Building The Largest Solana Treasury Company | Kyle Samani

Transcript

we're building a new financial system from the ground up here and like our ability to do things moves the needle in the long-term success of of the ecosystem as a whole. It was pretty clear to me that like where the you know multi coin jump and galaxy combined via forward industries is the right you know set of people and the right vehicle to do that. Although our guest this week is an investment partner of a registered investment advisor, nothing in this podcast should be considered an offer of Multicoins investment advisory services or should otherwise be confused for investment, tax, legal, or other financial advice. Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is

forformational purposes only and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Block Works. Our hosts, guests, and the Blockworks team may hold positions in the company's funds or projects discussed. All right, everyone. Welcome back to Empire. We are recording this on September 13th on Saturday. We've got Kyle Sani. This is going out on Monday. Kyle, what's happening, man? How are you? >> Hey, Jason. Good morning. and thanks for jumping on on a Saturday. >> You look you look refreshed and good for the lack of sleep that I'm assuming you're getting.

>> Thank you. I uh I got actually pretty good sleep last night and it's been it's been hectic, but honestly like I've been having more fun now than I've had in a while at work. So, >> all right. So, let's get into it. You guys just raised 1.6 billion for Forward Industries, which is the biggest salon in debt. You're doing it with uh uh Jump and with Galaxy and obviously Multicoin and and and you're kind of leading the helm. You put in 25 million of your own capital. Um you guys raised incredibly quickly. I have heard you say uh you or other people associated say no no no. This isn't just another debt. This isn't a regular debt, right? This isn't this isn't just another one of the 50 DATs.

Uh we've talked about DATs a little bit. that I think empire listeners are getting a little sick of the debt narrative, but give me the pitch on why this is not just what are you trying to do here and why is this not just another debt? >> Yeah, appreciate the question, Jason. It's the most important one and I tried to address this in my my blog post that I published earlier this week. Um, let me touch on this from a few angles. First is like what can this vehicle represent for like what can this vehicle do for Salana? Um and like you know SEC chair Atkins uh just announced he gave a speech project crypto 6 weeks 7 weeks ago and like he said we're going to bring US securities markets onchain. Um that process is like

a difficult process and like someone has to be the guinea pig and just like do all of the weird stuff and so we are going to be that guinea pig. Um we are working to perform all functions of the bit. We are this will be a multi-year process but we are going to transition you know running as much of the business as we can on chain and that'll be both for core operations think things like payroll paying vendors stuff like that as well as for capital markets functions. So think equity issuance um raising money, dividends, stock splits, governed like formal equity governance votes, you know, shareholder votes, stuff like that. Um we're going to do try and do all of that natively on

chain. Uh and in doing so, then we can obviously prove to the world that any other company can do so as well. Uh someone has to be first and just do all that weird stuff and we intend to to be first at doing all of that weird stuff. I think that's super important for the long-term success of Salana. Uh the second reason why I think this is not just another DAT is, you know, we have really cool ways to leverage our scale, our brand, and our reputation to actually accrete solar per share for our shareholders. Um, we expect to be able to use scale and brand to negotiate deals with a bunch of teams uh to to get additional equity andor tokens from from

those groups. Um we expect to work with a lot of onchain traders like think these new prop amms uh to earn pro you know whether it's via some sort of staking mechanism or commission rate from staking uh but to tap into the profits from those groups. This is stuff we're working towards um and to to actually earn incremental yield around that. Uh the third item kind of relatedly is M&A. um the market's not going to sustain 20 salana dats like it just doesn't I can see a world in which it sustains like three or four I think that's pos I think four is probably the absolute highest number but certainly not more than that um so this is

opportunity for M&A uh and we we certainly intend to capitalize on that um and you know the beauty of that is that you just have this MNAB arbitrage um if I trade at let's say 1.5 and someone trades at 08 um it's accreative for both parties to do a transaction at 1.1 right like uh and so that I think that's a very big opportunity. Uh and then maybe the last and perhaps the most interesting one as it pertains to like finance is you know uh strategy has actually started stopped doing converts and started moving towards just these perpetual preferreds. um and they they they're pretty in interesting instrument.

Uh because you don't have to repay the principal and you just you know it's a guaranteed coupon for the for the shareholder the equity holder. Um the problem with doing the perpetual reverse for Bitcoin is like well if the price of Bitcoin goes down over time like you have a problem. It's it's still an implicit form of leverage. Um you're not going to get margin called but it's still a form of leverage. With um Salana, you have two sources of yield that you can use to pay down that that coupon um the coupon payments. One is the native staking yield of course um which today on Salana is like roughly 8% plus or minus uh and two is um you know we're going to try and get loans dollar denominated from various trady

institutions and you know I think we're going to be able to borrow I'm hoping in the in the 4 to 500 dip range. We'll see if that's possible or not at at scale and uh deploy that into onchain DeFi uh which today you can earn 12 to 20% depending on what you're doing. Um and use that spread to further pay down those coupon payments. Right. >> Right. >> So I I think that like it's actually very cool that you can use Salana DeFi to to actually like fund the the financial operations of the business.

>> We have a lot there. We've got sole yield. We've got running the business on chain. We've got um arbitrage and credit rates. We've got moving all this capital on chain. Maybe tell me actually a little bit more about the the first thing that you said, which is uh something I didn't think we were going to talk about, but like running the business on chain. You said you're going to do payroll, you're going to do uh governance votes. I mean, you guys are a publicly listed company, so there's like I I think I I mean, I've never run a publicly listed company, but I would guess there's all these procedures that you have to do for governance and you send the shareholder votes out and they send the votes back and um you use like regulated HR platforms, I'm assuming, and all all that kind of stuff. So, how

do you So, it sounds like you are planning to do that stuff and do onchain or you're just you're saying we're going to not do all of that. We're going to run the business entirely onchain. I mean, look, to be clear, I I can't promise that those things will get done. But like, when we say we want to be the most natively onchain publicly traded company in the world, those are the kinds of things we want to do. >> Um, uh, I don't believe any of them are impossible based on the conversations I've had with with folks in this area. >> Um, obviously, step one to doing any capital markets operations on chain is you have to tokenize your own equity.

Um, and uh, I think that will get done pretty soon. I'm I'm pretty excited about that. Uh and then you know once you have your own equity on chain then you can obviously start getting more com you know start doing stuff on top of that um native onchain fundraising dividends governance etc. >> Will will you to do you uh envision that you guys will um tokenize 100% of the equity or a portion of the equity? >> It's definitely not going to be 100%. Um, obviously the existing shares that are trading today on NASDAQ are currently, you know, custody at the DTCC and there's a transfer agent there that that's managing that right now.

>> Um, and we can't force shareholders to to to to move over to tokenized equity on Salana mainets. >> Uh, I do expect of the 1.65 billion that came in the pipe, >> I expect a pretty good chunk of that, you know, I think midnight mid9 figures of that at least is going to uh take delivery on chain. >> Let's talk about the fund raise. So 1.65 65 billion. I heard from some people who participated that the raise happened in like two two to three weeks basically that it was an inc I don't know if that's correct but an incredibly fast amount of time to raise 1.6 uh 1.65 billion. Tell me about who the cash came from.

>> Uh yeah so it is correct the kind of fundraising time was two weeks basically. Um it was obviously very hectic. We did a number of webinars uh with with the kind of private institutional clients um from Cancer. Cancer was the bank we worked with. They were phenomenal. >> So Caner would send a note out. Is that how I've never I didn't know that's how it worked. Webinars like would Caner send a note out and they're like, "Hey, there's this sole dapping raise like any you know and then they get like hundred people on the webinar basically." >> Yeah, correct. I mean has a bunch of qualified institutional clients um and who you know uh and they can send notes out to them and say, "Hey, here's a deal. You know, take a look at the deal."

Um, so we have done in about two weeks. In terms of composition, look in the in the blog post, I believe that we published and press release earlier this week, we kind of outlined a lot of that, but it's a it's a very good composition, uh, I should say mix of, you know, Tradfi as well as Cryptonative. Um, on the crypto native side, you know, we have a bunch of well-known funds, firms like Parafi, Cyber Fund, um, a bunch of others are in there, um, the folks at at Big Brain. And then on the traditional side, uh I know you know I know Graticule was was there in size. I forget I can't disclose unfortunately names of a number of the other firms but I will say that there was a lot of firms in that invested that you very much have heard of um super super high-profile um

hedge funds. O >> of the 165 more or less than 50% was cryptonative. >> Off the top of my head I would say this is a rough estimation 40 cryptonative 60 not. Yeah. Interesting. You put in 25 million personally. >> Correct. Multicoin invested a 114 115 something like that. And then on top of that I did 25. >> Okay. So it's Multicoin Galaxy and Jump. Like are you guys 33 33 33 in this? Did one of you guys like spearhead this and you went to the other two saying hey let's let's get together? How did this come to be?

Um, yeah, the Jump in the Galaxy guys kind of started talking, uh, together at first. Uh, and then kind of gave me a call and, you know, pulled me in and and it just kind of became pretty natural from there. We all kind of realized, we're like, "Hey, look guys, like this is this is the dream team. Let's let's go knock this out of the park." >> Um, so we're super excited to be working together. Um, in terms of sponsor economics, uh, yeah, it the sponsor economics are a third each. >> Yeah. Nice. Um, what's the role of each of of each of you guys as you think of it? >> Yeah, I mean the you know the the reason part of the reason I'm doing this is like I'm only going to do this if it's going to be the dream team um to knock

it out of the park for Ford Industries and like I think we have that dream team. Um, working with Galaxy, I mean they're bringing a a ton to the table. Their client base invested, you know, a lot in the pipe. Uh they are running Galaxy Asset Management does have a contract with um with Ford Industries uh and is running um like all of the like clicking the buttons doing the buying, the selling, the staking, all that stuff. >> All the D5 stuff that's all running through their asset management division. >> Um uh they obviously ran the uh sale of locked soul for the FTX estate.

>> Y right. And so we know literally every owner of locked soul in the world. Um we certainly intend to buy lock soul to accrete sold per share for our shareholders. Um that'll be a minority of the balance sheet to be clear but but certainly will will be will be something um that galaxy has a investment making team which for M&A purposes is really good to have um accessible to us. Um so there is like their scale of resources is pretty phenomenal. you know, for Jump, um, all of the nodes that we're running are all running Fire Dancer. Um, and then Jump has a bunch of, uh, proprietary transaction ordering stuff, um, that they built that that they've used internally at Jump and that they're making available to to forward. Um, Jump is like, you know, arguably the best HFT

firm in the world, like across all asset classes and across crypto. and you know being able to leverage their proprietary stuff to earn incremental yield for our shareholders like is is awesome >> and probably knows every line of the Salana code base better than 99.99%. >> Yeah, exactly right. Like I mean they're obviously the the authors of fire dancer. Um the in addition like Jump has just incredible expertise and connectivity across all of Trafi exchanges. I mean Jump I think trades on effectively every regulated exchange around the world more or less. Um, and we want to bring our equity to people around the world. Obviously, part of that's going to be tokenizing on Salana, other than part of that's just going to be navigating tradey capital markets around the world.

>> Yeah. >> Um, and jump, you know, can help can help make that all that happen. >> Um, uh, and then, you know, for multicoin, it's like our deep connectivity obviously in the salon ecosystem and then, you know, my kind of my role is being the the public cheerleader and supporter of this thing. Um it uh I tweeted on Monday morning after the news went out, you know, in retrospect it was inevitable. Uh so >> yeah. Yeah. Um all right. So in the in the blog post, I was reading the blog post before before you jumped on here. It seems like there's three ways that multicoin can play a strong role. Um well, one is you get the I guess there's four ways. One is they get the you know, sailor of sailor of you're becoming the sailor of Salana. You know, whether that's the right title for you or not, I

don't know. But um three ways multicoin can play a role. One is um uh basically just acquiring soul at a better price maybe than other people could do. I'm going to use my own language, not yours. The second would be uh broadly arbitrageing credit rates and third would be um flowing capital into the Salana ecosystem. So let's go one by one through those. Maybe the first would be just locked versus discounted soul versus spot. Can you clarify how much of the 1.65 65 billion will go towards the OTC purchase of locked or otherwise like non-transferable tokens um for yeah for for this vehicle.

>> Uh I I can't be super specific. I can say it will be a minority for sure. >> Um probably can't get more specific than that. >> I think the thing people want to know is like if you're buying lock tokens, is it just like multicoins lock is this a vehicle to buy multi is this a vehicle to buy multi coins lock tokens basically? >> Sorry, I misunderstood the question. Yeah, I I can tell you 100% the Forward Industries is not going to face multicoin, jump or Galaxy for buying locked tokens or for that matter liquid tokens. Full like full stop. Um the only what just caveat to that is like Galaxy asset management trades with Galaxy's propest trading arm and like if you look on the headlines you'll see Galaxy

trading doing whatever. So some of that may or may not be Forward Industries, but like they obviously have their formal se separation and segmentation of their RAIA, which is which Forward Industries is a client of and then their their prop trades, >> right? I get the Galaxy relationship. So they so the Forward Industries won't buy Locked Soul or or or Spot Soul from Multicoin. >> Correct. Or from Jump or from Galaxy off of Galaxy's uh balance sheet sold. >> Nice. Okay. All right. That's okay. I think that's the big thing people people wanted to know. Um, in terms of the I guess anything else that you think is interesting. I mean this was the you three bullet points. The first was like Multicoin believes the company is in a unique position to acquire discounted

lock soul. Is there anything anything else that you think is relevant there that puts you guys apart? >> Um, no. I think I think that's going to be the big one is is we know the people to go buy from. Kicking off for its season 2 in September, Peaks Get Real is Web 3's first campaign rewarding people with tokens for creating real world value. With a total prize pool of 5% of Peak tokens initial supply, Get Real follows a simple formula. Connect your devices, create value, score points. The quest can include such things as driving around with a web 3 navigator app, measuring local noise pollution, or running an AI agent in your browser.

Further down the road, you can get a unique customizable NFT designed by the agency behind the recent Call of Duty rebranding, an NFT that will evolve as you make real world impact. Follow Peak OnX to find out more. As always, investments in blockchain technology involve risk, terms, and conditions apply. listening to arbitrage and credit rates. So for anyone who listened to the podcast that we just did with uh last week with Guy from Athena, there's like around like 20 25 minutes. He talks about how uh DATs the best DATs in the world will arbitrage traditional credit rates and DeFi rates. And from what I'm told and the blog post that you guys put out, it sounds like that's exactly what Ford's going to be doing. Um, but yeah,

curious to get into maybe you can tell me about the flow of how you see capital going into forward and then maybe the bank loan and then flowing on chain. I'm assuming it's something like you accumulate the soul. You open a traditional bank loan against the soul. You exchange the USD for USDC. You deposit USDC in a Salana DeFi pool for yield. The borrow rate minus onchain equals the spread. The spread times the size equals the profit. But I'm curious how you maybe you can expand on that. I mean, yeah, that that that's correct. You know, we we do have a number of open questions we're figuring out right now is um what kind of term, you know, we're trying to get access to the Fed window.

Um because obviously that's going to be or not direct access, but like go through a bank that has direct access to the Fed window and that will obviously accept, you know, liquid soul or state soul as collateral. Um so we're talking obviously with a bunch of counterparties trying to figure that out as soon as we reasonably can. I I can't guarantee it's going to get done, but certainly it's our aspiration. Yeah. So, roughly the thought is you go to the bank, you get a loan at 5%, you move it on to DeFi, you get 10% and you guys make 5%. >> Yes. >> So, this is like someone like a JP Morgan or a >> All the major primes, you know, obviously are certainly candidates, but it doesn't just have to be one of the primes. I mean, it can just be like a regional bank in Texas as an example.

>> Ah, okay. Hypothetically speaking, in in Texas where where you guys are. >> I I Texas. I'm assuming you guys have done the math on on some of these what some of these numbers can look like and how big you can actually like how much size you can actually put into some of these pools like where do what do you think I mean I use the numbers five and 10% but what is that what is it actually >> um I mean I I think we I'm optimistic we'll be able to earn greater than 5% at scale and and you know closer to 10 but look like as we put in size in rates will compress things need to readjust so uh unclear I I I hope we get to 10 but I can't guarantee that.

>> Yeah. Where do you have a sense of where this I this kind of gets into the third bucket, but like the onchain flow and you guys have this probably the most intimate knowledge from the capital allocation perspective of the Salana ecosystem um of of really anyone in the world. Like where do you see this flowing? I mean, you guys have made investments in all the in many of the leading Salana ecosystem companies, Camino and Jetto and Drift and things like that. I'm assuming it flows into your guys' port codes, but how do you how do you think about that? >> Yeah, I mean it's not they should flow into companies because multicoin invest in them. It's they should flow into like the leading companies like leading DeFi protocols on chain and look like risk is real and like obviously you know

particularly in EVM land there have been um smart contract implosions and such. Salana actually has had way way way way way fewer smart contract implosions because the SVM is a much safer environment than EVM. Uh, so you know, we're we're not trying to yolo into a contract that someone threw down yesterday. That's definitely not on the table for this vehicle. Um, right? Like the the there is no universal way to assess smart contract risk. Um, but the the most intuitive way to do it is the empirical way, which is how many dollars have been in the contract over how long.

Uh, and look at that in integral over time, right? So you can just measure dollar days. >> Um, and like that that is the honeypot test of of this. And certainly that's a key underwriting criteria for us. >> I'm just reading reading the line that you said. You said um given the pedigree of the sponsors, the size of the company's treasury, and the sponsor's intimate knowledge and relationship with the Salana ecosystem, the firm believes the company can leverage these relationships to strike deals with major Salana protocols and applications to help improve liquidity and increase yield basically. Um the interesting two words there are strike deals. So one one thought if I was running this thing, I'd be like, "Okay, great. Drift, you know, we've Drift is great and uh Camino and things like that, but I don't want to

just I mean, I know I'm invested in them, so I wanna, you know, that's that's great for us obviously as Multicoin and stuff like that, but maybe I can actually get a better deal here than like just some random market participant. Could you go to Camino and be like, "Look, Commamino, we'll we'll give we're going to put 500 million into Camino. Can you give me some I guess not can you give me some tokens for doing this?" >> Yeah. I mean, so so what you described is correct. And yeah, that's what we're we're looking to do. Um, part of it is scale. It looks like scale matters. Um, and then the other part of it is like for all of these DeFi teams, I think there's value in being able to say like a publicly traded company is using the service. Um, going to the next

institution, pension fund, traded company using your service like is valuable for them. >> That's how your listener saying, "Oh, that's very interesting. I wonder I'm trying to think of the second order implications of this. Okay, so forward will obviously probably help the price of Salana. Um my words not yours obviously, but um maybe what are the second order implications of this in terms of other things and protocols in Salana land doing well? How do you is there any guidance you can help give people? >> Salana is a thriving heterogeneous financial system. Um, and there's lots of parts and pieces to that. And given our our scale and our relationships, like we it's not like we're all going to

go all in on one protocol. That would be very silly. >> Um, we very much intend to spread it around and work with a lot of people. >> Um, and obviously that that list of people is going to evolve and change over time. Um, and as as the balance sheet grows, as we do these other things, you that'll create more opportunities to work with more folks. So, we very much want to be uh working with a lot of people around the world in Slake. Did did you um Kyle, did you follow the USD USDH hyperlquid kind of drama the past week? >> I've been following lightly. Yes. >> Lightly. Okay. So, one thing that I thought was genius, I'm I'm decently confident. I know nothing. I'm not I know nothing, but I'm decently confident that they kind of knew who they were going to pick ahead of time. it seems

like um with with native markets and bridge and stuff like that, but this was an amazing marketing and PR play where it it drove a bunch of interest and attention back into back into Hyperlquid and it just got a lot of attention on Hyperlid. How do you think about I mean could you run a public like a public uh RFP process essentially to be the lend and borrow protocol of of uh of Ford Industries? Look, the public RFP thing is interesting. Um, it's it's it's a fairly um hostile tactic. Um, because like the way most people prefer to do business is like you negotiate

privately and look, maybe you win or you lose the negotiation, but like that's kind of the standard way business is done in the world. Forcing everyone into the public configuration is uh it's a very aggressive negotiating stance. Not saying it's wrong, just just it's aggressive. Um I don't think we're trying to do that um and and create some sort of bidding war. Um so that's our intent. Um look, I think and look, we're not going to try and like build a DeFi protocol or like compete with existing DeFi protocols. I don't think that's the right thing for forward to do. to the extent forward like builds anything that like looks like DeFi, it would be something tied to the fact that we're a

publicly traded company. >> Um, and and something around trading tokenized securities or something of that nature. Like that would make more sense. >> But like it doesn't make sense for us to go create like interest rate derivative trading like exponent as an example or RL like commino that that's not the I I think really makes sense for forward. There's two buckets of M&A that I think could be interesting for DATs. It's like, you know, at some point some of these are going to trade below MNA. I mean, they're already starting to trade below below NAV. Um, and especially if we go into a bare market, there'll be really interesting opportunities. So, there's definitely like a kind of a DAT rollup rollup play. There's probably also a just an M&A play because you're a public company. You've got equity and,

you know, a lot of tokens to to to play with. How do you think about uh M&A with this? Yeah, I I expect that there will be substantial DAT consolidation both intraecosystem and across ecosystems. Uh um and we fully expect to it is our intent to to be on the acquiring side on on these and to do this at at scale >> both solds and and non-solds. >> Correct. >> I mean like we we know we have the team. We know we're going to be doing all of these things to to drive incremental value to our shareholders uh via all the stuff we've just been talking about over the last 20 30 minutes. Um we think the market we're optimistic that the market

is going to appreciate value that and understand that. Uh and then we're going to go execute on M&A. Uh and then yeah, I think I I actually think the DATs that are going to be in the uh are going to have the most difficulty are not going to be Ethereum DAT number seven or eight or Salana Dat number seven and eight. I actually think it's going to be, you know Swed two, and three. Um Avalanche Dat 1, two, and three. I I think those folks are actually going to be in the the most difficult position. >> How come? Oh, I just think like the market as a whole, I I'm very skeptical that those MNAVs will sustain at all. I think it's going to be very difficult for these things to sustain um below an

MNAV of one. And yeah, maybe they sell some of their balance sheet assets and try and like fight with the 1.0 mark, you know, the 1x MNAV number, but like when you're in that state of look, like the sweet ecosystem doesn't have enough liquidity and scale to like do this interesting DeFi stuff. um and you don't have all of the service providers to go do all these onchain equ like onchain tokenized equities and all this other stuff. Um my guess is banks and other like large lenders are not going to accept as collateral um for for anything of scale and so it just like the lack of maturity of these other ecosystems um I think makes it very difficult for the even yes nomly has DeFi and like nomly Avalanch has defi but like the

liquidity and the scale I don't think is there and I don't think the service providers are there for a publicly traded company to go engage and do all of this stuff. >> Yeah. I mean even even now like with the service providers for forward I am pushing all of them to to do things that they were unable to do. Um and and so like for and for it's going to be way harder and harder right as you go down the um the market cap rankings. >> Yeah. Yeah. >> So I I think that yeah there's there's going to be a lot of opportunity for for accretion for our shareholders in playing MNAV arbitrage.

>> Yeah. What about non what about non-dat acquisition? So there's I'm I mean if I get the emails I'm I'm assuming you get the emails of all these companies are selling right now in crypto and there's some that are not interesting and there's there's some that are quite interesting, right? And we we the other day we're talking about one that I think is probably pretty interesting. Would that um would that kind of would would you ever look to acquire nondats? >> The mandate of the of Forward Industries is to increase sold per share. Um we understand that if you are buying equity in for industries like you want us to do all of these interesting things that we've been talking about to accrete soul per share. Uh I think there's going to become a time not in the near future like I I think almost certainly not

within six months probably not even within 12 months but like who who knows I'm a pretty bad judge of timing. I tend to be too optimistic. Um and uh uh I think there's going to come there's going to there's going to become a point. Yeah. You you don't be a VC if you're like not an optimist, right? Um uh there's going to be a point in time in which uh these are it's just a publicly traded permanent capital vehicle that's like deeply cryptonative that's like doing like really kind of interesting and bizarre stuff. And I think that's when like non-DAT M&A, nonDAT minority or majority investments, you know, enter the fray. Again, I think that's pretty far in the future. Um, but hard to

envision a world four years from now in which that's not the case. >> Yeah. Yeah. Can we talk about preferreds? So you guys um I mean you mentioned at the top of the podcast, but you also the very bottom of your guys's announcement. I think it was the last paragraph or the second of the last paragraph, you basically said um the prop the uh perpetual preferred structure that um strategy is starting to popularize is probably the better I'm going to I'm botching the language I'm sure is is better for a DAT. Um there and there are two interesting things. One >> for a Salana Dat as opposed to a Bitcoin Data.

>> Yeah. Yeah. Okay. So that that's the that's the interesting part is why is it better for a Salana debt than a BTC debt? You you talked about this briefly at the top, but can you get into that again? >> Yeah. So look, I think there's an incredible opportunity here for Forward. Uh these professional preferred, you know, Sailor is paying roughly 9% uh I believe for his perpetual preferred, but his core business produces effectively no cash flow. Um uh or I should say his Bitcoin holdings produce no cash flow. um our our vehicle will produce cash flow uh via two mechanisms uh at a bare minimum. The first mechanism is obviously the native soul staking yield which today is rough nominally 8%

approximately uh and the second is by doing this uh credit spread arbitrage that we were just discussing earlier. Um we can use the profits from that to obviously pay the coupons for the perpetual preferred. Um what's interesting is, you know, I've talked to a handful of bankers about this already and uh the the first reaction they said is you're going to have to pay a higher rate than strategy because souls are like a smaller asset, less liquid or whatever. But then I pushed back on them and I said, "Well, the problem for Sailor is or is that he he has no yield like he has no organic profits to pay down the coupons. I can go to you and show you where my profits are coming from, right? To pay it down."

And they they were like, you know what, that's actually interesting. You actually might be able to get better terms than like than strategy. >> You think you actually get better terms than strategy because you have because Solana has has yield? >> Yeah, because you can actually like objectively you can show where the profits are coming from to pay the coupons. >> What's the yield right now? Eight or 9%. >> I believe it's in the I believe it's in the nish range. >> Yeah. H that's interesting. Salana aside, are is are preferred a better structure for debts than converts? >> Uh I'm not an expert in in these kind of longer tail financial instruments, but my understanding is yes.

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investments in blockchain technology involve risk terms and conditions apply. So, we're going to get Salana uh st Salana staking in the ETFs soon. >> I I I am very optimistic that is the case. >> Yeah, it seems pretty next month or two or three at sometime by the end of the year. It seems like we get it. What is the um will uh will that be good or bad for you guys? >> Uh I think it's great for Salana and it's great for forward as well. Uh a lot of people look some people don't like the corporate rapper structure that a DAT represents.

>> Yeah. >> Uh and some people really do um and you want to be able people to be able to go on Coinbase and Robin Hood and buy, you know, spot hole or if they want to buy an ETF rapper uh or they want the corporate rapper. You kind of need all three options available. and different folks around the world, you know, have different requirements around that or preferences. In some cases, there's very interesting tax consequences um for owning different types of instruments. So, we want to make all of this available to everybody. >> Yeah. Um would you st is there any reason, this is just more of a personal question, but is there any reason not to stake your soul? Like, do you would do you stake 100% of your soul?

>> Uh we expect the DAB will be staking the substantial majority of it soul at all times. So, we have this digital asset treasury DAT dashboard. And one thing that's been tough for us is there's a um there's a strong information lag in Tradfi, whereas crypto there's really we've gotten used so used to no information lag, right? Um but if you look at the information lag in crypto, uh it's weekly or sometimes even bi-weekly updates. Um I'm curious how you as you think about like running an onchain business, how do you think about this? Yeah, we want to lean into transparency um for the vehicle over time. We're not there today on day one. Um it'll take us some time to get there. Uh I am optimistic we will at some point publish

our all the the the company's addresses. >> Uh so that you know folks like y'all can you know have your dashboards updated in real time. >> Nice. That's cool. >> Um we're not we're not there yet. I cannot make any promises in timeline but that's certainly an aspiration. Nice. Cool. Um, how are you spending your time or how do you see yourself? I'm assuming this is taking up most of the time, but I guess moving into like later this year and even 2026, are you going to are you going to keep running this? Will you hire a CEO? How do you think about balancing your time between this and multicoin?

>> Yeah, I so we are u so Ford Industries is absolutely looking to hire right now. Um, we obviously looking for some core legal uh roles, things like uh a CEO to join the existing CEO Mike Kuit as kind of co-CEOs. Looking for new CFO uh to join Kathleen as the the existing CFO. So, sorry, let me take a step back. Ford Industries has their the current line of business, the design and and and medical stuff. They they do uh and then obviously we have the the treasury strategy and both of those businesses will proceed moving forward. Um and what we have discussed is we think the right thing to do is to basically have um you know two CEOs, one over each line of business, two CFOs, one over each line

of business, etc. Obviously we'll consolidate those um quarterly for financials and such. Um but like it kind of makes sense to just have the two independent teams. Uh so we're looking to build out kind of the all of the team members for the the Salana treasury side of the business. That includes a CEO, um a CFO, a GC, a CMO. Um, and then look, like if you think this is interesting and you want to be involved, like get in touch. We're looking for smart, motivated people who want to do things. Um, Multicoin kind of we hire based on if you're smart, motivated, and want to do things, you know, like that's how we write on multicoin. And yeah, I think that that will be true at Forward Industries as well.

>> Yeah. How much time are the Multicoin folks spending on this? >> Um, I'm probably spending the most time with the Multicoin folks. Um, but it's it's and it's ramping down. and we actually had had a big spike kind of leading up to the launch and um that that's kind of trail downwards fairly quickly. >> Yeah. Were um were any of your LPs uh upset is probably too strong of a word, but strongly questioning why you were spending time on this. >> Uh in fact, so I'm really glad you asked that. So we called um a number of our largest LPs across both our hedge funds and our venture funds before we agreed to do this with Jump and Galaxy socialize this with them and be like hey like what do you think and the feedback we got was uh was look this is interesting and cool. In fact our

largest LP came into to the DAT directly as well um on top of their exposure they obviously got through um you know through the hedge fund. Um, so we called a bunch of them and they said, "This is interesting. We understand why you want to do it. We just want to make sure that like you Kyle and you multicoin GP are not getting like all of the the the special economic like the sponsor economics um given the amount of time it's going to take of of the employees that multicoin." And I was like, "Yeah, that seems reasonable." And so we were very clear uh in our blog post and in our obviously our discussions with Jumping Galaxy that um 100% of the sponsor economics are acrewing to

multicoins hedge fund u not to Kyle personally as chairman or to multicoin GP. >> Nice. >> And and under that pretense they were all like extremely supportive. >> Yeah. Nice. Um is there anything else on this data that we have not covered Kyle that you think is important? Um, >> is there a worse? Have you thought about the worst case scenario? >> Um, I mean, look, it's like obviously a lot of people called us and said you're going to have, you know, conflict issues and and people are going to sue you and they're going to yell at you and all these things. And I was like, yeah, I agree. Like I I kind of assume all that stuff will happen. Uh, look, I've already been sued in my role at Multicoin a number of times. Like, whatever. It doesn't it hasn't really

impacted my life in any in any real way. Uh I I think that's like totally the wrong way to think about this. Uh >> I'm like a super high agency. >> Most investors have the world view that like you're an investor, you're a capital allocator, you like send money out the door and then like other people do the stuff and like hopefully you make profit. And I think that's a a very stylized uh and actually like just naive view of the world. Um we're building a new financial system from the ground up here. we are a very large player uh meaning multi going and now also forward in in that new financial system um agency matters and like our ability to do things moves the needle in the long-term success of of the ecosystem as

a whole and so like the reason yeah I'm going to have all of these problems and like look it's been I've slept less the last four weeks than I would have liked to um but it's like all worth it because we get to actually push the EOS system forward. Someone has to get out of bed and do all this stuff and uh like I it was pretty clear to me that like where the you know multicoin jump and galaxy combined via forward industries is the right you know set of people and the right vehicle to do that.

>> Yeah. Do you think that's a broader trend in venture where the mo where the best venture uh and just the best allocators will be more active instead of passive? >> Yes. I mean in general like there is alpha that comes from combining straight financial capital plus human capital you know connections whatever else for sure that's the case I mean right like Mark Andre just was on I think it was Jack Alman's podcast like a month or two is two months ago >> and he was he was very clear he's like the number one job of a venture firm is to imbue power into the company into the portfolio company I I disagree with the the the frame but like there is there are certainly elements of truth to it.

And like that power comes from not just like sitting in a room clicking buttons on a screen. That power comes from like doing things in the real world. Um and and certainly we we view it as our job and our mandate to do that. I mean that's why I'm so engaged in DC. Um I'm going to DC this week for a bunch of stuff. Obviously I've been in DC a lot over the last 18 months. uh and uh like that thing those things matter and like we we can move the needle for our industry and for our portfolio companies. >> Yeah. Yeah. >> Now now also for forward industries. >> Yeah. Let's talk um I have a few non-forward questions. One is um so there's an interesting conversation this past week. So we hyperlid uh USDC we mentioned that briefly Mert had a

comment that look maybe we should actually enshrine uh a stable coin into Salana. And actually Tousar, your co-founder said um one of the best things about Salana's culture is adopting good ideas from other EOS. Hyperlquid's idea to encourage stable coin issuers to buy hype with USDH interest is a powerful way to drive rev. Why should circle keep all the interest revenue from USDC on Salana and actually kind of pushed that even further and said for what it's worth Ethereum should do this too. It will massively drive up Ethereum's rev and drive buying pressure on ETH. Tell me your thoughts on this >> there. I think there's two ways to look at this um debate. One is um is this an open neutral platform

decentralized permissionless for everyone in the world meaning corporates users etc. And the other is is it an exchange with shareholders? Um, and like I don't I think I think actually most people intuitively view the answer like have have a view on the answer to that question. Uh they may not have like fully thought about it kind of with that degree of clarity, but I I think kind of most people identify in one of those buckets, those two buckets. And obviously if you're a hype own shareholder, hype token holder, you're obviously in the second bucket.

Um, if that's what Hyperlid is, like it's it's a CFI exchange. Not there's like some nominal things about it that look kind of DeFiish, but like not really. Uh and then there's like Salana and Salana is like working with Circle and with Tether and now Tether just announced USAT and USDG and these and all these things and Hyperlid you know they just gave the middle finger to Paxos to PayPal to Venmo um like explicitly they gave the middle finger to those people and then implicitly they gave the middle finger to every payment firm firm in the world like full stop and bank full stop like

they just gave the middle finger to everybody. Um and then probably also to a lot of Wall Street as well. um because they've made it very clear that like we're we're going to kingmake as a as a as a ecosystem and and like they don't even do it transparently like obvious and look I don't know the politics and the who's who and who has the token holders and what phone calls were being made but like obviously there's some group of like probably five to 20 people who like behind the scenes of calling the shots. Hyperlid is extremely non-transparent already by like as an organization. Um uh their code's not open source. They have no public, you know, roadmap. So like they're just like look, we're centralized exchange business and we're trying to make as much money as

possible, which is fine. Like that that's what they are, but that's not open platform for the world to transact. Um and and so I think where you net out on the debate is like just like which of those two things do you think hyperlquid is or Salana or Ethereum or you know whatever the the L1 or L2 in question is. Um I I feel fairly strongly that Salana should think of itself as an open platform and encourage the competition from these from these various stakeholder groups. >> You think so you so push that a step further. Would you enshrine a stable coin on Salon?

>> No no no absolutely not. No, no, >> you would not. You would not. Okay. Okay. >> Yeah. Know I'm I'm not I'm not on the hyperlquid camp side of this. Like I'm on this. >> Correct. Yes. >> Interesting. >> Yeah. >> How do you guys at Multicoin when you and Tara disagree? How do you come to conclusion? I guess I guess it's fine to just continue. >> Well, hey, we we obviously can disagree. Uh in this case, it's not like there's a decision to be made like, you know, there's not like an investment buy or sell decision. So, it's just it's just kind of like a philosophical thing and it's like look discreet is healthy and we want all of the the team members at Multicoin to know that like you can and should disagree.

>> Yeah. What what else do you and two disagree on right now? >> Oh, dude, we disagree on all the time. Uh I mean, how big should the sole position be? Like, you know, >> who wants a bigger soul position? >> Uh probably me. Um although that that has not necessarily universally been the case. >> Yeah. um you know what should we do for the next venture fund like whatever like should we launch a new fund strategy next year I mean there's a whole bunch of open questions um and we get we get to debate these things all the time corporate and protocol treasuries face a major challenge today cash and traditional instruments are losing ground to inflation a new industry report from liquid collective and iigen

cloud lays out the next evolution of the digital asset treasury moving beyond just passively holding Bitcoin to actively making digital assets like ETH and Soul productive through liquid staking and restaking. For CFOs, DATs, and corporate treasurers, the path to integrating liquid staking and restaking should be riskmanaged and aligned with long-term strategic goals. The productive treasury report outlines practical adoption and a forward-looking vision for the role of the modern treasury as a strategic enabler of new technology. Read the productive treasury report today by following the link in today's show notes. As always, investments in blockchain technology

involve risk terms and conditions apply. Maybe as we start to think about wrapping up, Kyle, I'd love to just rehear your vision for internet capital markets. I mean, you just gave a talk at All-inSummit, which is not live unfortunately yet, I think, but I think I think the video will be live at some point soon. Um, we just, you know, we've had massive regulation changes in the US this year. like I'd love to just hear your updated idea for uh internet capital markets. >> Um yeah, so uh in my own presentation like kind of the the core of it was talking a little bit about the past and like a little history lesson and then the future. Uh I think it's important to understand the past. Uh and look like

the current financial system we have in the United States today um is a result of hundred years of of evolution. Um and like intrinsically that's all past dependence. Um if you were to say time t0 I would say is uh the great depression 1929 uh stock market crash a lot of the people lost a lot of their money. There was a lot of fraud and abuse and stuff. As a result of that um congress passed three major pieces of legislation. The securities act of 33 the exchange act of 34 and the investment company act of 40 um to address a lot of those core issues. And those three pieces of legislation are still today the pillars of kind of modern financial regulation. also the the CA the commodities exchange act which I believe is 40 or 44 if I recall.

So that's all roughly 90 to 100 years old. Uh and then uh since then though we've had a ton of additional stuff come about. Um obviously we had SM Dley, we had DoddFrank. Um the administrative state has just generally grown right like the federal government in terms of employee count and stuff is is up you know basically up only over the last 75 years um in kind of all areas and the SEC has all these rules. NASDAQ and the have all these rule is like you just had all this crust accumulate over time. Obviously, you had the transition from paper to electronic, which like by the way the DTCC still like has paper stock certificates representing like all of the the shares that like trade on the

NASDAQ, right? Uh so all of this is has accumulated over a century. Um and kind of the one of the core points of my presentation is like well look if you were to redesign the financial system in 2025 uh from the ground up from first principles like what would you do? Um, and I think the answer is you would design one global 24/7 permissionless programmables system that is of course secured by cryptography. Uh, and like we believe that that core idea is basically the foundation for building internet capital markets and we think Salana is kind of the best instantiation of that you can see in in the real world today.

Um, so that's that's the the the kind of context and then you know the second part of the presentation is like looking at some really cool examples of how we think that actually manifests. Um, I think in the very near future you're going to see prediction markets embedded on uh not just on calry.com or on polymarket.com but like on media websites so like the Wall Street Journal, Fox, Blockworks, whatever. Um it's very clear that like everyone in the media kind of sees this coming. Uh and it's going to be really cool, right?

You read an article about the Fed cutting interest rates in the journal. Like why isn't there a chart a price chart and a buy yes no button? There obviously should be uh and and so we think that's a very exciting change coming to like how the world is going to understand prediction markets, how the world is going to understand finance probabilities and risk. like that's actually going to change how society understands financial risk, which is super cool. Um, we think that you're going to have producer markets for for uh for sports embedded in your TV. Every TV sold in the last seven years is a smart TV. They all have like some Android operating system or whatever.

Uh, obviously Apple TV, if you have a standalone, you know, they have that. And I think you're going to see betting markets built in like directly into the sports the sports broadcast. Um, think like is the will the next pass be completed? Like that kind of a thing. Super cool stuff like that. Is Bryson going to drive the green on the next hole? Um, so I walk through a few other examples. I mean, chat chat bots are certainly one that crypto people will appreciate. Obviously, the Telegram bots are very popular today uh in crypto. that behavior is clearly going to expand well beyond trading meme coins or crypto assets um or trading BTC per uh it's obviously going to be used for trading equities and everything else. And I I think the area where it's the most

exciting is actually sports. I mean being able to have to have a group chat with your buddies and post and like bet on you know games or whatever like that's obviously going to be >> I was actually doing I was doing this during the US Open. There's a group chat. All my friends were watching the US Open. We were all watching it live. Sometimes we'd be together. Sometimes we'd be at our own homes. And I mean, there's like basically people saying like, "He's going to get this next point." It's like, "No, he's not going to get this next point." And it would be very fun to click a button and bet on that. So, yes. Yeah. >> Yeah. That that that like is like so obvious.

>> Yeah. Yeah. >> Right. Like that that's going to be huge. And uh like like what's interesting about all of these examples is that for the entire history of of finance like last 30 years or even like go back even before we had electronic trading you had to call your broker right like think like boiler room wall for Wall Street type stuff. Um so you had to go to a destination to to trade. Even like though we since we've had Erade and in the 90s and through Robin Hood and now we have Coinbase and Phantom with all of these apps, you have to go to an app. The app like has your portfolio. There's like a search bar at the top and you like type in the ticker, right? Or or the CA uh and then you like and then you go there's a price chart

and there's a buy and sell button. And like that's how trading has been done forever. And we've never because because finance and Wall Street and regulated trading has always existed as this independent thing like it's so regulated it's not the APIs aren't public because of those those very mechanical reasons. you've never embedded trading in the rest of the software and crypto, you know, breaks down. This is the definition of permissionless access. >> Yeah.

>> Is you can embed this stuff in any software application. And so we're super super excited for uh like an explosion of finance and trading uh and money movement across all of software. that that that has probably been the single biggest limitation in in like the history of software for the last 30 to 40 years has been the fact that the money systems and the finance systems have just like lived in this separate universe that was not accessible to software developers. I mean, last thing I was thinking about is just um uh just genius and and stable coins and like your your your idea of like what the world right now stable coins have been growing, right? They've grown like 10x in the last couple of years, but it's

still been very confined to crypto. And I'm curious how you think about this as like a moment in time for stable coins. >> Yeah. I mean, it's pretty obvious that the passage of the Genius Act when you look back in 20 years is like going to be when the stable coin growth chart goes vertical uh because Congress passes consequential legislation very infrequently um and is unlikely to pass anything else that's related to stable coins probably like ever. Um right like we were said talking about earlier the the foundations of the modern financial system are the three acts from the 30s and 1940.

So these these things last decades if not centuries. Uh and so the the the consequences of legislation being passed are are profound. Um I think the Genius Act is probably the most consequential piece of legislation financial legislation passed since DoddFrank. >> Uh which is 2008 2009. Um and uh so I think that's currently exciting. Uh I think when we look then like again take the 10 we're 10 years from now looking backward what's like the moment that like like what's like the Netscape moment or the iPhone moment or whatever. Uh I think that moment is when iOS and Android

natively implement stable coins and there's going to be some software update that that you know comes from those guys. Uh, it's obviously not going to happen in 25. Maybe it happens in 26, doesn't happen in 26. I'm I'm optimistic it'll happen in 27, but you know, who knows? But it's going to happen at maybe it's 28. Like again, but like it's one of those things that if you pause and think about it, the probability that it happens. Apple and Google are obviously American technology companies. Both are very close to the administration. Uh Tim Cook and Sundar were at the White House like a week ago.

uh like it's they're going to implement stable coins in iOS and Android. We just don't know when. And when they flip that switch, you know, kind of sort of overnight 7 billion people are going to get a stablecoin wallet in their phone for free. And like the the the con like that that would probably be like the single largest um like capital shift in like human history like will be directly downstream of that fact that all of these people will be able to hold dollars in their phone.

They're not going to have to go to the app store and download an app. It'll just be it'll be there. Uh, and like that it's crazy that like when you really think about it, you're like, "Yeah, this this is going to happen with 100% probability and it's going to impact 7 billion people like roughly plus or minus." And look, some of the governments are going to fight it and stuff and they'll say whatever. But like look, Android is open source like it's very easy to get around things and whatever. >> You would say for a 100% certainty you think this happens. >> Yeah, it has to happen. like it's just inevitable and uh because it's it's a good revenue opportunity for Google and Apple. It's a good feature to add uh and like the White House like they're both close to the White House. Uh and like when it

happens, it's just going to unleash like crypto adoption is going to go absolutely vertical when this happens. M >> um and like this is the kind of stuff that I'm just like incredibly excited about what we're going to look back on in 10 years and it's like yeah that was so obvious. >> Kyle, anything else, man? This is a great conversation. >> Um no, man. Dude, this has been super fun. Appreciate you jumping on this Saturday morning. Um it's been super hectic, but we're uh we're having a good time at Ford Industries. >> Indeed. Congrats on everything. Always good to see you and I'll talk to you soon. >> Pleasure, Jason. [Music]