DeFi Technologies Inc. (DEFI.NE) Q4 2024 Earnings Call Transcript

Everyone, welcome to the DFI Technologies 2024 Financial Overview Call. Just going to give everybody here a second to, cycle in, and we'll start in a couple minutes. I'm going to start off by reading the risk and forward-looking statements. So, this presentation given and certain statements made within this earnings call, which are not historical facts such as expectations, anticipations, beliefs and estimates are forward-looking statements. These statements may include, without limitation, any statements preceded by, followed by or including words such as target, believe, assume, expect, aim, intend, may, anticipate foresee, see, estimate, plan, project, will is to focus can have, likely, should, would, could, continue, in other words, in terms of similar meaning or the negative zero. Others can be identified from the context in which statements are made. Forward-looking statements given the Company's current expectations and views of future developments in light of its current experience and perception of historical trends, based on numerous assumptions regarding the Company's present and future business strategies and environment in which it will operate in the future. Although the Company deem such forward-looking statements to be reasonable, no assurances can be given that they will be proven correct. The forward-looking statements are not guarantees of the future developments and results mentioned herein. Forward-looking statements that involve known and unknown risks, uncertainties and other factors such as but not limited to general economic and industry conditions, which are, in some cases, beyond the Company's control, which may cause actual results to materially differ when they expressed in such statement. The statements are made as for the date of the presentation as this earnings call, and the Company does not assume any obligation to review, update confirm any forward-looking statements contained herein, except to the extent legally required. Great. Welcome, everyone. And first off, what a great 2024. Congratulations here to management and congratulations to our shareholders that have stuck with us for the past few years. And from here, I'm going to head it off to our CEO, Olivier Roussy Newton, but first I'll also introduce the rest of the panel today. Of course, Oli, CEO; Johan Wattenstrom, the Co-Founder both DeFi Technologies and Valour; our CFO, Paul Bozoki; and our Corporate Secretary, Kenny Choi. Russell Starr should also be joining us here as well, our Head of Capital Markets. I'm Curtis Schlaufman, VP of Marketing and Communications. Oli, take it over.

Thanks a lot, Curtis. I think we -- thanks to everyone for being here. I think it's been a transformative year for both DeFi technologies, our subsidiaries and the overall, I would say, regulatory framework for general assets globally. We've read through this right, Curtis?

Yes. Yes, sorry.

So, overview on DeFi Technologies. We're a publicly listed company traded on CBOE, OTC markets and Frankfurt, and we're connecting traditional capital markets with a rapidly evolving high-growth world of decentralized finance and Web3. Our wholly-owned subsidiaries, venture portfolio trading desk, treasury strategy and industry partnerships, enable traditional investors to seamlessly top to the extensive $3 trillion receptor in a regulated manner. We have about a four-year operating track record. Valour was, I think, conceived by myself and Johan on 2017 and took a few years to get regulatory approvals. To date, we have 60-plus listed exchange-traded products for this 2024, CAD204.4 million in 2024 adjusted net revenue. And yes, to close off the year, we just before kind of at the end of the year finalized Neuronomics to five businesses in total. And yes, we're very much a founder-led team, as I mentioned, the Valour was incubated by myself and Johan in 2017 and DeFi in 2020 and both of those are amalgamated in 2021. We have diverse business lines in the form of ETPs, trading infrastructure, research more. Diversified revenue model provides broad exposure to the way of blockchain-based assets, services and applications. And going forward, now that we've kind of dramatically increased the strength of our balance sheet, proven our business model in the form of the Valour look to scale that across new geographies. We've also started to make strategic and accretive acquisitions that fuel the growth of our balance sheet and have all been extremely strategic. Here's a bit of an overview, graphically speaking in terms of the different business segments within DeFi. So, I will start from left to right. We have Reflexivity Research that we acquired at the start of last year. Reflexivity has really been kind of a bolt-on value-added service provider to our main and largest subsidiary, wholly-owned subsidiary Valour. So, when we go out into the market with new exchange-traded products, we have cutting edge research and it also allows us to see the emerging trends in the digital asset space. And effectively kind of know what products to list next and where the interest lies. Stillman has definitely been an extremely fast-growing company, very sharp team of young entrepreneurs that have definitely carved out a niche market and a very competitive trading business segment under digital assets, but definitely shined out. We've owned just under 6% of AMINA now since 2021, and that has been kind of growing in terms of AUM capacity globally and was the first FINMA regulated bank in Switzerland, one of the first kind of crypto banks in the world. A fairly new business segment, which we'll touch on a bit later in more detail, is DeFi Alpha. DeFi Alpha's focus is identifying low-risk arbitrage opportunities within the crypto ecosystem. This past year, we did $133.1 million, just under $100 million in revenue. We have somewhat substantial venture portfolio, just over CAD50 million just under $40 million. And the idea and premise behind our venture portfolio similar to Reflexivity is streamlining new ETPs, new products to kind of be invested in and bring to market first within our Valour business. One thing we're very excited about is our kind of majority acquisition of Neuronomics, a leading Swiss artificial intelligence and asset management firm. Through this 52.5% acquisition of the Company, we've also received a FINMA license and we believe artificial intelligence will be ingrained systematically in all kind of facets of digital assets. And we see kind of the highest profitability in terms of that business segment in asset management. And we have several joint ventures with a number of leading companies around the world. So, this is kind of high-level numerical facts on 2024. So adjusted book value of CAD192 million adjusted 2024 net revenue, CAD204 million; earnings per share, CAD0.39 market capitalization of roughly CAD1.2 billion, assets under management of just about a little over CAD1 billion. Adjusted EBITDA is CAD16 million and cash and digital asset treasury on balance is $81.3 million. And 2024 return on equity based on adjusted income 60%. So, these are some of the financial highlights of Q4 2024. We reported $22.4 million in cash on hand, up from $6.8 million on December 31, 2023. As of December 31, 2024, the Company's treasury holdings included 208 Bitcoin; 121 ETH; but just under 600,000 ADA, which is Cardano; 131,000 DOT, which is Polkadots blockchain; 14,000 SOL; 491 UNI, which is the Uniswap token; 433,000 AVAX, which is Avalanche ecosystem token; and just under 2 million CORE tokens, totaling just under CAD60 million, CAD58.9 million. The Company's venture portfolio investments were valued at CAD53.7 million as of December 31, 2024. Total value and cash treasury and venture portfolio stands at CAD135 million as of our year-end total adjusted revenues were CAD42.6 million for the three months ended December 31, and CAD204.3 million for the 12 months ended December 31 as well. Adjusted net income was CAD19.1 million for the three months ending December 31 and CAD115 for the 12 months ending December 31. Adjusted EBITDA was CAD20.08 million for the three months ended December 31, 2024, and CAD116.1 million for the 12 months ended December 31, 2024. On to Valour. So large generated staking lending income of CAD12.8 million and management fees of CAD2.9 million, AUM grew by 132% since December 2023 to approximately CAD1.18 billion as of December 31. Driven by favorable market conditions, obviously, kind of new crypto friendly administration in the United States and an aggressive strategic corporate action. Stillman, it's not been with us for a long time. We worked kind of diligently. There was several subsidiaries that have to be amalgamated regulatory licenses in the digital asset space are not always easy to kind of cross over into new entities. So, we've finalized that acquisition a few months ago. I think it was mid-October, and they generated just under $3 million in revenue and are growing extremely fast. So, once we have a few more months of Stillman on our balance sheet, we're very excited about the synergistic benefits of that business to Valour, DeFi Alpha and other opportunities we're looking at. DeFi Alpha specialized arbitrage desk. As I said, we'll touch on that in a bit more detail, generated CAD132.1 million. We are very careful in terms of not exposing ourselves to losses in that business. Reflexivity, very complementary, the two of Valour in the form of enhancing our product offerings in terms of discoverable and actionable research that people can review before selecting which exchange traded products, they would like to purchase and have just under $1 million in revenues for the three months ended December 31 and $2 million for the 12 months ended December 31, 2024. Here is our kind of AUM in net sales in USD. As you can see, we've kind of had a very robust increase into 2024 as digital asset prices climbed. And Johan, did you want to touch on any specific kind of data indicators pertaining to the slide?

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

Yes. So, I think to touch on that, as Johan mentioned, we've been bringing smaller I would say, smaller or newer coins to market that are definitely a lot popular, a lot more popular than say, what people might refer to as the blue-chip digital assets. People want exposure to volatility and growth, and we will continue to provide the largest and most diverse range of exchange-traded products to our clients across incoming geographies.

I think another point to add that's really important here is that we haven't had a net outflow month in probably a little over two years. And then, in fact, last month in February, when you had billions of dollars and outflows and all the ETFs globally, Valour still saw total inflows over $11 million into our ETPs. So, these products are very sticky. We continually see net inflows month-over-month and hope to see that trend continue.

Yes, definitely a good point, Curtis. It's nice to have a demographic of clientele that our risk on.

Yes.

So, obviously, we're confined by some of the things that we can share, but this has been an ongoing process since 2021 with specifically the SEC. So just to recap things on mid-September, the Company filed a 40-F Registration Statement with the United States Securities Commission in connection with its application to list its common shares on the NASDAQ stock market. on January 17, 2025, the Company filed an amended 40-F Registration Statement with the SEC. The listing of the Company's common shares on the NASDAQ remains subject to the approval of the NASDAQ, and the satisfaction of all applicable listing and regulatory requirements, including Form 40-F being nuclear affected by the SEC. The NASDAQ continues to progress its application to list its common shares on the NASDAQ. Obviously, there's lots of benefits to being listed on a major U.S. exchange. Most people know visibility, access to institutional retail investors and help DeFi make a name for itself, which I think is still kind of largely unnoticed in terms of our profitability and the uniqueness of our business model. And so yes -- and obviously, as we get material information, we're press releasing it right away in terms of this, I think it was kind of a jump ball with the election going into the end of the year. And once we had kind of pro crypto presidents. The game has definitely changed in terms of what we're seeing and the optimism across the border from Canada. In terms of stateside regulatory stuff. So, I'm not sure, Paul, you want to comment on anything or Russ?

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

And then from my desk at, we have a PCOB compliant auditor we filed our annuals. So, there's nothing holding us back from the financial and reporting point of view. We would be listed in the United States on NASDAQ because it it's called a foreign private issuer. It's really just getting effective with the SEC, which management here hopes it's Q2 and hopefully sooner, earlier in Q2 than much later in Q2.

So probably one of our biggest endeavors across the Company has been our strategic and global expansion. So, we have 60 ETPs as of now, targeting 100 plus by year-end, which are -- some of which include leverage and warrant products. We've been the first mover in a lot of these markets such as Africa, Asia, Middle East, which has its benefits, but also has a process to educate local regulators, exchanges, legal firms in terms of what digital asset offerings mean through a stock exchange and how to keep them secure. Some of our strategic partnerships that we've announced is our MOU with the Nairobi Stock Exchange to list our ETPs in Kenya and one in Singapore with a new exchange that's backed by SBI Holdings and SIX, which is the Swiss Stock Exchange called AsiaNEXT, and we should be seeing they're moving at a very both moving at a very fast pace. And so yes, we're using kind of some of these markets as a blueprint to then further aggressively expand Singapore into other Asian markets, Kenya into other African markets, and we have put in place eligibility letters in the Middle East in both the DFM, the Dubai Financial Markets and the with the Abu Dhabi Stock Exchange. So, asset management outlook for 2025, I think we being in a highly volatile macro environment, definitely trended up on the side of optimistic, but also definitely want to be conservative as the -- I think the world embraces kind of a new -- some I don't want to say kind of new world order, but a world order where assets and volatility kind of change and fluctuate on a daily basis, then it will take a little bit of time to kind of smooth things out. But just some quick kind of fact towards and highlights, AUM growth is up 900% since market lows in 2022. We already covered kind of some of some of these specific numbers, growth driven by favorable market conditions, new GP launches, we will continue to do. And we're always, from a technical perspective, working on increasing optimizing, taking the lending fees, making and automating our trading desk to make those more cash flow generating less human error. And we gave a conservative guidance of CAD227 million, $159 million, and Johan not sure if you wanted to kind of touch on kind of how we systematically came up with these numbers at all.

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

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

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

Yes. So, here's our asset outlook for -- outlook, corporate outlook for Stillman in 2025. As I mentioned prior in the call, it took several months to get the regulatory licenses over from their various subsidiaries into an amalgamated structure. We're forecasting $12 million to $16 million for again, always trading on the conservative side, driven by trade volume growth and new business initiatives. Q1 2025 forecast, $2.8 million to $3 million in revenue with significant growth potential of synergies with DeFi Technologies and war materialize. Focus in 2025 will be business development, expanding the team to accelerate its institutional client acquisition focusing on Latin America and Europe. Product and market expansion, enhancing FX and Stablecoin services to diversify revenue and hedge against appoint volatility, and this Stablecoin real-world asset market segment is booming, and we definitely have some inroads to have a seat at the table with Stillman's potentially new product offerings in that regard. Strategic partnerships, expanding global banking relationships, we announced kind of a partnering with one of the largest banks Liechtenstein, Bank Frick, some months to go and Fireblocks to broaden client access and streamlined by fiat transaction and team growth, brand evolution post-acquisition integration. We're still working on fine-tuning technology and trading technology across all of our subsidiaries. So, we're very excited about the potential growth of Stillman. It runs like us, very lean and mean. And I think, you'll see kind of more and more new products being launched and just general growth in terms of being a great business amidst market volatility. Johan, do you want to take this one?

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

And I just want to emphasize, there are two parts to DeFi Alpha. It's the larger trades that we've seen, but also, we have the daily systematic arbitrage through our daily flows that we see through our products.

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

Yes. I think we -- and just to touch again on DeFi Alpha, I think it definitely took a good 2.5 years for us to be able to accurately forecast with data endpoints, Valour revenue in conjunction with the ratio to AUM. So, I know everyone is very eager to see specific breakdowns of DeFi Alpha's outlook and projections. But as the market kind of changes which is what Johan alluded to, we're going through kind of new cyclical trends in volatility. And with that comes trading opportunities, but also risk of opportunities, which kind of delayed some of our core strategies. So hopefully, we're not even a year into having operated DeFi Alpha's. So, I think give us a few more quarters, and then we'll be able to specifically really have those specific breakdowns. But I think given kind of global certainty, we'll always tread with caution and provide conservative looks on all these numbers. So, to touch on Neuronomics in really kind of rocket signs Ph.D. team that's been working in artificial intelligence for a better part of the decade, if not longer, we acquired just over 50% on March 7, 2025. our strategic growth initiatives, expanded model-driven AMC program. So, we're partnering with Florida broadened actively managed certificates suite, leveraging proprietary AI for strategy development, proven through the AI platform Neurofin, market diversification, extending expertise into new asset classes, Q3 2025, launch AI-powered rebalancing strategy for the tech sector. So, there's a large pipeline in place, smart crypto AI Q3 2025, so high portfolio product that gives you high risk-adjusted returns across cryptocurrencies, crypto alpha AI captures out in the digital asset space. And then we'll be rolling out an equity solution, which we're very bullish on targeting inefficiencies in the technology stocks. And with this, there's so many new fund managers and institutional capital entering the space. I just think that every institutional and/or fund manager is going to have to have a breakdown of their portfolio in digital assets managed by artificial intelligence as we see enormous leaps and bounds every day essentially towards AGI. So, in the kind of majority acquisition of Neuronomics gives us compliance and tech edge. We get a FINMA license, which allows us to distribute products in Switzerland, where there's a huge number of family offices, institutional capital, large banks looking for products of this nature. And we have scalable infrastructure to go along with that. So, we're very excited about being able to launch AI-infused digital asset projects and then also get into equity products. And Johan, I'm not sure if I missed anything on this.

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

Yes, here is just a bit more of visuals on just their AI strategies outperforming general crypto index is I think all of this is available on our website as well. So, two pure-play exposures to Solana and Bitcoin Finance. So, we've been pushing forward on and obviously partners with the team at core. Really love what they're doing in terms of inventing a noncustodial staking and dual staking for Bitcoin. They definitely have the highest committed amount of Bitcoin to any kind of chain of this nature, and we'll be pushing forward aggressively with kind of all of these changes in the U.S. administration. We're definitely working with legal counsel to figure out and facilitate the most and quickest streamlined approaches to market for both of these companies, which as we announced, we'll be distributed to DeFi shareholders. So very excited about this, and we've obviously, on the SolFi step side, we have one of the largest Solana funds globally. In-house Solana team, we acquired Solana technology proprietary algorithms that maximize the yield when it comes to this. So, we'll definitely be -- as things become material, press releasing them. And I think just in light of the new administration changes with the SEC. We've definitely been figuring out and optimizing trajectory for the capital markets for both of these initiatives going forward. A - Curtis Schlaufman: Great. So, now we can move to questions for the last half of the call. You can type your questions into the chat, if they already have been answered and I'll just cycle through them. So, let me pull up the Q&A start with Michael Kim.

Curtis, I've answered a bunch of them just while we've been on the call, just to make sure we could get through them.

Awesome. Thanks Russ. We'll start with Michael Kim, an analyst from Zacks. In terms of the annualized revenue projection of CAD227 million for 2025, is that based on AUM as of December 31, 2024? And Johan yes, go ahead.

Yes, I think to break down -- there's a few inputs in that where we derive that from. But we actually assume the same levels of the crypto market as we have right now. But we have built in attractive for the AUM, we think we'll get from our new launches in terms of products, which is based on the kind of inflow we've seen in prior launches, both now and now in Q4 last year, but also prior to that. And the new geographies that we will get during the year. So mainly -- the main part there is the growth in our algo strategies, the new product launches, new geographies in terms of the AUM growth. The AM growth that we have kind of based the monetization numbers on do not assume a higher market. So -- but it's based on the yes, on the launches and the development of the business in terms of new card products and so forth.

Great. A question from Hal from the analyst at B. Riley. What is the best estimate for launches of ETPs in Asia, Middle East and Africa, given the regulatory commentary on the call today?

Yes, I can take this. We are definitely, I think, in the final strides with the Singaporean Exchange Asia next. And I think will be coming to market with a very innovative first of its kind product offerings, specifically and primarily to target the money market funds that trade in Singapore. So, I would be comfortable with kind of a 30-day time horizon in terms of Singapore. We are really in kind of like final steps with both Middle East and Africa. And it's really up to the regulators similar with the SEC to get with the greenlight. I think we have some people who drive a lot of influence in these markets. So, we're pushing as far as we can on a daily base in regards to that.

Another question. Can you speak to the custody risk of the assets tokens, several security issues, how you custody? And is that risk borne by the unitholders as well.

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

Yes, Johan, maybe comment about the fact that we also have several validators of our own, which as a result, with -- like with our Solana validator with our Core validator, we actually aren't lending out basically any of those products because they actually sit…

Yes, yes. Obviously, the one part of this could be counterpart risk. We basically do not lend tokens at the moment. So, we keep coins with our custodians, and we do save things from those custody accounts, and that's with our own validators, I would say, almost with all the underlying. So, we have a tech team on board that has been both developing custody solutions for a very long time in this space and also are a part of the process for allowing new custody solutions, third-party counterparties to come on. And we run the validator over and within our staking technology teams. So, we have that in-house, which also have obviously improved quite drastically our monetization rate during last year as we -- prior to that, we're using also third-party validators. So, custody is -- remains super conservative, but we have from that delegated to our own validators now.

Then I've invited analysts at Northland Capital Mike Grondahl to ask a few questions. Mike, go ahead.

So, I think you covered the three new geographies pretty well in the Q&A section. But are there any new ETFs or ETPs planned for Europe and the U.K. in 2025?

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

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

Yes.

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

Got it. And then embedded in your CAD227 million revenue guidance, DeFi Alpha, it sounded like from Johan's comment that could be roughly half of revenue in 2025. Did I hear that right? I'm trying to understand what's embedded in the CAD227 million for DeFi Alpha.

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

Got it. And then just two quick questions. We're sitting here at March 31. Can you comment on the March quarter? Is it appropriate to take, I don't know, 1/4 of the CAD227 million and say, the March quarter is at least 1/4 of that or close to 1/4 of that? And then secondly, so far year-to-date, was there any large DeFi Alpha trades?

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

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

Well, just for everybody, we do have -- we're in two funds. One of the funds gives us back 25% of our capital effective March 31. We won't get the money until June, but it's in distribution. The slight nuance to what Russ said for everybody is the [indiscernible] [Delom] is linked to the timing of the coin. So, coins out in 2028 have a [Delom] as high as 42%. The 25% I had at the end of December is on the basket of the entire portfolio. So, the coins in March don't have that much of a [Delom] on it. So, we won't see a big gain pick up, particularly linked to that, but we are commercially getting our capital back, if everybody can follow that, that the deal -- it's time value of money. So, coin several years out, have a bigger [Delom]. On a portfolio basis, we're at 25% at December and it will come down. But unfortunately, the March 31 trigger of one of the funds are securing back 25% won't give us a big [Delom] gain because those coins didn't have a big [Delom] them just for everybody. I know it's confusing, but the takeaway is it's noncash.

It's mark-to-market.

Yes, mark-to-market, and it turns around and it will reverse to zero by 2028 and grind steadily down.

Thanks, Mike. And then a question from Allen Klee. I think this will be the last one and a little bit over. What are the factors between -- behind the higher monetization from Valour. So, I think Johan, if you could explain just how the business model for Valour works in a little more detail.

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

Great. So, we're going to wrap it up here. I think high level, obviously, very spectacular 2024. If we’re going into 2024, I doubt the market figured that we would produce these results that we have today. So, we kind of took The Street by surprise. I think we have some surprises up our sleeve, as we've alluded to for 2025 as well. But thank you to all of you who have joined the call. Thank you for all the questions. If we weren't able to answer your call or answer your question during this call, please do reach out to ir@defi.tech, curtis@defi.tech or rstarr@defi.tech and will be happy to answer via e-mail or even take your call. This recording will be made available as soon as I get it up on Twitter. You can view the presentation that we had today via the link on the press release that we put out this morning. And with that, enjoy the rest of your Monday and have a great week. Thanks, everyone.

Thanks everyone.

Cheers. Bye.