probably closer to $75 million. And adding in the answer to the next question after that, basically our costs are now set at a fixed $12 million a year run rate.

I mean, it might go up a tiny bit, it might go down a tiny bit, but yes, our expenses will basically not change really in any material fashion moving forward, while, as I mentioned, revenues and therefore profits will skyrocket as Bitcoin goes higher.

I think what, to Bobby's question also having lived through several bear markets teach you is, you cut costs wherever you can, whenever you can, and are always looking to, opportunistically decrease spend, and it's just something you get used to living with when you have these severe bear markets, which are great to create and make extremely efficient and robust revenue-driven business models.

Great. Next one, you want to track that one down?

It's on tokenization.

Yes. And we definitely, I mean, in terms of real-world assets, definitely something that we've been looking at.

You've seen, definitely a large momentum in real-world asset associated tokens as of recent due to the tokenization of BlackRock's first fund on the Ethereum blockchain, so it's definitely a theme that we're looking at. Definitely some of our technology partners and the Swiss digital asset ecosystem has been pioneering the tokenization of real-world assets.

So as of yet, we don't have anything in operation, but we are definitely looking at real-world assets and potentially the productization, either in Valour or separately, of those opportunistically as of now, but as of yet, we don't have anything in the pipeline.

You want to tackle that one, or you want me to do it?

I think, this is the question, can you speak to your management fees on your products and the revenue of those assets under management, but I think that's been kind of a common thing we've addressed in our conversation. We are currently innovating to remove centralized form factors from our revenue production and bringing it in-house in a decentralized fashion that will continue, which results in higher yields of our trade revenues and assets under management and that's something we're perpetually doing going forward and as we've discussed, we have a fixed cost or hopefully depreciating cost basis that will continue to drive enormous growth to our bottom line.

And Jeff asks, how do you think the new legislation and ETFs affect your business?

Yes. So I mean, you know, when the ETFs got approved and launched, this was a question both myself and Russ were kind of inundated with, but lots of people reaching out to us and saying, oh, is all of your, Bitcoin AUM gone overnight?

The answer is no, it's actually grown since then with record net inflows and I think it's definitely great for the space because you're seeing institutional and retail participants now, being able to access a regulated instrument in the largest capital market in the U.S., which is great for digital assets as a whole. For our product specifically, it doesn't affect our growth.

It actually is a positive to our growth as our focus is niche markets in various geographies around the world where people are not trading in the U.S. market time zone and they're also trading in their, in Sweden, they're trading in Swedish kronas and other localized currencies in other European markets.

So we really focus on providing the best experience for our customers in those different jurisdictions. So yes, that's my answer.

And then, next question is, would you ever consider raising a digital asset venture fund with Pomp? I mean, that's an easy one.

We already have it. You're looking at it, guys.

Pomp is definitely kind of, before we made the acquisition, I think he's been an advisor to our company for close to since inception and referred to a few names in our venture portfolio. Would we explore the opportunities to shape our own venture form and raise outside money?

I definitely, potentially, was a conversation I had over lunch earlier today. So as the digital asset class expands, as we see opportunities, we will definitely kind of act on, to the best of our abilities.

And that's definitely an area of discussion we've had.

Any interest in white labeling our products for large institutions and investment banks?

Yes. So I think, this is kind of a double-edged sword that we've looked at in terms of one thing you need to factor in is, opportunity costs, proprietary knowledge that who, what information you're sharing with which counterparties, what their intentions are.

We've essentially gone through very strategic joint venture processes with the likes of Bitcoin Suisse, one of the first, I think probably the first digital asset company in Switzerland and in the Swiss ecosystem that has been kind of a champion for Switzerland and regulatory frameworks. So I think you'll see more mutually beneficial joint ventures presented and announced over time as we identify the right counterparties to attribute growth to our bottom line.

Are you looking to launch any ETPs for BRC20 or other Bitcoin chain projects or tokens?

Yes. So given our name DeFi, absolutely.

We're very enthused by Bitcoin, you know, and the whole Layer 2 community that's evolving on-chain. Obviously, it's the largest asset class in terms of digital asset space, so the innovations that are bringing DeFi on-chain are extremely exciting and we're actively discussing, I'll leave some things up for mystery, but we're actively discussing very novel ETP products that have to do within the DeFi and Bitcoin framework that's emerging within the L2 space.

And for anyone listening who hasn't been following kind of the innovation on Bitcoin and DeFi, you know, Ethereum kind of made this all possible several summers ago, but, you know, the robustness of the liquidity associated with Bitcoin is very interesting in terms of capturing yield off of that asset class and we're actively exploring ways to conceptually, formalize that into an ETP form factor.

Yes. This next one's a kind of similar to the to the last one, but it's, Michael Saylor and MicroStrategy is a Bitcoin-focused company.

They see a match made in heaven for DeFi? Would that be of interest to your team?

And then, the last question is also do you, due to the huge value proposition, do you foresee a potential acquisition or bid for Valour DeFi?

Well, I mean, I can take the last one. I think we have lots of inbound from, I would say due to the recent launches of the Bitcoin ETFs, you have probably every single financial institution globally looking at how they can bring digital assets to their customer base because they're inundated by requests of, if you're a client of a bank in Hong Kong or Singapore and you can't access the Bitcoin ETFs in the U.S.

globally, you're asking your bank or your financial advisor how you can get in on these massive returns that are being produced by the digital asset sector. So will there be new entrants in this space?

Definitely. I would say as of now where we have our heads down and our focus on delivering as much kind of shareholder growth as possible through, you know, the launch of our roadmap and optimization of our revenue-producing yield associated with our AUM.

And the only thing I'd add to that for everyone listening, management has a very meaningful stake in this company. Well over, like, 100 million shares are controlled by participants on this call and other players in the company.

My worry is that we're bought too soon and I know that sounds a little cheeky but it's not meant to be that way. We have a massive advantage that we're leveraging having all of these products that the likes of BlackRock, Fidelity and any of these other ETF providers would want to be involved in.

And if you look at the way they operate typically it tends to be through acquisition. And we're very close to cresting through a billion.

If things work out in the Middle East or Asia, all of a sudden our AUM growth is even more substantial and clearly that's something we're hyper-focused on. And with the tremendous discount that our stock's trading at, we become a very intriguing target.

So, you know, we're going to have to work diligently to get the share price up and that's something we're working on aggressively and you can see it unfolding on a day like today. And Dave asks, this just follows on, is our lower share price keeping institutions from participating?

Look Dave, no, I would guess that there's probably entities buying or an entity, or it could just be a ton of high net worth in retail. But people are starting to realize the value proposition of this company and the Pomp article today is an early step in that.

Our press release and our guidance another step but I have to reiterate that math. You know, we're already more profitable than any minor basically out there.

We are generating more free cash flow than some of these multi-billion dollar companies. And it's just a matter of getting more eyeballs on our stock and if everybody remembers what happened before it was, kind of 60, 70, 80 and then all of a sudden we were two bucks.

And I have a what's the best predictor of the future? It typically is the past and I don't see this as being any different this time.

Ollie, if you want to handle this one, do you want to buy back shares at some point or even issue a dividend if you start getting into that sort of billion plus AUM.

Yes. I think we've had a share buyback program in the past.

It's something we explore in terms of, when we see the opportunity to do that. I think it's a management decision that gets discussed but right now we're focusing on getting out as many innovative products as possible and I think, you know, the realization of, you know, new financial quarters ahead of us and people seeing the underlying growth being realized will eventually kind of correlate to the share price or, you know, very rapidly as you know, Russ pointed out, we've seen historically within our share price.

Last question from Joseph. ARK partnered with 21 shares to list a Bitcoin product in the U.S.

Were you approached for product listings? Would you partner with a giant asset manager like those heavy hitters to list products?

What are such dynamics in such a decision? So good question, Joseph.

We were definitely approached by U.S. market participants with portfolios.

We looked at acquisition opportunities and eventually kind of made the decision to focus on what we're good at, which is the markets that we operate in. I think going, we, from the technology perspective, there could be opportunities in terms of productizing our trading engine eventually when, these large institutions have to manage a multitude of cryptocurrencies over time.

But we don't, we think the BlackRock's, Fidelity's to the world is such a kind of controlling state of the U.S. financial enterprise that it would be a bit reckless of us to go into a market we know nothing about and try to compete against behemoths.

So that's a executive decision that we made to focus on where we're seeing growth, which is in novel cryptocurrencies that will not be permitted for many years to operate within the United States financial sector. So to elaborate, you know, again, at Valour we're seeing the biggest growth in new coins such as Solana.

Our main focus is on bringing, all of these new coins to the market. And that's something that we just simply can't do in the U.S.

under its current regulatory regime. And we don't see that, you know, changing any time soon.

And, everyone, it's, it is two o'clock and we're at our limit. But, you know, as always, Ollie or I are, you know, amenable to answering emails.

Feel free to reach out. And I suspect from all of us, we want to say thank you.

Thank you for joining us. And thank you for all the questions.

And thank you for being consistent and supportive shareholders.

That's great, guys. Very informative webinar.

Thank you both so much. This does conclude the Q&A session.

Thanks to everybody who joined us on the call today. If you do have questions or need more information like Rush just mentioned, please feel free to reach out any time.

My email address is [email protected]. A video replay of today's webinar is going to be available very shortly, right after this call.

So keep an eye out for social channels or contact me directly for the link. If you have any follow-up questions, reach out anytime and be sure to add DeFi to your watch list.

Thanks, everybody, and have a great day ahead.

Thanks, Jamie. Thanks, everybody, for attending.

Cheers, guys.

Thank you. Bye-bye.