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DeFi Technologies Inc. has announced the successful acquisition of Stillman Digital, a leading global liquidity provider in the digital asset space. The strategic move, finalised on October 7, 2024, aims to enhance DeFi Technologies' trading capabilities and diversify its revenue streams, particularly benefiting its subsidiary Valour Inc.
Stillman Digital's core products and services include:
Electronic Trade Execution: Generating over US$500 million in monthly volume with 24/7 streaming prices.
OTC Block Trading: Processing an average trade size of $2 million+, with monthly volumes exceeding US$1 billion.
Market-Making: Providing liquidity to central limit order book products, handling US$400 million in monthly volume.
The company has outlined that newly licensed & future revenue drivers consist of the following:
Institutional Focus: As part of its broader growth strategy, Stillman Digital will continue executing against its strategic development roadmap, focused on adding and deepening relationships with large corporate and institutional clients. By leveraging its existing blue-chip regulatory licenses, proprietary trading technology, and liquidity network, Stillman Digital is poised to realize additional growth and market share as part of the broader Defi Technologies ecosystem. DeFi's platform will help unlock revenue synergies and economies of scale via its distribution channels, balance sheet, and marketing expertise.
Custody: Stillman Digital offers secure storage solutions with advanced encryption, multi-signature technology, and insurance. Utilizing state-of-the-art encryption and multi-signature technology, Stillman provides maximum security, offering both cold storage for long-term asset preservation and warm wallet solutions for convenient access. Stillman Digital provides 24/7 monitoring and support to safeguard clients' assets and implement rigorous compliance and regulatory standards to maintain trust and transparency. Revenue is generated through custody fees based on the volume and value of assets under management.
Foreign Exchange: Stillman Digital plans to facilitate competitive currency exchange with access to a wide range of fiat and digital asset pairs. Using advanced trading algorithms and liquidity providers, they ensure optimal execution. Clients benefit from real-time market insights and analysis to make informed trading decisions and have access to customizable trading interfaces via Web Portal or API. Revenue is generated through spreads on currency pairs and trading volume.
Proprietary Trading: Future balance sheet maximization will be achieved via market-neutral proprietary trading activities across various digital asset markets. Sophisticated trading strategies and risk management techniques are utilized to generate consistent returns on capital. Cutting-edge technology and data analytics are leveraged to identify profitable trading opportunities. Strict compliance and regulatory controls are implemented to mitigate risks and ensure adherence to applicable laws. Revenue is generated through trading profits.
Valour, part of DeFi Technologies' asset management business line, issues exchange-traded products (ETPs) that allow retail and institutional investors to access digital assets through their traditional bank accounts. The acquisition of Stillman Digital is expected to significantly enhance Valour's offerings and operational efficiency.
Valour's product range includes fully hedged digital asset ETPs with low to zero management fees, listed across European exchanges, banks, and broker platforms. Notable products include Valour Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings, offered completely fee-free.
The integration of Stillman Digital, known for processing over US$20 billion in trade volume since 2021, is anticipated to strengthen Valour's position in the market. Stillman's expertise in electronic trade execution, OTC block trading, and market-making will allow Valour to internalise part of its trading flows and potentially offer more competitive products.
Olivier Roussy Newton, CEO of DeFi Technologies, commented on the synergies: "This acquisition not only expands our capabilities in the trading sector but also provides Valour with enhanced liquidity and trading expertise. We expect this to translate into more efficient operations and potentially more attractive products for our investors."
Jonathon Milks, CEO of Stillman Digital, commented, "Teaming up with DeFi Technologies signals an exciting new phase in the evolution of Stillman Digital. This partnership will further bolster our ability to offer high-quality liquidity solutions and trading services to institutional customers. Together, we will push forward in closing the gap between traditional finance and decentralized finance. We look forward to tapping into the DeFi team's expansive network in the web3 industry to fuel customer acquisition and continue driving profitable growth, all while building on the robust technological and regulatory framework we've developed at Stillman over the last four years."
The acquisition is also expected to diversify DeFi Technologies' client base. While Valour primarily serves off-chain retail and high-net-worth clients, Stillman Digital focuses on on-chain institutional clients, providing a balanced portfolio. This diversification is anticipated to help smooth out Valour's cyclical revenue tied to crypto price movements, ensuring greater stability across various market conditions.
As part of the deal, DeFi Technologies acquired all issued and outstanding securities of Stillman Digital for 2.5 million common shares, with 1 million shares subject to a one-year lock-up schedule.
