Inside the $1.65B Solana Bet | Kyle Samani on Forward Industries & the Future of Finance
Summary
Investment in Solana: The podcast discusses a $1.65 billion fundraise led by Forward Industries, highlighting Solana's focus on performance and its potential to revolutionize capital markets by bringing them on-chain.
Solana's Evolution: Solana is described as a refinement of Ethereum with a focus on speed and scalability, aiming to create internet-native capital markets, akin to a decentralized NASDAQ.
Yield Opportunities: Solana offers an 8% yield through staking, with additional opportunities in decentralized finance (DeFi) to enhance liquidity and network effects.
Digital Asset Treasuries (DATs): Forward Industries aims to be a leader in on-chain corporate operations, tokenizing equity and conducting corporate actions on-chain to demonstrate the viability of internet capital markets.
Partnerships and Strategy: Forward Industries partners with Jump and Galaxy to leverage their expertise in trading and asset management, aiming to maximize yield and drive shareholder value through strategic DeFi engagements and potential M&A activities.
Regulatory Developments: The podcast highlights the SEC's intent to move U.S. securities markets on-chain, marking a significant regulatory shift that could accelerate the adoption of blockchain technologies in traditional finance.
Market Outlook: The conversation emphasizes the transformative potential of blockchain and AI as major trends, encouraging investors to engage with these evolving capital markets for future growth opportunities.
Transcript
Salana is in some sense a refinement of Ethereum which is a hyper hyperfocus on performance from day one. We can bring capital markets natively to the internet and and make finance feel like an internet native primitive. It's an incredibly exciting time in in crypto. We're going to move US security markets on chain. It's just kind of one of like one of the most obvious mega trends in the world. It's going to be such an incredible place forward for the next decade. If you have any questions about how to navigate the current environment, Wealthon can help connect you with a vetted advisor to get a free portfolio review. Just click the link in the description below or head to wealthon.com/free. There's no obligation and it will just take a few minutes of your time. Again, that's wealthon.com/free. Welcome back to Wealthon. My name is Chris Perkins. I'm the president of Coinfund and today I'm with my friend Kyle Samani. Kyle, welcome. Chris, thanks for the invitation. Glad to be here on the show. All right, man. So, you just led a $1.65 billion fund raise for a company called Forward Forward Industries. I think this is the largest fund raise in this entire DAT space. Is is that correct? Um, that is so the 1.65 65 raised is the largest Salana Dat raise and I think it's the second largest overall. I think one of the Bitcoin ones was larger. Still humongous and and this is exactly what we're going to dig into on the show. Um now Kyle, you you founded Multicoin. Would you just give us a little bit about a background on yourself and then we're going to dive into it. Yeah. Um so hi everyone, my name is Kyle Sani. I'm a founder and managing partner at Multicoin Capital. U Multicoin is an SEC registered investment adviser uh based in Austin, Texas. We are about to turn 8 years old on October 1st. will celebrate our 8th birthday. Uh we are one of the oldest and largest crypto focused investment firms in the world. Uh we have two major strategies. We run a hedge fund and venture venture business. Uh our hedge fund owns a big pile of liquid stuff. Uh Salana, a whole bunch of other things. Uh long short but long bias. Uh and our venture business obviously we're investing in early stage teams building in and around the crypto space. Um we are as a firm probably most well known for our investment in Salana. Uh we led the seed round in Salana all the way back in 2018. We actually also led all three of their financings before they launched the the network and the token in in 2020. Um and and today we're also one of the most active investors in the salon ecosystem. I think we've done roughly 30 deals um in and around the salon ecosystem since then. Awesome. We've been talking about this DAT phenomena essentially where we take equity rappers um and and companies and shells and we use the proceeds of fundraisers to buy underlying crypto asset classes. Um and what we've always looked at, we're a big investor on the DAT side and none of this is investment advice, but we look at a number of different elements when before we invest into a DAT and and perhaps one of the most important things are the fundamentals of the underlying token. Um and in your case, it's Salana. So would love for you to talk to the listeners about what is Salana? I think a lot of them have heard it before. They know it's like you know it's out there. They don't know exactly how it's how it differentiates but if you don't mind give us a Salana 101 what it is you know how you think of it from a value creation perspective and then like why are you such a big investor? Yeah. So I think a little context and history is important to understand Salana. So Bitcoin was the first and like Bitcoin is just digital gold. It does not have smart contracts. Um Ethereum invented smart contracts. Um and Ethereum launched in 2015, so uh a little more than 10 years old. Uh but Ethereum really never figured out a scaling strategy. Uh and Salana then took the core core idea of smart contracts and said, "How can we basically apply all of the modern optimizations and distributed systems um and and virtual machines and execution and and GPUs to make a system go as fast as humanly possible. Um so Salana is in some sense a refinement of Ethereum um which is a hyper hyperfocus on performance uh from day one. Uh I had the good fortune of meeting Anatoli obviously at the very beginning and uh he made it very clear he's like my only objective is to make this thing go as fast as possible because my goal is to make decentralized NASDAQ. Um that was in his pitch deck back in 2018 was was calling it decentralized NASDAQ. Um, in the time since then, I I think the that uh northstar of decentralized NASDAQ has evolved. And I think the modern incarnation of that uh is what we now call internet capital markets. Uh uh and you know, I think that kind of encompasses this this idea of we can bring capital markets natively to the internet and and make finance feel like an internet native primitive. Today, finance does not feel like an internet native primitive. uh right the stock market closes over 4 p.m. Um the ability to you know one of the core facets of the internet is that you have functions of of certain websites embedded in other websites. The most common example would be if you have a YouTube video you know embedded on a third party website and that's like native to how the internet works today. Uh that is not true for finance. Um, the idea of of trading being embedded as just like a primitive in thirdparty applications that are not Robin Hood or Erade or Coinbase has not really been a thing for the last 30 years. And uh, I think part of the big part of the vision of internet capital markets is making finance and internet primitive. Um, we now see this where you have Telegram, you can now trade and a lot of people do trade out of a Telegram group chat. Um, I think that's going to come to iMessage hopefully in the very near future once Apple opens up the APIs. Uh, I think the opportunity to embed trading in all kinds of new contexts is going to be a massive part of of the future. And so we look at Salana as the substrate that's going to power these internet capital markets. Yeah. And and I think that's a great description. Uh when I think about Salana, I just think about speed, right? TPS, transactions per second, decentralized NASDAQ. um as as you start talking about uh internet capital markets and we're investors in in Superstate um which is helping facilitate that. I don't think people understand how big a deal this is. Um we're actually just put canonical equities on chain for the very first time. And I think there's a couple of like regulatory things that need to get worked through before this scales. But you have the what this is going to end up being is anyone with a connection to the internet is going to be able to access you know stock markets like like Ford Industries 247. And what blows my mind is that the entire IPO market cap in 24 was like $30 billion. I think the memecoin market cap uh well sorry $30 billion was raised. The memecoin market cap was $140 billion. Why? because the internet's just hungry for products and and like there was we had some issues with regulation. Now, as we start putting things with value into the internet and we and the regulators allow you to buy them, I think it's going to be huge. Like how big do you think this is going to be? Yeah. You know, I think it's funny you use the memecoin analogy here understand. And I think the right kind of context for that is like think early Twitter and remember they called it micro blogging and it was like what do you tweet? It's like I had a donuts for breakfast and like and people were like this is dumb. Yeah. And like Twitter evolved into you know today one of the most important not only financial services but like a new services in the world right and it's kind of like crit critical for modern discourse not only in the United States but around the world. Um I I I think similarly probably think about memecoins in the same way like yes they are in some sense like trivial uh I you know I eat donuts for breakfast. Uh but I think they are uh a harbinger of like the future of people having fun on the internet. Uh and I think a lot of hardcore finance people discount the having fun with your friends part. Yeah. Um the the memes are funny. Um the group chats are funny. The live streams are funny. Uh and like it's there's a real sense of camaraderie that comes from it. Uh yeah. And so I think people deeply discount that. Uh, you know, maybe the better way to understand that is like, um, the inventor of entertainment finance is Jim Kramer. Uh, like he he is like entertainment finance 1.0. To the best of my knowledge, entertainment finance did not exist prior to Jim Kramer. Uh, and uh, I look at memecoins and live streamers. So, think like Dave Dave Portoy, Roaring Kitty. Yeah. But now there's a there's there's tens of thousands of streamers every day on this platform called Pumped Fun. Yeah. That are are kind of like entertainment finance 2.0. Yeah. Um and I encourage you to to try and understand like what is the psychological state of the people who are engaging and uh there's a lot of fun to be had there. Throughout September, we're shining the spotlight on gold with a lineup of expert conversations, sharp market analysis, and practical investment guidance. To dive deeper, make sure to grab our complimentary gold investing report using the link in the description below. And Wealthon together with SCP Resource Finance will be hosting a global silver conference this October in Toronto. Eric Sprat will be delivering the keynote and it promises to be a landmark gathering for silver investors. You can find out more in the details in the description below. I think it's a little more than that as well. Um because memecoins trade so violently. They're incredible stress tests for infrastructure. And I feel like the stress tests and and the amount of throughput that's required has really helped the ecosystem get ready for the transactional throughput that you're going to need through Visa, through payments, through through equities. I mean, Jump is one of your partners here. These guys trade so like so much volume. I mean, I used to deal with Infi, but maybe that's another benefit of what we've seen to date. It's like kind of like everything is ready now for the future and and I personally think memecoins were a part of that. I don't know if you you agree. Oh, absolutely. Yeah. All right. So, Solana is the token. It's powering internet capital markets. Um, and and it's defined by speed and transactions per second. uh and now you've launched a treasury company. Um can you tell us about it as an overview? Um tell us about the partners, tell us about the raise and why this is going to be such an incredible company going forward. Yeah, so the most I'll start off with by talking about the why. Um you know, if you asked me three months ago, do you have any interest in digital asset treasuries? I would have said no. Uh actually, that's not even a theoretical question. A lot of people pitched me digital asset treasuries three months ago and I I said no. Uh but but the reason I said no is I only understood them as a vehicle for financial engineering. Um Sailor pioneered this with strategy and like look he's just levering up and buying Bitcoin. His balance sheet produces no cash flows. Um and that was like I was like okay yeah I'm not not that interested here. Uh a two kind of fundamental learnings I had in the last three months that that really opened my eyes to the opportunity. Uh the first is like why at at an ethos level. Um SEC chairman Paul Atkins gave a speech on July 31st titled Project Crypto. Uh I encourage you just Google Atkins Project Crypto. It's a five-minute read. And it's a speech he gave to the 4,000 employees at the SEC. And in that speech he said, "We are going to move United States Securities Markets onchain um unequivocally." And um I started thinking about h how is that going to happen? And I started to think about like it's just going to be slow despite his unequivocal um request because like trady markets like well what would it mean for those people to move over and like you have the DTCC has to be involved nine NASDAQ would have to be involved the banks would have to be involved the brokers would have to be involved maybe some clearing houses and like that's just a lot of people um all of whom are regulated and slow and it occurred to me that like well could I let's say as chairman of a digital asset treasury company like accelerate that process um and that that was kind of my first aha moment was understanding I I can accelerate this and so we look at it as part of our mandate um at forward industries to be the most natively onchain publicly traded company in the world um we're not there yet but uh and there's no guarantee we will be that but that is our uh one of our goals Um and in doing so we need to prove that you can run both the capital market side of the business and the operation side of the business on chain. Uh let me be clear what that means. Um the first step in doing that is obviously tokenizing uh the Ford shares. Our ticker is Ford like the car company um FD uh and uh we're going to tokenize our equity. You expect to hear something from us very soon on that front. Uh once our token once our equity is tokenized then we want to start doing all major corporate actions on chain um dividends shareholder governance things of that nature fundraising uh stuff stuff like that. Um to prove to the world that you can do all those things. Uh the second then part of that is moving to core operations of the business on chain. Uh after we closed the pipe a couple weeks ago, the very first thing that Ford Industries did was do a $1 million uh market order buy of Salana on the Salana blockchain. Uh I tweeted the transaction ID. It's public information. Go scroll through my Twitter, you can find it. Um but very very cool to see that happen. Uh in addition to just being able to buy or sell assets on chain, we want to be able to do payroll on chain. We want to be able to do uh obviously new equity grants to employees. We want to be able to pay vendors, all that kind of a thing. Uh, and we're going to, you know, strive to do all that stuff. In doing all of those things, we will be in a we will be able to prove to the world that you can run parts or all of a publicly traded company negatively on chain. That way, when companies 2, 3, 4, 5, 6, 10, 50, 500 want to come up, show up and do the same thing, they will know that there is a proven path for them to do so. Um, as obviously a very long time believer in Salana, uh, I I kind of view take a sense of responsibility in like saying what can I do to accelerate the vision of internet capital markets and and being in this role I think allows me to do that. Yeah. So, um, that's a one major why on why we're doing this. And then the second major why and why we're doing this is like a financial one which is uh the cash flow profile of Salana differs very wildly from that of Bitcoin. Bitcoin produces no yield. Uh and like lending rates on Bitcoin are like oneish percent maybe two tops but it strategy would show up at 600,000 Bitcoin. I guarantee you rates would plummet below 1% with that much supply in the market. So you can't really earn any yield. Um, if you stake Salana today, you can earn roughly 8% uh, yield. Uh, and then there's, of course, all of this cool DeFi stuff in Salana, which I'm assuming we'll talk about here in a few minutes, but you can then take the assets on the balance sheet, both soul and dollars, uh, and do interesting stuff natively on Salana. um and uh obviously do that to earn incremental yield but then also you can then that increases liquidity on the Salana blockchain which then further accelerates you know the flywheel of of Salana's network effects as a global financial system. Yeah. So so much to unpack there. Uh first off, it sounds like you want to eat your own cooking and and you're going to blaze the path as as we look through phase number the first uh vertical that you talked about, you know, using the blockchain to for corporate actions and everything else. Is this just a function of getting your developers to do it or are there things standing in your way? What's the timeline before you think I mean obviously you're not going to be fully on chain overnight, but talk to me about how that's going to progress, how you're going to phase it and and what obstacles are in your way. Yes. I mean the primary obstacle here is just service providers. Um obviously as a board we can sign a document tomorrow and say like do these things but then there's just practical realities on uh service providers. Uh and again we are a very large entity uh we're very public uh and that uh and and we have a lot of pedigree in in the space already and relationships with more or less everybody. Um and so our ability to lean on service providers and push on them to unlock these new actions uh is real. Um whereas I think you know candidly someone else showing up trying to do the same things is just going to have less uh less uh efficacy in doing so. So uh we are pushing our service providers as hard as we can. Um step one is unlocking uh tokenized equity on chain and then once that's there then you can start to do the other stuff. Yeah. I don't think people really grasp how big a deal tokenized equity on chain is because you know with I think by the way I think tokenization's dead as we knew it because you used to like lock stuff in a box and you would move it around and you get the settlement risk up front but you still had all the costs and all the latency and all the transfer agents. We're able to kill that with stuff of the stuff that Rob's doing and issuing it canonically. I think it's going to be massive. Um so so that that's that's pretty exciting. What do you think? So today we have a lot of these ecosystems. You have like the foundation you have labs. It feels to me like companies like yours are going to almost I don't want to say replace labs but I mean it's a very similar function as you're just trying to like just catalyze the ecosystem. How's the role with labs entities going forward? Yeah, you know we're very fortunate. We know obviously the core team at Salana Anatoli and Raj being the founders uh and you know Lily today is the president of Salana Foundation. Um we obviously know all these folks for a very long time. I actually helped recruit Lily into her current job. Wow. um as president of Salana Foundation. So know these folks well. Um look, I don't think there's going to be a a ton that we rely on them for. Um in some ways it's important that we're separated. Yeah. Um the Sana Foundation is a Swiss nonprofit um and they look and act like a nonprofit and uh Forward Industries is a greedy capitalist American corp and uh we should act accordingly. Um, and so I actually think there's a very healthy kind of a yin and yang here where they fulfill their roles and responsibilities of foundation and we fulfill ours. Um, as as capitalists. All right. Favorite topic for me is yield. I think crypto is powered by yield. Um, apparently banks don't understand that we can generate yield on chain. Um, they're figuring it out uh very painfully. Yield is everything. Salana staking is around 8% between eight and nine. Um and and to the point you made previously, Bitcoin doesn't have organic yield and so you have to use a lot of financial engineering uh preferred uh convertibles in in in an ability to increase your essentially your your your Salana to share to share but now you have an another ability to generate that mnav uh when we talked about in the past the multiple to nav and that's through yield. And so tell us about how you're going to use you know this other incredible vertical called yield to generate to to generate your your multiple to nav. Yeah. So um you know first thing that I was in with with where the yield comes from. Let's just start with the 8% kind of headline number for Salana. There's two that has two subcomponents to it. One is inflation which um today on Salana the today on Salana inflation is roughly 4% approximately 4% and change um and uh that's obviously like new issuance which means if you are not staking then you are not receiving part of that yield. So so there is you know that's not like strictly organic economic activity um but it is nominally it is nominal yield. The second component of that is uh comes from transaction fees. Um and that's roughly the other 4%. Um and that 4% comes from users of the Salana blockchain all over the world paying transaction fees to use the system. Salana is very famous for transaction fees being very low. It's like a hundredth of a penny or something like that to transact on Salana. And um some of that is the hundth of a penny. Salon is running 1500 transactions per second roughly of of demand load. Uh and so that obviously adds up very quickly. But then the other component of that is um when when specifically traders pay to basically uh accelerate their transactions. Um and so there's kind of like a pay for priority mechanism in Salana. Uh and often those transaction fees can be t thousands or even tens of thousands of dollars for a single transaction. Again, all of that will flow to stakers. So uh you know those are the two sources of yield. Um and uh that adds up to like roughly 7 billion annualized something like that for Salana mainet today and that's paid out as free cash flow effectively as free cash flow every two and a half days to stakers. Um so it's not like some fake number like this is going to your your pocket as a Salana staker and obviously as a shareholder that'll be directly reflected in the balance sheet of the company. Do you have a target number of uh Salana as a percentage that you want to acquire and how does that revenue like what's your what's your goal on on staking revenue and as you mature? Yeah, I mean today look forward industries we disclosed uh recently we own about 6.8 million soul uh we are staking it uh and so you know that's producing you just kind of assume 7 to 8% kind of headline number on yield. So you can do the math there's like roughlyund million or so in revenue coming from that. Um pretty straightforward. Uh so that's kind of the the the revenue of the business today. Our expenses are obviously very low for for sure. Um one of the things that a lot of projects ask me about is hey I really want to generate this yield but yield comes with risk. Now there are all different types of risk as you get into staking or DeFi. Uh Salana doesn't really have slashing like other other protocols but there's smart contract risk, there's hacking risk. Obviously, you have assembled around you some incredible experts, but like for the people out there who are wondering, you know, yields not for free, there's always some risk. How do you mitigate those risks? You're using insurance, like what other tools are at your disposal to to navigate that side of things? Yeah. So, the so the most important part of of the yield comes from staking. And the core staking contract that we are using is the systemwide contract developed by the FA Foundation. um has been audited I don't know five, six, seven, eight times um and is globally used by everybody. Um if that contract were to have a bug and there were to be some uh you know bad event um I think it's likely that the people would uh undo the system and and refix it. Hard to reason about ahead of time but we're not really worried about that because that's built into the L1. Um so there's there's really minimal risk if any there uh for the other things that we are looking to do in terms of taking the the balance sheet sole and dollars and deploying that into protocols on chain. Um the there is obviously some risk with those contracts. Uh and you know we have a pretty robust risk management process uh at at Forward. Um and to describe the high level of it we basically look at the integral of dollar days. Uh meaning uh if you have a contract that's had a million dollars in it for 100 days that that would have hundred million dollar days um in the contract. If you've had a billion dollars in something for a thousand days that would be whatever a trillion whatever that ends up being right. Um so you get the point. The the theory of this um test is that uh dollars in a contract are a target for attackers to come and try and take. And so the more money that's been in a contract for longer is is your empirical proof that the system is safe. Um that that system will ever give you a 100% guarantee, but obviously you're asmtoically approaching 100% over time. Uh and so we have kind of a mechanism for assessing that. Um that that's the the highest level. There's also some more subtleties as well beyond that, but but that would be the the most understandable way to think about it. Got it. And you have a couple partners on this latest deal. Uh Galaxy and Jump. uh two entities that I know very well but maybe you can describe who they are, why you guys came together, how it came together and what roles are they going to serve going forward for forward. Yeah, so the three sponsors uh of the pipe that came in are multicoin jump and galaxy. Uh we're equal partners uh we're sharing sponsor economics 13 each. Uh I am chairman of the company and uh the folks at Galaxy and John each have a boarded server sheet now. Uh the are kind of roles each of us play. So you know I famously led the seed round in Salana. We are one of the most prominent VCs in the Salana ecosystem today. Uh and I've been a very public and vocal spokes spokesperson for Salana for six five six years at this point. Uh and I'm fairly well known for that. Well, it was pretty obvious for me to to slide in here as kind of the public face and doing the media and such. Uh moreover um you know we're using uh all of the reputa all of our relationships with the various Salana DeFi teams um to strike deals with those teams um to earn incremental yield above and beyond even the public yield you can get by tapping in these protocols. I hope to have some stuff to announce soon on that front. Uh so that's kind of the role we're playing. Um the second role is from Jump. Um the folks at Jump are one of the largest trading firms in the world and they are the largest trading firm in crypto. full stop. Uh Jump uh is very famously building uh a new Salana validator client called Fire Dancer. Um this is the second major validator client for Salana. I won't get into all of the the technicals of that other than to say um it's kind of paramount for the long-term success of Salana to have multiple validator clients. Um it is an extreme uh technical endeavor to undertake. Um and the Jump folks are one of the few firms in the world actually qualified to do so. Um so they're building that. uh they are intimately familiar with the intricacies of of Salana trading and DeFi and all these things and they'll also be contributing some of their proprietary uh trading tools to forward industries so that we can maximize yield for our shareholders. Uh and then the third party are the folks at Galaxy. Uh Galaxy is uh crudely uh Goldman Sachs of crypto would be the simplest way to describe them. They are one of the largest trading counterparties in the space. They have an investment bank. They have an RAA. They have all these major divisions uh and uh they have basically helped put the deal together. They have they are the um uh running point on accounting. Obviously we are a publicly traded company so we have to have gap financials. Um forward industries has an asset management agreement with Galaxy's asset management division. Um I'm not the one custodying the funds or or clicking the buttons. Um Galaxy has a dedicated regulated team to handle all that stuff. Um they are intimately familiar with Salana and they run one of the more complex trading systems on the Salana blockchain today. Um and of course they were the ones who ran the sale of soul tokens for the FTX estate. Yeah. Um and so they know uh literally every buyer of FTX locked FTX, excuse me. The G Galaxy is uh has contact information for every owner of locked soul in the world. Um and to the extent that Forward Industries is buying Locked or Soul at a discount at the market price, um we obviously have a direct line to get in touch with them via Galaxy, right? That's really important because that helps you drive your MNAV, right? If you can acquire discounted soul, so what if it's locked up? You're increasing your share count, your uh your soul per share. Bingo. Um and so yeah, I I don't ever think we're going to be in a position where 80 or 90% of the balance sheet is locked, but certainly we should be able to juice yields for our shareholders um with a minority of the balance sheet. Yeah, it brings and that's one of the benefits of DATs. It's it's brings us equity market liquidity, which is pretty huge. Um look, this was a pretty big raise, 1.65 billion. I heard it happened pretty quick. We did the fund raise two weeks. Um it was one of the most hectic things I've ever done. Uh it was incredible to see the the support. Um we believe we have the dream team. I think most uh investors who speak with us and look at other vehicles agree we have the dream team. Um and so that's why and of course like Arrow here believes in Salana. Uh and so that kind of combination of factors made it possible for us to move that quickly. So it was a lot different than a venture fund raise. Uh yes. Uh venture fundraises uh take a little bit more time. Yeah. Totally. Totally. All right. So we talked a little bit that you're not the only uh sold out there. Um I think based on what you've talked about it's pretty obvious to people how you're seeking to differentiate but maybe you could talk about your your differentiation a little bit. Yeah. Um I mean look at the end of the day uh what you're under all digital asset treasury companies are publicly traded permanent capital vehicles by definition. Um and what's going to cause a permanent capital vehicle to outperform or underperform in the long run is going to be the quality of the decisions by the team. Uh and so the first and foremost what any investor should be underwriting is the team. Um I've already spoken to our backgrounds. I encourage you to compare uh our backgrounds against the other digital asset treasuries. Uh I think most people will come away with the conclusion that that we are best-in-class group. Um uh so it's you're underwriting very much us doing things to create shareholder value. Um getting mechanically then into what that means. Um that means uh you know deploying the assets into into DeFi in a optimized way that means leveraging our relationship and our scale to negotiate deals with these DeFi teams to earn um above market return. Um what I mean by that is if you go on let's say uh drift today and deposit USDC as an example um there's some headline rate of yield that you can earn. um we can because of our relationships and our scale negotiate more favorable economics above and beyond that. Um and we can do that not only for Drift but for lots of these DeFi protocols. Got it. Um so I think that'll that'll drive and then and then lastly and probably the most interesting opportunity is M&A. Um there are I think probably what 25 or 30 DAT vehicles that are live around the world something like that. Um it seems like we're going to be closer to 40 or 50 in the not too distant future. uh and uh I the market is not going to sustain 40 or 50 of these things and so there's going to be an opportunity uh and not sorry there's going to be consolidation because a lot of these are not going to sustain um and so the opportunity to roll up other gas um on attractive MNAV basically running MNA arbitrage um is going to be very attractive and so uh we intend to be on the acquiring sag of that of those transactions. Yeah, people ask me all the time, is this DAT craze frothy or is it real? And my answer is yes. Like there are people that are pouring into the space who don't know what they're doing and they're going to be wonderful acquisition targets, but at the same time, this is a new part of market structure and it's it's very powerful if executed correctly, you know, by the right team and it's here forever and it's going to it's going to really help catalyze these ecosystems and their growth. So, as you step back and think about M&A, I think there are a couple ways you could go. Um, you could start rolling up soul DATs or you could you could go out to other tokens and like that really sends a message too because you could see communities trying to rally to like prevent you know you from taking over another token project. But if you dump that token and use it to buy yours like that's very powerful in in a way and and I think it's going to be kind of a game of thrones going on um in both directions. How how do you think it's going to work from a phasing perspective? Do you think you'll see rollups on on just within this whole ecosystem first or is it hey whatever opportunity presents itself I'm going after yeah whatever opportunity presents itself first. Um we don't particularly care. We're here to work for our shareholders and um if the financials make sense then we're going to do the deal. Awesome. Um going forward where are we going to see forward Industries uh a year to 18 months from now? What can we expect to see? Um I mean look we are uh I think in 12 to 18 months obviously we'll be in a position to have done a number of these onchain activities uh to as I mentioned earlier to like become a natively onchain company. Uh I feel confident we'll have made substantial progress on that front. Uh we I think will have you know at that point tokenized our equity and started doing these these deals with all these DeFi teams. That seems very likely within that period. Uh and look, I think we'll start to do other more creative things with the balance sheet. Uh the market, hard to say exactly how fast it's going to evolve, but uh there's a ton of opportunity in the space and uh we intend to be creative and take advantage of it. Amazing. We're also seeing a proliferation. I think yesterday the SEC put out new guidance on ETFs. Um Salana already has an ETF. Um how do you think about if you're an investor? Um and we don't have um yielding ETFs yet. We probably will. I don't know if there'll be haircut because of liquidity, whatever. But if you're an investor, um you can invest in a couple of different things. You can go soul, which is a commodity. It's unregulated. Maybe not the easiest thing for some people to do. For you and I, we we're used to it. You could do the ETF, which has like an MNAV of one. It's it's equal to one soul. Maybe we introduce staking or maybe we don't. And you have the DAT. H how do you think about that through an investment lens? you know, if you're if you're new to the ecosystem and you're trying to get in, like h how do you how do you think about those different instruments? Yeah, I mean, um, look, I run a hedge fund for business and venture funds and and you do too as well, Chris. And, you know, we charge 2 and 20 and like the question investors have to, uh, ask is like, can the investor can the the investment manager, you know, outperform despite the fees? Um, that's true in multicoin and coin fund and that's going to be true at Ford Industries as well. Um, so you're underwriting our ability in the long run to to outperform. Cool, man. I really enjoyed this conversation. Uh, any last thoughts before we let you go? I know you have a packed schedule and you're going to be on the road a lot. Um, yeah, you know, uh, I think it's an incredibly exciting time in in crypto. The Genius Act just passed. Uh, the Clarity Act, I optimistic, is going to pass fairly soon. Um, the chairman of the SEC has said we're going to move US security markets unchained. Um it's just kind of one of like the one of the most obvious mega trends in the world. The AI is the other obviously obviously big one today. Uh and look the prior ones were like social cloud and mobile. Um you know don't think too hard like it's an incredibly exciting opportunity. Uh do your research obviously and and understand who's out there but uh you know engage with capital markets. Um it's such a it's going to be such an incredible story for the next decade. Thanks Kyle. really appreciate you coming on today and uh good luck. Wish you the utmost success and I hope you kill it out there. Thank you. Hey Chris, thanks for having me on the show. Pleasure. If you have any questions about how to navigate the current environment, Wealthon can help connect you with a vetted advisor to get a free portfolio review. Just click the link in the description below or head to wealthon.com/free. There's no obligation and it will just take a few minutes of your time. Again, that's wealthy.com/free. Thanks so much for joining us. We'll see you again next time. [Music]
Inside the $1.65B Solana Bet | Kyle Samani on Forward Industries & the Future of Finance
Summary
Transcript
Salana is in some sense a refinement of Ethereum which is a hyper hyperfocus on performance from day one. We can bring capital markets natively to the internet and and make finance feel like an internet native primitive. It's an incredibly exciting time in in crypto. We're going to move US security markets on chain. It's just kind of one of like one of the most obvious mega trends in the world. It's going to be such an incredible place forward for the next decade. If you have any questions about how to navigate the current environment, Wealthon can help connect you with a vetted advisor to get a free portfolio review. Just click the link in the description below or head to wealthon.com/free. There's no obligation and it will just take a few minutes of your time. Again, that's wealthon.com/free. Welcome back to Wealthon. My name is Chris Perkins. I'm the president of Coinfund and today I'm with my friend Kyle Samani. Kyle, welcome. Chris, thanks for the invitation. Glad to be here on the show. All right, man. So, you just led a $1.65 billion fund raise for a company called Forward Forward Industries. I think this is the largest fund raise in this entire DAT space. Is is that correct? Um, that is so the 1.65 65 raised is the largest Salana Dat raise and I think it's the second largest overall. I think one of the Bitcoin ones was larger. Still humongous and and this is exactly what we're going to dig into on the show. Um now Kyle, you you founded Multicoin. Would you just give us a little bit about a background on yourself and then we're going to dive into it. Yeah. Um so hi everyone, my name is Kyle Sani. I'm a founder and managing partner at Multicoin Capital. U Multicoin is an SEC registered investment adviser uh based in Austin, Texas. We are about to turn 8 years old on October 1st. will celebrate our 8th birthday. Uh we are one of the oldest and largest crypto focused investment firms in the world. Uh we have two major strategies. We run a hedge fund and venture venture business. Uh our hedge fund owns a big pile of liquid stuff. Uh Salana, a whole bunch of other things. Uh long short but long bias. Uh and our venture business obviously we're investing in early stage teams building in and around the crypto space. Um we are as a firm probably most well known for our investment in Salana. Uh we led the seed round in Salana all the way back in 2018. We actually also led all three of their financings before they launched the the network and the token in in 2020. Um and and today we're also one of the most active investors in the salon ecosystem. I think we've done roughly 30 deals um in and around the salon ecosystem since then. Awesome. We've been talking about this DAT phenomena essentially where we take equity rappers um and and companies and shells and we use the proceeds of fundraisers to buy underlying crypto asset classes. Um and what we've always looked at, we're a big investor on the DAT side and none of this is investment advice, but we look at a number of different elements when before we invest into a DAT and and perhaps one of the most important things are the fundamentals of the underlying token. Um and in your case, it's Salana. So would love for you to talk to the listeners about what is Salana? I think a lot of them have heard it before. They know it's like you know it's out there. They don't know exactly how it's how it differentiates but if you don't mind give us a Salana 101 what it is you know how you think of it from a value creation perspective and then like why are you such a big investor? Yeah. So I think a little context and history is important to understand Salana. So Bitcoin was the first and like Bitcoin is just digital gold. It does not have smart contracts. Um Ethereum invented smart contracts. Um and Ethereum launched in 2015, so uh a little more than 10 years old. Uh but Ethereum really never figured out a scaling strategy. Uh and Salana then took the core core idea of smart contracts and said, "How can we basically apply all of the modern optimizations and distributed systems um and and virtual machines and execution and and GPUs to make a system go as fast as humanly possible. Um so Salana is in some sense a refinement of Ethereum um which is a hyper hyperfocus on performance uh from day one. Uh I had the good fortune of meeting Anatoli obviously at the very beginning and uh he made it very clear he's like my only objective is to make this thing go as fast as possible because my goal is to make decentralized NASDAQ. Um that was in his pitch deck back in 2018 was was calling it decentralized NASDAQ. Um, in the time since then, I I think the that uh northstar of decentralized NASDAQ has evolved. And I think the modern incarnation of that uh is what we now call internet capital markets. Uh uh and you know, I think that kind of encompasses this this idea of we can bring capital markets natively to the internet and and make finance feel like an internet native primitive. Today, finance does not feel like an internet native primitive. uh right the stock market closes over 4 p.m. Um the ability to you know one of the core facets of the internet is that you have functions of of certain websites embedded in other websites. The most common example would be if you have a YouTube video you know embedded on a third party website and that's like native to how the internet works today. Uh that is not true for finance. Um, the idea of of trading being embedded as just like a primitive in thirdparty applications that are not Robin Hood or Erade or Coinbase has not really been a thing for the last 30 years. And uh, I think part of the big part of the vision of internet capital markets is making finance and internet primitive. Um, we now see this where you have Telegram, you can now trade and a lot of people do trade out of a Telegram group chat. Um, I think that's going to come to iMessage hopefully in the very near future once Apple opens up the APIs. Uh, I think the opportunity to embed trading in all kinds of new contexts is going to be a massive part of of the future. And so we look at Salana as the substrate that's going to power these internet capital markets. Yeah. And and I think that's a great description. Uh when I think about Salana, I just think about speed, right? TPS, transactions per second, decentralized NASDAQ. um as as you start talking about uh internet capital markets and we're investors in in Superstate um which is helping facilitate that. I don't think people understand how big a deal this is. Um we're actually just put canonical equities on chain for the very first time. And I think there's a couple of like regulatory things that need to get worked through before this scales. But you have the what this is going to end up being is anyone with a connection to the internet is going to be able to access you know stock markets like like Ford Industries 247. And what blows my mind is that the entire IPO market cap in 24 was like $30 billion. I think the memecoin market cap uh well sorry $30 billion was raised. The memecoin market cap was $140 billion. Why? because the internet's just hungry for products and and like there was we had some issues with regulation. Now, as we start putting things with value into the internet and we and the regulators allow you to buy them, I think it's going to be huge. Like how big do you think this is going to be? Yeah. You know, I think it's funny you use the memecoin analogy here understand. And I think the right kind of context for that is like think early Twitter and remember they called it micro blogging and it was like what do you tweet? It's like I had a donuts for breakfast and like and people were like this is dumb. Yeah. And like Twitter evolved into you know today one of the most important not only financial services but like a new services in the world right and it's kind of like crit critical for modern discourse not only in the United States but around the world. Um I I I think similarly probably think about memecoins in the same way like yes they are in some sense like trivial uh I you know I eat donuts for breakfast. Uh but I think they are uh a harbinger of like the future of people having fun on the internet. Uh and I think a lot of hardcore finance people discount the having fun with your friends part. Yeah. Um the the memes are funny. Um the group chats are funny. The live streams are funny. Uh and like it's there's a real sense of camaraderie that comes from it. Uh yeah. And so I think people deeply discount that. Uh, you know, maybe the better way to understand that is like, um, the inventor of entertainment finance is Jim Kramer. Uh, like he he is like entertainment finance 1.0. To the best of my knowledge, entertainment finance did not exist prior to Jim Kramer. Uh, and uh, I look at memecoins and live streamers. So, think like Dave Dave Portoy, Roaring Kitty. Yeah. But now there's a there's there's tens of thousands of streamers every day on this platform called Pumped Fun. Yeah. That are are kind of like entertainment finance 2.0. Yeah. Um and I encourage you to to try and understand like what is the psychological state of the people who are engaging and uh there's a lot of fun to be had there. Throughout September, we're shining the spotlight on gold with a lineup of expert conversations, sharp market analysis, and practical investment guidance. To dive deeper, make sure to grab our complimentary gold investing report using the link in the description below. And Wealthon together with SCP Resource Finance will be hosting a global silver conference this October in Toronto. Eric Sprat will be delivering the keynote and it promises to be a landmark gathering for silver investors. You can find out more in the details in the description below. I think it's a little more than that as well. Um because memecoins trade so violently. They're incredible stress tests for infrastructure. And I feel like the stress tests and and the amount of throughput that's required has really helped the ecosystem get ready for the transactional throughput that you're going to need through Visa, through payments, through through equities. I mean, Jump is one of your partners here. These guys trade so like so much volume. I mean, I used to deal with Infi, but maybe that's another benefit of what we've seen to date. It's like kind of like everything is ready now for the future and and I personally think memecoins were a part of that. I don't know if you you agree. Oh, absolutely. Yeah. All right. So, Solana is the token. It's powering internet capital markets. Um, and and it's defined by speed and transactions per second. uh and now you've launched a treasury company. Um can you tell us about it as an overview? Um tell us about the partners, tell us about the raise and why this is going to be such an incredible company going forward. Yeah, so the most I'll start off with by talking about the why. Um you know, if you asked me three months ago, do you have any interest in digital asset treasuries? I would have said no. Uh actually, that's not even a theoretical question. A lot of people pitched me digital asset treasuries three months ago and I I said no. Uh but but the reason I said no is I only understood them as a vehicle for financial engineering. Um Sailor pioneered this with strategy and like look he's just levering up and buying Bitcoin. His balance sheet produces no cash flows. Um and that was like I was like okay yeah I'm not not that interested here. Uh a two kind of fundamental learnings I had in the last three months that that really opened my eyes to the opportunity. Uh the first is like why at at an ethos level. Um SEC chairman Paul Atkins gave a speech on July 31st titled Project Crypto. Uh I encourage you just Google Atkins Project Crypto. It's a five-minute read. And it's a speech he gave to the 4,000 employees at the SEC. And in that speech he said, "We are going to move United States Securities Markets onchain um unequivocally." And um I started thinking about h how is that going to happen? And I started to think about like it's just going to be slow despite his unequivocal um request because like trady markets like well what would it mean for those people to move over and like you have the DTCC has to be involved nine NASDAQ would have to be involved the banks would have to be involved the brokers would have to be involved maybe some clearing houses and like that's just a lot of people um all of whom are regulated and slow and it occurred to me that like well could I let's say as chairman of a digital asset treasury company like accelerate that process um and that that was kind of my first aha moment was understanding I I can accelerate this and so we look at it as part of our mandate um at forward industries to be the most natively onchain publicly traded company in the world um we're not there yet but uh and there's no guarantee we will be that but that is our uh one of our goals Um and in doing so we need to prove that you can run both the capital market side of the business and the operation side of the business on chain. Uh let me be clear what that means. Um the first step in doing that is obviously tokenizing uh the Ford shares. Our ticker is Ford like the car company um FD uh and uh we're going to tokenize our equity. You expect to hear something from us very soon on that front. Uh once our token once our equity is tokenized then we want to start doing all major corporate actions on chain um dividends shareholder governance things of that nature fundraising uh stuff stuff like that. Um to prove to the world that you can do all those things. Uh the second then part of that is moving to core operations of the business on chain. Uh after we closed the pipe a couple weeks ago, the very first thing that Ford Industries did was do a $1 million uh market order buy of Salana on the Salana blockchain. Uh I tweeted the transaction ID. It's public information. Go scroll through my Twitter, you can find it. Um but very very cool to see that happen. Uh in addition to just being able to buy or sell assets on chain, we want to be able to do payroll on chain. We want to be able to do uh obviously new equity grants to employees. We want to be able to pay vendors, all that kind of a thing. Uh, and we're going to, you know, strive to do all that stuff. In doing all of those things, we will be in a we will be able to prove to the world that you can run parts or all of a publicly traded company negatively on chain. That way, when companies 2, 3, 4, 5, 6, 10, 50, 500 want to come up, show up and do the same thing, they will know that there is a proven path for them to do so. Um, as obviously a very long time believer in Salana, uh, I I kind of view take a sense of responsibility in like saying what can I do to accelerate the vision of internet capital markets and and being in this role I think allows me to do that. Yeah. So, um, that's a one major why on why we're doing this. And then the second major why and why we're doing this is like a financial one which is uh the cash flow profile of Salana differs very wildly from that of Bitcoin. Bitcoin produces no yield. Uh and like lending rates on Bitcoin are like oneish percent maybe two tops but it strategy would show up at 600,000 Bitcoin. I guarantee you rates would plummet below 1% with that much supply in the market. So you can't really earn any yield. Um, if you stake Salana today, you can earn roughly 8% uh, yield. Uh, and then there's, of course, all of this cool DeFi stuff in Salana, which I'm assuming we'll talk about here in a few minutes, but you can then take the assets on the balance sheet, both soul and dollars, uh, and do interesting stuff natively on Salana. um and uh obviously do that to earn incremental yield but then also you can then that increases liquidity on the Salana blockchain which then further accelerates you know the flywheel of of Salana's network effects as a global financial system. Yeah. So so much to unpack there. Uh first off, it sounds like you want to eat your own cooking and and you're going to blaze the path as as we look through phase number the first uh vertical that you talked about, you know, using the blockchain to for corporate actions and everything else. Is this just a function of getting your developers to do it or are there things standing in your way? What's the timeline before you think I mean obviously you're not going to be fully on chain overnight, but talk to me about how that's going to progress, how you're going to phase it and and what obstacles are in your way. Yes. I mean the primary obstacle here is just service providers. Um obviously as a board we can sign a document tomorrow and say like do these things but then there's just practical realities on uh service providers. Uh and again we are a very large entity uh we're very public uh and that uh and and we have a lot of pedigree in in the space already and relationships with more or less everybody. Um and so our ability to lean on service providers and push on them to unlock these new actions uh is real. Um whereas I think you know candidly someone else showing up trying to do the same things is just going to have less uh less uh efficacy in doing so. So uh we are pushing our service providers as hard as we can. Um step one is unlocking uh tokenized equity on chain and then once that's there then you can start to do the other stuff. Yeah. I don't think people really grasp how big a deal tokenized equity on chain is because you know with I think by the way I think tokenization's dead as we knew it because you used to like lock stuff in a box and you would move it around and you get the settlement risk up front but you still had all the costs and all the latency and all the transfer agents. We're able to kill that with stuff of the stuff that Rob's doing and issuing it canonically. I think it's going to be massive. Um so so that that's that's pretty exciting. What do you think? So today we have a lot of these ecosystems. You have like the foundation you have labs. It feels to me like companies like yours are going to almost I don't want to say replace labs but I mean it's a very similar function as you're just trying to like just catalyze the ecosystem. How's the role with labs entities going forward? Yeah, you know we're very fortunate. We know obviously the core team at Salana Anatoli and Raj being the founders uh and you know Lily today is the president of Salana Foundation. Um we obviously know all these folks for a very long time. I actually helped recruit Lily into her current job. Wow. um as president of Salana Foundation. So know these folks well. Um look, I don't think there's going to be a a ton that we rely on them for. Um in some ways it's important that we're separated. Yeah. Um the Sana Foundation is a Swiss nonprofit um and they look and act like a nonprofit and uh Forward Industries is a greedy capitalist American corp and uh we should act accordingly. Um, and so I actually think there's a very healthy kind of a yin and yang here where they fulfill their roles and responsibilities of foundation and we fulfill ours. Um, as as capitalists. All right. Favorite topic for me is yield. I think crypto is powered by yield. Um, apparently banks don't understand that we can generate yield on chain. Um, they're figuring it out uh very painfully. Yield is everything. Salana staking is around 8% between eight and nine. Um and and to the point you made previously, Bitcoin doesn't have organic yield and so you have to use a lot of financial engineering uh preferred uh convertibles in in in an ability to increase your essentially your your your Salana to share to share but now you have an another ability to generate that mnav uh when we talked about in the past the multiple to nav and that's through yield. And so tell us about how you're going to use you know this other incredible vertical called yield to generate to to generate your your multiple to nav. Yeah. So um you know first thing that I was in with with where the yield comes from. Let's just start with the 8% kind of headline number for Salana. There's two that has two subcomponents to it. One is inflation which um today on Salana the today on Salana inflation is roughly 4% approximately 4% and change um and uh that's obviously like new issuance which means if you are not staking then you are not receiving part of that yield. So so there is you know that's not like strictly organic economic activity um but it is nominally it is nominal yield. The second component of that is uh comes from transaction fees. Um and that's roughly the other 4%. Um and that 4% comes from users of the Salana blockchain all over the world paying transaction fees to use the system. Salana is very famous for transaction fees being very low. It's like a hundredth of a penny or something like that to transact on Salana. And um some of that is the hundth of a penny. Salon is running 1500 transactions per second roughly of of demand load. Uh and so that obviously adds up very quickly. But then the other component of that is um when when specifically traders pay to basically uh accelerate their transactions. Um and so there's kind of like a pay for priority mechanism in Salana. Uh and often those transaction fees can be t thousands or even tens of thousands of dollars for a single transaction. Again, all of that will flow to stakers. So uh you know those are the two sources of yield. Um and uh that adds up to like roughly 7 billion annualized something like that for Salana mainet today and that's paid out as free cash flow effectively as free cash flow every two and a half days to stakers. Um so it's not like some fake number like this is going to your your pocket as a Salana staker and obviously as a shareholder that'll be directly reflected in the balance sheet of the company. Do you have a target number of uh Salana as a percentage that you want to acquire and how does that revenue like what's your what's your goal on on staking revenue and as you mature? Yeah, I mean today look forward industries we disclosed uh recently we own about 6.8 million soul uh we are staking it uh and so you know that's producing you just kind of assume 7 to 8% kind of headline number on yield. So you can do the math there's like roughlyund million or so in revenue coming from that. Um pretty straightforward. Uh so that's kind of the the the revenue of the business today. Our expenses are obviously very low for for sure. Um one of the things that a lot of projects ask me about is hey I really want to generate this yield but yield comes with risk. Now there are all different types of risk as you get into staking or DeFi. Uh Salana doesn't really have slashing like other other protocols but there's smart contract risk, there's hacking risk. Obviously, you have assembled around you some incredible experts, but like for the people out there who are wondering, you know, yields not for free, there's always some risk. How do you mitigate those risks? You're using insurance, like what other tools are at your disposal to to navigate that side of things? Yeah. So, the so the most important part of of the yield comes from staking. And the core staking contract that we are using is the systemwide contract developed by the FA Foundation. um has been audited I don't know five, six, seven, eight times um and is globally used by everybody. Um if that contract were to have a bug and there were to be some uh you know bad event um I think it's likely that the people would uh undo the system and and refix it. Hard to reason about ahead of time but we're not really worried about that because that's built into the L1. Um so there's there's really minimal risk if any there uh for the other things that we are looking to do in terms of taking the the balance sheet sole and dollars and deploying that into protocols on chain. Um the there is obviously some risk with those contracts. Uh and you know we have a pretty robust risk management process uh at at Forward. Um and to describe the high level of it we basically look at the integral of dollar days. Uh meaning uh if you have a contract that's had a million dollars in it for 100 days that that would have hundred million dollar days um in the contract. If you've had a billion dollars in something for a thousand days that would be whatever a trillion whatever that ends up being right. Um so you get the point. The the theory of this um test is that uh dollars in a contract are a target for attackers to come and try and take. And so the more money that's been in a contract for longer is is your empirical proof that the system is safe. Um that that system will ever give you a 100% guarantee, but obviously you're asmtoically approaching 100% over time. Uh and so we have kind of a mechanism for assessing that. Um that that's the the highest level. There's also some more subtleties as well beyond that, but but that would be the the most understandable way to think about it. Got it. And you have a couple partners on this latest deal. Uh Galaxy and Jump. uh two entities that I know very well but maybe you can describe who they are, why you guys came together, how it came together and what roles are they going to serve going forward for forward. Yeah, so the three sponsors uh of the pipe that came in are multicoin jump and galaxy. Uh we're equal partners uh we're sharing sponsor economics 13 each. Uh I am chairman of the company and uh the folks at Galaxy and John each have a boarded server sheet now. Uh the are kind of roles each of us play. So you know I famously led the seed round in Salana. We are one of the most prominent VCs in the Salana ecosystem today. Uh and I've been a very public and vocal spokes spokesperson for Salana for six five six years at this point. Uh and I'm fairly well known for that. Well, it was pretty obvious for me to to slide in here as kind of the public face and doing the media and such. Uh moreover um you know we're using uh all of the reputa all of our relationships with the various Salana DeFi teams um to strike deals with those teams um to earn incremental yield above and beyond even the public yield you can get by tapping in these protocols. I hope to have some stuff to announce soon on that front. Uh so that's kind of the role we're playing. Um the second role is from Jump. Um the folks at Jump are one of the largest trading firms in the world and they are the largest trading firm in crypto. full stop. Uh Jump uh is very famously building uh a new Salana validator client called Fire Dancer. Um this is the second major validator client for Salana. I won't get into all of the the technicals of that other than to say um it's kind of paramount for the long-term success of Salana to have multiple validator clients. Um it is an extreme uh technical endeavor to undertake. Um and the Jump folks are one of the few firms in the world actually qualified to do so. Um so they're building that. uh they are intimately familiar with the intricacies of of Salana trading and DeFi and all these things and they'll also be contributing some of their proprietary uh trading tools to forward industries so that we can maximize yield for our shareholders. Uh and then the third party are the folks at Galaxy. Uh Galaxy is uh crudely uh Goldman Sachs of crypto would be the simplest way to describe them. They are one of the largest trading counterparties in the space. They have an investment bank. They have an RAA. They have all these major divisions uh and uh they have basically helped put the deal together. They have they are the um uh running point on accounting. Obviously we are a publicly traded company so we have to have gap financials. Um forward industries has an asset management agreement with Galaxy's asset management division. Um I'm not the one custodying the funds or or clicking the buttons. Um Galaxy has a dedicated regulated team to handle all that stuff. Um they are intimately familiar with Salana and they run one of the more complex trading systems on the Salana blockchain today. Um and of course they were the ones who ran the sale of soul tokens for the FTX estate. Yeah. Um and so they know uh literally every buyer of FTX locked FTX, excuse me. The G Galaxy is uh has contact information for every owner of locked soul in the world. Um and to the extent that Forward Industries is buying Locked or Soul at a discount at the market price, um we obviously have a direct line to get in touch with them via Galaxy, right? That's really important because that helps you drive your MNAV, right? If you can acquire discounted soul, so what if it's locked up? You're increasing your share count, your uh your soul per share. Bingo. Um and so yeah, I I don't ever think we're going to be in a position where 80 or 90% of the balance sheet is locked, but certainly we should be able to juice yields for our shareholders um with a minority of the balance sheet. Yeah, it brings and that's one of the benefits of DATs. It's it's brings us equity market liquidity, which is pretty huge. Um look, this was a pretty big raise, 1.65 billion. I heard it happened pretty quick. We did the fund raise two weeks. Um it was one of the most hectic things I've ever done. Uh it was incredible to see the the support. Um we believe we have the dream team. I think most uh investors who speak with us and look at other vehicles agree we have the dream team. Um and so that's why and of course like Arrow here believes in Salana. Uh and so that kind of combination of factors made it possible for us to move that quickly. So it was a lot different than a venture fund raise. Uh yes. Uh venture fundraises uh take a little bit more time. Yeah. Totally. Totally. All right. So we talked a little bit that you're not the only uh sold out there. Um I think based on what you've talked about it's pretty obvious to people how you're seeking to differentiate but maybe you could talk about your your differentiation a little bit. Yeah. Um I mean look at the end of the day uh what you're under all digital asset treasury companies are publicly traded permanent capital vehicles by definition. Um and what's going to cause a permanent capital vehicle to outperform or underperform in the long run is going to be the quality of the decisions by the team. Uh and so the first and foremost what any investor should be underwriting is the team. Um I've already spoken to our backgrounds. I encourage you to compare uh our backgrounds against the other digital asset treasuries. Uh I think most people will come away with the conclusion that that we are best-in-class group. Um uh so it's you're underwriting very much us doing things to create shareholder value. Um getting mechanically then into what that means. Um that means uh you know deploying the assets into into DeFi in a optimized way that means leveraging our relationship and our scale to negotiate deals with these DeFi teams to earn um above market return. Um what I mean by that is if you go on let's say uh drift today and deposit USDC as an example um there's some headline rate of yield that you can earn. um we can because of our relationships and our scale negotiate more favorable economics above and beyond that. Um and we can do that not only for Drift but for lots of these DeFi protocols. Got it. Um so I think that'll that'll drive and then and then lastly and probably the most interesting opportunity is M&A. Um there are I think probably what 25 or 30 DAT vehicles that are live around the world something like that. Um it seems like we're going to be closer to 40 or 50 in the not too distant future. uh and uh I the market is not going to sustain 40 or 50 of these things and so there's going to be an opportunity uh and not sorry there's going to be consolidation because a lot of these are not going to sustain um and so the opportunity to roll up other gas um on attractive MNAV basically running MNA arbitrage um is going to be very attractive and so uh we intend to be on the acquiring sag of that of those transactions. Yeah, people ask me all the time, is this DAT craze frothy or is it real? And my answer is yes. Like there are people that are pouring into the space who don't know what they're doing and they're going to be wonderful acquisition targets, but at the same time, this is a new part of market structure and it's it's very powerful if executed correctly, you know, by the right team and it's here forever and it's going to it's going to really help catalyze these ecosystems and their growth. So, as you step back and think about M&A, I think there are a couple ways you could go. Um, you could start rolling up soul DATs or you could you could go out to other tokens and like that really sends a message too because you could see communities trying to rally to like prevent you know you from taking over another token project. But if you dump that token and use it to buy yours like that's very powerful in in a way and and I think it's going to be kind of a game of thrones going on um in both directions. How how do you think it's going to work from a phasing perspective? Do you think you'll see rollups on on just within this whole ecosystem first or is it hey whatever opportunity presents itself I'm going after yeah whatever opportunity presents itself first. Um we don't particularly care. We're here to work for our shareholders and um if the financials make sense then we're going to do the deal. Awesome. Um going forward where are we going to see forward Industries uh a year to 18 months from now? What can we expect to see? Um I mean look we are uh I think in 12 to 18 months obviously we'll be in a position to have done a number of these onchain activities uh to as I mentioned earlier to like become a natively onchain company. Uh I feel confident we'll have made substantial progress on that front. Uh we I think will have you know at that point tokenized our equity and started doing these these deals with all these DeFi teams. That seems very likely within that period. Uh and look, I think we'll start to do other more creative things with the balance sheet. Uh the market, hard to say exactly how fast it's going to evolve, but uh there's a ton of opportunity in the space and uh we intend to be creative and take advantage of it. Amazing. We're also seeing a proliferation. I think yesterday the SEC put out new guidance on ETFs. Um Salana already has an ETF. Um how do you think about if you're an investor? Um and we don't have um yielding ETFs yet. We probably will. I don't know if there'll be haircut because of liquidity, whatever. But if you're an investor, um you can invest in a couple of different things. You can go soul, which is a commodity. It's unregulated. Maybe not the easiest thing for some people to do. For you and I, we we're used to it. You could do the ETF, which has like an MNAV of one. It's it's equal to one soul. Maybe we introduce staking or maybe we don't. And you have the DAT. H how do you think about that through an investment lens? you know, if you're if you're new to the ecosystem and you're trying to get in, like h how do you how do you think about those different instruments? Yeah, I mean, um, look, I run a hedge fund for business and venture funds and and you do too as well, Chris. And, you know, we charge 2 and 20 and like the question investors have to, uh, ask is like, can the investor can the the investment manager, you know, outperform despite the fees? Um, that's true in multicoin and coin fund and that's going to be true at Ford Industries as well. Um, so you're underwriting our ability in the long run to to outperform. Cool, man. I really enjoyed this conversation. Uh, any last thoughts before we let you go? I know you have a packed schedule and you're going to be on the road a lot. Um, yeah, you know, uh, I think it's an incredibly exciting time in in crypto. The Genius Act just passed. Uh, the Clarity Act, I optimistic, is going to pass fairly soon. Um, the chairman of the SEC has said we're going to move US security markets unchained. Um it's just kind of one of like the one of the most obvious mega trends in the world. The AI is the other obviously obviously big one today. Uh and look the prior ones were like social cloud and mobile. Um you know don't think too hard like it's an incredibly exciting opportunity. Uh do your research obviously and and understand who's out there but uh you know engage with capital markets. Um it's such a it's going to be such an incredible story for the next decade. Thanks Kyle. really appreciate you coming on today and uh good luck. Wish you the utmost success and I hope you kill it out there. Thank you. Hey Chris, thanks for having me on the show. Pleasure. If you have any questions about how to navigate the current environment, Wealthon can help connect you with a vetted advisor to get a free portfolio review. Just click the link in the description below or head to wealthon.com/free. There's no obligation and it will just take a few minutes of your time. Again, that's wealthy.com/free. Thanks so much for joining us. We'll see you again next time. [Music]