Ep 43 — Why it's not NAV but Native Yield with Leah and Max from...

Full Title

Ep 43 — Why it's not NAV but Native Yield with Leah and Max from Sol Strategies

Summary

This podcast episode features Leah Wald and Max Kaplan of Sol Strategies, a company focusing on leveraging Solana's native yield capabilities through validator operations to build a unique public equity vehicle. The discussion contrasts their approach with Bitcoin-focused treasury models, emphasizing Solana's technical advantages and its role in bringing real-world assets onto the blockchain.

Key Points

• Sol Strategies differentiates itself from Bitcoin treasury companies by harnessing Solana's native yield through staking and validator operations, enabling them to acquire SOL at a cheaper price and structure unique financing deals.
• Sol Strategies served as a pioneering public equity vehicle for Solana, offering institutional investors and the market access to the asset before dedicated Solana ETFs were available, addressing a significant demand gap.
• Solana is positioned as superior to Ethereum due to its consistently better performance across key metrics like DEX volumes and transaction throughput, with its high-volume handling capabilities, demonstrated by meme coin activity, serving as a stress test for the network.
• The Solana network is continually evolving with new developments like application-specific sequencing to enhance trading experiences and the Alpenglow consensus algorithm aimed at reducing block times to 25 milliseconds, making it competitive with centralized exchanges.
• Sol Strategies intends to be the first company to list its stock on-chain, aiming to tokenize real-world assets, though regulatory clarity, particularly regarding DeFi integration, remains a primary hurdle that is anticipated to clear by late 2025.
• Despite its strengths, Solana needs improvement in network jitter, which affects transaction consistency for traders, and in enhancing the developer experience due to the complexity of the Solana Virtual Machine.

Conclusion

Sol Strategies aims to be a leading Solana technology company, generating revenue from its validator operations and supporting the network's growth by building innovative solutions.

The company is deeply invested in the success of the Solana network, believing in its technical superiority and ability to drive future economic activity on-chain.

They are actively working to facilitate the tokenization of real-world assets like public equities, anticipating significant progress in bringing stocks on-chain within the year, despite ongoing regulatory challenges.

Discussion Topics

• How might the ability to generate native yield on blockchains like Solana influence the investment strategies of public companies and institutional investors in the future?
• What are the most significant real-world assets or industries you foresee being transformed by blockchain tokenization, and what are the main hurdles for their widespread adoption?
• Given the ongoing technological advancements in blockchain networks, how important is user experience (UX) and developer experience (DX) in determining a blockchain's long-term success and widespread adoption?

Key Terms

Native Yield

Yield generated directly from the core functionality of a blockchain asset, such as staking rewards, without relying on external financial products.

Staking

The process of locking up cryptocurrency assets to support a blockchain network's operations and earning rewards in return.

Validator

A node on a proof-of-stake blockchain network responsible for verifying transactions and maintaining the integrity of the blockchain.

NAV

Net Asset Value, referring to the value of an entity's assets minus the value of its liabilities.

ETF

Exchange-Traded Fund, an investment fund that trades on stock exchanges.

DEX

Decentralized Exchange, a cryptocurrency exchange that operates without a central authority.

TVL

Total Value Locked, the total value of cryptocurrency locked into a DeFi protocol or blockchain.

UX

User Experience, the overall experience of a person using a product or service.

Application-specific sequencing

A mechanism allowing applications on a blockchain to control the order in which their transactions are processed within a block.

Alpenglow

Solana's new consensus algorithm designed to significantly reduce block times and improve transaction speed.

Jitter

The variation in latency of transaction confirmation times on a blockchain network.

SVM

Solana Virtual Machine, the runtime environment that executes smart contracts on the Solana blockchain.

EVM

Ethereum Virtual Machine, the runtime environment that executes smart contracts on the Ethereum blockchain.

MEV

Maximal Extractable Value, the maximum value that can be extracted from block production by including, excluding, or reordering transactions within a block.

Front-running

A form of MEV where a validator or bot places an order knowing a larger order is about to be executed, allowing them to profit from the price movement the larger order causes.

White label validator

A service where one company operates a validator node for another entity under the latter's brand, handling technical complexities.

Timeline