And thank you for participating in this session of the WTR Insights Conference. For this session, we're featuring Sol Strategies. My name is John Roy. I cover technology here at Water Tower Research. We're pleased to be hosting Michael Hubbard, who's the CEO, and Steve Ehrlich, who's the Director of Capital Markets. Welcome, gentlemen.
Thanks, John. Great to be here.
Thanks, John. Happy to be here.
Before proceeding, I must mention that Sol Strategies' safe harbor statements are available on their website. As always, investor questions are encouraged. Please enter them into the chat box, and we will address them as soon as possible, in the session or in the forthcoming management series report. Those wishing to request a meeting with Sol Strategies can do so through the conference portal. With that, let's get going. Gentlemen, Sol Strategies really started out as a Solana staking and treasury vehicle, and has since added the Houdini Swap's transactional revenue, plus you have a Nasdaq listing now. How would you describe the business today, and what do you think investors still get wrong about the model?
Yeah, thanks, John. That's a great question. The business has really been evolving quite a lot in the last few years. It's been just over two years now that we've been fully focused on the Solana ecosystem, and we spent a lot of time building up our treasury position, but also our infrastructure and staking business on Solana. And that business is still operating and maintaining a very good momentum. But at the same time, we've continued our focus on expansion of the operating side of the business. That's where earlier this year we continued an M&A-based strategy and identified Houdini Swap as a great acquisition target. We closed on Houdini Swap on the 1st of June, and it's brought in a really new dimension to the business. The way we think about it is as a vertical stack, vertical integration.
Blockchain infrastructure is like highway infrastructure for a country, right? It's a way that people get around. And what they do on those roads may differ. Some people are just driving to work. Some people are transporting cargo. Just as on a blockchain, people are swapping, people are market-making, people are borrowing, trading meme tokens, all kinds of different things. Now, who actually owns the roads? And who charges a toll for using those roads? That's how we look at validators and staking. And especially with the expansion of the ETF space into more alternative blockchain markets beyond just Bitcoin. We've now seen Solana ETFs come around. We've seen Solana staking ETFs come around. So we saw an opportunity to serve those types of consumers or users by providing them with a reliable institutional counterparty, which is what we see ourselves as.
VanEck, with their Solana Staking ETF is a great example. They exclusively use Sol Strategies as their staking provider. But beyond that business is very tightly linked to the token, the Solana token, and its price movements and overall macro movements in the blockchain market. So we've been looking at how do we decouple from that and grow the business further up the stack. And so up the stack means, okay, now we're operating the roads, but do we start operating freight trains or cargo systems or buses that transport people on those roads? And essentially what that means is operating an app with end users that we are serving. And that's where Houdini Swap comes in. And so with Houdini Swap, we are offering a really great service where it's not exclusive to Solana.
We operate on over 120 different blockchains, and we support over 1 million different tokens, in fact. And we allow our users to swap from any token on any of those blockchains to any other token on any of those other blockchains with no friction. So the goal there really is to enable this mobility of money, of cash flow between ecosystems, which is very important for Solana, but for every other blockchain ecosystem. And we also allow people to do it privately, which is a big piece. Most people don't realize that every blockchain transaction by default is public. With Houdini, you're able to choose, if you wish, to swap between two tokens, or even just send one token from one place to another and do so privately.
If you and I go out for a coffee and you pay for my coffee and I want to send you CAD 10 afterwards, I'm not showing you my entire bank statement and everything else that I'm spending my money on. If a company is paying their employees, the employees don't see what everyone else is being paid, or how much money the company has in their bank account or what other suppliers they're paying. These are use cases we think are growing in demand and precisely why we thought the privacy area is something that we should be growing and expanding into. The other piece is that it's not tied specifically to the price of any singular cryptocurrency, but is actually a transaction and volatility-driven business. In times of volatility, we actually benefit because we see a higher volume on Houdini.
That's really great to diversify and solidify the base of the business. As I said, we're growing up that stack. Now we're operating the roads, but we're also operating some of the freight and the cargo and the bus services or whatever you want to call it on top of that. As far as the Nasdaq listing, just to touch on that point briefly. That's really about expanding access to the stock. Previously being listed on the CSE is not a minor exchange by any means, but it is still a much smaller market compared to the U.S. Nasdaq trading is available to many more investors in the U.S., but worldwide. That has allowed us to grow our investor base and allow more investors globally to be able to gain access to that stock.
Now we're really focused on how are we growing and building the fundamentals on the business and telling that story to investors and explaining what we're building here.
Michael, that's a great introduction there. Houdini Swap, it generated roughly, what? CAD 1 million- CAD 1.2 million in revenue with, I don't know, a 60%+ EBITDA margin, I think. That was just in the first month that you owned it. Did that exceed your expectations, and what kind of milestones should investors be looking for over the next 12 or 18 months?
Thanks for that, John . I am glad you put the million in there when you were going 1-1 .2. The entire business has been exceeding our expectations here in the fact that it continues to grow. Now as prices have increased and we have seen increased volatility, we have seen the business continue to expand and grow. We did announce in June, at the end of June in our August financials, for the quarter, that it was about CAD 65 million of volume in June. Just recently we announced that July we had a 1% increase, which is nice. August had a 15% increase. So we did CAD 74 million, 12% to 15% increase in August. You see the business is increasing. It is special in the fact that it is trading, so when the market does get more volatile, we see more volume.
It is not just a product that is B2C, where anyone can connect their wallet and use our system. We are expanding our integrations with B2B consumers, some of the bigger wallets in the marketplace that have massive distribution. We touch because we are adding the privacy and execution pieces to that, too. So we are really excited about that over the next 12 months. We have a large pipeline of wallets that we are working with to expand into, and we think this business can significantly grow over the next 12 months.
Excellent. So as a follow-on to that. Historically, your results have tracked with the Sol-USD price and the staking economics of what is going on. Now with Houdini Swap, you have this transactional revenue. I am just curious, does that make things more predictable? If so, what would the target mix kind of be for the two, transactional versus staking, going forward?
Yeah, I think predictable is tricky. There is definitely going to be a significant change, I believe, in that correlation going forward. As I mentioned earlier, we are seeing that Houdini Swap benefits from volatility. Volatility drives activity, and Houdini Swap is a volume-based business. So our revenue there is not tied to the movement of any cryptocurrency. That is where we really like owning that in the stack. So we still have treasury. We still have the validator and staking business. So we maintain that exposure. Now we have added on this volatility-based exposure. So it gives us that really broad base. Going forward, I think on the staking and validator side, certainly earlier in this year, we saw that that market was depressed. We have seen a bit of a rebound there in recent months, which has been great to see.
Especially in the last 45- 60 days, we've seen that that market has improved. Houdini equally is going to be a significant contributor in our financials going forward, both in terms of revenue and bottom line. That's going to be really important in the future.
One thing I'll throw on top of that, too, is that when crypto markets go up, you get a lot of volume. The volatility is important, and Michael keeps harping on that, and it's important for people to understand, is that crypto, unlike any market, when crypto prices actually go down, you see more people than in the traditional markets buying the dips. That increases that volatility and therefore increases the Houdini volume. Then lastly, on top of that, as more and more securitization, tokenization of securities, and tokenization of credit products happens on-chain, you'll see more volume and more volatility and more opportunity for Houdini to get more volume.
Right. It's kind of like the pie is also growing in addition.
Correct.
Yeah.
Yeah. The pie is getting bigger.
Right. Now, you were mentioning the Nasdaq listing, and it was something certainly that you've seen happen over the last year. STKE, of course, is the new Nasdaq sticker. New. It's your Nasdaq sticker. It's not new anymore. I am curious as to how that's changed your investor base. Has it added analyst coverage? Have you gotten a little more liquidity? What kind of things have happened with the listing?
We are seeing more interest in the stock because it is on Nasdaq under the STKE listing symbol. We are seeing the volume grow. Probably actually two-thirds to three-quarters of the volume every day is now trading on Nasdaq rather than the CSE. We are seeing more institutions have an interest. Cantor does cover us, as well as you guys obviously do. We've had many meetings with interested analysts who are learning about the story. I think the addition of Houdini makes the story even more interesting than what it was just three, four months ago. I think that is also interesting to the investors. I think when you couple that Nasdaq listing with the changes and additions we've made to the business, you're seeing more and more interest, and the volume is increasing every day.
With some days, I believe July 1st, we did 5 million shares we traded. You're starting to see more volume pick up in the stock, and we think that'll happen as we continue to do more things like this and get in front of more investors and have that distribution. We think that's going to continue to increase, and Nasdaq brings that opportunity.
Excellent. Now, you've been described as Wall Street's gateway to Solana. What are you seeing from institutional allocators and financial intermediaries that gives you confidence that you're seeing confidence and adoption accelerating?
Yeah. I think, John, the last 18 months have been a really wild ride in this space. Last summer, 2025, we saw a real big kind of hype train around cryptocurrencies from the institutional side. All of that culminated around September or October last year, where things were looking really positive. Then, famously, in October last year, the crypto market kind of underwent a bit of a correction. Might be a bit of an understatement. I think since then, it's been a little bit in limbo. If we look at the macro environment as a whole, I think the last 12 months have been tricky and full of mixed signals. We've seen continued interest from institutions, but I think we have to categorize institutions into the crypto-forward ones. Sorry, I'm going to have to start over there. I wasn't sure whether Steve was-
No problem.
Telling me to continue.
No, I'm saying Steve asked if we were okay on time. We're fine on time.
Okay. I just dropped it into the chat, so I figured maybe you or Krista could just would've copied it.
Don't worry about it. Krista will cut all this stuff out.
Okay.
Okay.
I'll just go ahead and. Sorry about that. I'll just go ahead and re-ask the question, and then you can go into it. But we're doing fine on time.
Got it.
Sol Strategies has been described as Wall Street's gateway to Solana. What gives you guys the confidence, and what are you seeing from institutions that gives you an impression that the adoption is accelerating?
Yeah, thanks, John. I think, if we look at the macro environment in the last, let's say, 18 months, it's been a really interesting journey. Last summer, 2025, I think there was overwhelming optimism in the space, particularly from institutions in the U.S. around impending regulation, the expected clarity, not the act, but just the word clarity around regulation. A lot of that collapsed around October last year when the crypto market as a whole underwent quite a violent downward correction. The last 12 months has really been a bit of a limbo. I think we have to also be honest about where the macro is, and the first half of this year has not been filled with a lot of positive mindset in that space. No one has really known where the market was going to go next. We've seen a shift in the last 60 days.
Things have improved significantly, and we've seen sentiment trend up a lot. With institutions, I think we really have to categorize them into three buckets. You've got the crypto-forward institutions. So you've got Bitwise, VanEck, the big ETF issuers that are very positive on blockchain technology and cryptocurrencies and are actively working in that space, that have already issued some instruments in that space as well. Then you have the crypto-interested ones. I think those have really taken a step back in the last 9- 12 months. Then you have those that are staying completely hands-off still. I think our sense is that we're going to see that middle bucket re-engage in the upcoming future, in the next few months if this current sentiment shift sustains itself. Obviously, this week, with CLARITY being defeated, has pushed sentiment down a bit.
Again, I think that is going to be temporary. But realistically, as that kind of sentiment sustains and goes back up, we see that appetite for this industry is still there within those institutions. We just need that regulation, that CLARITY for them, and this time I mean the Act, and it is going to come. We know without doubt. It's just a question of when. Last year, there was a real sense of urgency, and I think that sense has dissipated. So it'll come back.
What do you see is the next steps for the CLARITY Act? It missed this procedural vote recently, but what does it have to do? Does it come back with, et cetera, or is it a new form? Do we have to wait through the midterms? What's your thinking?
Having been in this market for a long time, in the traditional financial markets, as well as the blockchain market and crypto market. What I think is going to happen next is the SEC and CFTC will take a stronger position and start putting rules in place to bring the innovation and keep the innovation in the United States. I think that's been one of the mandates that has been in place for a while now. It didn't make it through the Senate, but that's kind of a speed bump. The SEC and CFTC will bring rules that will help guide us into what we can do, what's next, how people can trade it, the regulation of exchanges. That's all coming. Now, that may not be permanent because the SEC and CFTC rules are not necessarily permanent in nature.
But I think it's going to be able to really drive more innovation. If you really, one of the things I like to talk about is how the markets have evolved over 35, 40 years. If you go back to May Day in 1975, you used to have set commissions, and that all changed. Then, in the '90s, you were still doing trading by calling up brokers on the floor of the exchange. Anyone who's ever watched "Trading Places," you've seen the pits. That's how it used to be. You used to sign compliance tickets on the blue and pink tickets and manually stamp them. Then we got the internet. Now the blockchain technology, as I think the SEC and CFTC both recognize, is the next wave of financial innovation that's going to help regulators and the market structure in the future.
So it's coming. It's just going to come in a different form. That, to Michael's point, is okay, we'll take a little retrace back here a little bit. It's not even a big one that happened since CLARITY didn't make it through the Senate, but I think you're going to have even more rules and regulations coming up that's going to really push pricing, push innovation, push use cases.
Yeah. I can just-
Go ahead.
Sorry, I just want to jump in briefly there as well. I just want to add as well, I think, the will to get regulation in place certainly exists amongst the senators, amongst the government. It's really just a discussion of the exact form it'll take. The important thing is that there is the desire to establish the U.S. as the leading environment economy for this technology. Another thing is that if you look at where we were 10 years ago, this was a nascent technology that no one knew if we were going to stick around. Blockchain is here to stay. Like where we are in 2026, this is not something that's going to disappear and can be ignored anymore. Regulation will come. Regulation is good.
It provides us with exact clarity and ideas of how to implement technologies, and it's just a matter of time. We will get there.
Excellent. I kind of wanted to do a quick follow-up on that. What kind of specific changes, you were talking about specifics, do you really think that institutional investors and institutions themselves really need to see before they get a lot more active?
Look, I think there's a big debate ongoing about tokenization of securities, right? How some providers do it, and how issuers prefer to do it. I think we're going to see some, hopefully, get some rules about the issuance side. I think as an issuer, I prefer that our stock is tokenized by us on the blockchain so people can buy it, whether stateside or anywhere around the globe, and use it in their own wallet if they want to, rather than some of these derivative forms that have come about. I think you're going to start seeing rules around that, and that's just one area.
I think there's many areas that how trading is, and how shorting and how you can short and lend on that, and other products that can evolve from the ability of consumers and holders and investors to actually hold the issuer issued tokenized security is far different than what can happen with derivatives. I think you'll see some of those rules. I think it's important to get those rules in place.
Yeah. Just to add to that as well, something that I think is often overlooked is depth of market. You already have very deep liquidity on-chain for certain assets. Famously on Solana, Sol-USD trades at a tighter spread on-chain than it does on any centralized exchange. The orders fill in seconds, less than a second. But that's just one asset. If we look at the traditional finance world and the depth of liquidity that exists right now, crypto markets are not yet fully there where they can fill a billion dollar debt positions. That happens over time, and that's a gradual inflow. I'm sure institutions are not going to put everything in one day.
We're going to see a gradual on-ramp, and as the liquidity comes into the system and these deeper positions become not just possible but also lower risk as a percentage of the overall market, we'll see greater demand.
John, but that takes us back to the comment you said about the pie getting bigger. This pie could become the entire stock market, could be on the blockchain. When you think about how big this can grow and the question about how big can the business grow and Houdini and any other part of our business that we're in as a blockchain technology provider, it could be massive. Because as things go on-chain, that means the validators become more valuable. That means our routing network and privacy become more valuable. That's how the market's sizing over the next few years. It may not happen tomorrow, and it won't happen tomorrow. But over the next three, five, 10 years, this is where you want to be. The infrastructure is moving to the blockchain, and you want to get in when you can earlier, not later.
You're going to be upset five years from now when you say, "I missed my opportunity because I saw it coming, that all the trading went from the internet to the blockchain, and I missed it. Why didn't I get involved?" That's what you're going to miss if you don't get in with everything that's happening right now.
Well, excellent. We're running a little tight on time, so why don't we ask one final question. Looking into 2027, what kind of operational and financial milestones would you tell investors to look at to measure how Sol Strategies is making its progress towards a sustainable, diversified infrastructure business?
Yeah. Thanks, John. That's a really important question, and I think the key to that is really going to be when we start reporting our first full quarter with Houdini Swap numbers in it. Going forward, we had multiple acquisitions in the 2025 financial year, multiple validator acquisitions. We've seen on our financials some non-cash items relating to that have perhaps muddied the waters a bit. So really focusing on the cash-based items in our financials and looking at our EBITDA and what the split is going forward between the various business lines. We think that's going to be really helpful for investors to understand the business and the potential for the business. The milestones for the next year are really going to be where does Houdini Swap grow? What does the revenue grow to in there?
Of course, as always, we maintain at least one eye in the market on any potential other M&A opportunities. So that's never excluded as a possibility.
Great. Well, gentlemen, I want to thank you both, Michael, Steve, for participating in this. I want you to have a great afternoon. For investors, why don't you stay with us? If you want more information on Sol Strategies, you can find it on our website at www.watertowerresearch.com. If you're interested in getting some questions addressed, let us know and please put them in the conference portal. If you're interested in having a one-on-one meeting with management, also put that in the conference portal. Our next WTR Insights Conference session will begin shortly. Please stay with us.