Description:
DeFi & TradFi: Can They Coexist Forever? Speakers: Hadley Stern, Joseph Onorati This is a panel from DAS London 2025.
Transcript:
Okay, great. Uh, nice to see you here. We both uh from Canada representing Canada here, although I now live in the US, but uh but you uh you're involved in an interesting project project that's listed on the NASDAQ. Do you want to tell us a little bit about that and how you got involved in that? >> Sure, Hadley. Yeah, thanks for uh having me on. Um yeah, I'm the uh CEO at Defi Development Corp. DFDV is the the ticker and it's the first um non-bitcoin treasury company, digital asset treasury, ADAT, uh in the US and we did a change of control transaction back in April. >> Um and it's been kind of a whirlwind since now there's I think there's almost 200 uh listed or about to be listed uh digital asset treasuries in the US now. And uh we've raised about $400 million now. I think the balance sheets around uh it's a little over 400. Um and it's all invested in uh Salana. Yep. So uh to some people this may be a little confusing like what exactly are you? Are you a DeFi guy? Are you a trady guy? And if you're a DeFi guy, why are you you know running a public company? >> Yeah. Why aren't you doing staying pure DeFi? >> Yeah, you like to troll me about this. >> Yeah. Um, so I had never worked in uh traditional finance. I've been I've been working in the crypto space since 2013. I was at Kraken for eight and a half years. Uh, most recently as the chief strategy officer there. Um, and I left about a year ago now. and uh uh kind of found my way after the end of choke. 2. Uh you know, a few of my friends and I were talking and we said um well, what are some of the implications of end of choke point 2? And one of them was uh the public markets in the US are going to open up to crypto. And another is that many of the assets that might have been considered securities uh in the prior administration would not be securities now. And Salana was named in the uh Coinbase SEC complaint >> uh which you know the argument was that it was a security at the time. So this business that we're in and that many of these companies are in was basically illegal, you know, a year ago. Um, and uh, of course that's not the case now. Um, so I guess I didn't think of uh, like a transition into public markets as, you know, oh, I'm going from DeFi to Tradfy or whatever. uh it just sort of um was a natural uh progression I'd say and and I think where uh the the market will go over time eventually these two systems will kind of merge together and they'll just be finance you know in 20 years we're not going to talk about them together hopefully it's more decentralized than centralized but um there's just going to be one system in the long run >> yeah I mean I I agree in Salana there's very much the narrative I think the foundation uses these terms. You know, the NASDAQ Salon will will be the the chain that runs NASDAQ from a transactions per second and regulatory standpoint, but you're still so you're kind of almost like a bit of a Trojan horse, but you can imagine a future where your stock itself will be issued and perhaps uh controlled on the Salana blockchain. Do you imagine that that future happening? >> Well, it happened already. >> Yeah. um >> talk about that >> through the uh the partnership between backed I guess it's backed and kraken uh with the xstocks um so we were the first uh digital asset treasury I think the first digital asset treasury in the the xstocks launch group >> and so the the stock is already tokenized its ticker is DFDVX and you can go on you know coin gecko or coin market cap and look at where it's traded and there's there's uh you know DeFi pools they're very small I mean it's fairly illquid but you know maybe there's some opportunity for yield generation on some of the AMMs there uh but you know for example on Orca one of the decentralized exchanges on Salana you can uh you can trade DFTBX you know so how should this audience you know we have a very institutional audience how should they think of DATs you know categorize them in terms of you know because often come across as a marinade when you know you can stake directly through a DAP you can buy a fund you can uh buy through a custodian so where do you see where did DATS play in the the institutional kind of life cycle and what's their place >> yeah um well okay this question I always have to like answer uh with like addition context. So >> I think when you say institutions, I think there's a bunch of segments of institutions, right? So >> um and the way that the subsegments will access crypto markets are different, right? So, uh I I think probably the most uh close comparison for um a DAT is probably an ETF but and the kind of the advantage that DATs have over ETFs is they can uh stake the asset so they can earn yield on the asset and the DATs can also participate in the ecosystems uh with which the assets are associated. So for example uh DFTV deploys uh first we run our own validators. I guess that's another difference. So we run our own validators. We stake our balance sheet to our own validators. We get third party stake and the the key metric for the company is Salana per share growth. Salt per share growth or SPS growth. And uh so we we generate uh yield through staking our balance sheet assets, thirdparty delegation to the validators that then turn into this salt per share metric or growth and then we also participate in the uh the ecosystem uh to which we're a part of. So one of the things we do is we have a liquid stake token that Sanctum actually uh like initiated this token and we've kind of adopted it DFD Saul and DFDV SOL is a collateral asset on Camino and Drift and uh Exponent Raidex many of the Salana D5 projects and that lets users uh earn yield on uh Salana via staking to our validator via just by holding DFD saw. And then and we hold this on our balance sheet as well. Some of the assets are deployed in DFTV SOL and then we can use DFTV SOL as collateral asset to uh to borrow or trade um uh other assets in the Salana ecosystem or just to buy more uh Saul. So uh you can't do any of that stuff in an ETF. >> Yeah. And so kind of end of the day, the ETFs, a Salana ETF for example, might earn, I don't know, 5% 6% if they're >> if they're lucky. Or maybe there's a a Marinate Saul ETF that earns seven and a half or something. And not to put words in your mouth, maybe that's an option. >> Um, but we we think and our, you know, Ford guidance indicates that we should earn more than that on our Treasury assets. And of course the like we see with Micro Strategy I think Micro Strategy your strategy yielded something like 72% Bitcoin per share growth last year and Bitcoin earns no native yield and Micro Strategy or Strategy is not participating in uh the Bitcoin kind of DeFi ecosystem because it's nent I would say and uh but they were able to earn that yield through the financial engineering side of the business um where they have been issuing preferred stock where they're kind of uh taking the position as a Bitcoinbacked financial institution and can issue these financial instruments via preferred stocks and uh of course the convertible debt um that they've been raising for years uh is accreative on a Bitcoin per share basis and the other debts including DFTV have done the same thing. um which has resulted in uh I think in the last four months we're over 100% sold per share growth if my number is correct. I'd have to 100% check my number but it's on the website dftv.com. >> Yeah, actually your website is to me an interesting story on the transparency of the DeFi world. I think you've done a great job with the >> it's it's almost a dashboard right of the different metrics which is you know really great to see. So I think you know summarizing I think the investor and and certainly in the US there's just the fact that until DATS came along and until ETFs come along there's a whole market of US investors that can't participate in Salana and that's the same in the UK too. Um, so that's certainly a part of it is access, but it sounds like if I'm an investor and I'm thinking, you know, do I invest in ETF or a DAT, you're you're allowed to do more things. So I'm almost investing in the Salana ecosystem more broadly, right? When I'm investing in in DVI dev corp, is that fair to say? >> I think that's fair to say, but uh we have not taken exposure in um other tokens. Yeah. on or in the salon ecosystem besides uh Saul itself and derivative assets kind of on top of Saul but we do participate uh I'd say pretty deeply very deeply in the ecosystem and we >> ultimately generate revenue for those projects through deploying our uh assets across the Salana DeFi ecosystem. So yes, I think that is fair to say. So I I'm going to go back to the Tradfi DeFi thing which may be you know a personal tick of mine. I apologize but I often try to think about like five years out where is the innovation going to come from. So you're doing, you know, you mentioned you're doing some very interesting things with your liquid staking token on Camino and Drift and Camino and Drift are, you know, leading DeFi uh protocols on uh on on Salana. But then I'm thinking, you know, did they eventually become wrapped up in the the broker dealer public markets framework or in the future does the public markets framework allow you to do do the things that you're able to do on Camino? Where do you do you have a vision of of where that's going to end up and how it's going to blend? >> Uh, now this might counter my blending argument. Um, okay. I think probably the long-term answer is uh and this is like maybe very long term you know 50 years from now uh maybe there will be uh I guess major changes in how these systems are regulated because uh today I mean they're kind of not regulated >> and I I think that's great personally um but they're transparent because the code is public and the you know code is ultimately law. Uh you know it's what enforces the contracts. So I don't know maybe longer term uh the uh traditional or historic um regulatory frameworks or systems are less and less necessary >> while the uh decentralized kind of code is law systems um can take their place and of course we see orderly markets um and uh I'd say a great deal of transparency come out of those systems and I think that'll continue. >> Yeah, everything is a bit of you know blessing and a curse, right? I'm sure some people in the DeFi space would have liked some regulatory things happening on Friday with you know stopping markets and putting a pause which is a very kind of you know the idea 24/7 it never stops in DeFi. Um and so DeFi people kind of look at traditional markets and think oh it's you know shut down on the weekends with some derision but then there's some benefits to having those you know those controls in place. Uh and so seeing how that all maps out I think will be will be very interesting in the future. So you know you've just started this adventure. Where do you see where do you see the company going? Is it like when you wake up every morning is your primary focus acquisition of Saul and and raising more money to acquire it? Is that is that the primary mission? >> Yeah, ultimately that is the the primary mission. Acquire as much Saul as possible and generate as much uh salt per share growth which should translate to stock price appreciation or we hope it does. Uh that that's kind of the the goal every day. But uh how we do that I think is fascinating and allows us to allows us an opportunity to create financial products that um may have never existed before where we can bridge the public markets to decentralized finance and kind of the primary tool or one of the tools to do this is uh preferred stock offerings. So with a preferred stock offering in the US, you can basically if your lawyers can write it into the contract, then that's the financial instrument that you can create, right? So strategies listed four of these so far. And the four of them are they're all kind of interesting in their own right I would say but they're also kind of vanilla and they haven't kind of seen a a deeper crossover between kind of the two worlds but I anticipate in the notsodistant future that the digital asset treasury companies and maybe DFTV included will have uh preferred stock offerings that are uh tied to the underlying asset Or uh maybe they allow users to get exposure to uh say a stable coin yield generation market or system through investment in a public company vehicle. And there'll be dozens of these maybe maybe hundreds in um just the next couple of years. I mean, there's going to be a uh I'll say bonanza of preferred stock instruments offered in the US that give public market investors exposure to uh decentralized finance. >> Interesting. So, you know, it's almost if you were to go to Camino Drift's page and look at all the products, you could imagine literally a security for for each one. I mean, >> maybe not that extreme. >> Maybe not. >> Yeah, but almost that extreme. Yeah. So, one of the one of the things that we've just done in the last three weeks, we did a partnership with Gauntlet, and Gauntlet created a uh Drift vault for us for a DFTV Saul. So, DFDB Saul is collateral asset, and then they run a um like a basis trade on Drift. So they borrow a stable coin and they run the trade and it generates yield beyond the uh the staking yield where DFTV saw is the base asset. Maybe that earns I don't know six and a half or 7% now maybe a little higher because of all the transactions that took place over the weekend. Um but uh it can earn net I don't know three four 5%. You can just go look at it on the the drift page and there's a dashboard for it now. And yes, we could issue a preferred stock that just in invests in this drift vault >> and then make that available to anybody with, you know, a Robin Hood account or any brokerage account, you know, that can trade US equities around the world, >> which that sounds amazing. >> That's really cool in my opinion. >> Yeah, it's pretty amazing to think of that level. Uh it makes sense, right? But then it's a matter of the level of investor education and the market for these type of you know it's one thing to I always feel like when I at Marinate I always feel like it's our our sales conversations are kind of like a Russian doll blockchain crypto bitcoin ethereum salana staking you know so now I'm thinking salana uh to uh you know various multiply products on bonk >> you know that would be securitized but you can you can imagine that happening. So talk to us a little bit, you know, we're at Marinate obviously obsessed with validators and even though we don't run any, we're a very large marketplace for validators. How does your validator infrastructure play into the operation of the company? Do you have in mind that you know you want to stake as much as possible? Do you have to manage that from a risk standpoint? What does that look like? >> Uh well uh Salana staking is uh non-custodial and there's no slashing risk. So, we're pretty comfortable staking all or nearly all the balance sheet to our validators and uh Parker who is our uh COO and chief investment officer has been running his own validators for two years and we brought his validators into the business and yeah, I'd say we feel very comfortable staking to them. Um but uh we're open to uh deploying the assets otherwise if the yield opportunity is higher. Of course we want to uh participate in uh validation and security of the network. >> Um but ultimately our responsibility is to our shareholders and to uh grow that salt per share as much as possible. So if there's another opportunity that uh presents itself for example maybe lending the Saul is more profitable from one day to the next right then >> uh we might take advantage of that. Yeah, it's interesting to think about how you know the DAT ecosystem specifically in Salana um you know I I think and end investors would think about oh they're just getting exposure to Saul but they're actually getting exposure to Salana staking which is actually beneficial for the Salana network right continued decentralization and that's something in with the conversations we've had with ETFs we want to avoid a scenario where you know I think you know six or seven% % of Bitcoin is now uh custodied at at one fantastic company but at one company and so for a proof ofstake network that becomes uh existential. Well, thanks for being here. Any last words you want to get across about DATs and DeFi DevCp to the audience? No, I I well I'd say the thing that I'm most excited about is the preferred stock offerings and all of the financial innovation that I think will kind of happen on top of it to bridge uh Trafi and DeFi through that, you know, particular instrument type. >> Great. Thank you very much. >> Well, thank you. [Applause]
