Executive Summary / Key Takeaways

• DeFi Technologies Inc. ($DEFT) is strategically positioned as a leading financial technology company bridging traditional capital markets with decentralized finance (DeFi), offering diversified exposure through regulated exchange-traded products (ETPs) and specialized services.
• The company has demonstrated a significant financial turnaround, reporting Adjusted Revenue of US$32.1 million, Adjusted EBITDA of US$21.6 million, and Adjusted Net Income of US$17.4 million for Q2 2025, alongside a positive TTM net income of US$19.44 million, reflecting strong operational profitability.
• Valour, a key subsidiary, has achieved substantial growth, surpassing US$1 billion in Assets Under Management (AUM) by July 2025 and is on track to launch 100 ETPs by year-end 2025, driven by innovative products like the 1Valour Bitcoin Physical Staking ETP offering a 1.4% annual yield.
• Recent strategic initiatives, including a US$100 million direct offering, investments in stablecoin development across Canada and Africa, and the unveiling of a sovereign finance framework, underscore the company's aggressive expansion and commitment to institutional-grade DeFi solutions.
• While facing competition from larger players like Coinbase and Galaxy Digital, DeFi Technologies differentiates itself through its specialized ETPs, proprietary arbitrage trading desk, and deep research capabilities, establishing a unique competitive moat in the evolving digital asset landscape.

Bridging Worlds: DeFi Technologies' Vision and Market Position

DeFi Technologies Inc. ($DEFT) stands at the forefront of financial innovation, serving as a critical conduit between conventional capital markets and the rapidly expanding realm of decentralized finance. As the first Nasdaq-listed digital asset manager of its kind, the company offers equity investors a diversified entry point into the decentralized economy through an integrated and scalable business model. This encompasses several key business lines: Valour, which provides access to a broad spectrum of digital assets via regulated ETPs; Stillman Digital, a digital asset prime brokerage; Reflexivity Research, offering in-depth digital asset research; Neuronomics, focused on AI-powered quantitative trading strategies; and DeFi Alpha, the company’s internal arbitrage and trading arm.

The broader digital asset industry is experiencing a significant shift, characterized by increasing institutional adoption and a growing demand for regulated, transparent investment vehicles. This trend, coupled with the inherent volatility of cryptocurrency markets, creates both immense opportunities and complex challenges. In this dynamic environment, DeFi Technologies has carved out a niche by focusing on specialized products and services that cater to sophisticated investors seeking structured exposure to digital assets.

The competitive landscape for DeFi Technologies is multifaceted. Direct competitors include established cryptocurrency exchanges and financial services providers like Coinbase Global Inc. , diversified digital asset firms such as Galaxy Digital Holdings Ltd. , and companies with significant Bitcoin treasury holdings like MicroStrategy Inc. . While Coinbase boasts a larger scale, extensive user base, and broader ecosystem, and Galaxy Digital offers a comprehensive suite of investment banking and advisory services, DeFi Technologies differentiates itself through its specialized focus on ETPs and arbitrage opportunities. MicroStrategy, primarily a business intelligence firm, has pivoted to large-scale Bitcoin accumulation, a different strategic approach compared to DEFT's diversified DeFi exposure.

Technological Edge: Innovation in Digital Asset Exposure

At the core of DeFi Technologies' competitive strategy is its commitment to technological differentiation and product innovation, particularly through its subsidiary, Valour. The company's ETPs are designed to offer investors indirect, regulated exposure to underlying digital assets, digital asset indexes, or other decentralized finance instruments without the complexities of direct asset management or custody.

A prime example of this innovation is the launch of the world's first physically-backed Bitcoin Staking ETP, "1Valour Bitcoin Physical Staking," on the London Stock Exchange. This product offers professional investors an attractive annual staking yield, currently set at 1.4%, positioning it as one of the most competitive rates among regulated, exchange-traded Bitcoin products globally. This tangible benefit allows investors to participate in Bitcoin's network economics and generate yield directly through a regulated financial instrument, bypassing the technical hurdles of managing wallets or staking protocols themselves. Similarly, Valour has introduced staking ETPs for Hedera (HBAR) and Internet Computer (ICP) on the SIX Swiss Exchange, where native staking rewards are integrated directly into the products' Net Asset Value (NAV), providing secure and transparent yield generation.

Beyond ETPs, DeFi Technologies, in collaboration with SovFi, has unveiled a full-stack Sovereign Finance Framework. This framework aims to modernize the over US$100 trillion sovereign debt market by introducing a new class of principal-protected, capital-appreciating sovereign instruments. The mechanics involve coupons converting to Bitcoin via a patent-pending process within a regulated ETP issued exclusively through Valour, while the principal remains intact, and investors receive principal plus accrued Bitcoin at maturity. This initiative demonstrates a forward-thinking approach to integrating blockchain technology into traditional finance, offering a novel solution for sovereign debt management and investment.

These technological advancements and product innovations are crucial to DeFi Technologies' competitive moat. They enable the company to offer unique, yield-generating investment opportunities that are difficult for traditional financial institutions to replicate quickly and provide a differentiated offering against broader crypto platforms. This focus on regulated, yield-bearing products enhances the company's market positioning, potentially leading to higher asset gathering and improved margins by attracting institutional and retail investors seeking sophisticated yet compliant digital asset exposure.

A History of Evolution and Strategic Expansion

DeFi Technologies Inc., originally incorporated in 1986, underwent a significant transformation, operating as Valour Inc. before its rebranding in July 2023. This name change signaled a strategic pivot towards its current mission of bridging traditional capital markets with decentralized finance. The company's journey has been marked by periods of both rapid growth and operational challenges. In 2021, total revenue stood at $8.11 million, surging to $136.63 million in 2022, before moderating to $14.76 million in 2023. Throughout these years, the company consistently reported net losses, with net income from continuing operations at -$56.07 million in 2021, -$48.55 million in 2022, and -$15.13 million in 2023.

The latter half of 2024 and early 2025 marked a period of accelerated expansion and diversification. By July 2025, Valour, a subsidiary, achieved a significant milestone, surpassing US$1.01 billion in Assets Under Management (AUM), representing a 31% increase since May 30, driven by robust investor demand and rising digital asset prices. Valour also expanded its European footprint, entering the Swiss market in July 2025 with the listing of HBAR and ICP Staking ETPs on the SIX Swiss Exchange, and has set an ambitious target to reach 100 ETPs by year-end 2025.

Further solidifying its strategic direction, DeFi Technologies launched its DeFi Advisory business line in July 2025, securing its inaugural mandate with Nuvve Holding Corp. (NVVE) to manage its HYPE token treasury strategy. The company also reported all-time highs in Bitcoin AUM, reaching US$302 million, and SUI AUM, hitting US$63.5 million, during July 2025. These operational achievements underscore the company's ability to capitalize on market momentum and expand its product offerings.

Financial Performance and Robust Capitalization

DeFi Technologies has demonstrated a notable financial turnaround, particularly in its recent performance. For the three months ended June 30, 2025, the company reported Adjusted Revenue of US$32.1 million, Adjusted EBITDA of US$21.6 million, and Adjusted Net Income of US$17.4 million, reflecting strong profitability from core operations. This marks a significant positive shift from the annual net losses observed in previous years. The company's TTM (trailing twelve months) net income as of September 30, 2025, stands at a positive US$19.44 million, further highlighting this improved financial health.

The company's TTM revenue is US$75.79 million, with a gross profit of US$75.79 million, indicating a strong gross margin. The operating margin for the calendar year 2025 (as of September 30, 2025) is 13.88%, and the profit margin is 25.65%, suggesting efficient operations and a healthy bottom line.

Liquidity and capital resources have also seen substantial improvement. In September 2025, DeFi Technologies successfully closed an oversubscribed US$100 million registered direct offering, indicating strong investor confidence. This capital infusion significantly bolsters the company's financial position, with total cash (TTM) reported at US$160.84 million, a substantial increase from US$15.97 million at the end of 2024. The company's total debt (TTM) is US$7.41 million, with a manageable Debt to Equity ratio of 10.76%. This strong liquidity and reduced debt burden provide a solid foundation for continued strategic investments and operational expansion.

Competitive Dynamics and Strategic Differentiation

DeFi Technologies operates in a highly competitive and rapidly evolving digital asset market. Compared to industry giants like Coinbase (COIN), which offers a broad suite of retail and institutional trading and custody services, DeFi Technologies maintains a more specialized focus. While Coinbase benefits from a larger operational scale and extensive user base, DEFT's strength lies in its targeted approach to providing regulated, yield-generating ETPs and its proprietary arbitrage trading desk. This desk offers enhanced efficiency in identifying market opportunities, potentially leading to superior margins and recurring revenue from trading activities.

Against Galaxy Digital (GLXY), a diversified financial services firm in digital assets, DEFT's strategy emphasizes niche, indirect exposure to DeFi protocols, which can lead to greater efficiency in identifying specific opportunities. Galaxy's broader focus and established partnerships, however, may provide stronger operational execution in certain segments. MicroStrategy (MSTR), primarily a Bitcoin accumulator, presents a different competitive angle, where DEFT's diversified DeFi exposure offers a more flexible portfolio management approach compared to MicroStrategy's direct holding model.

DeFi Technologies' competitive advantages, or moats, are primarily rooted in its specialized offerings and intellectual capital. Its proprietary arbitrage trading desk provides a tangible benefit in exploiting market inefficiencies, contributing to cash flow generation. Furthermore, its specialized research capabilities, exemplified by Reflexivity Research, offer deeper insights into DeFi trends, fostering customer loyalty and driving faster innovation cycles. The company's regulatory licenses for DeFi products also act as a significant barrier to entry for new players, raising costs and complexities for potential competitors.

However, DeFi Technologies faces vulnerabilities, particularly its smaller scale compared to industry leaders. This can lead to higher customer acquisition costs and potentially lower margins in certain areas, impacting overall financial performance. The company's dependency on volatile digital asset markets also presents a risk, as market downturns could affect revenue and cash flow, potentially leading to longer recovery times compared to more diversified financial institutions. The broader industry trend of increasing energy demands from AI-driven data centers could also indirectly pressure DeFi operations through higher energy costs.

Outlook, Guidance, and Risk Considerations

DeFi Technologies' outlook is characterized by continued strategic expansion and product innovation. Valour, its asset management arm, is on track to expand its ETP offerings significantly, aiming to reach 100 ETPs by year-end 2025. This aggressive product roadmap, coupled with ongoing geographic expansion into high-growth markets across Asia, Africa, and the Middle East, is expected to drive further AUM growth and revenue diversification. The company's strategic investments in stablecoin development, such as with Canada Stablecorp for QCAD and Continental Stablecoin Inc. for cNGN in Africa, position it to capitalize on the increasing global adoption of regulated stablecoins. Nigeria, for instance, leads worldwide in stablecoin usage, driven by demand for USD-pegged assets and cross-border payments.

Despite the positive momentum, investors should be mindful of several key risks. The regulatory environment surrounding decentralized finance and cryptocurrencies remains fluid and can significantly impact the acceptance and growth of Valour's ETPs. Changes in rules and regulations could introduce unforeseen operational complexities or limit market opportunities. Furthermore, the inherent volatility of the cryptocurrency market poses a continuous risk, as digital asset prices directly influence AUM, revenue, and treasury holdings.

DeFi Technologies has also identified share ownership and depository imbalances, prompting an escalated trading review in collaboration with Shareholder Intelligence Services, LLC and Urvin Consulting LLC to enhance market transparency and protect shareholder interests. While the company's shares are currently trading at low forward P/E and P/S multiples, potentially suggesting undervaluation, this assessment is contingent on the sustained rise of cryptocurrency markets and the company's ability to maintain its growth trajectory.

Conclusion

DeFi Technologies Inc. is carving out a distinctive and increasingly influential role at the intersection of traditional finance and decentralized innovation. Its strategic focus on regulated, yield-generating ETPs, coupled with a proprietary arbitrage trading desk and deep research capabilities, provides a compelling investment thesis for those seeking exposure to the burgeoning digital asset economy. The company's recent financial performance, marked by a significant turnaround to profitability in Q2 2025 and a positive TTM net income, underscores the effectiveness of its integrated business model and strategic initiatives.

With Valour's AUM surpassing US$1 billion and an ambitious target of 100 ETPs by year-end 2025, DeFi Technologies is demonstrating robust operational execution and a clear roadmap for growth. Strategic partnerships in stablecoin development and the pioneering Sovereign Finance Framework further solidify its position as an innovator. While the inherent volatility of digital asset markets and evolving regulatory landscapes present ongoing challenges, DeFi Technologies' commitment to technological leadership and its ability to attract substantial capital, as evidenced by its recent US$100 million offering, position it favorably for sustained expansion. For discerning investors, DEFT represents a unique opportunity to participate in the institutionalization of decentralized finance, driven by a specialized approach and a clear vision for the future of digital asset investment.