Hyperliquid Strategies Stock

Good morning, and welcome to Hyperliquid Strategies Earnings Conference Call for Fiscal Year ending June 30, 2026. I'm Rob Diamond, Director of Corporate Affairs for Hyperliquid Strategies, Inc. Participating in today's call are David Schamis, Chief Executive Officer; and Brett Beldner, Chief Financial Officer.

After the presentation, there will be an opportunity for questions and answers from the audience. Before we begin, please note that the comments during today's call and the accompanying presentation contain forward-looking information. All statements other than statements of historical facts are considered forward-looking statements. All forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from the results discussed in the forward-looking statements.

Some of these risks and uncertainties are identified and discussed in the company's filings with the SEC. In addition, information in this call and the presentation regarding Hyperliquid and its operations is based on information that has been publicly disseminated by Hyperliquid and has not been independently verified by the company. We ask you take a moment to read the disclaimers at the beginning of the slides that accompany this presentation as they contain important information.

Great. Thank you, Rob. As I think most people know, but it's worth repeating, Hyperliquid Strategies is the largest publicly traded digital asset treasury company for the HYPE token. We're listed on NASDAQ. The HYPE token, obviously, is the native Hyperliquid token on the blockchain.

We have a strong balance sheet. As of August 18, we have 29.4 million HYPE tokens, $133 million in cash and cash-like instruments, and we have no debt. I say this all the time, but we really only have 4 meaningful balance sheet items. We have cash, we have tokens, we have a deferred tax liability, and we have equity, and it's really that simple.

We, as a company, are a DAT, but that means that we're not an ETF. We have the ability to participate in the ecosystem in ways that we can as an operating company rather than an investment vehicle. The first thing we've done is become a validator on the Hyperliquid blockchain. We are one of the largest non-foundation validators on the blockchain, and we are working hard to explore other things that we could be doing, other initiatives we can be doing in the ecosystem to create value both for the broader ecosystem and for our shareholders.

We're a top 10 DAT. I think as of the writing of this document, we're #6 DAT in the world. We are obviously the largest -- I shouldn't say obviously, we are the largest DAT vehicle for any digital asset other than Bitcoin and Ethereum.

I'll say a word about Hyperliquid generally. I think, again, from the first time we started doing these calls until today, Hyperliquid has gotten quite a bit more recognition in the world. But Hyperliquid is extremely well positioned and one of the most successful blockchain use cases out there, perps, stablecoins, real-world assets, prediction markets. We're going to go into that as we go through this discussion. Unlike a lot of other blockchains, Hyperliquid generates some real revenue. That real revenue turns into buybacks of the token. So effectively, that revenue generation is instantly or almost instantly returned to the token holders.

And from a valuation point of view, it is actually quite easy to understand how that works and quite comparable to a lot of other things that people in this world value when it comes to businesses. Hyper is now a top 10 token, #6 -- excuse me, #7 largest token, and it is by far the largest token to have emerged within the last 5 years.

Hyperliquid is incredibly well positioned across all the most successful blockchain use cases out there. Perps have generated over $5 trillion of volume across all the various venues for Perps. But in a lot of ways today, it's hard to say Hyperliquid without the word Perp, and it's hard to say Perp without the word Hyperliquid. It's become such an important part of the Perp world.

And I think in a lot of ways, Hyperliquid has done a tremendous amount to bring Perps to the forefront of the sort of minds and thoughts of the investing world. The stablecoin world, which we all know is $305 billion of stablecoin market cap out there. Hyperliquid has made a major move in stablecoin revenue as we'll talk about. RWAs, I say this all the time, but it's worth repeating. Lots of people in the crypto world for a long time have been talking about how real-world assets are going to come on chain.

I think that there's been a lot of theorizing and pontificating about it. There hasn't been a lot of actual action. That is not the case in the Hyperliquid world. Since last November, there's been a tremendous amount of actual real-world assets traded in perp form on Hyperliquid. And prediction markets, as many people know, are a large and emerging opportunity in the world that's been dominated really by 2 players so far.

Hyperliquid has launched and will continue and we'll soon be launching their permission-less platform for prediction markets. It's called outcome markets in the Hyperliquid world that we think will take -- make a major impact versus the other 2 incumbents, mostly because of cost and trading experience.

Let's go to the next page, please. We'll dive a little deeper into each one of these things. Perps, as we said, Hyperliquid continues to dominate the decentralized futures -- perpetual futures trading. It really has been the core of what Hyperliquid was built on from the beginning. I think when we started on this venture over a year ago, I was doing a lot of explaining to people about what a perp is. I still do some explaining to people about what a perp is. But today, the knowledge base of the general investing public is so much higher on Perps. People understand it. People understand why it's valuable. And rather than reading through every line on this page, I'm going to focus on one, which is no fragmentation.

I think that is an incredibly important part of what Perps can bring to the levered investing world. So for many, many years, the best way to invest in, let's just say, equities has been through call options. Call options are widely used by lots of people in lots of places. I think I saw recently that a pretty high percentage of Robinhood's revenue these days are call options, which is totally understandable. The problem with call options are for every name, for every NVIDIA, for every Tesla, for every Microsoft, for every single individual ticker that exists, there are many, many, many different CUSIPs of call options.

You have multiple strike prices. You have multiple expiration dates. You then have puts and calls. For something like NVIDIA, to use that as an example, there could be hundreds or thousands of different CUSIPs for one particular ticker. So the problem is the entire world of people choosing to invest in NVIDIA in a levered fashion with call options, all of that liquidity, all of that open interest is spread over every one of those CUSIPs.

So even for the super highly liquid names, you have that liquidity spread over many, many different CUSIPs. What that does is it widens bid-ask spreads. There's a reason that many of the venues out there are paid for customer flow. They're paid for customer flow, not because people like showing big numbers because the bid-ask spreads are wide and with wide bid-ask spreads, market makers can make a lot of money.

On the Perp side, for every one ticker, there is one Perp. So there's an NVIDIA ticker, obviously, on the NASDAQ. There's one NVIDIA Perp on TRADE XYZ, whether you want to trade 20x leverage and you want to hold that position for 20 minutes or whether you want to trade 1x leverage and hold that position for 6 months. It's the same contract. It's the same liquidity pool.

Bid-ask spreads are much, much tighter. And in the end, the cost to trade to the end user, to the customer is materially different. And that is a very, very big difference, and that is a perfect example of financial technological advancements in the financial world like Perps, actually benefiting the end user in a big way. There are market makers out there who enjoy those wide spreads that are on the -- that do not like this as much as you would expect.

On Page 8, we talk about stablecoins. Stablecoins have already made a very large splash in this world. Circle's IPO last year was incredibly successful and brought what stablecoins are to the forefront of the investment community. USDC, which is Circle's stablecoin has been a hallmark of the Hyperliquid exchange from the beginning. I don't think 100% of the pairs traded on Hyperliquid or USDC, but a very high percentage of them are. Initially, 100% of that revenue that was generated from those stablecoins sitting on the Hyperliquid ecosystem went back to Circle.

During 2026, it was announced that Hyperliquid had recut a deal where 90% of that reserve yield is actually going back into the Hyperliquid ecosystem, which is basically directly falls to the bottom line and is used to increase the buybacks of the HYPE token. I actually think that either went in -- officially went into place either yesterday or today or sometime around now. So that is not just announced that I believe that is in place now, and it is quite exciting. That has the potential, as you see in some of these numbers here to move the needle quite meaningfully for the Hyperliquid ecosystem and for the value of the tokens going forward.

Go to the next page, 9, real-world assets, again, a year ago, there was not $0.01 of real-world assets traded on Hyperliquid. Today, it has very much become the full story. I talk about this a lot, but when the Iran war began in February, late on a Friday, New York Times, I believe the only place that oil traded for about 48 hours following that was on Hyperliquid.

So amazingly, here we are in 2026, one of the most important, one of the most liquid, no pun intended markets in the world is oil. A major geopolitical event happens late on a Friday. And this trading venue that had only offered oil for a small number of weeks leading up to that day was the only place that any real volume was traded for a full 48 hours. It's quite amazing actually.

Go to the next page, Page 10. This is one of my favorite charts. This is actually a conglomeration of a number of charts that I put on Twitter over the last number of months. Hyperliquid has become a place not only where existing real-world assets like Tesla or NVIDIA have been trading, but pre-IPO listings have come about on Hyperliquid, where we saw some real volume leading into the IPO. I'm not going to deconstruct this whole chart because it's a bit confusing. But basically, the lines on the left are where these various names were trading on Hyperliquid pre-IPO.

The lines on the right are where the underlying spot trading happened post-IPO and the 4 dots in the middle are where these 4 IPOs were priced. And I would point out that the price on hyperliquid leading into the IPO was, a, an excellent predictor of where the stocks would trade post-IPO.

And also, with all due respect, did a much better job of predicting where these things will trade than the investment banks that price these IPOs at those 4 dots right there. This is a little bit of a soapbox that I've been on. I've been on the soapbox many years before I even knew what Hyperliquid was, many years before Hyperliquid was invented or founded. But I think the IPO discount that gets charged to companies when they go IPO has been very high. It's been too high for too many years.

There's a real-world impact on that high IPO discount every time a venture capitalist invests in a new company on the back end of that model, they assume an IPO price. They assume realization for their investment. And then IPO discount has an actual effect on capital they're willing to allocate, on people, those new ventures are willing to hire, employment, et cetera. It is real. It is important.

And if Hyperliquid can have an impact on reducing that IPO discount for companies going forward, I will personally find a lot of satisfaction out of that after years of me talking about this. But again, we love this chart. We love this page, and I think it's actually worth staring at for a few minutes even after this call.

Go to the next page. As we talked about a minute ago, outcome markets on Page 11. Is Hyperliquid's way of talking about our prediction markets. This is something that went live on mainnet on Hyperliquid on May 2, though it was only their own markets that they implemented. It is expected to go permissionless shortly. What it means to go permissionless in this case is the way HIP-3 allows others to build their own markets, their own Perp markets on Hyperliquid. That will be the same case for outcome markets.

So I don't think anyone thought that the team, the Hyperliquid team in Singapore was going to be the right people to be deploying markets for who might win the Senate race in Michigan this November or all the other -- whether congressional salaries will be increased or the other hundreds of different things that people take positions on Polymarket, on Kalshi. But the idea is for third-party builders, third-party deployers who have an expertise, who can draw liquidity and volume and market makers in these things to be deploying them and to use the underlying Hyperliquid technology. We also expect when these markets are up and running to be both significantly less expensive than the 2 incumbents and to also have a significantly better trading experience than those are for the actual people doing the trading.

Let's go to Page 12. This is, again, no secret to anybody, but Hyperliquid has consistently been amongst the highest on-chain revenue generators of all the blockchains out there. The chart in the middle is quite amazing. I talk about this all the time, but in the fourth quarter of 2024, there was $14 million of revenue. By the third quarter of 2025, we received $324 million, quite an amazing growth.

Over time, you see the different components of that revenue here. You've seen it come down since the third quarter of 2025, but it's worth talking about that. There is no doubt since then, up until, quite frankly, this week, we've seen a bit of a crypto winter and crypto has been in a bit of a bear market when it comes to trading volumes in general.

Obviously, Bitcoin is down quite a bit since its peaks in October of last year. What's happened on Hyperliquid is what's replaced the volumes of crypto has been a lot of real-world asset trading. The real-world asset trading right now is in something known as growth mode, where the fee levels for the real-world assets are running at about a 90% discount to where the crypto fee levels are.

It is expected to stay there for a while. We are not expecting growth mode to end anytime soon. So what has happened is lower fee volume has replaced higher fee volume over the last number of quarters. We expect over time, 2 things to happen. One, crypto volumes to return in this week and last week, late last week has been a good example of that. That's already happening. And we obviously expect real-world asset volumes to continue to grow in a big way and to see these numbers moving in the right direction.

Go to Page 13. This is again, something we talk about a lot, but from the economic value numbers on the page earlier, turning into specific revenue dollars for Hyperliquid. You can see, obviously, these numbers are highly correlated to the page earlier. 99% of these revenue dollars are used to repurchase the token. Those token repurchases happen live, daily on a programmatic basis. I talk about all the time how -- if you were to compare this to a public company, a public company might generate earnings quarter. They have a Board meeting sometime after the end of the quarter.

The Board sits around in a fancy hotel or somewhere and debates whether they should use those earnings to buy back stock or to pay a dividend or to buy the CEO a new airplane or whatever. Here, there's none of that discussion and debate. It literally happens every day. It's programmatic, it's live, and it's 99% being used to repurchase the token. It's really one of my favorite features of the whole Hyperliquid system.

If you go to Page 14, we are constantly thinking about the HYPE token versus other cryptos out there. One of our thesis when we got into this over a year ago, one of the things we've talked about a lot, both before and after close is we expect the correlation between Hyperliquid and the large incumbent cryptos to go down over time. If you look at the chart on the left, this is the correlation of HYPE, ETH and Solana to Bitcoin. And you can see HYPE has been and almost at every point in this chart is much lower correlation than the other 2. And that's what we've expected. That's what we continue to see happening.

And the HYPE Token is trading much more based on the value creation from the Hyperliquid ecosystem and much less as just a pack of crypto that's highly correlated to Bitcoin. On the right, we show the chart of the Hyperliquid token value relative to Bitcoin ETH. And so it's really interesting that, that silver spike in January of last year, late January of last year, there was quite a bit of volatility and trading activity in silver.

Hyperliquid had recently listed silver the way it recently listed oil not long before that. A lot of that volume -- a fair amount of that volume was on Hyperliquid. In a lot of ways, that was the world's first view of what this Hyperliquid thing was and what was going on in the real-world assets side of Hyperliquid. You saw a breakout moment there.

Oil, we talked about already, you saw a breakout moment there. And then when the pre-IPOs started trading in a major way on Hyperliquid, we saw another breakout there. Obviously, last week, for anyone that missed it, when the President commented on Hyperliquid in his press conference, that also was obviously a breakout moment that it will be hard for us to forget.

Page 15, it's worth pointing out here that the HYPE token is firmly established as a top 10 token. Which shows as $17 billion of circulating value. That is an apples-to-apples comparison to these other tokens that are out there trading. The footnote here is actually worth reading. We do our own version of what we think the market cap of Hyperliquid is. We add a significant amount of the currently locked tokens that are owned by the founding group.

We think -- we don't think -- we're fairly certain over time, those tokens will unlock. So we think the right way to think about this, both from a circulating supply point of view, but also from a market cap and a valuation point of view would be to add those back that gets to a materially higher number, although interestingly, it would only move Hyperliquid from #7 to #6 on this chart.

If you flip to Page 17, we now get into some of the fiscal year 2026 highlights. To refresh everyone's memory, our fiscal year is June 30, just to keep everybody on their toes. So during -- we closed our transaction on December 2, 2025. Since then, we have raised close to $650 million in net proceeds through issuances of stock in the open market. That 76 million shares have been issued. The average price of our issuance has been $8.50 and the average mNAV at the time of issuance is 1.15x.

We have deployed a significant amount of cash into buying tokens over this period. The average price is about $46.77, which somewhat coincidentally equates very close to the tokens we originally acquired as part of the initial deal that was announced last July. They were both at or around the $46 level. To state the obvious, every single day that goes by, that average will be ticking up as long as we're buying more tokens because the token price is a lot higher. So I don't want anyone to be too surprised at our next earnings call when that $46 number is higher. Frankly, I hope it's higher because if it's lower, that would mean the token price would go down a lot between now and the end of the next quarter.

The mNAV has been quite volatile over the period. I often say that I was expecting the underlying token to be quite volatile, and it has been, but I was not expecting the mNAV to be as volatile as it has been. It's been as high as at or around 1.3x. It's been as low as at around 0.75x. That, while on one hand, has caused me materially more gray hairs than when I started in this, it is also something we should not be upset about, we should be quite happy about as a DAT, because when that multiple is high, we're able to issue stock in an NAV accretive way and buy more tokens. And when that multiple is low, we're able to use our cash reserves to buy back the stock that is also NAV accretive.

While a steady 1.0 or 1.1 mNAV would be a nice relaxing way to live life, it actually would not create the same amount of accretion -- value accretion opportunities that we've had when we've done this. If you go to Page 18, we've talked about this a lot already. But obviously, over the period -- over the period of the last quarter, the NAV has moved quite a bit over time. Our cash value has gone up. Our HYPE treasury has gone up an awful lot by $1.2 billion. And the deferred tax liability has increased along with that.

By the way, it's important to point out any time we talk about NAV, we generally are talking about it including the deferred tax liability, meaning deducting the deferred tax liability from the NAV. I think that is both accurate from a GAAP point of view, and it is also the right way to think about it from a value point of view. If and when the time ever came where we were selling tokens and liquidating the DAT, we would be paying that tax. So that is not -- that is a real liability that may come about one day.

On the other hand, until we were selling tokens, until we were in that mode, that is not a liability that we have to pay today. That is not a liability that accrues any interest. It is not unreasonable for someone to also look at our NAV, while adding back, while adding the deferred tax liability back to the NAV, which would obviously increase the value of the NAV and reduce our mNAV at any given point.

If you go to Page 19. Again, we like thinking about correlations around here. We look at how our stock is correlated to HYPE. Interestingly, very early on, there was much less correlation than one would expect. That had a lot to do, I think, with just getting our deal closed in the month of December, some fair amount of probably share turnover in that month. And also, it was a pretty grim month in general for crypto. HYPE, I think, was in the 20s and 30s for much of that month versus where it was today. HYPE was quite a bit higher before December.

So it was kind of a funny time to close this deal, but those correlations have come up a lot. As you see, I don't think 100% is necessarily our goal. I think 100% -- we're not -- as I said before, we're not an ETF and we don't hope to be an ETF. But generally speaking, this number -- the correlation being higher rather than lower is the right thing to us. And generally speaking, the direction of the line on this chart feels very good to us.

The chart on the right shows how our stock has performed relative to the other large DATs out there. On one hand, it's nice to see this. On the other hand, I remind our team and our Board all the time that we shouldn't break our arm patting ourselves on the back on this one. I think that this is almost maybe not 100%, but mostly close to entirely because of the underlying token performance.

And needless to say, we made a good choice with choosing the HYPE token going in, but most of this outperformance has been the HYPE token's outperformance. But we hope to add a little bit to it by our good work and our hard work around here.

Page 20, I've alluded to this earlier, but because of the growth we've had, both in the underlying stock price performance and the equity we've issued, the net equity we've issued since closing, we are now the sixth largest DAT in the world. We are by far the biggest non-ETF and Bitcoin DAT. I certainly hope over time, we continue to move up these ranks.

I think as Hyperliquid itself becomes more and more relevant and more and more important in the -- not just crypto world, but the asset trading world in general, I would assume as its market cap grows, we will see our name moving higher on this list over time. Maybe that one day, we'll be giving Michael Saylor a run for the money -- his money on the total value of our treasury.

And with that, wild statement, I will pass this over to Brett to talk about some of the financial aspects of the quarter.

Thanks, David, and good morning, everyone. It is my pleasure to present to you our financial results for our fiscal year-end June 30, 2026. The context of my discussion and our performance for the year tracks the transition from HSI agreeing to issue a PIPE last year to the acquisition of a biotech company in December to becoming the largest digital asset treasury company, focusing solely on supporting the HYPE token and the Hyperliquid ecosystem.

For the year, we generated approximately $553 million of income related to our treasury assets, being our tokens and cash and cash equivalents. That we refer to as our treasury strategy. The income was primarily driven by unrealized gains on our HYPE tokens, both from the appreciation of the tokens that we received at the acquisition closing, but also from our effective acquisition strategy of purchasing approximately 16.5 million HYPE tokens at optimal prices.

All of our HYPE tokens are staked, which combined with any revenues we received from our validator resulted in $9.5 million of staking and validator revenues that were primarily recognized in the fourth quarter as our holdings grew. Our operating costs for the year were approximately $14 million, with a significant decrease between the third and fourth quarter after we divested the legacy biotech business and became solely focused on the Hyperliquid treasury strategy business.

In addition, for the year, we recognized $35.6 million of, IPR&D write-off expense related to the business combination and other expense of $14.3 million, $12.2 million of which related to an accounting charge required to be recognized based on the structure of our equity facility. This expense was a noncash charge with an offset to stockholders' equity and had no impact on our mNAV.

The final component is a deferred tax expense of approximately $184 million, which related to the embedded unrealized taxable gain of our HYPE tokens as required under GAAP. This is not a current obligation, as David said, rather, it only arises in the future if we decide to sell all of our tokens, which we currently have no desire to do.

Moving on to the next page, our balance sheet. We continue to keep it simple. As of June 30, 2026, we had a little over $2 billion of assets and no debt. As of June 30, our assets were comprised of approximately 29.3 million HYPE tokens valued at around $1.9 billion and approximately $150 million of cash-like instruments, which included cash, short-term treasuries and USDC.

We believe it's important to retain cash to be able to take advantage of treasury opportunities as they arise, whether that is buying tokens at depressed prices or repurchasing our own stock when we trade below certain mNAV multiples. We continue to recognize a deferred tax liability, approximately $184 million as required under GAAP for the embedded taxable gain, which, as discussed, is not a current obligation and only becomes one if we decide to sell our tokens.

The net result is an extremely strong capital position. Stockholders' equity of approximately $1.9 billion, up over 150% from last quarter due to both the appreciation of HYPE and the net capital raised from issuing equity. I will now turn the presentation back over to David for some closing remarks.

Thanks, Brett. I'll make a couple of minor comments before we go over to Q&A. But in the 8 or so months since we have closed our deal and have been public, as I said before, we've seen tremendous volatility, both in the underlying token and in our mNAV. And I have to say it's been awfully interesting because at different moments over this period, we've had people publicly calling us geniuses, thinking we're doing an unbelievably great job of what we're doing. And we've also had people calling us idiots thinking we're doing a terrible job doing what we're doing.

I would put forward that we are neither geniuses nor idiots. I think that we -- what we've done from the beginning, what we've set out to do and what we try to continue to do is to run this in a very disciplined fashion. We do not want to get overly ebullient when things look great. We don't want to get overly negative or overly depressed when things don't look as great.

And again, the word we try to repeat around here over and over again is discipline. One of those disciplines, as I'm sure you'll see and you've noticed, is that we keep a fair amount of cash on the balance sheet. I think that we have never had to sell any call options against our tokens. We've never been painted into a corner, where we need to generate cash and do unnatural things with our treasury, and we think that is awfully important when it comes to running a debt in a disciplined and successful way.

Having a lot of cash gives us the opportunity to buy our stock when the token value goes very low, and it gives us the opportunity to potentially find other things in the ecosystem to do that we think can generate revenue that would, over time, justify a long-term mNAV well above 1. I think that's all I would say as far as closing remarks, and I am eager to have some questions from the community.

Our first question will come from Gareth Gacetta with Cantor.

There were some reports out that your team is working with the Hyperliquid Policy Center on a path to the U.S. So I'm wondering if you could talk about what that partnership involves and maybe how we should think about a potential U.S. product here?

Do you think Hyperliquid's front end might be just turned on for U.S. persons or maybe the back end being distributed through regulated front end? And ultimately, if the exchange has the KYC to kind of gain access to the U.S., do you think it will have to do that globally for everyone?

Gareth, thanks for the question. Certainly, a good question. It didn't take long to get to this, so I appreciate it. Look, really, all I could say on this topic right now, all I want to say on this topic right now is it's clearly no secret that Hyperliquid is working to get into the U.S. If there was any confusion, the President cleared that up last week for everybody.

And as you'd expect, we are willing and eager to be as helpful as we can in any way we can. And we're also perfectly happy to not be helpful and not be involved if that's how it ends up playing out. So look, I don't want to say anything more than that. I don't want to preempt anything more. But again, it's no secret they're working on it. And as I said, we're eager to be as helpful as we can in any way we can for obvious reasons. And I both appreciate the question, and I hope you understand that's all the detail I can get into right now.

Totally. No, that's very helpful. And then maybe a more technical one on AQAv2. I'm wondering if the fact that kind of all HIP-3 and HIP-4 markets now are having to be backed by USDC, would that end up impacting the overall stablecoin growth of the platform? For example, if more HIP-3 and HIP-4 markets are launched, would we assume that the stablecoin supply should grow with those new markets as well?

Yes. Look, I think that's a reasonable assumption, right? The more things that are traded on Hyperliquid, the more different markets, the more open interest generally speaking, the higher the USDC reserve level is going to be. So I think that is a perfectly reasonable assumption.

And you can probably go back historically and look at the different levels of Hyperliquid and where those USDC levels were and make some -- extrapolate some assumptions going forward.

The one benefit, though, of Hyperliquid as well as you are allowed to cross collateralized positions. So it may not necessarily be a one-for-one, but it certainly should increase the overall pie.

Okay. Great. Really helpful. And then maybe one last one. So I know we've kind of had these 2 catalysts here with the U.S. announcement or potential announcement and then also AQAv2. But do you think that these 2 opportunities are being priced into the token even after kind of the recent gains over the past 2 weeks?

Look, it's really hard to know. Obviously, it's after President Trump's announcement at the press conference, obviously, the token jumped up quite a bit. So clearly, the market noticed it's not like the market missed that. But look, we're obviously very bullish long term. We generally think the token is great value long term, and we think it's going to be worth a lot more in the future than today.

It's really hard to sit here and break out the components of value and what's contributed what to get to the $82.14 that it's trading at right now. So look, it's an awfully good question. And I think generally, the market is taking all the information that's out there, but we think the conglomeration of all that is a token with a lot of upside.

Our next question will come from James McIlree with Chardan.

A couple of questions. David, you've spoken -- I think you mentioned twice expanding your investments into the ecosystem. I was hoping you could elaborate further on timing and what that might look like? And then secondly, for Brett, with the OpEx down quarter-to-quarter, are we at a new steady state? Or is there anything that we should expect on the trajectory of OpEx going forward?

Yes. So when it comes to investments in the ecosystem, we've really only done one thing so far, and that's become a validator on the Hyperliquid ecosystem. I think we've talked about that in the past. It generates revenue. It doesn't generate a ton of revenue. So I don't want to overplay what that means for our shareholders, but it's something we're happy to be doing.

We've looked at a lot of things. We're looking at a lot of different things. But we -- I have to say we have a pretty high bar here. To do something that is complicated, that drains a lot of time and energy for management that it will be difficult to digest potentially for the investment community and that might not generate a whole lot of value or has a lot of risk attached to it is not something we're particularly excited about, right?

We are -- our core business is in the DAT treasury business. We are eager to find additional paths of revenue over time, but we're not crazy about it, right? We're not going to say yes to everything that comes along. traditionally for the last 25 years, I've been in the investing business where I say no to 95-plus percent of the things that come along. So we're probably running at about that ratio, to be honest, and I'm not -- that's not a bad thing. If you say yes to everyone that said something, you're going to find lots of ways to lose money. Brett?

Yes. And on part 2 of your question, the answer to that is yes. We are at a more steady state that fourth quarter should be more representative of our operating expenses going forward. With that being said, as David was just discussing, as opportunities and investments and other things that we consider arise, that number may obviously change based on whatever costs relate to that. But regarding steady state of operating, yes, we should be at a $4 million for the quarter seems reasonable, and we continue to focus on costs, and we'll continue to do so.

To beat the dead horse here, I don't mean to beat a dead horse, but the things we're looking to put our money to beyond just our DAT activities are things where we see real asymmetric upside. Things we can maybe spend a little bit of money on and have huge potential upside either directly for our shareholders or for the ecosystem in general or both or most likely are things we're excited about. Things we can put a little bit of money out and get a 15% return on a small amount of money, to be honest, doesn't excite us that much. It's just not worth it.

Our next question will come from Matthew Galinko with Maxim Group.

Congrats on all the good work. Maybe if we could focus a little bit on the single margin account concept. Do you -- is that having an impact today as far as adoption? Or do you think that has a bigger impact after we get permissionless outcomes?

I'm sure we can find evidence of this. I don't have it at the tip of my tongue, but we think it is already having an impact and will continue to. So when it comes to the Perp world, right, such an important part is for market makers to be able to sort of easily and efficiently make those markets for these different asset classes that might be on different assets that might be on the exchange, the HYPE exchange, Hyperliquid exchange in Perp form.

The easier you can make it for people to do that, the more efficiently they can do it, the more people you attract, the more capital you attract, the lower the bid-ask spreads will be, the higher the liquidity will be. So I think it's already having an impact and will continue to. And I think that, that's sort of one important example, but there are others as well about how good of a system the team in Singapore has built and how quick they are to make improvements to it over time.

And when you think about what they've done in a short period of time with 12 people working there and how quickly they're able to turn out things like that. You compare that to any of the major incumbents, on one hand, the New York Stock Exchange has been around for 234 years. On the other hand, New York Stock Exchange has been around for 234 years. And adding any sort of improvements in the trading experience like this for these large incumbents is such a technical lift. It's such a time sink at such a cost relative to what the Hyperliquid team is able to do. It's really, really impressive to see what a team with sort of a fresh slate, a white piece of paper can do in a short period of time.

So the answer to your -- that's a long answer to your question. I think the answer is yes.

Well, very good. And maybe just a quick follow-up. You touched on the 2 ways you might think about mNAV, including or excluding the deferred tax liability. Curious for your treasury operations, which version do you use, if one at all?

Yes. I would say -- and I've said this a few times, and it's always important to sort of repeat and also to go into more detail as time goes on as we think harder about this stuff. Below -- first of all, our primary thing we look at is mNAV. It's just straight NAV, not with adding back the DTL. On the other hand, I would say NAV with adding back the DTL is very much a secondary thing we look at.

And if we were optimizing for things when we were issuing stock, I would say 2 things we like to see. One is that our net proceeds from that issuance is above 1.1x mNAV. And above 1x mNAV, including -- with the DTL add-back. So this is both an art and a science. We're in these markets. We're seeing how things are trading. We're making decisions on the fly. We think we're making good decisions way more than we're making bad decisions.

But we're looking at both. Primarily, it's the straight mNAV, but we are definitely not forgetting about the mNAV plus DPL, and we're focused on that as well. And look, over time, those numbers will diverge further, hopefully, as the value of the HYPE token goes up and our gains in the things we've already bought increases. So we're constantly looking at that.

Our next question will come from Brian Vieten with Siebert.

Brian, if we miss you today, feel free to reach out. We're happy to do this privately. We'll happy to wait a few more seconds. Looks like we missed Brian, might be missing in action.

No problem.

As I said, we're around. Any other questions?

We currently have no other questions. So I can go ahead and pass the call back to Hyperliquid Strategies for any closing remarks.

I don't think I have any more to say than we've said already. I certainly appreciate everyone joining these calls. We report so much of our material information on a weekly basis. It's a little funny to sit here on August 27 and talk about data as of June 30, when, in fact, we've had many weekly updates since June 30.

So I especially appreciate everyone listening to this. And hopefully, you found it interesting. As we've said many times, a big part of our job is interacting directly with shareholders. So I encourage everyone to reach out if they have stuff they want to talk about privately any time. Thank you all for joining.

Good morning, and welcome to Hyperliquid Strategies Second Fiscal Quarter Earnings Conference Call. My name is Robert Diamond, and I am Director of Corporate Affairs for Hyperliquid Strategies. Participating in today's call are David Schamis, Chief Executive Officer; and Brett Beldner, Chief Financial Officer. David will review the company's vision and strategy as well as the current business environment and market positioning. This will be followed by Brett, who will review the company's financial performance. As a reminder, this conference is being recorded. We ask that you please hold all questions until the completion of the formal remarks, at which time you will be given instructions for the question-and-answer session.

Before we begin, please note that the comments during today's call and the accompanying presentation contain forward-looking information. All statements other than statements of historical facts are considered forward-looking statements. All forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from the results discussed in the forward-looking statements. Some of these risks and uncertainties are identified and discussed in the company's filings with the SEC. In addition, information in this call and the presentation regarding Hyperliquid and its operations is based on information that has been publicly disseminated by Hyperliquid and has not been independently verified by the company. We ask that you take a moment to read the disclaimers at the beginning of the slides that accompany this presentation as they contain important information.

Thank you, Rob. This is David Schamis. I'm going to start on Page 5. Just to remind everybody, we are a digital asset treasury company, and our job is to hold the HYPE token. When we closed on December 2, investors contributed both HYPE tokens to us and cash. Since then, we have used our cash to both buy back our stock as well as to buy HYPE tokens in the market. We continue to be very impressed with the speed at which Hyperliquid is moving to continue to grow its existing crypto business and maybe even more exciting to bring real-world assets on chain. Two Fridays ago, when silver had a massive trading day, 2% of the world's trading volume happened on Hyperliquid. And that was after it only being available on the Hyperliquid platform for about 3 weeks, incredibly impressive.

If you go to Page 6, just to remind everybody, HSI, Hyperliquid Strategies, Inc., is currently the largest DAT for HYPE by a pretty wide margin. I have said before many times that unlike Bitcoin and other widely available tokens, HYPE is still not easily accessed, particularly in the United States. And our main job, at least for now, is to enable that access for investors on a major U.S. exchange.

As we will continue to discuss, we try to be as efficient as possible with our capital, primarily focused on the NAV per share accretion that we could achieve with our activities. We will continue to explore opportunities to enhance our yield while taking as little additional risk as possible. HYPE is already a very volatile asset, and we are not looking to turn HSI into a VC fund.

On Page 7, people have seen this group before, but we're very proud of the world-class group we have put together to help advance the Hyperliquid ecosystem and to grow our NAV per share. The most valuable thing that we think we can do for the ecosystem is to help different players and people in the system access the traditional financial system.

There aren't too many senior leaders in the traditional financial world that someone in our group can't get access to. Bob was the CEO of Barclays. I frequently point out that Barclays was the only major U.S. or U.K. bank to never take government money. Eric Rosengren was a career Fed guy who most recently served as the President of the Boston Fed and member of the Fed's Open Market Committee. Larry Leibowitz was the President and COO of the New York Stock Exchange when it was merged into ICE. Tom King was the former Head of the Corporate and Investment Bank in Barclays. and more importantly, a Managing Director at Salomon Brothers in the '90s when both myself and Yaron, our COO, were lowly analysts in the investment bank. And lastly, we have partnered with some of the top participants in the crypto market who give us, TradFi guys, some invaluable insights into the crypto world and most notably, Paradigm is a cosponsor of the deal with us here.

If you go to Page 8, we are executing aggressively on our strategy here. A few things to point out. Two analysts have started to cover HSI. Hopefully, they're on this call, and we expect more to come in the not-too-distant future. We think that as part of spreading the awareness of Hyperliquid, this is done both with things like being on TV and being very public, but it's also one-on-ones with investors, going on podcasts, being at conferences, et cetera. I happen to be sitting in Hong Kong right now at a crypto conference.

One of the more interesting things that have happened since we announced this deal last July, needless to say, we have talked to lots of people who find what we're doing interesting. We spent some time with a very large, very well-known, high-frequency trading firm, U.S.-based. And amazingly, they told us that they are not able to buy the HYPE token directly themselves, even though they are quite engaged in crypto trading. And that's because it is traded on a DEX and their current compliance program wouldn't let them invest directly on a DEX. That to me proved just how much value we could be bringing right now by creating a DAT for Hyperliquid.

If you go to Page 10, this is a bit of a high level on the global financial system. Needless to say, I could drone on here for a long time, but I'm not going to. The basic concept is we have all heard more and more that crypto -- excuse me, that real-world assets are going to be moving on chain. But how exactly that's going to happen has been an open question in a lot of places, and we think Hyperliquid is a big part of that.

The other thing I want to point out, over the last 10 years or so, there have been crypto maximalists who think the whole world is going on chain, and we're all going to be buying bread in the store with Bitcoin overnight. There have also been quite a bit of people from the financial services world, in particular, who think it's all going to 0, and this is all just a joke. For years, we have been sitting somewhere in the middle of those things, and we think the world is moving to being in the middle of those things. I think it is obvious that crypto is real, trillions of dollars of market cap, and will be here for a long time, if not forever, and innovations that come out of it will be very, very important. On the other hand, I don't think we're all going to be buying bread tomorrow with Bitcoin, at least not in the United States.

If you go to Page 11. On Page 11, there are a couple of general observations I'd like to make. First, it is difficult to get consistent data. And when it comes to crypto, there is often no single source of truth. There's also a lack of standardized definitions that we have to pull through to figure out how we think about a lot of these things. There's a lot to cover and new developments literally pop up every day in this world. 2025 saw a solid performance of Hyperliquid as both a perp DEX as well as a blockchain. The perp DEX excelled in the first half and was for a long time on track to be the single largest fee-generating blockchain. The blockchain setup proved efficient and saw huge volumes processed and attracted many new users rapidly. Some important innovations turned into real revenue generators very quickly.

If we go to Page 12, some numbers around this. From a very small base in the fourth quarter of 2024, Hyperliquid saw massive revenue growth through 2025. And even though the fourth quarter was less than the third quarter, so far in the first quarter of 2026, we're seeing a very strong rebound. January had $79 million of revenue, which was approximately double December. And on that rate, we'd be at about $240 million of revenue for the first quarter. Meanwhile, Hyperliquid is the #1 DEX in perp volume, the #1 perp open interest with more than 150,000 active weekly addresses.

If you go to Page 13, this is a very important page, and it shows a number of things that are happening in the Hyperliquid system. Over the last 12 months, they've rolled out all these things, and I'm going to briefly run through them. First one, builder codes. This is allowing other people like Phantom to use their distribution to tap into the perp liquidity on Hyperliquid, thus adding more volume and more fees to the platform.

The second one, HIP-3. This allows others to create their own perp exchange front ends for whatever real-world assets they see opportunities in, without the time and the cost of building the back-end nuts and bolts of the central limit order book. The third is BLP. This allows users to share collateral across positions, which is so important to market makers in the platform, ultimately bringing more liquidity to the platform. And fourth, HIP-4, extending the idea of HIP-3 in allowing others to create their own front ends in both options and prediction markets. I think for so many companies we're all used to in the TradFi world, if they achieved one of these things in a 12-month period, they would be very proud of themselves. Hyperliquid is going to do all 4 of these things, that is extremely, extremely impressive.

One thing I always talk about as a way to visualize how important these things are, I'll talk about HIP-4 for a second. And imagine being a start-up company looking to raise money to compete with Polymarket. You're sitting in the room with a venture capitalist and they ask you how long it will take and how much money it will cost for you to build a back-end processing system to compete with Polymarket.

The answer before HIP-4 would have been it will take a lot of money and a lot of time. That would be a serious deterrent to someone putting money into that new venture capital startup. Instead now, that company can say, we're going to use the infrastructure provided by HIP-4, and we're going to entirely focus on the front end, meaning the marketing, the finding customers and offering interesting things and creating liquidity. The entire back end can be handled by HIP-4, which is extremely impressive.

On to Page 14. There are a couple of nice headlines. There's been many, many more, obviously. I will say, last spring, when we started seriously investigating Hyperliquid, very few people in the traditional finance industry had any idea what Hyperliquid was. Today, even with all the progress that it has made, it is still relatively unknown in the circles that we normally run in. A big part of our job is to continue to bring awareness to this amazing blockchain and the technology associated with it to the mainstream financial world. The more people we talk to, the more time we spend on it, the more impressed people are, and the more amazed that this has been created and growing right under their nose.

Lastly, let's go to Page 15. This graph shows perfectly how while so many people are talking about all the useful things that are being built on chain, the HYPE token has true utility in that 99% of the revenues of the blockchain are being used to repurchase and burn the tokens. Versus everything else in the crypto world today, there is literally no comparison between all of them combined and what Hyperliquid has done in this regard.

That being said, let's switch now. Let's go to Page 17. This is a little bit how we think about our treasury strategy. This is meant to be a framework. This is an art, not a science. The main point here, the main value we can add is that over time, we want to be able to buy the HYPE tokens and possibly buy our own shares to take advantage of varying market conditions to ultimately create NAV per share accretion for our shareholders. That is our #1 goal.

To state the obvious, this chart, I think, speaks for itself. But when our mNAV is high, we will be selling shares into the market, thus accreting our NAV per share. When our mNAV is low, we'll be buying back our shares in the market, thus accreting our NAV per share. When we believe that HYPE is trading below its fundamental value, we will be buying the HYPE tokens. And when we believe that HYPE is trading above its fundamental value, we will consider selling. Just for the avoidance of doubt, right now where we have been and pretty much where we have been since close, we believe that HYPE is well below its real fundamental intrinsic value and we are, needless to say, very bullish. A simple thing I would tell you is when we think of things like PE, price to earnings, HYPE trades well below the S&P 500 and even more further below other comparables in the crypto world. It's not even close actually.

If you go to Page 18, this is a bit of an update of what we have done so far. These numbers are as of last week. We will be, going forward, posting on a dashboard, all the things we do, with a 1-week lag. So it's perfectly appropriate today that we're showing these numbers with about a 1-week lag. But since we closed, we have deployed about $150 million -- $140 million. Of that $140 million, $10 million approximately have been in buying back our own shares. We did that at an average price of $3.42. We've repurchased over 3 million shares. That brings our adjusted fully diluted share count down to about 150 million.

We have bought about $130 million in tokens. Our average price is a little under $26 per token. We have purchased about 5 million tokens, and that brings our amount of HYPE held to about 17.5 million HYPE tokens. We have about $125 million of capital remaining. That is both for treasury deployment, also buying back stock if the opportunity came about. That excludes some capital we are reserving for operating the business. Obviously, we're a public company, and there are costs associated with that. We also have an ELOC in place to do additional share issuances, as we talked about earlier, when we see the opportunity.

With that, I'm going to move to Page 20, and I'm going to pass on to Brett to talk in more detail about some of the financial metrics.

Thank you, David, and good morning, everyone. Now I'd like to discuss our financial performance for the first 6 months of our fiscal 2026 reporting year. Page 20 provides a summary of our performance. As you will see, HSI's results are driven by 2 key factors: the change in the value of the HYPE token between signing and the end of the reporting period and the acquisition of Sonnet. Going back, the terms of the overall transaction provided that we received commitments from investors in both cash and HYPE tokens of approximately $888 million. The value of the HYPE contributions was fixed at signing at around $46.37 a token. Upon closing the acquisition of Sonnet in December, the price of the tokens had declined to around $32.86 a token. The difference between the 2 resulted in an accounting loss on the HYPE commitment of around $169 million.

The acquisition of Sonnet was treated for accounting purposes as an asset acquisition. The excess purchase price paid for Sonnet, including associated transaction costs over the fair value of both the tangible and intangible net assets acquired, represented in-process research and development costs of $35.6 million. These costs were written off at closing as they were not deemed to have any future use. The remainder of our pretax operating performance primarily related to the period after the transaction closed through December 31. We recognized interest income from our cash and cash equivalents and staking income from our HYPE tokens for a total of approximately $1.4 million. We record our HYPE tokens at fair value, so any changes in the value of our HYPE holdings are reflected through income. Due to the decline in the HYPE token price post closing, an unrealized loss of approximately $93 million was generated for the time between the transaction closing and December 31.

SG&A and R&D expenses represent operating costs for the period, which include establishing the $1 billion equity line, getting the company up and running, as well as normal operating costs of both the HYPE treasury business as well as the Sonnet legacy business. We also note that there was a tax impact of the transaction in our results. The transaction was structured in a manner that allowed the company to receive contributed HYPE tokens at an investor's tax basis. The difference between our tax basis and the fair value of the tokens on December 31 resulted in an $18 million deferred tax liability with the corresponding deferred tax expense reflected in our income statement. The net result is a $318 million loss for the 6 months ending December 31, 2025.

Moving on to Page 21 and our balance sheet. I'll spend a minute or 2 focusing on the material items. There are 2 material assets on our balance sheet at the end of the quarter, cash and cash equivalents and our HYPE tokens. Upon closing, we received about $300 million of cash from investors and approximately $10 million from Sonnet. This cash has been used during the period to purchase $9 million of HYPE tokens, buy back approximately $10 million of common stock, pay closing costs and pay operating expenses.

As of December 31, we had approximately $282 million of cash and cash equivalents remaining, a portion of which, as David discussed, we will maintain to ensure we have sufficient funds for our operations over the foreseeable future, and the remainder is eligible to be used for our treasury strategy. The $327 million HYPE Digital Assets balance represents the fair value of the approximately 12.9 million HYPE tokens that we owned as of December 31. This consists of the HYPE tokens that we received as contributions from our investors, HYPE rewards earned from staking, and any HYPE purchased as part of our treasury strategy.

On the liability side, we have no debt obligations other than short-term liabilities that resulted from either the transaction or in the normal course of business. The deferred tax liability represents our current estimate of the tax obligation that would exist if we were to sell all of our HYPE assets based on the price of the HYPE token on December 31. Please note, we currently have no intent to sell our HYPE, but are required to recognize this under GAAP. Our stockholders' equity represents the value of all the shares and warrants issued in the transaction, less the operating losses from our financial performance and deducting share repurchases. So overall, while the price performance of the HYPE token was not as we would have liked during the reporting period, the size of our cash balance on hand, combined with the price of HYPE in January, left us in a very strong position to execute our treasury strategy.

Moving on from our financial results to Page 22. We spent a lot of time since closing, speaking to investors, analysts and looking at other digital asset treasury companies. And the one key message that we received is that other than for SEC reporting, there is a lack of transparency in the market about company's digital asset holdings, cash positions, net asset values, et cetera. We debated internally amongst the senior management team as well as the Board as to how best provide useful information to the public, but yet not prejudice our ability to be in the market for both HYPE and our shares. And the result of those discussions is illustrated on Page 21 (sic) [ Page 22 ].

This slide represents a dashboard that we will be putting up on our website that contains an illustration of several key factors that we, as senior management, used to implement our treasury strategy and therefore, wanted to share that with the public. Walking through an example, we consider the following: the fair value of our HYPE portfolio, the current market capitalization of PURR, our company stock, including any common stock equivalents. Common stock equivalents currently include the number of shares that our preferred stock is convertible into and will include any dilutive securities that may exist in the future.

These items are then incorporated into the analysis, which we will show in 2 ways. On the left side, we take our stockholders' equity or net asset value from the last reporting period and roll it forward through the following. We subtract cash spent from operations, add the amount of cash we've received from issuing equity and subtract the amount of cash that we've deployed in our treasury strategy. We then remove the balances of our HYPE portfolio and current deferred tax liability estimate from the last reporting period and update them based on the current HYPE token price to get an adjusted net asset value number.

On the right side, we provide our current cash balance and our HYPE portfolio at fair value based on the current token price and subtract out our estimated deferred tax liability and adjust for other movements to get to the same adjusted net asset value. The adjusted net asset value is then compared to the current share price to get a trading multiple of adjusted NAV as illustrated on the slide here and will be included on the website. Some of these factors such as the HYPE price and our stock price will update real time, and other updates such as the execution of our treasury strategy will be updated on a weekly basis 1 week in arrears. We believe that this information is important for people to understand our business and our performance more often than once a quarter when we provide our required SEC reporting. We hope you will as well. We expect the website will be up and running for this dashboard today.

And now I'll turn it back over to David to wrap up the presentation.

Thanks, Brett. I'll make 2 last sets of comments. The first, just to beat the dead horse on this Page 22, we thought it was important to show this both ways, the left and the right. There are some people who wanted just a simple analysis on the right, how much cash do we have, how much tokens do we own, deferred tax liability that they can add back and what does that come out to. And there are some people who are going to be much more careful and want to flip back to our financial statements. And that's what we do on the left. And obviously, they both come to the same number, which is the key thing.

We are not going to take everybody through all the pages in the appendix. You can go through those on your own, but I do want to point out one page that we think is very important. Page 31, we believe to be an important page. This is where we equate the tokens outstanding on HYPE to what we consider to be how an analyst would look at a regular way public company. It's amazing how much time we spend talking to people about this, and it is a topic that is not normally something spent a lot of time when dealing with, as I say, regular way public companies. If you look at the column on the left, we start with 1 billion tokens. This is the initial supply, and this is the most that could ever be issued in the future.

To start with, we deduct things that have been reserved to generally help develop the platform and participation in trading and staking to drive the ecosystem. This includes future emissions, Hyper Foundation, and community grants. These may be issued in the future, and they'll only be issued in the future if they're associated with specific growth initiatives that believe to add to the value of the total ecosystem, but they have not been issued yet. The second bucket would be tokens that have been permanently burned, either through buybacks from the Assistance Fund or fees on HyperCore and HyperEVM. Those are gone forever.

What's left? The outstanding token supply, which we have up here, is what we would equate to a regular way public company when thinking about shares outstanding. Now of that, about half is to the core contributors. These are the founders of Hyperliquid. Some of these are unlocked, meaning they're vested and allowed to be sold and traded. Some are not yet unlocked. But for our purposes, we assume it is all available because over time, they will unlock. We think the likelihood of any of these unvested not vesting are pretty low.

And then the last is the circulating supply. That's the amount that you can buy and sell today. And when you add those 2 things together, that is what we consider to be the outstanding token supply, which equates to about a $15 billion market cap if we were comparing this to what I call a regular public company. This is a topic we'll be talking about quite a bit. It will come up a lot. I am curious and eager to hear comments from others about how they feel about token supply, and if they think we're thinking about this the wrong way.

With that, that concludes our formal presentation, and we would like to go to any questions and answers from listeners.

[Operator Instructions] Our first question comes from James McIlree with Chardan.

Can you hear me?

Yes, we hear you fine.

Great. In Slide 8, you have a line that says you're exploring validator opportunities. Can you discuss what's going into that, potential timing, cost and the thought process as to why you would or wouldn't do it?

Yes. I think that one of our goals, certainly long term, but probably more like medium term, is to be more and more engaged in the Hyperliquid ecosystem. I think being a validator would be one way we could do that. The other thing is that it is important going forward that we have an operating business beyond just holding the tokens for all the various reasons we all know. Being a validator checks that box. So we are working through that. I don't have a particular time line. I don't want to say it will be on a particular date, because this is something you don't want to roll out until you're absolutely perfect. There's not a lot of room for error in being a validator. But we think this will be something in, I would call it, the medium term. I think the cost of getting this up and running will not be significant. It will be something. Nothing in this world is free. But it won't move the needle in any meaningful way. We're not going to like spend a bunch of money to buy something and put a bunch of goodwill on the balance sheet. That's not even remotely possible.

That's great. That's helpful. And then secondly, the thought process on buying the stock or buying the token, I know what you're saying, but can you put a little bit more specificity around that, that is -- and I'm making up numbers now. So you need mNAV to be greater than 1.1x before you start issuing stock or you need mNAV less than, again, making up numbers, 0.9x, in order to buy the stock. Can you put maybe a little bit of boundaries on where you would be buying tokens versus buying stock relative to mNAV?

Yes. Look, as I've said before, we consider this an art, not a science. Like we're not going to sit here and say at 0.91x, we won't be buying back our stock, but at 0.89x, we will be. The other thing is that it depends on how long you're at these various levels. If you sit at 0.89x, just to use your example, for 5 minutes, we're not going to necessarily be pouncing into the market. If we're there for 5 days or 5 weeks, there's more likelihood we would. So again, I would say, on one hand, we're specifically not going to put those kind of specific numbers out there. On the other hand, I would have to say, the range you used, the above 1.1x and below 0.9x, is certainly where we get focused on both ends of that, if that makes sense to you. Again, it doesn't mean we're going to hit the button at 1.11x, but that's where we really start paying attention and focusing ourselves. At 0.01x or at 0.99x, we're not going to sit there and be super focused on either one of those.

Yes, I got it. That makes sense.

Hopefully, that's helpful. And I'm not trying to be evasive. I'm actually -- I'm just telling you the actual truth. This is how we go about it. This is not meant to be an algorithm. It's meant to be a thought process.

That makes eminent sense. I appreciate that. And then lastly, so is that an investment committee decision? Or is that a CEO decision? Or how does that decision get made to say, okay, the mNAV is at levels we find interesting, so we're going to be buying stock or buying the token?

Yes. I would say it's 2 things. It's a constant discussion and debate among the management team. It is frequent updates to the Board around our thinking around this. The Board is not involved in every purchase, that wouldn't be feasible, but I don't think any purchase we do would surprise any Board member when we do it. But ultimately, the decision is with me, the CEO.

Our next question comes from Gareth Gacetta with Cantor.

Can you hear me right?

Yes, Gareth.

I just wanted to kind of double dive on the staking for the quarter. Could you maybe provide an update on what percentage of your HYPE holdings are staked with validators? And I don't know if you've given kind of a framework on how to think about that going forward if you kind of expect to maintain a certain percent staked versus liquid?

Yes. Brett, you can correct me if I'm wrong here, but 100% is staked. At the moment, 100% is staked with Anchorage, our custody provider. And I think we plan on having 100% staked all the time unless there's -- obviously, circumstances might change sometimes, but the steady state we expect is to be 100%.

That is correct as to where we are at the moment. Of course, as David said earlier, we do evaluate other opportunities that may come in to use the HYPE tokens. But as David also explained, we are not planning on being a hedge fund. So in order to do something that generates a return that's acceptable with risk, it would have to meet our standards. And as a result, currently, the plan is to continue to stake until something that we're comfortable that is better comes along.

Got you. Just a quick follow-up too. I know it's kind of early, but the ecosystem just announced HIP-4 in kind of prediction markets. So I'm wondering if you could just kind of give like your overall thoughts high level and how you think you might end up playing in that space.

Yes. Look, we're excited about HIP-4. There was talk about it, some speculation over the last months. So I don't think -- we weren't surprised, but we're excited about it. And it just shows the advancements here and the idea that we're going to be -- it's both options and prediction markets. Prediction markets have certainly garnered a lot of attention in the world lately. But on the other hand, the amount of options that are traded in this world, the amount of revenue generated from options being traded in this world, so far dwarf what's going on in prediction markets. It's not even close. But both of them are really great to see. It's not out yet. I think that the Hyperliquid team is still in the building mode there, but I'm glad they announced it, and I'm glad that the world is getting prepared for it.

From our point of view, I'm not sure we have any particular plan to do anything particularly interesting day 1. We're evaluating, as we said before, evaluating things we potentially do that token around HIP-3, haven't done anything yet. I always tell people that when we think about these things, when we think about committing our capital to anything other than staking, whether sort of the Twitter world likes it or not, we move at sort of TradFi speeds. We're not moving at crypto speeds. And that's sort of the world we live in and how we think about it. But we're careful with our capital, but obviously want to generate the best yields we can.

Totally. And maybe if I could sneak one last one in. I just wanted to hear your thoughts on the CLARITY Act passage. I know it's kind of back and forth, and it seems like we're butting heads a little bit, but some outlooks seem to be like we're gaining progress. So I just wanted to kind of get your take in and what types of catalysts that might bring going forward?

Yes. Look, I don't think we have any particular knowledge that's not well known to everyone around timing or likelihood of passage. I had heard in the sort of late fall, early winter that there were some people who are quite well placed that were absolutely certain the President will be signing at the end of 2025. That didn't happen, obviously. I think prognosticators now are thinking it will be done in the spring, which would be great. Again, it's really hard to know whether it's going to happen or not. I'm sure Kalshi or Polymarket can tell us the odds of it happening, and that's probably as good as any guess we're going to have.

As far as what it means for Hyperliquid, I still think it's somewhat unclear. I don't think perps are going to be explicitly allowed in the CLARITY Act. It's possible, but I don't expect that. I don't necessarily expect DEX to be explicitly allowed in the U.S. in the CLARITY Act. On the other hand, we do think there may be paths in the act for regulatory action over time to pave the way for these things. I would say that's sort of our hope. But beyond that, I don't think we know anything you guys don't know. And we're hoping it gets done. I think as a voter and as a crypto market participant, I'm hoping, come November, this isn't like some major partisan issue in the November elections that this is behind us. So that would be bad. And I think both parties are hoping that, that's true that it is not a major partisan issue.

Congrats on the first earnings call.

Yes. Thanks for joining, and thanks for the good questions.

That concludes the question-and-answer portion of today's call. I'll now hand the call back to Hyperliquid Strategies' team for any written questions and closing remarks.

Look, we're happy everyone joined. Appreciative for the questions. Appreciative for everyone focusing on this, and we look forward to continued success. Just one last point. As we said before, we expect, by the end of the day today, our dashboard to be on the website. And I think that will be a nice look into how we see the NAV on a sort of day-to-day, minute-by-minute basis. Thanks, everyone, and look forward to doing this again.

Thank you.