WEBVTT 1 00:00:00.160 --> 00:00:03.200 Just having this very strong belief in what crypto and 2 00:00:03.200 --> 00:00:06.759 blockchain technology will become, and it will take a long time, 3 00:00:06.799 --> 00:00:08.599 but it will eventually become ubiquitous. 4 00:00:09.199 --> 00:00:09.320 You know. 5 00:00:09.480 --> 00:00:12.320 For us, it was like the right choice and basically 6 00:00:12.320 --> 00:00:15.199 looking at it as like our best risk adjusted return 7 00:00:15.240 --> 00:00:17.920 opportunity out there. You can not only make sure you 8 00:00:17.920 --> 00:00:21.039 can survive but also thrive in the tougher times as well. 9 00:00:21.120 --> 00:00:25.120 Does it make sense to eventually explore doing a basket 10 00:00:25.199 --> 00:00:28.079 of these assets, like maybe you hold Bitcoin with Solana 11 00:00:28.280 --> 00:00:30.160 or maybe Bitcoin, ETHERM and Solona. 12 00:00:30.239 --> 00:00:33.479 Right for us, we're all in on Solana. We do 13 00:00:33.600 --> 00:00:36.640 think that it is then will be the leading smart 14 00:00:36.640 --> 00:00:38.439 contract or high performance blockchain. 15 00:00:43.880 --> 00:00:46.320 This episode is brought to you by Uphold, which is 16 00:00:46.359 --> 00:00:49.399 a great crypto platform that makes it easy to buy, sell, 17 00:00:49.520 --> 00:00:54.320 and stake crypto assets. Uphold has over three hundred plus cryptocurrencies, 18 00:00:54.359 --> 00:00:57.240 including Bitcoin in all the top all coins, and they 19 00:00:57.280 --> 00:01:01.799 offer a crypto staking on over ninety crypto assets. I've 20 00:01:01.799 --> 00:01:04.319 been a user of the platform for many years. They 21 00:01:04.359 --> 00:01:07.560 are safe and reliable, they don't commingle or lend out 22 00:01:07.560 --> 00:01:10.920 your crypto funds, and they are one hundred percent reserve. 23 00:01:11.239 --> 00:01:15.079 You can review their transparency report. 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So if you'd like to learn 34 00:01:45.840 --> 00:01:48.439 more about Uphold and all the great services they offer, 35 00:01:48.760 --> 00:01:52.120 visit the link in the description. Hey, folks, welcome into 36 00:01:52.159 --> 00:01:55.000 the Thinking Crypto podcast. I'm your host, Tony Edward and 37 00:01:55.079 --> 00:01:58.319 joining me is Brian Rudik, who is the chief strategy 38 00:01:58.359 --> 00:02:00.879 Officer at UPEXI. Ryan, great to have you. 39 00:02:01.760 --> 00:02:04.040 Thanks so much for having me. Really appreciate it. 40 00:02:04.480 --> 00:02:07.680 Yeah, Brian, I'm excited to chat with you. UPEXI was 41 00:02:07.680 --> 00:02:10.719 one of the first publicly traded companies with a Salona 42 00:02:10.840 --> 00:02:13.960 Treasury strategy, so I want to dive into the details 43 00:02:14.000 --> 00:02:16.039 there and learn more. But let's kick it off with 44 00:02:16.120 --> 00:02:18.479 your background. Tell us about where you're from and what's 45 00:02:18.520 --> 00:02:19.639 your professional background. 46 00:02:20.360 --> 00:02:22.759 Yes, appreciate that. Yes. 47 00:02:22.879 --> 00:02:28.560 Brian Ruddick, chief strategy officer at Upexy, originally from Northeast Ohio. 48 00:02:28.840 --> 00:02:32.000 You grew up in the Cleveland area, went to school 49 00:02:32.039 --> 00:02:36.280 in North Carolina, grad school in Chicago, spent time in 50 00:02:36.319 --> 00:02:40.159 San Francisco in New York. But I spent most of 51 00:02:40.159 --> 00:02:43.680 my career in traditional finance. I was managing a book 52 00:02:43.680 --> 00:02:46.520 of bank stocks, always in this long short construct for 53 00:02:47.000 --> 00:02:50.719 funds like Citadel, Ballyasne, Millennium, and it was really there 54 00:02:50.960 --> 00:02:53.159 where some of the banks that I covered that were 55 00:02:53.159 --> 00:02:56.599 the crypto fiat on off ramps like Signature and Silvergate 56 00:02:57.039 --> 00:02:59.800 kind of pushed me down the crypto rabbit hole. Decided 57 00:02:59.800 --> 00:03:03.080 that there are so many wonderful use cases and benefits 58 00:03:03.080 --> 00:03:06.280 that this technology can bring that it will take some time, 59 00:03:06.479 --> 00:03:10.000 but it will be ubiquitous eventually. Want to be a 60 00:03:10.000 --> 00:03:12.439 part of it full time. So I moved in early 61 00:03:12.479 --> 00:03:15.479 twenty twenty one over to GSR, which is one of 62 00:03:15.479 --> 00:03:18.719 the largest firms a crypto been around for over a decade. 63 00:03:18.719 --> 00:03:22.080 They are the largest digital asset market maker, and I 64 00:03:22.120 --> 00:03:25.960 led their research function for four and a half years 65 00:03:26.080 --> 00:03:29.199 until I moved over to UPEXI to become their chief 66 00:03:29.240 --> 00:03:30.080 strategy officer. 67 00:03:31.120 --> 00:03:33.599 That's interesting because you know, you mentioned your backgrounds in 68 00:03:33.680 --> 00:03:37.000 TRADFI dealing with stocks and so forth and those type 69 00:03:37.000 --> 00:03:40.280 of assets, but now you have this convergence of crypto 70 00:03:40.560 --> 00:03:44.479 and publicly traded company and the crypto impacts as stock price. 71 00:03:44.879 --> 00:03:46.919 So it's kind of like the merging of these two worlds. 72 00:03:46.960 --> 00:03:48.840 What's that like for you? It's like you get to 73 00:03:48.840 --> 00:03:50.400 do your kind of your old job a bit, but 74 00:03:50.479 --> 00:03:51.400 also new things. 75 00:03:51.960 --> 00:03:55.400 It's been awesome. I've enjoyed every second of it. Yeah, 76 00:03:55.400 --> 00:03:57.639 I really think that this kind of hits on exactly 77 00:03:58.560 --> 00:04:01.840 my skill set and expertise. And I say that because 78 00:04:02.039 --> 00:04:05.520 Digira sid treasury companies are literally just banks, and so 79 00:04:05.800 --> 00:04:09.159 I think it's enabled us to really internalize and understand 80 00:04:09.159 --> 00:04:12.080 where all these great benefits come from. So if you 81 00:04:12.080 --> 00:04:15.280 think about micro strategy, it's literally been the best performing 82 00:04:15.280 --> 00:04:18.120 stock since August twenty twenty when it turned on it's 83 00:04:18.120 --> 00:04:21.560 bitcoin treasury strategy. It's more than tripled the return of 84 00:04:21.600 --> 00:04:24.120 bitcoin and it's been barely leveraged, so there has to 85 00:04:24.160 --> 00:04:28.560 be some value creation there, and so really comes from 86 00:04:28.720 --> 00:04:31.439 what I would call capital Marcus arbitrage. When they are 87 00:04:31.519 --> 00:04:34.319 issuing equity at two times book or two times NAV, 88 00:04:34.639 --> 00:04:37.480 they're essentially selling a dollar for two or buying bitcoin 89 00:04:37.560 --> 00:04:40.759 half off. It's how they've created twenty six billion worth 90 00:04:40.800 --> 00:04:44.240 of free bitcoin over the last six quarters for shareholders. 91 00:04:44.240 --> 00:04:46.000 And we can get into the math. I can give 92 00:04:46.040 --> 00:04:48.639 you an example. But the other way that I think 93 00:04:48.680 --> 00:04:53.439 about it is banks essentially borrow money from depositors, They 94 00:04:53.480 --> 00:04:55.519 pay an interest rate on that, and then they lend 95 00:04:55.519 --> 00:04:58.120 it to borrowers they pay, then they earn a higher 96 00:04:58.360 --> 00:05:01.160 yield on that, so they earn spread income, which is 97 00:05:01.160 --> 00:05:03.680 the difference between the yield on loans and their cost 98 00:05:03.759 --> 00:05:07.920 to deposits. And then the market will essentially is a simplification, 99 00:05:08.040 --> 00:05:12.000 but present value all of that future spread income added 100 00:05:12.079 --> 00:05:14.160 to the current book value, and then banks will trade 101 00:05:14.160 --> 00:05:17.199 above book. And we're the exact same way. Actually, so 102 00:05:17.800 --> 00:05:20.600 we borrow funds or raise funds from the capital markets, 103 00:05:20.920 --> 00:05:24.480 we invest into Salana. We are in the spread between 104 00:05:24.680 --> 00:05:27.399 the return on soul and our cost to capital. The 105 00:05:27.480 --> 00:05:30.360 market will then present value all that spread added to 106 00:05:30.439 --> 00:05:33.079 our NAV, and then that'll work out to something that is, 107 00:05:33.600 --> 00:05:35.920 you know, above one which we can then monetize for 108 00:05:35.959 --> 00:05:37.160 the benefit of shareholders. 109 00:05:37.839 --> 00:05:41.040 You know, I've never heard anyone categorize it as a bank, 110 00:05:41.120 --> 00:05:44.240 that these digital acid treasury companies are banks. And it's 111 00:05:44.240 --> 00:05:46.560 fascinating you the way you broke it down, because you 112 00:05:46.720 --> 00:05:49.480 are operating like a bank, even though it's you know, 113 00:05:49.519 --> 00:05:52.759 it's not fiat per se. It's you're using crypto assets. 114 00:05:53.160 --> 00:05:55.240 And you know, I want to break design in Layman's 115 00:05:55.279 --> 00:05:57.839 terms because there's still a lot of people who this 116 00:05:58.000 --> 00:06:01.240 concept is still foreign to them, Like why does holding 117 00:06:01.360 --> 00:06:05.040 a crypto asset increase the stock price? Is it simply 118 00:06:05.079 --> 00:06:08.439 that this asset continues to appreciate in value, and that's 119 00:06:08.439 --> 00:06:10.480 what's driving the volatility, is driving all this. 120 00:06:11.439 --> 00:06:13.560 So there's a couple of ways I could think of it. 121 00:06:13.720 --> 00:06:17.480 So I would say that didrasset treasury companies can and 122 00:06:17.480 --> 00:06:20.040 should trade it a premium to underlying NAB when the 123 00:06:20.040 --> 00:06:25.439 market has strong expectations of forward DIGITRA set returns. And 124 00:06:25.519 --> 00:06:28.120 so from my first example, you know, if they think 125 00:06:28.160 --> 00:06:30.879 that the return on the diditra asset will outpace the 126 00:06:30.920 --> 00:06:34.120 cost of capital, that company will earn spread every year 127 00:06:34.600 --> 00:06:36.560 and that will be added to the NAB and then 128 00:06:36.600 --> 00:06:39.680 that'll cause you to trade at this premium. Another way 129 00:06:39.720 --> 00:06:41.959 you could think about it is like folks just want 130 00:06:42.000 --> 00:06:45.199 to access crypto in the form of a familiar equity security. 131 00:06:45.560 --> 00:06:48.040 You saw that with Gray Scales g sol closed end 132 00:06:48.079 --> 00:06:51.279 Salona Trust. It routinely traded at a five hundred percent 133 00:06:51.319 --> 00:06:54.439 plus premium, and that was simply because folks wanted to 134 00:06:54.480 --> 00:06:58.360 access Solana in their SWAB account. And then the last 135 00:06:58.399 --> 00:07:01.920 reason I'd say is folks want access to these different 136 00:07:02.000 --> 00:07:05.360 value ACRUL mechanisms that you can't get with owning the 137 00:07:05.399 --> 00:07:09.319 tokens natively or in alternative instruments like an ETF. And 138 00:07:09.680 --> 00:07:12.920 these are things that dats can uniquely do. So you know, 139 00:07:12.959 --> 00:07:16.160 this is issuing equity above book, which is by definition 140 00:07:16.360 --> 00:07:20.000 a creative. This is things like staking or running validators 141 00:07:20.040 --> 00:07:23.319 to where you can earn additional commissions. And this is 142 00:07:23.360 --> 00:07:26.600 things like buying lock tokens at this discount for built 143 00:07:26.600 --> 00:07:29.560 in games for shareholders, and so add all that up 144 00:07:29.600 --> 00:07:32.160 and folks are willing to pay a premium. I've got 145 00:07:32.199 --> 00:07:34.920 other examples that can kind of explain this numerically, but 146 00:07:35.079 --> 00:07:37.600 I know that was a lot, so I'll stop there. 147 00:07:37.920 --> 00:07:40.199 No, that's great and Thank you for doing that, because 148 00:07:40.720 --> 00:07:42.639 I think it's important for folks that wrap their heads 149 00:07:42.680 --> 00:07:45.959 around this. I think there's still a lot of skeptics 150 00:07:46.000 --> 00:07:48.720 and there are people who just once again the education barrier. 151 00:07:48.800 --> 00:07:51.240 They just need to understand all these different moving parts 152 00:07:51.240 --> 00:07:54.079 and components and how it's playing out of why this 153 00:07:54.240 --> 00:07:58.519 is happening right the so what question is answered? So 154 00:07:59.319 --> 00:08:02.040 tell us about you PEXI, the history of the company 155 00:08:02.240 --> 00:08:05.759 and why it decided to make this move to have 156 00:08:05.879 --> 00:08:07.600 Solana as a treasury asset. 157 00:08:08.360 --> 00:08:13.519 Yes, so, Upexy is and was a consumer brands company, 158 00:08:13.560 --> 00:08:16.399 so it owns different consumer brands that it sells either 159 00:08:16.439 --> 00:08:20.160 direct to consumer or via Amazon. It was making and 160 00:08:20.279 --> 00:08:24.600 continues to make, roughly fifteen million in annually recurring revenue. 161 00:08:25.000 --> 00:08:29.000 It's roughly break even. And then candidly, I think Upexy 162 00:08:29.079 --> 00:08:32.759 was trying to figure out how to increase its growth opportunities. 163 00:08:33.639 --> 00:08:37.519 And before I'd even met UPEXI, they had announced back 164 00:08:37.559 --> 00:08:40.879 in February that they wanted to establish this crypto treasury. 165 00:08:41.399 --> 00:08:42.360 And while I was. 166 00:08:42.320 --> 00:08:45.759 At GSR, I was talking to our founder Chris and 167 00:08:46.159 --> 00:08:48.360 basically telling him we should try to create the micro 168 00:08:48.440 --> 00:08:51.440 strategy of Solana really wasn't rocket science, so you could 169 00:08:51.480 --> 00:08:54.000 just see all the value that micro Strategy had created 170 00:08:54.320 --> 00:08:57.960 and all of their wild success. And then sol Strategies, 171 00:08:58.000 --> 00:09:01.039 which is up in Canada's trading at five times it's 172 00:09:01.159 --> 00:09:05.679 nav and so having this background in equities is basically like, 173 00:09:06.360 --> 00:09:09.799 if micro Strategy is trading at two times, Soul Strategies 174 00:09:09.840 --> 00:09:13.159 is trading at five times, I've got reasons why a 175 00:09:13.200 --> 00:09:16.279 smaller company in one underpinned by a smaller token with 176 00:09:16.320 --> 00:09:20.279 these additional value accrul mechanisms should trade it a premium 177 00:09:20.320 --> 00:09:23.440 to something like micro Strategy. There's no reason why if 178 00:09:23.480 --> 00:09:28.000 we figured out how to create one, then we shouldn't 179 00:09:28.039 --> 00:09:31.399 trade at this premium valuation as well. And so at 180 00:09:31.440 --> 00:09:35.679 GSR we contacted investment bankers. They introduced us to UPEXI. 181 00:09:36.159 --> 00:09:38.720 Upexy was already going down this route, as I mentioned, 182 00:09:39.039 --> 00:09:41.279 And then it just made sense while I was at GSR, 183 00:09:41.399 --> 00:09:44.559 for GSR and for me to lead that investment in 184 00:09:44.600 --> 00:09:47.480 that one hundred million dollar pipe, which was actually the 185 00:09:47.519 --> 00:09:50.960 first large scale pipe for an old coin treasury company. 186 00:09:51.159 --> 00:09:53.000 And what I'd say is when we did it like 187 00:09:53.000 --> 00:09:55.600 that one hundred million was eye popping and kind of 188 00:09:55.639 --> 00:09:58.639 gave everybody the blueprint and It was really difficult to 189 00:09:58.639 --> 00:10:01.240 get to that one hundred million because like it was untested, 190 00:10:01.279 --> 00:10:04.240 and then as folks saw that, hey, this actually works, 191 00:10:04.240 --> 00:10:08.159 there is a reason why these companies should trade above 192 00:10:08.200 --> 00:10:11.919 book value, and people became more educated. You've seen like 193 00:10:11.960 --> 00:10:14.720 over one hundred of these now. But that was essentially 194 00:10:14.759 --> 00:10:18.559 how Upexy kind of pivoted into digital assets, and then 195 00:10:18.600 --> 00:10:20.759 from there it just made sense for me to join 196 00:10:20.879 --> 00:10:24.320 Upexy and continue to push on this with our management team. 197 00:10:24.519 --> 00:10:24.639 Oh. 198 00:10:24.759 --> 00:10:28.639 Absolutely, how much Solana are you currently holding and how 199 00:10:28.720 --> 00:10:31.039 much capital have you raised to purchase Alana? 200 00:10:31.879 --> 00:10:33.399 Yeah, we raised. 201 00:10:33.000 --> 00:10:37.240 One hundred million in their initial pipe essentially, and then 202 00:10:37.279 --> 00:10:40.600 we raised an additional two hundred million subsequent to that. 203 00:10:41.879 --> 00:10:44.639 Fifty million was in equity. One hundred and fifty million 204 00:10:44.720 --> 00:10:48.559 was in this very innovative in kind convertible note where 205 00:10:48.759 --> 00:10:52.240 there is actually very little risk for the investor or 206 00:10:52.279 --> 00:10:55.600 for the company because all the soul that is contributed 207 00:10:55.639 --> 00:10:59.080 as consideration for that's held in this triparty agreement, at 208 00:10:59.120 --> 00:11:02.840 this triparty arrangement, at this qualified custodian. So if at 209 00:11:02.879 --> 00:11:07.200 the end of the two years the investor hasn't converted 210 00:11:07.200 --> 00:11:09.759 to Upexy equity, they literally just get their soul backs, 211 00:11:09.799 --> 00:11:12.120 so they're basically in the same spot, but they have 212 00:11:12.200 --> 00:11:15.759 this essentrally free option to convert to upexy equity, which 213 00:11:15.759 --> 00:11:17.879 they would do if they were much better off. 214 00:11:18.360 --> 00:11:19.399 And so we've raised three. 215 00:11:19.360 --> 00:11:23.159 Hundred million, We've seen some appreciation in the price of soul, 216 00:11:23.639 --> 00:11:26.080 and we've been buying a lot of lock sool at 217 00:11:26.080 --> 00:11:29.480 this roughly mid teens discount, and so we own two 218 00:11:29.519 --> 00:11:32.919 million soul roughly right now, and the current market value 219 00:11:32.919 --> 00:11:36.000 is roughly three hundred and seventy five million, and that 220 00:11:36.039 --> 00:11:39.519 comes from both soul price appreciation and then that discount 221 00:11:39.600 --> 00:11:41.759 as well. 222 00:11:41.000 --> 00:11:43.440 Mentioned a qualified custodian, Are you able to tell us 223 00:11:43.440 --> 00:11:44.440 WHOI custodian is. 224 00:11:44.639 --> 00:11:48.000 I'm not sure if we've publicly well, we have disclosed 225 00:11:48.480 --> 00:11:51.240 Bitgo as one of ours. We put out a pressure release, 226 00:11:51.279 --> 00:11:54.080 and then we've got a couple others. We diversify amongst 227 00:11:54.120 --> 00:11:57.759 them for best operational practices, and I don't think that 228 00:11:57.799 --> 00:12:00.879 we've publicly disclosed it. And so just as public company 229 00:12:01.120 --> 00:12:02.519 that they could can't say. 230 00:12:03.000 --> 00:12:06.360 Oh got it. Okay, Now, this is a foll up 231 00:12:06.399 --> 00:12:09.039 question to maybe something I asked you earlier, and that 232 00:12:09.240 --> 00:12:14.240 is why crypto and not real estate. Why not gold? 233 00:12:14.480 --> 00:12:18.480 Is it because crypto has a much higher upside and 234 00:12:18.919 --> 00:12:22.279 because it's still a young asset class. Is that kind 235 00:12:22.320 --> 00:12:28.200 of the ethos of why crypto? Yeah, So, in my view, 236 00:12:28.240 --> 00:12:31.399 there's all these really wonderful use cases and benefits that 237 00:12:31.440 --> 00:12:34.480 you get with crypto that you don't get with other technologies. 238 00:12:34.919 --> 00:12:38.120 These are things like the removal of intermediaries that did 239 00:12:38.240 --> 00:12:43.519 like the democratization of value exchange, and new constructs around ownership, 240 00:12:43.600 --> 00:12:47.840 governance and business models. And it's such an nascent technology 241 00:12:48.279 --> 00:12:51.240 that anytime that you're this early, there's going to be 242 00:12:51.240 --> 00:12:54.399 a lot of volatility and speculation around what this could become. 243 00:12:54.799 --> 00:12:57.759 But actually, if you look at the underlying fundamentals, if 244 00:12:57.759 --> 00:13:02.240 you look at like crypto users or number of developers 245 00:13:02.559 --> 00:13:06.519 or number of transactions, like all this stuff is up 246 00:13:06.519 --> 00:13:09.120 into the right and so we're just looking at that 247 00:13:09.320 --> 00:13:12.120 and at the end of the day, like valuations and 248 00:13:12.200 --> 00:13:15.440 values will follow fundamentals, and just having this very strong 249 00:13:15.480 --> 00:13:19.159 belief in what crypto and blockchain technology will become and 250 00:13:19.679 --> 00:13:21.799 it will take a long time, but it will eventually 251 00:13:21.799 --> 00:13:24.840 become ubiquitous. You know, for us, it was like the 252 00:13:24.919 --> 00:13:27.559 right choice and basically looking at it as like our 253 00:13:27.600 --> 00:13:31.759 best risk adjusted return opportunity out there, Oh for sure. 254 00:13:32.240 --> 00:13:34.039 And so what do you think the timeline might be? 255 00:13:34.080 --> 00:13:38.080 This is a hard question for the lifespan of this strategy, 256 00:13:38.159 --> 00:13:40.960 because eventually there's going to be more liquidity. These assets 257 00:13:41.000 --> 00:13:43.559 are going to be less volatile. You mentioned, they'll become 258 00:13:43.679 --> 00:13:46.840 ubiquitous where they're everywhere and everybody can access it. So 259 00:13:47.159 --> 00:13:50.519 do I necessarily need to go buy upexy stock fifteen 260 00:13:50.600 --> 00:13:52.480 years from now, just as an example, I don't know this. 261 00:13:52.759 --> 00:13:55.279 Once again, this is a very different asset class in 262 00:13:55.320 --> 00:13:58.919 a sense that many of it of the supply is hardcap, 263 00:13:59.279 --> 00:14:01.879 it's globally distributed to you have liquidity coming in from 264 00:14:01.919 --> 00:14:04.720 all parts of the world. So what is like your 265 00:14:04.919 --> 00:14:08.039 time span or timeline for the you know, for this 266 00:14:08.799 --> 00:14:09.919 strategy so to speak. 267 00:14:10.440 --> 00:14:13.039 Yeah, I think it remains to be seen. But what 268 00:14:13.159 --> 00:14:15.840 I note is like a lot of this is predicated 269 00:14:16.000 --> 00:14:20.840 on any treasury company. So a couple things first is, uh, 270 00:14:21.120 --> 00:14:24.559 when analyzing any treasury company, the biggest determinant of how 271 00:14:24.559 --> 00:14:27.639 they'll do is the token that they're underpinned by. And 272 00:14:27.720 --> 00:14:30.919 so for us, we feel very strongly that Solana is 273 00:14:31.240 --> 00:14:34.519 likely the endgame winning high performance blockchain. You know, you 274 00:14:34.639 --> 00:14:36.840 have to not only be sure that the token will 275 00:14:36.879 --> 00:14:40.159 be around in five years, where most all coins really aren't, 276 00:14:40.960 --> 00:14:43.559 but also that it will do well. And so for 277 00:14:43.639 --> 00:14:47.480 one like we feel very fortunate to be underpinned by Solana, 278 00:14:47.519 --> 00:14:49.840 and that was an intentional choice on our part. The 279 00:14:49.879 --> 00:14:53.840 second thing is a big key piece that the business 280 00:14:53.840 --> 00:14:57.159 model is predicated on is trading at this premium to book. 281 00:14:57.240 --> 00:14:59.480 And so in my mind when you ask like when 282 00:14:59.519 --> 00:15:02.039 will the part stop, it's like when these companies stop 283 00:15:02.080 --> 00:15:05.919 trading at a premium, I would actually argue that you 284 00:15:06.000 --> 00:15:08.519 can and should trade at a premium like we're talking 285 00:15:08.559 --> 00:15:11.759 about during times when folks like forward view of crypto 286 00:15:11.919 --> 00:15:15.519 is positive, and then when folks think that you're not 287 00:15:15.600 --> 00:15:18.200 going to out earn your cost to capital, you should 288 00:15:18.279 --> 00:15:21.200 trade it a discount. And it just turned to micro strategy, 289 00:15:21.240 --> 00:15:23.759 and you know, you can, man, you can measure the 290 00:15:23.799 --> 00:15:27.200 efficacy of their treasury operations by looking at in their 291 00:15:27.240 --> 00:15:31.600 increase in bitcoin per share. And so twenty twenty four 292 00:15:31.720 --> 00:15:34.720 it increased seventy three percent, twenty twenty one it was 293 00:15:34.759 --> 00:15:37.720 something like fifty percent, and then then two bear markets 294 00:15:37.720 --> 00:15:40.600 still increased but was more like mid single digits. So 295 00:15:41.080 --> 00:15:43.840 all that's to say is I would argue that the 296 00:15:43.879 --> 00:15:47.320 model can and likely will go on pause during the 297 00:15:47.360 --> 00:15:50.600 inevitable bear markets, but then you can really you know, 298 00:15:50.759 --> 00:15:54.120 will eventually return to this bull market and then you know, 299 00:15:54.159 --> 00:15:56.480 it's likely that what we've seen in the past with 300 00:15:56.559 --> 00:15:59.200 micro strategy is like the companies will then return to 301 00:15:59.200 --> 00:16:02.159 that premium multip which you can then monetize for shareholders. 302 00:16:02.200 --> 00:16:04.480 So kind of remains to be seen. 303 00:16:04.519 --> 00:16:07.480 Will EBB and flow, but I think like the model 304 00:16:07.559 --> 00:16:10.840 is here to stay, and you know, depending on market conditions, 305 00:16:10.840 --> 00:16:14.759 can really utilize that and accrue a lot of value 306 00:16:14.799 --> 00:16:16.039 for shareholders through it. 307 00:16:16.600 --> 00:16:18.360 And you know, some of what you mentioned I think 308 00:16:18.399 --> 00:16:20.399 answers this question, but I want to make sure I 309 00:16:20.440 --> 00:16:23.519 get every base covered here. So what would you say 310 00:16:23.519 --> 00:16:26.120 to people who would say, well, I can go invest 311 00:16:26.159 --> 00:16:28.519 in a Salona ETF, why should I go through you 312 00:16:28.679 --> 00:16:31.480 PEXI as a solo treasury company. 313 00:16:32.399 --> 00:16:35.480 I would say, for access to these different value a 314 00:16:35.559 --> 00:16:39.320 cool mechanisms. So an ETF can't issue equity above book 315 00:16:39.360 --> 00:16:43.279 and pull in additional accretion in ETF, well probably will 316 00:16:43.279 --> 00:16:45.519 be able to stake, but right now you know they're 317 00:16:45.519 --> 00:16:49.399 not able to stake and an ETF can't go out 318 00:16:49.440 --> 00:16:52.000 and buy lock sool out of fifteen percent discount. 319 00:16:52.120 --> 00:16:53.519 So for all these. 320 00:16:53.360 --> 00:16:57.559 Reasons, my view is if you have a solid view 321 00:16:57.720 --> 00:17:00.559 of like the medium term for a cryptotoken, a digital 322 00:17:00.600 --> 00:17:03.679 asset treasury company actually could be the best way to 323 00:17:03.720 --> 00:17:05.400 play it for many investors. 324 00:17:06.039 --> 00:17:09.720 And then Solana offers saking capabilities. Are you staking any 325 00:17:09.720 --> 00:17:12.559 of your soul? And if you are, are those rewards 326 00:17:12.559 --> 00:17:14.640 being paid as dividends or are they just reinvested. 327 00:17:15.359 --> 00:17:19.160 We are staking substantially all of our Solona. We're actually 328 00:17:19.160 --> 00:17:22.240 not running our own validators. We're delegating to a bunch 329 00:17:22.240 --> 00:17:27.039 of top validators. The reason for that is what we're 330 00:17:27.079 --> 00:17:29.720 seeing is a lot of validators simply want steak, and 331 00:17:29.799 --> 00:17:32.920 so most of them are willing to pass back literally 332 00:17:32.960 --> 00:17:35.920 every economic possible. So for us, if we were to 333 00:17:35.960 --> 00:17:37.880 run our own validator, unless we thought we were going 334 00:17:37.920 --> 00:17:40.759 to attract a lot of delegated soul and a commission 335 00:17:40.799 --> 00:17:43.119 that we could charge on top of that, we actually 336 00:17:43.160 --> 00:17:46.759 lose money by running our own validators. And I kind 337 00:17:46.799 --> 00:17:49.920 of think it keeps the story simple for traditional investors 338 00:17:49.920 --> 00:17:52.359 as well. Having been on the other side, I tend 339 00:17:52.400 --> 00:17:54.359 to think that people don't really invest in things they 340 00:17:54.400 --> 00:17:57.880 don't understand. You have to start to explain proof of 341 00:17:57.920 --> 00:18:02.480 state consensus mechanism. It's a lot simpler to tell folks like, hey, 342 00:18:02.799 --> 00:18:04.839 we can earn eight percent on this. You know, you 343 00:18:04.839 --> 00:18:08.319 don't see micro strategy out there, you know, running bitcoin 344 00:18:08.599 --> 00:18:11.559 mine like bitcoin mining, or running rigs themselves. So we're 345 00:18:11.559 --> 00:18:14.160 staking it all and then we get that in kind, and. 346 00:18:14.119 --> 00:18:17.240 So it just adds to our soul per share. That's great. 347 00:18:18.240 --> 00:18:22.440 Are there any defied components or it's too early, or 348 00:18:22.599 --> 00:18:25.480 are you exploring anything that you can do to earn 349 00:18:25.480 --> 00:18:26.240 additional yield. 350 00:18:26.960 --> 00:18:27.799 We're starting to. 351 00:18:28.519 --> 00:18:32.519 But what I'd say is we're trying to maximize shareholder value, 352 00:18:32.559 --> 00:18:35.440 but in a risk prudent manner, and I think that 353 00:18:35.599 --> 00:18:39.400 is actually somewhat unique among different dats out there. And 354 00:18:39.480 --> 00:18:42.279 so our view is we're not going to take on 355 00:18:42.359 --> 00:18:44.960 too much leverage to where you could potentially get in trouble. 356 00:18:45.279 --> 00:18:47.880 Micro strategy will only lever up to twenty percent, and 357 00:18:47.960 --> 00:18:51.920 NAVE we're at roughly eleven percent right now. We're dealing 358 00:18:52.000 --> 00:18:54.400 with an asset that's you know, much more volatile and 359 00:18:54.480 --> 00:18:58.240 Bitcoin number two we're not doing a lot of like 360 00:18:58.400 --> 00:19:01.960 on chain dgen trading. Like my personal view is like 361 00:19:02.000 --> 00:19:04.400 if we came out and you know, this is not guidance, 362 00:19:04.400 --> 00:19:08.240 but finger in the air, if we issued equity at 363 00:19:08.240 --> 00:19:11.880 our current multiple, you could see a fifty percent increase 364 00:19:11.880 --> 00:19:15.359 in our soul per share, and assuming that that multiple holds, 365 00:19:15.400 --> 00:19:18.839 like our stock would move commensurately with that. And just 366 00:19:18.920 --> 00:19:24.319 this ability to intelligently issue equity and increase soule per 367 00:19:24.319 --> 00:19:27.319 share is just so powerful that in my mind, it 368 00:19:27.359 --> 00:19:29.359 doesn't make a lot of sense for us to start 369 00:19:29.400 --> 00:19:32.920 looping you know, LSTs and trying to earn an additional 370 00:19:33.039 --> 00:19:35.720 like two percent per year or something like that. And 371 00:19:35.759 --> 00:19:38.960 I think we would consider it when we get additional 372 00:19:39.000 --> 00:19:42.319 regulatory clarity, but I think like, we're not fully there yet. 373 00:19:42.519 --> 00:19:44.880 And then the last thing that we're doing is we're 374 00:19:44.960 --> 00:19:48.640 using like risk and operational best practices, so as I mentioned, 375 00:19:48.720 --> 00:19:52.799 using only qualified custodians and top validators, and we're diversifying 376 00:19:52.799 --> 00:19:55.599 amongst them. And we think that this positions us really 377 00:19:55.640 --> 00:19:59.400 well to whether any market environment and is a strategy 378 00:19:59.440 --> 00:20:02.440 that will resid not only with like crypto investors, but 379 00:20:02.480 --> 00:20:04.200 also traditional investors as well. 380 00:20:04.720 --> 00:20:07.480 So on that note, right, in mitigating risks, reducing your 381 00:20:07.519 --> 00:20:10.519 risk not being over levered and so forth. How are 382 00:20:10.519 --> 00:20:14.039 you preparing for market downturns and bear markets right as 383 00:20:14.039 --> 00:20:17.480 we've seen the cyclical pattern of even as stock market right, 384 00:20:17.519 --> 00:20:20.160 things go up and down over time depending on what 385 00:20:20.200 --> 00:20:23.400 the Fed's doing, global liquidity and all that stuff. How 386 00:20:23.440 --> 00:20:26.279 are you preparing for that? And you know there's a 387 00:20:26.319 --> 00:20:29.119 lot of companies doing this. There's talks of some of 388 00:20:29.160 --> 00:20:31.359 these companies might blow up, and not necessarily because of 389 00:20:31.400 --> 00:20:34.440 the crypto assets, but maybe mismanagement. But I think you 390 00:20:35.039 --> 00:20:36.559 address some of that right with the things that you 391 00:20:36.640 --> 00:20:38.519 guys are doing to avoid situations like. 392 00:20:38.480 --> 00:20:42.119 That hundred percent, And so I think it's about being 393 00:20:42.200 --> 00:20:45.599 disciplined in the bowl market. So, I mean, we've disclosed 394 00:20:45.599 --> 00:20:48.599 that we have a a line where we can draw on, 395 00:20:48.720 --> 00:20:51.079 and we have forty million that we've pulled on this 396 00:20:51.079 --> 00:20:53.440 This is where like that forty million relative to our 397 00:20:53.680 --> 00:20:56.480 three hundred and seventy five million of soul NAV works 398 00:20:56.480 --> 00:21:00.119 out to like low teens leverage. It's tempting because we 399 00:21:00.160 --> 00:21:02.440 have more on that line that we could draw and 400 00:21:02.519 --> 00:21:05.759 we obviously have this very positive view of Solana, but 401 00:21:05.960 --> 00:21:07.799