Building The Largest Solana Treasury Company | Kyle Samani

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, Multicoin Jump and Galaxy combined via Forward Industries is the right 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 Multicoin's 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 for informational purposes only, and the views expressed by anyone on the show are solely their opinions, not financial advice, or necessarily the views of Blockworks. Our hosts, guests, and the Blockworks team may hold positions in the companies, funds, or projects discussed.

All right, everyone, welcome back to Empire. We are recording this on September 13th, on Saturday. We've got Kyle Samani. This is going out on Monday. Kyle, what's happening, man? How are you?

Hey, Jason. Good morning. 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 Solana dApp. You're doing it with, uh, uh, Jump and with Galaxy, uh, and obviously Multicoin. 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, you or other people associated say, no, no, no, this isn't just another DApp. This isn't a regular DApp, right? This isn't, this isn't just another one of the 50 DApps. We've talked about DApps a little bit. I think Empire listeners are getting a little sick of the DApp 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 DApp?

Yeah, I appreciate the question, Jason. It's the most important one. And I tried to address this in my blog post that I published earlier this week. 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 Solana? And like, you know, SEC Chair Atkins 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 on-chain. 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. 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, raising money, dividends, stock splits, governance, like formal equity governance, votes, you know, shareholder votes, stuff like that. We're going to do, try and do all of that natively on-chain. And in doing so, then we can obviously prove to the world that any other company can do so as well. Someone has to be first and just do all that weird stuff. And we intend to be first at doing all of that weird stuff. I think that's super important for the long-term success of Solana. 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 SOL per share for our shareholders. We expect to be able to use scale and brand to negotiate deals with a bunch of teams to get additional equity and/or tokens from those groups. We expect to work with a lot of on-chain traders, like think these new prop AMMs, to earn, you know, whether it's via some sort of staking mechanism or commission rate from staking, but to tap into the profits from those groups. This is stuff we're working towards, um, and 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 Solana DApps. Like, it just doesn't. I can see a world in which it sustains like 3 or 4. I think that's probably the absolute highest number, but certainly not more than that. So there's an opportunity for M&A, and we certainly intend to capitalize on that. And the beauty of that is that you just have this MNAB arbitrage. If I trade at, let's say, 1.5 and someone trades at 0.8, it's accretive for both parties to do a transaction at 1.1. Right? Like, and so that's, I think that's a very big opportunity. 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 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 reverts for Bitcoin is like, well, Well, as the price of Bitcoin goes down over time, like you have a problem. It's, it's still an implicit form of leverage. You're not going to get margin called, but it's still a form of leverage. With Solana, you have two sources of yield that you can use to pay down that coupon, the coupon payments. One is the native staking yield, of course, which today on Solana is like roughly 8% plus or minus. And two is, you know, we're going to try and get loans dollar-denominated from various TradFi institutions. And, you know, I think we're going to be able to borrow, I'm hoping in the, in the 400 to 500 BIP range, we'll see if that's possible or not at scale and deploy that into on-chain DeFi, which today you can earn 12 to 20% depending on what you're doing and use that spread to to further pay down those coupon payments, right? Right. So I think that like, it's actually very cool that you can use Solana DeFi to actually like fund the financial operations of the business.

We have a lot there. We've got SOL yield, we've got running the business on-chain, we've got arbitraging credit rates, we've got moving all this capital on-chain. Maybe tell me actually a little bit more about the first thing that you said, which is 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 governance votes. I mean, you guys are a publicly listed company, so there's like— I think— 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 you use like regulated HR platforms, I'm assuming, and all that kind of stuff. So how do you— so it sounds like you are Planning to do that stuff and do on-chain, or you're just, you're saying we're going to not do all of that. We're going to run the business entirely on-chain.

I mean, look, to be clear, I can't promise that those things will get done, but like when we say we want to be the most natively on-chain 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. Obviously, step one to doing any capital markets operations on-chain is you have to tokenize your own equity. And I think that will get done pretty soon. I'm pretty excited about that. And then, you know, once you have your own equity on-chain, then you can obviously start getting more, you know, start doing stuff on top of that. Native on-chain fundraising, dividends, governance, etc.

Will you do envision that you guys will tokenize 100% of the equity or a portion of the equity?

It's certainly not going to be 100%. 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's managing that right now. And we can't force shareholders to, to, to, to move over to tokenized equity on Solana mainnet. 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 mid-9 figures of that at least is going to take delivery on-chain.

Let's talk about the fundraise. So $1.65 billion. I heard from some people who participated that the raise happened in like 2 to 3 weeks, basically. That is an incredible— I don't know if that's correct, but an incredibly fast amount of time to raise $1.65 billion. Tell me about who the cash came from.

Uh, yeah, so it is correct. The kind of fundraising time was 2 weeks, basically. Um, it was obviously very hectic. We did a number of webinars, uh, with, with our other kind of private institutional clients, um, from Kanter. Kanter was the bank we worked with. They were phenomenal.

So Kanter would send a note out. Is that how— I've never— I didn't know that's how it worked, webinars. Like, would Kanter send a note out and they're like, hey, there's this Sol dApp being raised, like any, you know, and then they get like 100 people on the webinar, basically?

Yeah, correct. I mean, Cantor House 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 that in about 2 weeks. In terms of composition, look, in the, in the blog post, I believe that we published on 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 crypto native. Um, on the crypto native side, you know, we have a bunch of well-known funds, firms like ParaFi, Cyberfund, um, a bunch of others are in there. Um, the folks 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'll 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.

Of the $165 million, more or less than 50% was crypto native.

Off the top of my head, I would say this is a rough estimation. 40 crypto native, 60 not.

Yeah. Interesting. You put in $25 million personally?

Correct. Multicoin invested $100, $400, $415, something like that. And then on top of that, I did $25 million.

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?

Yeah, the Jump in the Galaxy guys kind of started talking together at first and then kind of gave me a call and pulled me in and it just kind of became pretty natural from there. We all kind of realized, we were like, hey, look guys, this is the dream team. Let's go knock this out of the park. So we're super excited to be working together. In terms of sponsor economics, yeah, the sponsor economics are a third each.

Yeah.

Nice.

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 Forward Industries. And like, I think we have that dream team, um, working with Galaxy. I mean, they're bringing a ton to the table. Their client base invested a lot in the pipe. Uh, they are running Galaxy Asset Management, does have a contract with with Forward Industries. It is running like all of the, like clicking the buttons, doing the buying, the selling, the staking, all that stuff, all the DeFi stuff, that's all running through their asset management division. They obviously ran the sale of locked SOL for the FTX estate. Right. And so we know literally every owner of locked SOL in the world. We certainly intend to buy locked SOL to accrete SOL per share for our shareholders. That'll be a minority of the balance sheet, to be clear, but certainly will be something. Galaxy has an investment-making team, which for M&A purposes is really good to have accessible to us. So there's just like their scale of resources is pretty phenomenal. You know, for Jump, all of the nodes that we're running are all running Firedancer. And then Jump has a bunch of proprietary transaction ordering stuff. that they built, that they use internally at Jump and that they're making available 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 awesome.

And probably knows every line of the Solana codebase better than 99.99%.

Yeah. Exactly right. Like, I mean, they're obviously the authors of Firedancer. In addition, like, Jump has just incredible expertise and connectivity across all of tradfi exchanges. I mean, Jump, I think, trades on effectively every regulated exchange around the world, more or less. And we want to bring our equity to people around the world. Obviously, part of that's going to be tokenizing on Solana, then part of that's just going to be navigating tradfi capital markets around the world. Yeah. 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 Solana ecosystem. And then, you know, my kind of my role as 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, uh, 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 3 ways that Multicoin can play a strong role. Um, Well, one is you get the— I guess there's 4 ways. One is they get the, you know, sailor of— sailor of— you're becoming the sailor of Solana. You know, whether that's the right title for you or not, I don't know. But 3 ways Multicoin can play a role. One is basically just acquiring SOL at a better price maybe than other people could do. I'm going to use my own language, not yours. The second would be broadly arbitraging credit rates, and third would be flowing capital into the Solana ecosystem. So let's go one by one through those. Maybe the first would be just locked versus discounted SOL versus spot. Can you clarify how much of the $1.65 billion will go towards the OTC purchase of locked or otherwise like non-transferable tokens for— yeah, for this vehicle?

I can't be super specific. I can say it will be a minority for sure. Probably can't get more specific than that.

I think the thing people want to know is like if you're buying locked tokens, Is it just like Multicoin's lock? Is this a vehicle to buy multi— is this a vehicle to buy Multicoin's lock tokens, basically?

Sorry, I misunderstood the question. Yeah, 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 prop desk 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 separation and segmentation of their RIA, which is, uh, which Forward Industries is a client of, and then their, their prop trading. Right.

I get the Galaxy relationship. So that, so that Forward Industries won't buy locked SOL or, or, or spot SOL from Multicoin.

Correct. Or from Jump or from Galaxy off of Galaxy's balance sheet SOL.

Nice. Okay. All right. That's okay. I think that's the big thing people, people want to know in terms of the, I guess, anything else that you think is interesting. I mean, this was the 3 bullet points and the first was like Multicoin believes the company is in a unique position to acquire discounted locked SOL. 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.

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Let's get into arbitraging 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, DApps, the best DApps in the world, will arbitrage traditional credit rates and DeFi rates. And from what I'm told in 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 SOL, you open a traditional bank loan against the SOL, you exchange the USD for USDC, you deposit USDC in a Solana DeFi pool for yield. The borrow rate minus on-chain 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's correct. You know, we do have a number of open questions we're figuring out right now is What kind of turn, you know, we're trying to get access to the Fed window. Um, cause 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 SOL or staked SOL 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 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 Texas, where you guys are.

I live in Texas.

I'm assuming you guys have done the math 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 you, what do you think? I mean, I use the numbers 5% and 10%, but what is that? What is it actually?

I mean, I think we, I'm optimistic we will be able to earn greater than 5% at scale and, you know, closer to 10%. But look, like, as we put in size in, rates will compress, things need to readjust. So unclear. I hope we get to 10%, but I can't guarantee that.

Yeah. Where do you have a sense of where this— this kind of gets into the third bucket, but like the on-chain flow, and you guys have this, probably the most intimate knowledge from the capital allocation perspective of the Solana ecosystem, 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 Solana ecosystem companies, Kamino and Jito and Drift and things like that. So I'm assuming it flows into your guys's portcos, but how do you, how do you think about that?

Yeah, I mean, it's not they should flow into companies because Multicoin invests 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 smart contract implosions and such. Solana actually has had way, way, way, way, way fewer smart contract implosions because the SVM is a much safer environment than EVM. So, you know, we're not trying to YOLO into a contract that someone threw down yesterday. That's definitely not on the table for this vehicle. Right? Like, there is no universal way to assess smart contract risk. But the most intuitive way to do it is the empirical way, which is how many dollars have been in the contract over how long, and look at that integral over time, right? So you can just measure dollar days. And like that, that is the honeypot test of this. And certainly that's a key underwriting criteria for us.

I'm just reading, reading the line that you said. You said, given the pedigree of the sponsors, the size of the company's treasury, and the sponsors' intimate knowledge and relationship with the Solana ecosystem, the firm believes the company can leverage these relationships to strike deals with major Solana protocols and applications to help improve liquidity and increase yield. Basically, 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, Drift is great and Kamino and things like that. But I don't want to just— I mean, I know I'm invested in them, so I want to, 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 Kamino and be like, look, Kamino, we'll, we'll give— we're going to put $500 million into Kamino. 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, so 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, trad fund, whatever it is, and being able to say you have a publicly traded company using your service, like is valuable for them.

Let's say your listener is 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 Solana. My words, not yours, obviously. But maybe what are the second-order implications of this in terms of other things and protocols in Solana land doing well? How do you— is there any guidance you can help give people?

Solana is a thriving, heterogeneous financial system. And there's lots of parts and pieces to that. And given 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. We very much intend to spread it around and work with a lot of people. And obviously that list of people is going to evolve and change over time. And as the balance sheet grows, as we do these other things, you know, that'll create more opportunities to work with more folks. So we very much want to be working with a lot of people around the world.

And it's like, did you, um, call—

did you follow the USDH Hyperliquid kind of drama the past week?

Uh, I've been following lightly. Yes, lightly.

Okay. So one thing that I thought was genius, 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 drove a bunch of interest and attention back into, back into Hyperliquid. And it just got a lot of attention on Hyperliquid. How do you think about— I mean, could you run a public, like a public RFP process essentially to be the lend and borrow protocol of, of, of Forward Industries?

Look, the public RFP thing is interesting. It's a fairly hostile tactic because the way most people prefer to do business is you negotiate privately and look, maybe you win or you lose the negotiation, but that's kind of the standard way business is done in the world. Forcing everyone into the public configuration is a very aggressive negotiating stance. I'm not saying it's wrong, just it's aggressive. I don't think we're trying to do that and create some sort of bidding war. So I don't think that's our intent. 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. 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 RLM like Camino. That's not the, I think really makes sense for a forward.

There's two buckets of M&A that I think could be interesting for DApps. It's like, you know, at some point some of these are going to trade below— I mean, they're already starting to trade below NAV. And especially if we go into a bear market, there'll be really interesting opportunities. So there's definitely like a kind of a DApp roll-up, roll-up play. There's probably also just an M&A play because you're a public company, you've got equity and, you know, a lot of tokens to play with. How do you think about M&A with this?

Yeah, I expect that there will be substantial DApp consolidation. Both intra-ecosystem and across ecosystems. Uh, um, and we fully expect, uh, it is our intent to be on the acquiring side on these and to do this at scale.

Oh, both sold dApps and non-sold dApps?

Correct. I mean, like, we, we know we have the team, we know we're going to be doing all of these things to drive incremental value to our shareholders. Via all this stuff we've just been talking about over the last 20, 30 minutes. We think the market, we're optimistic that the market is going to appreciate and value that and understand that. And then we're going to go execute on M&A. And then, yeah, I think, I actually think the dApps that are going to be in the, are going to have the most difficulty are not going to be Ethereum dApp number 7 or 8 or Solana dApp number 7 and 8. I actually think it's going to be, you know, Sweet at 1, 2, and 3. Um, Avalanche at 1, 2, and 3. I think those folks are actually going to be in the most difficult position.

How come?

Oh, I just think like the market as a whole, 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 1. And yeah, maybe they sell some of their balance sheet assets and try and like fight with the 1.0 mark. The 1x MNAV number. But when you're in that state of— look, the SUI ecosystem doesn't have enough liquidity and scale to do this interesting DeFi stuff. And you don't have all of the service providers to go do all these on-chain tokenized equities and all this other stuff. My guess is banks and other large lenders are not going to accept SUI as collateral. For anything of scale. And so just like the lack of maturity of these other ecosystems, I think makes it very difficult for the, even yes, nominally Sui has DeFi and like nominally Avalanche has DeFi, but like the liquidity and the scale, I don't think it's 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. I mean, even now, like with the service providers for Forward, I am pushing all of them to do things that they were unable to do. Um, and, and so like for SUI and for, it's going to be way harder and harder, right? As you go down the, um, the market cap rankings.

Yeah.

So I think that, yeah, there's, there's going to be a lot of opportunity for, for accretion for our shareholders and playing MNAV arbitrage.

Yeah. What about non, what about non-DAO acquisition? So there's, I mean, if I get the emails, 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, 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 non-DATs?

The mandate of the, of Forward Industries is to increase sold per share. Um, we understand that if you were buying equity in Forward Industries, like you want us to do all of these interesting things that we've been talking about to accrete sold per share. Uh, I think there's going to become a time. Not in the near future. I think almost certainly not within 6 months, probably not even within 12 months, but look, who knows? I'm a pretty bad judge of timing. I tend to be too optimistic. And, uh, uh, I think there's going to come, there's going to, there's going to become a point. Yeah. You'll be a VC if you're like not an optimist.

Right.

Um, uh, there's going to be a point in time in which these are just a publicly traded permanent capital vehicle that's like deeply crypto native. That's like doing like really kind of interesting and bizarre stuff. And I think that's when like non-DAAT M&A, non-DAAT 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 4 years from now in which that's not the case.

Yeah.

Yeah.

Can we talk about preferreds? So you guys, I mean, you mentioned at the top of the podcast, but you also, the very bottom of your guys' announcement, I think it was the last paragraph or the second to last paragraph, you basically said the perpetual preferred structure, that strategy is starting to popularize, is probably the better— I'm going to— I'm botching the language, I'm sure— is better for a dApp. And there are two interesting things.

One is for a Solana dApp as opposed to a Bitcoin dApp.

Yeah. Okay. So that's the, that's the interesting part is why is it better for a Solana debt than a BTC debt? And 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 perpetual preferreds. You know, Saylor is paying roughly 9%, uh, I believe, for his perpetual preferreds, but his core business produces effectively no cash flow. Um, uh, or I should say his Bitcoin holdings produce no no cash flow. Um, our vehicle will produce cash flow, uh, via two mechanisms, uh, at a bare minimum. The first mechanism is obviously the native SOL staking yields, which today is 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 professional preferreds. What's interesting is, you know, I've talked to a handful of bankers about this already and the first reaction they said is you're going to have to pay a higher rate than strategy because SOL is like a smaller asset, less liquid or whatever. But then I pushed back on them and I said, well, the problem for Saylor is, is that 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 were like, you know what? That's actually interesting. You actually might be able to get better terms than like the strategy.

You think you actually get better terms than strategy because you have— because Solana has yield?

Yeah. Because you can actually like objectively, you can show where the profits are coming from to pay the coupons. Hmm.

What's the yield right now? 8% or 9%?

I believe it's in the— I believe it's in the 9-ish range.

Yeah, that's interesting. Solana aside, are preferreds a better structure for DApps than converts?

I'm not an expert in these kind of longer-tail financial instruments, but my understanding is yes.

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So we're going to get Solana staking in the ETFs soon.

I am very optimistic that is the case.

Yeah, it seems pretty— next month or two or three, sometime by the end of the year, it seems like we get it. What is the Will, uh, will that be good or bad for you guys?

Uh, I think it's great for Solana and it's great for Forward as well. Uh, a lot of people look, some people don't like the corporate wrapper structure that a dApp represents.

Yeah.

Uh, and some people really do. Um, and you want to be able to, people to be able to go on Coinbase and Robinhood and buy, you know, spot SOL, or if they want to buy an ETF wrapper, uh, or they want the corporate wrapper. 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 for owning different types of instruments. So we want to make all of this available to everybody.

Yeah. Would you stake? Is there any reason, this is just more of a personal question, but is there any reason not to stake your SOL? Like, do you stake 100% of your SOL?

We expect the dApp will be staking the substantial majority of its SOL at all times.

So we have this Digital Asset Treasury dApp dashboard, and one thing that's been tough for us is there's a, there's a strong information lag in TradFi, whereas crypto, there's really— we've gotten so used to no information lag, right? But if you look at the information lag in crypto, it's weekly or sometimes even biweekly updates. I'm curious how you, as you think about like running an on-chain business, How do you think about this?

Yeah, we want to lean into transparency for the vehicle over time. We're not there today on day one. It'll take us some time to get there. I am optimistic we will at some point publish all of the company's addresses so that folks like y'all can have your dashboards updated in real time.

Nice. That's cool.

We're not, we're not there yet. I cannot make any promises on timeline, but that's certainly an aspiration.

Nice. Cool. 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. So we are— so Ford Industries is absolutely looking to hire right now. Um, we obviously are looking for some core legal, uh, roles, things like, uh, a CEO to join the existing CEO, Mike Kruett, as kind of co-CEOs. Looking for new CFO, uh, to join Kathleen as the existing CFO. So sorry, let me take a step back. Forward Industries has the current line of business, uh, the design and medical stuff that they do. Uh, and then obviously we have the treasury strategy. And both of those businesses will proceed moving forward. And what we have discussed is we think the right thing to do is to basically have, you know, two CEOs, one over each line of business, two CFOs, one over each line of business, et cetera. Obviously we'll consolidate those quarterly for financials and such, but like, it kind of makes sense to just have the two independent teams. So we're looking to build out kind of all of the team members for the Solana Treasury side of the business. Includes a CEO, a CFO, a GC, a CMO. 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. Multicoin, kind of, we hire based on if you're smart, motivated, and want to do things, you know, like, that's how we run a Multicoin. And I think that will be true at Forward Industries as well.

Yeah. How much time are the Multicoin folks spending on this?

I'm probably spending the most time with the Multicoin folks, but it's ramping down. We actually had a big spike kind of leading up to the launch, and that's going to trail downwards fairly quickly.

Yeah. Were any of your LPs— upset is probably too strong of a word— but strongly questioning why you were spending time on this?

In fact, so I'm really glad you asked that. So we called a number of our largest LPs across both our hedge funds and our venture funds before we agreed to do this with Jumping 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 the dApp 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 special economic, like the sponsor economics, um, given the amount of time it's going to take of, of the employees at 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 Jumpin' Galaxy that, um, 100% of the sponsor economics are accruing to Multicoin's hedge fund, uh, not to Kyle personally as chairman or to Multicoin GP.

Nice.

And when under that pretense, they were all like extremely supportive.

Yeah, nice. Um, is there anything else on this that we have not covered, Kyle, that you think is important? Um, is there a worst— 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, conflicts, issues, 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 kind of assume all that stuff will happen. Look, I've already been sued in my role at Multicoin a number of times, like, whatever. It doesn't really impact my life in any real way. I think that's like totally the wrong way to think about this. I'm like a super high agency. Most investors have the worldview 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 very stylized and actually like just naive view of the world. We're building a new financial system from the ground up here. We are a very large player, meaning Multigoin and now also Forward. In that new financial system, agency matters and like our ability to do things. Move the needle in the long-term success of the ecosystem as a whole. And so, like, the reason that, yeah, I'm going to have all of these problems and like, look, it's been, I've slept less the last 4 weeks than I would have liked to. But it's like all worth it because we get to actually push the ecosystem forward. Someone has to get out of bed and do all this stuff. And like, it was pretty clear to me that like where the, you know, Multicoin Jump and Galaxy combined via Forward Industries is the right set of people and the right vehicle to do that.

Yeah. Do you think that's a broader trend in venture 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, connections, whatever else, for sure that's the case. I mean, right, like Marc Andreessen just was on, I think it was Jack Altman's podcast, like a month or two months ago.

Yeah, it was a good podcast.

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 disagree with the frame, but like there's 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 doing things in the real world. And certainly we view it as our job and our mandate to do that. I mean, that's why I'm so engaged in DC. 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. And those things matter. And we can move the needle for our industry and for our portfolio companies. 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 Hyperliquid, uh, USDC-H, we mentioned that briefly. Mert had a comment that, look, maybe we should actually enshrine a stablecoin into Solana. And actually, Tushar, your co-founder, said, um, one of the best things about Solana's culture is adopting good ideas from other ecos. Hyperliquid's idea to encourage stablecoin issuers to buy hype with USDC-H interest is a powerful way to drive REV. Why should Circle keep all the interest revenue from USDC on Solana? 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 revenue and drive buying pressure on ETH. Tell me your thoughts on this.

I think there's two ways to look at this debate. One is, is this an open, neutral platform, decentralized, permissionless? For everyone in the world, being corporates, users, et cetera? And the other is, is it an exchange with shareholders? And I think actually most people intuitively view the answer, like have a view on the answer to that question. They may not have fully thought about it with that degree of clarity, But I think kind of most people identify in one of those buckets, those two buckets. And obviously if you're a Hype shareholder or Hype token holder, you're obviously in the second bucket. Because that's what Hyperliquid is. Like, it's, it's a CeFi exchange. There's like some nominal things about it that look kind of DeFi-ish, but like, not really. And then there's like Solana, and Solana is like working with Circle and with Tether, and now Tether just announced USAT. And USDT and these and find all of these things. Hyperliquid, they just gave the middle finger to Paxos, to PayPal, to Venmo. Like explicitly they gave the middle finger to those people. And then implicitly they just gave the middle finger to every payment firm in the world, like full stop. And bank, full stop. They just gave the middle finger to everybody. And then probably also to a lot of Wall Street as well. Because they've made it very clear that like, we're going to kingmake as an ecosystem. And like, they don't even do it transparently. Like, obviously, look, I don't know the politics and who's who and who are the token holders and what phone calls are being made. But like, obviously, there's some group of like, probably 5 to 20 people who like, behind the scenes are calling the shots. Hyperliquid is extremely non-transparent already by this, 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 a centralized exchange business and we're trying to make as much money as possible, which is fine. Like, that's what they are. But that's not open platform for the world to transact. Um, and so I think where you net out on the debate is like, just like, which of those two things do you think hyper liquid is? Or Solana or Ethereum or, you know, whatever the, the L1 or L2 in question is. I feel fairly strongly that Solana should think of itself as an open platform and encourage the competition from these, from these various stakeholder groups.

So you, so push that a step further. Would you enshrine a stablecoin on Solana?

No, no, absolutely not.

No, no, you would not. Okay. Okay.

You know, I'm not, I'm not on the hyper liquid camp side of this. Like, I'm on—

you disagree with Tushar on this?

Correct.

Yes. Interesting.

Yeah.

How do you guys at Multicoin, when you and Tushar disagree, how do you come to conclusion? I guess. I guess it's fine to just continue disagreeing.

Well, hey, we obviously can disagree. 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, disagreement is healthy. And we want all of the team members at Multicoin to know that like, you can and should disagree.

Yeah. What else do you and Tushar disagree on right now?

Oh, dude, we disagree on shit all the fucking time. I mean, how big should the SOL position be? Like, you know, who wants a bigger SOL position? Probably me. Although 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 to, we get to debate these things all the time.

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Maybe as we start to think about wrapping up, Kyle, I'd love to just re-hear your vision for internet capital markets. I mean, you just gave a talk at All In Summit, which is not live, unfortunately, yet, I think. But I think, I think the video will be live at some point soon. We've had massive regulation changes in the US this year. I'd love to just hear your updated idea for internet capital markets.

Yeah. So in my Olin presentation, the core of it was talking a little bit about the past and a little history lesson and then the future. I think it's important to understand the past. And look, like the current financial system we have in the United States today is a result of 100 years of evolution. And like intrinsically, that's all path dependence. If you were to say time T zero, I would say is the Great Depression, 1929 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, Congress passed 3 major pieces of legislation, the Securities Act of '33, the Exchange Act of '34, and the Investment Company Act of '40. To address a lot of those core issues. And those three pieces of legislation are still today the pillars of modern financial regulation. Also the CEA, the Commodities Exchange Act, which I believe is '40 or '44, if I recall. So that's all roughly 90 to 100 years old. And then since then though, we've had a ton of additional stuff come about. Obviously we had Sarbanes-Oxley, we had Dodd-Frank, 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 NYSE have all these rules. And so like you just had all this cruft 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 all of the shares that trade on NYSE and NASDAQ. So all of this has accumulated over a century. And one of the core points of my presentation is, well, look, if you were to redesign the financial system in 2025 from the ground up, from first principles, what would you do? And I think the answer is you would design one global, 24/7, permissionless, programmable system that is, of course, secured by cryptography. And like, we believe that that core idea is basically the foundation for building internet capital markets. And we think Solana is kind of the best instantiation of that you can see in the real world today. So that's the kind of context. And then The second part of the presentation is looking at some really cool examples of how we think that actually manifests. I think in the very near future, you're going to see prediction markets embedded on not just on Calsree.com or on Polymarket.com, but on media websites. So like the Wall Street Journal, Fox, Blockworks, whatever. It's very clear that everyone in the media kind of sees this coming. And it's going to be really cool, right? You read an article about the Fed cutting interest rates in the Journal. Why isn't there a chart, a price chart, and a buy, yes, no button? There obviously should be. And so we think that's a very exciting change coming to how the world is going to understand prediction markets, how the world is going to understand finance, probabilities, and risk. That's actually going to change how society understands financial risk. Which is super cool. We think that you're going to have prediction markets for sports embedded in your TV. Every TV sold in the last 7 years is a smart TV. They all have like some Android operating system or whatever. 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 broadcast. Think like, 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? So, Gary, I'll walk through a few other examples. I mean, chatbots are certainly one that crypto people will appreciate. Obviously, the Telegram bots are very popular today in crypto. That behavior is clearly going to expand well beyond trading meme coins or crypto assets, or trading BTC perps. It's obviously going to be used for trading equities and everything else. And I think the area where it's the most exciting is actually sports. I mean, being able to have a group chat with your buddies and shitpost and like bet on, you know, games or whatever, like that's obviously going to be amazing.

I was actually doing that. 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 yeah.

Yeah.

Yeah.

That, that, that like is like so obvious.

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 finance, like last 30 years, or even like, look, go back even before we had electronic trading, you have to call your broker. right? Like think like Boiler Room, Wall Street type stuff. So you had to go to a destination to trade. Even like though, we, since we've had E-Trade and in the '90s and through Robinhood, and now we have Coinbase and Fantom 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 the CA.

Uh, and then you like, and then you get, 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 software and crypto, you know, breaks down. This is the definition of permissionless access. 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 movements 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 stablecoins and like your, your, your idea of like what the world— right now stablecoins have been growing, right? They've grown like 10x in the last couple of years, but it's still been very confined to crypto. I'm curious how you think about this as like a moment in time for stablecoins.

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 stablecoin growth chart goes vertical. Because Congress passes consequential legislation very infrequently, and is unlikely to pass anything else that's related to stablecoins probably like ever. Right? Like we were literally talking about earlier, the Foundations of the Modern Financial System are 3 acts from the '30s and 1940. So these things last decades, if not centuries. And so the consequences of legislation being passed are profound. I think the Genius Act is probably the most consequential piece of financial legislation passed since Dodd-Frank, which is 2008, 2009. And so I think that's incredibly exciting. 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? I think that moment is when iOS and Android natively implement stablecoins. And that's going to be some software update 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 optimistic it'll happen in '27. But, you know, who knows? But it's going to happen at— maybe it's '28, right? 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. Tim Cook and Sundar were at the White House like a week ago. Like, it's— they're going to implement stablecoins 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 cons, 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.

You would say for 100% certainty, you think this happens?

It has to happen. Like, it's just inevitable. And, uh, because it's a good revenue opportunity for Google and Apple. It's a good feature to add. And like the White House, like they're both close to the White House. And like when it happens, it's just going to unleash like crypto adoption is going to go absolutely vertical when this happens. 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.

No, man, dude, it's been super fun. Appreciate you jumping on on a Saturday morning. It's been super hectic, but we're having a good time before we end Mysteries.

Indeed.

Congrats on everything.

Always good to see you, and I'll talk to you soon.

Pleasure, Jason Yanowitz.