A Solana Treasury Firm Made $66.6M Without Making Much Revenue

DeFi Development (DFDV) stock fell 8.95% from its $3.24 previous close to $2.95 on November 12. The drop came on the day the Solana (SOL) treasury firm reported a $66.6 million third-quarter profit.

The company said its net asset value (NAV) per share more than quadrupled from August 12 to September 30. Shares traded above the prior close in the morning before sliding from midday.

Follow us on X to get the latest news as it happens

Revenue Nearly Halved, So Where Did the $66.6 Million Come From?

The company’s Q3 shareholder letter shows revenue fell 47.4% year over year to $2.4 million. Its quarterly filing shows two gains drove the profit instead.

• Net gains on digital assets added $37.9 million. That was 49% less than the $74.4 million booked a year earlier.
• A further $33.4 million came from gains on derivative instruments, up from $4.6 million a year earlier.

Revenue covered only part of $4.3 million in operating costs and $3.4 million in interest expense. SOL holdings and equivalents still grew 13% from August 12, reaching about 2.61 million by November 9.

Shares recovered slightly after the bell, trading at $3.05, 3.39% above the close. The drop added to earlier losses. A BeInCrypto Q3 earnings preview showed DFDV stock down at least 37% from September 30 to November 6.

Why DFDV Stock Moves Faster Than SOL in Both Directions

That growing treasury also explains why the stock swings harder than SOL itself. The company uses debt and preferred stock to buy more SOL without issuing new common shares. In Q3, the stock returned about 1.5x SOL’s price gain, according to the letter.

Management puts that amplification above 9x. About $221.8 million of gross SOL sits on roughly $23.9 million of net asset value for common holders. That figure uses the company’s $84.99 SOL reference price from November 11.

CEO Joseph Onorati acknowledged the downside.

“Amplification works in both directions, and shareholders felt its impact over the last year as SOL fell,” Onorati wrote in the shareholder letter.

The firm now plans to fund more SOL mainly through CHAD, its perpetual preferred stock. DeFi Development first pitched it through an up to $20 million preferred offering at a 13% dividend. The rate rose to 14% on November 2.

The company also stress-tested CHAD against lower SOL prices. After a 50% SOL drop, assets left after convertible principal would cover CHAD notional 0.4x. Modeled income would then trail CHAD dividends and convertible interest by about $3.3 million yearly, before other costs. The model assumes a 5% yield on the SOL treasury.

CHAD follows the digital credit model of Strategy’s STRC and Bitcoin treasury firm Strive’s SATA. Demand for CHAD will shape how much SOL DeFi Development can add without selling new common shares.

Subscribe to our YouTube channel to watch leaders and journalists provide expert insights