Hi Fintech Architects,
In this episode, Lex speaks with David Namdar - CEO of the BNB Network Company, kicking off with his journey from early Bitcoin adoption in 2012 to co-founding Galaxy Digital and now leading the BNB Network Company. Namdar explains the evolution of public markets’ engagement with crypto, highlighting how regulatory hurdles and speculative cycles shaped market participation. He outlines the rise of Digital Asset Treasury (DAT) companies, crediting Michael Saylor’s MicroStrategy for pioneering the model by converting $400 million in cash to Bitcoin - now holding over $75 billion in BTC.
We examine how Binance, with 290 million users and 40% of global crypto volume, supports BNB as a deflationary asset, burning up to $2 billion per quarter. Finally, Namdar shares why BNB, not Bitcoin, is the focus of his new DAT initiative, offering U.S. investors exposure to an underrepresented but powerful asset.
Thanks for your time and attention,
Matt Low 🙌
Key discussion points:
Digital Asset Treasuries Are Emerging as Crypto ETFs in Disguise:
Public companies like MicroStrategy and MetaPlanet are turning their balance sheets into crypto holdings, offering indirect exposure to Bitcoin, Ethereum, and BNB. This model is attracting billions and creating a new on-ramp for investors -especially where ETFs or direct access are limited.
BNB Is Massively Used Yet Underrepresented in U.S. Markets:
With 290 million users and up to $2B in quarterly token burns, BNB is one of the most used tokens globally. Yet it’s largely inaccessible to U.S. investors, creating a major disconnect and a potential opportunity for BNB-focused public vehicles.
Crypto Booms Often Rely on Misunderstood, Unsustainable Incentives:
Namdar highlights how past cycles inflated demand through staking rewards and nominal yields, not real value. A lack of economic literacy continues to fuel hype over fundamentals, risking long-term sustainability.
Background
David Namdar’s journey to becoming CEO of BNB Network traces a pioneering path through crypto’s evolution. After starting in traditional finance at UBS Hong Kong and Millennium Management, he discovered Bitcoin in 2011 and became an early evangelist, attending New York’s first Bitcoin meetups in 2012-2013. He co-founded SolidX Partners in 2014, filing the world’s second Bitcoin ETF application just weeks after the Winklevoss twins, then partnered with Michael Novogratz in 2017 to co-found Galaxy Digital, taking it public in Canada.
Following Galaxy, he founded Coral DeFi, co-founded NFT.com, and became a prolific angel investor while advising multiple digital asset treasury companies. This unique combination of Wall Street trading experience, early crypto entrepreneurship, and institutional digital asset expertise - spanning over a decade from Bitcoin’s infancy to crypto’s institutional adoption - made him the ideal candidate to lead BNB Network’s ambitious $500 million treasury strategy in 2024.
👑Related coverage👑
Topics:
BNB Network Company, Binance, BNB, Galaxy Digital, SolidX Partners, MicroStrategy, Bitcoin, Bitcoin treasury, Ethereum, Digital Asset Treasury, DAT, treasury, crypto, convertible debt, tokenomics, crypto treasury, capital markets
Timestamps
1’09: Building the Crypto Investment Bank: Taking Digital Assets to Public Markets
4’43: Why Going Public Matters: Crypto Firms, Capital Access, and Market Credibility
7’28: From Fintech to DeFi: How U.S. Markets Mispriced the Crypto Transition
11’07: Real Yield vs. Hype: Why Crypto Markets Keep Getting It Wrong
14’36: The Rise of Digital Asset Treasuries: How Crypto Became a Corporate Balance Sheet Strategy
18’28: Financial Engineering in Crypto Treasuries: How Convertible Debt Fueled Massive Bitcoin Accumulation
22’23: Boom, Hype, Exhaustion: The Capital Cycle Behind Crypto Treasuries
28’52: From Foundations to Public Markets: Why BNB Is the Next Big Treasury Bet
33’25: BNB by the Numbers: Inside the Tokenomics of the World’s Largest Crypto Exchange
39’18: Premiums, Discounts, and Buybacks: Managing Value in Crypto Treasury Stocks
44’41: The channels used to connect with David & learn more about BNB Network Co,
Illustrated Transcript
Lex Sokolin:
Hi everybody, and welcome to today’s conversation. I’m absolutely thrilled to have with us David Namdar, who is the CEO of the BNB Network Company, also one of the original co-founders of Galaxy Digital and a very, very early crypto entrepreneur and investor. David, welcome to the conversation.
David Namdar:
Thanks, Lex. Happy to be here.
Lex Sokolin:
So give us a whirlwind tour of how you got into crypto, and then what led you to be a co-founder and Galaxy. What was that like in the early days?
David Namdar:
Actually, that wasn’t my earliest chapter in the space. You know, I guess the real starting point was I started my career out in Hong Kong at UBS.
I was covering all the Asian markets and then really trading on a global basis. I came back to New York, was working at Millennium, one of the biggest hedge funds, and again trading in almost every stock market in the world. And I realized that people in Asia kind of had an advantage to people in the West. And when it came to thinking about currency, because the average person in Hong Kong, in Tokyo and Shanghai thought about multiple currencies on a daily basis, much more so than people in the West, or even had the dollar in the euro. And everything just works. And so when I was at Millennium, I first was exposed to Bitcoin, and I started going into some of the earliest bitcoin meetups in New York in 2012, 2013 and tried to convince other people in the hedge fund world and banking world to open their eyes to it. And when I saw the resistance there, I left. End of 2013 or early 2014 to start my first company in the space.
That was, SolidX Partners. And the idea was to form a niche investment bank focused on digital assets. We tried to do a Bitcoin ETF. Second in the world after the Winklevoss twins. And we tried to create the derivative side using total return swaps and put out one of the very first research reports ever on bitcoin and digital assets as an institutional asset class. So that was all 2014, 2015 a bit too early, but and especially following what happened with the collapse of Mount Gox in 2013, when a lot of people were still kind of worried about and, you know, the the risks too much and all the things, and people thought that governments were going to shut it down and Bitcoin would never become what it is today. And then a couple of years later, I got connected to Mike Novogratz. He was out of Fortress at the time and just focused on managing his family office. He’d made a couple of investments in the space in Ethereum and Ripple, and through Dan Morehead at Pantera that he knew from Fortress.
And I went in to manage all of his digital assets and, you know, do what I do best at this point of just create chaos and expand the opportunity and suck everyone into crypto more and more. So I fought with everyone in the family office and pulled him and them deeper and deeper into crypto, and planted the seeds to launch a hedge fund and a business together that became known as Galaxy Digital. Then I brought the opportunity for us to go public, and we couldn’t do it in the US markets at the time because of the regulatory environment, so we saw the opportunity to do it in Canada. There had been a couple of crypto mining companies that had gone public in Canada, and it was just a bit more open to it. Some people in the Canadian market even thought of, you know, they just made a comparison of real mining gold, silver or other commodities and crypto mining. And so, you know, they were a little bit earlier to embrace it. And we were the first ones to really bring a kind of real, diversified crypto investment bank and crypto business to the public markets, and it was the kind of larger version of my first company, SolidX.
Lex Sokolin:
That’s an incredible amount of activity compressed into a very short amount of time. So thank you for that. I’m really curious actually on the public markets, because it’s going to reflect a little bit the conversation about digital asset treasuries. What was the motivation to go public? I mean there’s often just like let’s get liquidity for owners. But you know, for a business like Galaxy, how were you thinking about at that time the need to go public on the Canadian exchange? And then how are you thinking about sort of the market structure of that exchange, like it wasn’t, you know, it wasn’t the Nasdaq yet. So was there enough liquidity? Did that matter? Like what were the considerations?
David Namdar:
Sure. Yeah, actually that’s a great question. And so I’ll take it back to SolidX for a second. So one of the issues with SolidX was after the financial crisis, the things we were trying to do create a Bitcoin ETF. Right. In order to have a product that retail investors could trade, the institutional investors could, you know, manage and manage creations and redemptions in their ETF desks.
The problem was it was too early and people didn’t see the opportunity and were too worried about the risks of Bitcoin as the underlying asset for the total return swaps that we were trying to do. The issue there was ISDa, which is a standard form of international kind of derivatives contract, and the banks didn’t want to face a small new company or start up on these kind of ISDa agreements. And so had SolidX actually been a public company earlier. Right. Because if the environment or opportunity allowed for it, those both of those would have been things that, you know, SolidX may have succeeded at bringing to market. So with Galaxy Digital, you know, when we thought about what that business looked like across trading, investment banking advisory and thought about all the different parts of the business that, you know, we could build out. We saw the need to have the credibility of being in the public markets, and also to be able to tap into that public markets capital to grow out the business, you know.
Now, almost ten years later, we’re seeing a lot more companies be able to access very large amounts of capital in the private markets. But at the time, even back then, both the the validation in order to attract customers and do business with other large organizations and the ability to attract capital through public markets, who are really the driving factors.
Lex Sokolin:
Take us through a little bit the next couple of years as it was focused on the public markets in the US, and I think the lens that I want to explore is the sort of wobbly transition from fintech to digital assets to crypto to DeFi that’s going on in terms of what people are comfortable with owning, doing and from a generational perspective. And also kind of the temperature of the US public markets for these assets. You know, and it’s a loaded question in my mind. I’m thinking about the SPAC boom of like 21, 22, the fintech companies and IPOs coming to market and kind of that early phase of crypto exchanges and brokers trying to come to market as well. Can you trace the evolution of how US capital markets have looked at our asset class and these kind of adjacent plays?
David Namdar:
Yeah, absolutely. And actually I think this is kind of what I love thinking back through. And you know, I remember when we first met around that time and kind of something between 2016 and 18 and, seeing the evolution of the market since then. So one of the key things that unfortunately had hindered a lot of this was kind of the onerous regulatory environment. And so I still and a lot of others in the space look at the regulation of the Bit License in New York by the NYDFS and Ben Lawsky and that really like. Slowed down and pushed away a lot of innovation and crypto companies and capital from coming to New York and from, you know, coming to the US. And I think that had weighed on the markets through 17, 18, 19. And, you know, you could say even potentially all the way till today. So now in 17 and 18 during this kind of ICO boom, and there’s a couple of companies like Galaxy and some of the miners got public.
You know, I looked at it then like Bitcoin and ether became the funding currencies for the digital asset world that people had to buy bitcoin or buy Ethereum in order to participate in all of these ICOs and all the other things that were kind of burgeoning across the crypto ecosystem. And what happened was companies were holding on to if you raised a bunch of Bitcoin in an ICO. Then they were holding on to that Bitcoin and they saw that Bitcoin went up in price. So and similar for Ethereum. So the ICOs and the companies that were receiving the investment ended up becoming kind of speculators on the underlying asset. And as more and more people had to buy Bitcoin and ether to get into these projects, and they saw that these projects made money on paper or on their balance sheets, you know, it created this kind of reflexive or leveraging process as the markets had levered up. A lot of that was taking place outside of the public markets, and there was very little of that happening in public markets. Then in kind of 2021, during like the DeFi boom or, you know, decentralized finance boom, what was happening then was instead of just being able to access the crypto world through Bitcoin and Ethereum, there were a number of different rails that were set up where people could actually invest through stablecoins.
You know, tether had really, you know, started to like, grow in size quite a bit. Circle had started to become popular as well. And then a number of the other large crypto assets so people could come into the crypto world through those mechanisms. And what was happening was the same thing. Another leveraging process was created because new projects were incentivizing people to lock up their tokens or lock up, whether it was Bitcoin, Ethereum, or stablecoin to lock up their tokens or their value into these new protocols through yields that were being given. And one of the lines they’d come up with then was really a lot of it was inflation disguised as yield. If you and I start a project and we own 50% of the supply, and then we sell the next 10% of supply to people, but we hold back 40%, right, that people can earn into. Well, as they’re earning into that extra 40% remaining, me and you or the other, whoever were the earliest people that started that project, are then selling into the new buyers, as they’re kind of waiting to collect those yields.
Lex Sokolin:
Let me pause you on this. Just because it was always amazing to me. Like economics 101 that you maybe learn in high school is the difference between nominal interest rates and real interest rates. And I feel like so much of crypto would just not exist if people understood the difference between nominal yield and real yield.
David Namdar:
No, I think that’s where, you know, one of the other things I now I love about the crypto market is whatever people were doing before, once they get into crypto, you know, the hope is that they have to or they are able to kind of grow and evolve. So if somebody came from a hedge fund background, right, or markets background, well, all of a sudden they need to learn about and understand early stage technology investing and understand regulatory environments across the world and understand technology in a way they never had before. If someone’s a lawyer, they need to understand markets, late stage, investing, early stage. What’s the security and technology more than they ever had before.
And, you know, keep going down that path. And so again, I think that’s a positive. But at the same time, you know, to your point, there’s also been in every cycle, there’s a lot of misunderstanding of economics. And you know, what’s real technological innovation and what’s hype and what’s, you know, just marketing.
Lex Sokolin:
That gets us to the public markets. Being receptive to some of the crypto companies and fintech companies after Covid. And you’ve got, you know, this lockdown of two years where everybody’s online, hyper speculation turned on, everything went digital, all commerce went, you know, to Amazon instead of to terrestrial stores. And so people were ready for these. You know, you had like the GameStop Reddit army show up. So you had this kind of capital again waiting to deploy. But then it all disappeared. What happened then?
David Namdar:
That’s where particularly there was an overlap in some of this hype and excitement between GameStop, Reddit and then, you know, I think back to Coinbase IPO and was pretty similar to like kind of the hype and momentum of Robinhood.
![What's going on with GameStop in 4 charts [OC] : r/dataisbeautiful](https://substackcdn.com/image/fetch/$s_!r9gr!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F4073f286-91b2-40fc-b3a9-2375b6346e09_1198x1199.jpeg "What's going on with GameStop in 4 charts [OC] : r/dataisbeautiful")
And it all kind of converged. And I think what happened were one of the beautiful things about that chapter was that was, you know, outside of crypto, that was really one of the first real attempts of retail kind of taking ownership or kind of getting more empowered over investing in capital markets. And, you know, a similar process was playing out in the crypto markets as well. You know, as part of this longer term and bigger vision of really taking out middlemen and having more control over your finance and sovereignty, over your money, all these big, you know, vision themes and, you know, idealistic future states of what money and finance can look like. But then, you know, they kind of got hit still with a wall of trade fee regulations and kind of market structure that, you know, I think some people would say that, like the game was still rigged. Right. So if I remember correctly, there were a number of times where, you know, Robin Hood, because of some of the funds and institutions behind it, turned off buying of some of the theme and fad stocks and meme stocks.
And so, you know, I think if anything, even though that caused kind of a temporary collapse in the markets, then it also led to more and more belief and kind of confidence in the crypto markets where, you know, those conditions don’t exist, where you don’t have these large institutions that can kind of rig the game against you.
Lex Sokolin:
Take us towards digital asset treasuries. Let’s define what they are, kind of how they came about. And then we’ll go into what the market looks like for them.
David Namdar:
For that we also have to just go back a little. And so I think I always like to give credit to the people who have kind of started this off. And I usually start with Michael Saylor, but I’ll go a little bit earlier. There were actually 1 or 2 companies and I’ve, have you reconnected with some of them today? Like Charles Allen is a friend of mine. If you ever came across him who was running BTCS. Which now is kind of pivoted and looked at as an Ethereum treasury.
So that’s really you know, he was public as early as 2014 or 15. It was one of the first companies to hold assets on the balance sheet of a public company. You know, these other mining companies, they were tending to you know, they would mine Bitcoin or Ethereum, but then they would sell the assets to pay their fees and kind of treat the rest as revenue. So then, you know, we go back five years ago to Michael Saylor. Michael Saylor had been running a company for most of his career, right. Tech 1.0. And the business was a software business that had kind of failed or struggled to grow, but it had about 400 million of cash on the balance sheet. So he ended up being convinced about the merits of Bitcoin and the upside. You know, in the crypto world, in a very funny story, because the story that I’ve heard is that he bought or so sorry, he sold the domain voice.com to Brendan Blumer, who had done the block one EOS ICO, and after he saw that he sold it for $30 million, he realized, whoa, there must be something here.
If these crypto guys have this much money. And so that opened his eyes to the opportunity or reopened it. And from then on he was kind of all in on Bitcoin and it was done in, you know, kind of unbelievable way. So he took the 400 million of cash out on his balance sheet, made the decision to put it all into Bitcoin and realizing that, you know, Bitcoin is a much stronger, more sound money than fiat currency. And he fought with the board. He fought with, you know, whatever other rules he had to get through. Ultimately, after he started to purchase the bitcoin, his stock traded at a premium and people were excited about it. So the market rewarded him for that. And then what he’s done over time is he sold more equity when the stock traded at a premium to the bitcoin holdings, and he bought more bitcoin and he sold equity and he bought more bitcoin. And he kind of went through this process of kind of the financialization of Bitcoin, of then issuing convertible debt and issuing other financial products solely with the intention of accumulating more Bitcoin.
So now, over the last five years, he’s been able to accumulate over $75 billion worth of Bitcoin and his stock and companies trading and valued over $100 billion today. So because of the success in what he’s accomplished and accumulating over 3% of the Bitcoin supply, that’s led to a number of copycats and kind of the proliferation of that strategy. He’s partly responsible because he’s been actually out there running an event, Bitcoin for corporates and teaching people treasurers, CFOs, you know, small business owners. He’s been teaching people at large public companies and at private companies about the merits of holding bitcoin over fiat currency. And, you know, now in the last couple like year or two, we’ve seen this proliferate in the US, but also in a number of markets around the world. So now I think there’s over 100 digital asset treasury companies focused on accumulating Bitcoin. There’s a dozen or so you know that we’re now seeing, look at and realize, wait, there’s actually the merits to holding some of these other important crypto assets.
So there’s you know a handful that are focused on accumulating Ethereum, a handful that are focused on Solana and starting to see some focus on BNB as well as a couple of others.
Lex Sokolin:
When you look at what Saylor has done, and especially kind of the early premium of the market capitalization to the net asset value of what was on his balance sheet, what were the financial instruments that he was using that allowed for such rapid growth to occur?
David Namdar:
Sure. So, I mean, early on, I don’t know the exact time when he started to use convertible debt, but I know that in this like 21, 22 period, his business had faced some fragility. I think he even was borrowing some money on chain using some DeFi products, if I remember correctly, because I remember people were focused on like a liquidation price that he could have achieved had Bitcoin fallen to 3000 or 5000 then. So he was utilizing kind of ATMs, which were at the money to sell his equity when it was trading at a premium. And the premiums kind of persisted for a lot longer than people have, you know, believed.
And usually I think it’s averaged between 70 to 100% premium to the Bitcoin that he’s been holding on the balance sheet along the way. And then he also was the first one I said he kind of the financialization of Bitcoin. He had utilized a number of convertible debt offerings. And as his balance sheet grew, he was able to get surprisingly very strong terms on that debt. I think he issued some preferred shares as well. Preferred equity. And so what he’s been doing and part of kind of what he sold is, well, Bitcoin is growing at 20 to 30% annually or even faster. It’s one of the fastest horses you know, in the entire world. I think he’s described it as. And he looks at it as well. Any chance he can to borrow money today in fiat terms and pay it back at 0%, 5% convertible debt, right. It’s worthwhile for him to do that and to own as much Bitcoin as he possibly can. And so that strategy has worked out very well for him.
I think what’s interesting now when we look at the landscape of digital asset treasury companies, a couple of them have also explored using convertible debt. A lot are moving away from that and trying to move away from kind of anything that puts the balance sheet at risk. And one of the reasons why I say that is because a lot of the convertible debt holders and investors today, they’re at much more aggressive terms than what Michael Saylor has been able to get for strategy. And the convert investors, they don’t really care what the underlying asset is, whether it’s Bitcoin or Ethereum or anything else. They just care that they have a claim on it, and they’re actually incentivized to short sell the stocks. And, you know, just to hedge out their exposure. And so I think moving forward, we’ll probably see these Treasury companies use less convertible debt and come up with other mechanisms that are much more aligned with, you know, keeping all investors on the same page going forward.
Lex Sokolin:
Why do you think the premium in May have persisted for so long for MicroStrategy?
David Namdar:
That’s a good question. I mean, I think he has been out there telling the story well, and it’s an aspect of belief in his ability to accumulate more and grow the Bitcoin per share for his underlying investors. And so I think that’s a key thing when I look at, you know, I’ve been approaching the Treasury, the space myself as an investor and invest in MicroStrategy on and off over the years and invested in Meta Planet and you know, now been investing in a number of the more recent ones this year in this cycle. And when I think about, you know, my own approach to investing, I try to think about, all right, who are the management teams that I’m betting on, they’re going to be able to grow the Bitcoin per share, the Ethereum per share, the BNB per share. Right. And people that I think are going to be in this industry three years, five years, ten years from now that aren’t just coming in to capitalize on kind of the exuberance in the market, you know, in any short period.
Lex Sokolin:
Can you talk about the dynamics in that pricing over the last call it 6 to 12 months. And I know that we’re going to we’re soon going to get to Binance and be and be in the debt that you’re leading. But I’d love to just get that kind of last bit of context of what’s happened, you know, between, let’s say, May and October of this year.
David Namdar:
I think what really kicked off a lot of this debt proliferation this year, where I look at really two things Meta Planet in Japan and Nakamoto here, who are the founders in Puerto Rico, David Bailey and so with Meta Planet, it was the most successful, where it is kind of, in one sense, the most successful Bitcoin treasury company around the world after MicroStrategy. And what they were able to tap into is to realize that, well, the Japanese market is a very interesting market where there’s beneficial tax rulings around owning and having Bitcoin exposure through a public company versus through individual kind of holdings of it. And so they managed to and they were trading at a similar premium to MicroStrategy for a period of time, somewhere between 50 and 100%.
I think they had about a couple hundred to 700 bitcoin, 700 million worth of bitcoin on their balance sheet. And then all of a sudden, when people realize this opportunity, that it’s a faster way to get capital from the Japanese market into crypto through the public markets, the premium expanded and all of a sudden Meta Planet was able to vastly increase their Bitcoin holdings and start to I think the premium got up to 4 or 500%, and they issued equity up there and were able to really start to grow their their Bitcoin per share. And they’ve accumulated, you know, over a couple billion dollars worth of bitcoin at this point. And then here in the US, Nakamoto was started by David Bailey, who was one of the earliest people I’ve known in this space and really been a a Bitcoin owner, kind of from the very beginning, even longer than Michael Saylor, longer than, you know, almost anybody who’s active in the space today. He was a founder of Bitcoin Magazine and BTC Inc. and when he shared and he actually was one of the lead investors in Meta Planet.
So he’d been following the MicroStrategy playbook and seeding some of these Bitcoin treasury companies around the world. And then in forming his own Nakamoto, it really opened people’s eyes to the opportunity. And what he did was he was very successful in raising awareness and raising capital. I think initially he was going to go out and raise 200 million of capital and ended up raising over 700 million. And so that really kicked off this wave of other Bitcoin treasury companies where, you know, we’ve seen Anthony Pompliano and Vivek Ramaswamy Strive Asset Management. You know, and we’ve seen a lot of these others take different approaches, some through kind of mergers with existing businesses, some through SPAC mechanisms. Or we saw Jack Mallers from, you know, with Cantor and Tether do 121. And so really seeing a number of different approaches to the market. Then, you know, I think everybody was focused on the idea that you’re investing in a pipe or you’re investing into this company, you know, at a Nav of close to one. And if the premiums persist, you know, you have a chance in a short period of time to get, you know, some small or meaningful return on your capital as the public markets assign a premium to these treasury companies and then get the flywheel going.
So that was the initial idea and kind of what people got excited about going into it. Then we saw two main Ethereum ones come to market for the two largest ones today Sharp Link and Bitmain, and Bitcoin had been in the existing company operating in the space. Sharp Link had been a gambling company, but that was taken over by Joe Lubin, one of the founders of Consensys and founders of Ethereum. And so as they kicked off, they really were able to kind of sell people on this vision of, well, Ethereum is an incredible asset. There’s a lot of hype and momentum in the stablecoin theme on Wall Street following the success of circle’s IPO, and they managed to capitalize in a short period of time and by selling equity at a premium, also selling into and the hype, as I said about circle, they accumulated, I think, over 15, 20 billion worth of Ethereum in a very short period of time in a creative way, where they were able to grow the value for those initial Pipe investors and the initial shareholders.
Now, in the last couple of months, I look at it where it’s been a little bit like the ICO boom, where, you know, 2017, 2018, where I kind of developed this thesis that, you know, if you look at X amount of capital, let’s say out of the next 50 to 100 billion of capital, something like 25 to 50% of that is going to go to the largest 5 or 10 companies, right? MicroStrategy, meta planet, you know, it could be 21 Pro or Pro cap Nakamoto, any of these. And then, you know, link BMR and some of the others. And the next 25% of capital is going to go to the next, let’s say, 20 or 30 of those companies. And then the last 25% of the capital might go to this long tail of 100 to 300 companies. And that’s kind of exactly the distribution of how it played out with ICOs. There were from the longer tail, there were a couple of companies and projects that surprised, and they were like, wait, how did this one raise 30 million? How did this one raise 100 million? And some of those exist today and ended up, becoming meaningful projects and some didn’t.
And so I think that the way that the capital has kind of been dispersed among these different buckets, that’s also now led to a lot of kind of investor confusion and also just a period, you know, as tends to happen in crypto, where there’s a lot of hype and excitement to then, you know, a lot of kind of hesitation or worry and exhaustion. And I think the market’s just feeling a bit of exhaustion right now towards the Treasury strategy. And that’s why, you know, a lot of them are trading at you know, premiums to their Nav today even.
Lex Sokolin:
There’s been a lot of different types of tokens and coins that have gone through, like the digital asset treasury approach. And in many cases the dots are replacing what the foundations used to do. And now that we have a more crypto friendly set of regulators and politicians, you can create commercial entities that want to grow protocols. You don’t have to wrap them in these non-commercial foundations and grants and kind of like cultural misfits almost to what the actual goal is. So that was a lot of context, but I think it was extremely helpful. Tell us a bit more about Binance, about BNB and what you’re focused on.
David Namdar:
Sure. And like I think it’s important because the context matters and it’s what, you know, I think only when people get into the crypto space or when they see during these periods of excitement, or in the most recent phase, as we’re living through it and building it, you know, the people who have that context are able to see and understand kind of where we are and, you know, what’s led to now. And so you just mentioned, like this regulatory environment that we’re in today, that’s I think, the most important piece that’s kicked a lot of this off. Had the regulatory environment been better earlier on, we might have gotten a Bitcoin ETF or the Winklevoss twins might have gotten their Bitcoin ETF. We might have seen investors in the US make 50 to $200 billion of gains on Bitcoin already, and it would there’d be a lot more innovation, a lot more companies and a lot more activity happening in the US.
Well, at least it happened in the past year. And so now that’s what allowed for some of these newer crypto companies to come to market between Circle, Gemini, Bullish. And I think there’s a wave of other crypto companies that we’re going to see get public. And we also will see, you know, more that sensible regulation that actually invites and introduces more, you know, opportunity and growth for the crypto exchanges that exist in the US and some of the ones that are operating internationally to interact with and allow us customers in a way they hadn’t before. I think the CME or someone had put out regulation or CFTC had put out regulation recently, or an announcement that they’re exploring allowing US investors to access offshore international crypto exchanges. So that’ll be a significant point as well and could be one of the biggest stories of the next, you know, 1 to 2 quarters. Now for me, the regulatory piece has been something I’ve followed closely. So after Galaxy, I had the opportunity to be the CEO of FTX US or Binance US or a number of public mining companies, and none of them felt like you know, the right thing.
I didn’t want to be part of just one exchange or one company and kind of put all my energy behind it. And also because the regulatory environment would have been, you know, I think I would have might have pushed me out of the industry if I had to deal with all the headaches, you know, that came with doing it, because I know somebody who was running one of the exchanges at the time. And, I think they burnt out completely or no longer in the industry. And so then when I think back to the last couple of years, I’ve really been investing broadly across the space, supportive of a number of kind of early participants that have been looking to kind of sell out of their businesses or take them public, whether through IPOs or SPACs. And through that process, it’s kind of felt like the Binance and the BNB story have followed me quite a bit. And so I had been like, after investing in some of these, a couple of close contacts had been telling me, all right, well, look, you’ve you’ve been doing crypto and capital markets for longer than a lot of people and kind of better at selling and explaining the the Treasury story and model more than a lot of the management teams and more than the bankers, for sure.
And so they really wanted to push me to run one of the Bitcoin treasuries in any market in the world. And as I started to look at it, just from a very genuine standpoint, I didn’t think and I still don’t think I could as passionately and with as much conviction, share the Bitcoin story, as well as Michael Saylor or David Bailey or Simon at Metapan or a couple of these others. But when I think about what I’ve done in the space and everything, you know, I like pointing out and identifying things that are happening around the world and the true global nature of the crypto markets, and also helping people see overlooked and undervalued opportunities. And so, you know, the idea of running a Bitcoin treasury company didn’t resonate as much and felt like it would actually be harder for me to do in a very genuine way. But the idea of running a BNB focused treasury company just felt like it fit just right. Ultimately, I was convinced to do it by a couple close partners of mine. And, you know, I’m super grateful because it’s been an incredible story to tell already the last couple of months. And, you know, I think in the coming years ahead, it’s going to be like something I’m very, very passionate about and excited to share and work on.
Lex Sokolin:
Let’s lay the, the groundwork. What is Binance? How big is it? How many users does it have? You know, can you give us some scale relative to companies we might know in Coinbase and so on. And then what is the BNB token?
David Namdar:
Binance is by far the largest cryptocurrency exchange in the world. And so just to put this in scale, I think they publish on their website the toll on my users. I think it’s just pushing past 290 million users. From a scale standpoint, I believe Coinbase is somewhere in the 20 to 40 million user range. Kraken is, you know, between 10 and 20 million users. Gemini I think also is in that, you know, 10 to 20 million user range. So as an exchange, we’re talking about something that’s potentially between 5 to 15 times larger than Coinbase or any other US exchange.
And it also is by far, you know, as the largest trading volumes across almost every single trading pair. And I think they’re making up almost close to 40% of all global crypto trading volume. So to put that in some perspective, if we were to think about any other vertical, if you look at Facebook and Google and Apple in each of those verticals, the largest company in that segment is a US company that’s publicly listed in the US and has a ton of US customers. Binance, as the largest cryptocurrency exchange in the world, is not active in the US and they don’t have any US customers. And so, you know, had they if they were able to access US customers and us customers obviously would want to access the significant liquidity and opportunities they have there, you know, then it would be like significantly bigger as well. And so I can’t think of another market in the world where or another vertical where the largest company exists outside the US. US investors have no opportunity to invest into the equity of that business, and US users can’t even access it as customers as well.
Lex Sokolin:
How does the token get you there? How does the token accrue value? And then how does the DAT accrue the value from the token?
David Namdar:
When Binance was first kind of picking up steam in 2017, 2018, you know, they had introduced and were one of the first introduced an exchange token, and this was different than Ethereum and Bitcoin, where the tokens initial utility was to provide discounts on trading fees on the Binance exchange. And so, you know, some people point out and I’ve heard, which, you know, is a fairly accurate statement, that in a lot of ways, trading is the biggest and kind of most successful use case within the crypto world so far. And by trading for some people, that’s speculation. For others it’s exchange of value. And, you know, and for others it’s kind of growth and investment, right. You know, we’ve had an asset class that’s grown from, you know, hundreds of billions to 4 trillion today. So, you know, there’s been a number of different areas where, you know, the importance of trading in and out of value is arguably or the case could be made.
That is really one of the most important like areas of crypto. So when they first introduced the token it would provide fee discounts on all of the trading fees on Binance and then they upgraded it and migrated the token to then grow from its initial users to. Then for the last five years it’s been known as BNB chain. And really it’s matured into being this whole vibrant ecosystem. Now that’s still powered by or has a relationship with Binance. They’re still out of those 290 million users I mentioned, I believe I’ve seen some estimates that 80 to 90% of those users utilize and use BNB to pay for those reduced trading fees. So in a lot of ways, you can make the case that BNB is actually the most widely used or regularly used cryptocurrency in the world, except a lot of that’s in off chain activity that’s happening on Binance. But that still benefits BNB over time. And so BNB also allows people to participate in other areas of the ecosystem, to earn airdrops, to kind of earn discounts and other things.
And so there’s really this like constant organic demand that happens for the token, which makes it it’s a bit different than what exists with Bitcoin, Ethereum as well with Bitcoin and Ethereum. You know, Ethereum has a kind of gas or burn that happens from every transaction, but that gas is going to the miners in the BNB ecosystem. There’s a kind of burn that happens in every single transaction. Every single transaction creates a tiny deflationary mechanism that reduces the total supply. Every transaction, all those trading fees that are mentioned actually go towards a quarterly burn that reduces the total supply of BNB. And so to give you some perspective, you know, the last four quarterly burns averaged over $1 billion per quarter of BNB that was burned. I’m expecting this quarter to be the largest one ever by a significant margin. I believe it’s going to be over 1.5 billion. It might get to 2 billion of value of BNB that gets burnt and that leads to a reduction in a supply. So just to explain a little bit.
One of the ways I look at that while these are not equities. Right. And it’s very important nuance to realize that like crypto tokens aren’t it still has some similarities to a mechanism. If you look at like a stock buyback, if you look at what, you know, Warren Buffett does at Berkshire Hathaway or any large company, when the company makes money, they have the choice to pay it out as a dividend or to reinvest in the company, or to buy back their shares and reduce the supply. With BNB, there’s kind of a native mechanism that’s been reducing the supply by anywhere from call it 3 to 6% per year.
Lex Sokolin:
Does it matter if the debt trades below Nav or not? First of all, and you know, if it does, what are the tools you’re going to have to manage that.
David Namdar:
So yeah. So let me step back and say just to kind of introduce a little bit of like why and how we started this and where I see it. So when I think about the DATs and the opportunity. Right. I. As I said, I’ve been investing in them. I am investing in them for the medium and long term. Meta planet was the best performing stock, I think, in Japan and one of the most liquid stocks in Japan last year. But it took, you know, there was some groundwork that went into it, and it took a year or two for the story to play out, and that still happened in a short period of time. MicroStrategy. It took five years for people to kind of, you know, realize just the massive, like accumulation effect that, you know, they’ve been able to achieve and growing the Bitcoin per share. So when I think about this and approaching it right, I’m looking at it like, well, BNB is this incredible asset that I want to own more of, right? And I want to help people own and get exposure to it. There’s an aspect, like I mentioned, where it’s not easily accessible in the US, right? So not only the lack of having US users has kind of prevented and could be an upside catalyst that could drive value in the future.
But also, you know, it’s very hard for them to get exposure even in buying the underlying asset. And so part of this is trying to think of and create a way to have an access vehicle right in a regulated Nasdaq publicly listed company for people to get exposure and something that like, you know, when I think back to when I first, you know, was working on a Bitcoin ETF, right. It still pains me a little bit today that by not getting an ETF approved back, then, you know, the SEC and others that prevented it fundamentally, you know, hurt us investors that weren’t able to buy into a Bitcoin ETF with Bitcoin at $100 to $300. Right. When I think about BNB today, by it not being easily accessible in the US, US investors have been hurt by not being able to access and be part of this thriving BNB ecosystem that’s kind of grown to where it is. And, you know, and so I’m really trying to help get people open up people’s eyes to it and get them that access, you know, for the medium and long term.
Now in terms of the dynamics, well, look like as we’ve gone through a lot of the history here, there’s periods of exuberance, there’s periods of pessimism and panic. You know, we just had last week one of the biggest sell offs or I think the biggest selloff ever in crypto history. And you know, in a number of ways the markets bounce back very strong and people are feeling very confident. BNB actually managed to outperform and ended up breaking to new highs even after the selloff. And you know, showing a lot of resilience. And I think with crypto it’s important to realize the volatility has always been an important feature of it. Right. And when you have an asset that’s growing significantly. Volatility is a good thing. And so it’s important to zoom out and think about where this is going. And if we think, you know, if someone were to think that well this is the end for crypto assets. And it’s not going to become a bigger and bigger part of society and financialization of the world, and you know, all that.
Then it’s easy to panic and get worried about where you are when you think and believe in the vision that this is going to be a much larger asset class over time. Well, then thinking about these specific vehicles and thinking about all the Treasury opportunities, it does become a little less relevant of in the short term, whether it’s trading at a premium or trading at a small discount. Now the key thing is right. The companies that are operating treasury strategies, when I think about all right, what are the most important aspects? The most important aspects are to grow the net crypto asset per share, the Bitcoin, the BNB or the Ethereum per share. Right. And not to put those assets at risk. So that’s the reason why I kind of bring up. And you know, I’m very averse to taking on convertible debt or anything that’s going to harm the balance sheet, because there’s also an aspect when you look at with Ethereum, with Solana, with BNB, there’s a number of staking and yield and revenue generating opportunities.
So even if the asset or the treasury equity gets valued at a discount over time with the yield that’s generated and the ability to buy back the shares when they’re at a discount, that ends up also being accretive and kind of increasing the BNB per share for all of the other investors. In April, May of this year, I was at the Bitcoin conference in Vegas, and I think my single most important takeaway was, Michael Saylor was getting grilled very hard on all of these things of what he’s going to do when his premium goes away and if the stock ever trades at a discount to their Nav. And he calmly said and he’s like, well, listen, let’s just say if we have $50 billion of Bitcoin and there’s 5 or $10 billion of people of idiots that want to sell the stock at a 20, 30, 50% discount, well, I’ll issue preferred shares. I’ll buy that back. Everybody else benefits and makes money from me buying those shares at a discount. Right. So the key thing that I took away from that was part of running a successful treasury company is the ability to access capital in good markets and bad markets, and the ability to have that medium and long term, you know, opportunity to grow the value and allow this a creative process to play out.
Lex Sokolin:
Fantastic. David, thank you for such a broad conversation and really excited about what you’re doing. If our audience wants to learn more about you and about the company, where should they go?
David Namdar:
So I try to share everything on my Twitter @Namdar, on the companies @BNB Network Co, and on our website at BNC network. That yeah, that’s a good starting point.
Lex Sokolin:
Awesome. Great to have you.
David Namdar:
Thank you as well. It’s been great.
Postscript
Sponsor the Fintech Blueprint and reach over 200,000 professionals.
👉 Reach out here.Read our Disclaimer here — this newsletter does not provide investment advice
For access to all our premium content and archives, consider supporting us with a subscription.
