Reconnecting With Ben: The SLX TGE, Community Feedback & The Future of Solstice

Recorded in Paris, during Proof of Talk.

Hodl Up: Welcome back to another episode of Hodl Up. We're here in Paris, and with us today we have Ben Nadareski from Solstice. We had Ben on an episode back at Breakpoint, so what better way to catch up with him than another conversation? Ben, thank you so much for joining us again.

Ben: Great to see you guys again.

Hodl Up: It's a huge pleasure for us as well, and a lot has happened since we last spoke. First of all, congrats on the TGE.

Ben: Thank you. The TGE was a wild process across the board, but we're very happy to have gotten SLX out to the market for all of our users, and it was a key sign and milestone for the Solstice protocol.

Hodl Up: We know you can't make everyone happy, and we've seen the community feedback and what people have been saying. Personally, we joined the Flares campaign right after our episode. You basically sold us the whole idea, and we were quite glad we joined. We've seen that some people in the community weren't happy, and that's understandable, because some people join just to get something out of it. That's the whole issue with airdrops, and why airdrops have gotten such a bad reputation in recent months. We did talk briefly about how you were planning to make sure the price didn't dump, and you've done that remarkably well, better than any other project we know of in the last 18 months. So what was the thought process behind everything, and how has the whole journey been for you?

Ben: Absolutely. When it comes to a TGE, or any token launch, especially of a utility and governance token, you have to make sure the protocol's top priority isn't the token's price chart. So many protocols just focus on the price chart. What we've focused on more than anything is the core protocol and the product, where we've seen incredible growth over the last few weeks, topping $500 million in TVL. On top of that, the token launch itself was very well structured. We wanted to make sure the tokenomics were well distributed. We wanted CEXs open for deep liquidity and global access to SLX, and we wanted DEX venues on the DeFi side to have access too. To structure all of that properly, there has to be a healthy balance between mercenary sell pressure right out of the TGE and product utility in the market. That's why we launched SLX on day one with utility for all token holders, including staked SLX and direct utility of SLX within the protocol across our multiple products. Those are the kinds of things that drive a successful token launch and very natural market dynamics. If you look at the SLX price chart since TGE, what we're seeing is very natural, organic recognition of the protocol's value and the utility of the SLX token. SLX reflects our fundamentals as a protocol, and that shows in everything we've done.

Hodl Up: When it comes to the TGE specifically, I think you beat expectations, even Polymarket's, because not everyone expected an FDV of $200 million one day after launch. That was astonishing in my opinion. When I saw what people were saying about SLX the day before TGE, I thought it had to be a planned attack on the company, because it didn't make sense. But the way you handled the vesting and everything was really professional and technically well planned.

Ben: It's a very good point. If you look at the price charts, about 85 to 90% of token launches over the last couple of months have been down.

Hodl Up: Exactly.

Ben: I've been in the crypto industry since about 2013, and unfortunately this is still the game: you try to create the maximum FDV hype possible, sustain it, and then it gets liquidated. We priced ours very conservatively at TGE, because we looked at the market fundamentals of similar yield protocols in the space. I say similar loosely, because we do a lot of things differently, but for tokenized yield solutions, the FDV-to-TVL ratio is one of the major fundamental points I want to highlight. Typically you look at how much TVL is in the protocol versus the FDV. At launch, a lot of these protocols have seen anywhere from 2x to 14x right off the bat, and then they settled somewhere in the range of 0.3 to 0.6 FDV-to-TVL. We came out of the gate at an initial price point of $130 million FDV. Why? Because at the time that was a 0.4 ratio, right in the middle of that settled range. We said, if we're going to grow, let's start where we deserve to be. Since then we've grown in TVL, which strengthens our fundamentals. We've grown in product launches, in narratives, in SLX utility. That's compounding value that sets new floors higher than where you launched, and that's the kind of structuring that matters most. It's all driven by fundamentals rather than the hype premiums we've seen in the market.

Hodl Up: We reached out to other users who participated in the campaign and hold SLX. One question they had, knowing we'd be doing this episode, was about the thought process behind the Binance Alpha listing. Walk us through that.

Ben: Absolutely. As everyone knows, we're a Solana protocol, and SLX is natively issued as an SPL token on Solana. Binance Alpha is a key part of the CEX unlock process. We wanted centralized exchange and DeFi exchange processes launching at the same time. On the centralized side, the kickoff is typically a Binance Alpha launch, followed by other exchanges. That's typically how you get integrated, and it's the world's largest CEX. Let's be honest: if you want deep liquidity and global access for any token launch, Binance is categorically one of the major players you should be looking to work with, and Binance Alpha is part of that process. In a fully decentralized world, with full liquidity in decentralized pools, yes, that's a true DeFi principle that I definitely believe in, and others in the ecosystem do too. But for maximum exposure and a healthy chart with deep liquidity, you need to work with the CEXs properly. Binance has been a great trading partner for us over the last several years as well, and on the listing side it was a great opening, with Binance Futures opening just recently too.

Hodl Up: All right. We've talked about the TGE and what you've been building since our last talk. What are your next steps for the next few months? I think the market is slowly... maybe not in price action, but money is flowing in. Something is going on behind the scenes, so maybe we're coming back as an industry.

Hodl Up: You gave us alpha for the airdrop. Now give us alpha for what's next.

Ben: I've got two good alpha drops for you. Number one, first and foremost, SLX utility is going to keep increasing. The roadmap is clearly outlined in the white paper, so you can see exactly where we're going. For example, instant redemption of your eUSX holdings while you hold SLX. That's direct value end users can capitalize on. On top of that, the risk curve of our yield products is going to evolve rapidly, starting with Stretch USX, which was announced in the last 24 hours. Stretch USX is an STRC-based product, with STRC as the underlying asset, separated into two risk tranches, junior and senior. The junior tranche, with somewhat higher risk, targets upwards of 29% yield, while the senior tranche targets 8%. It's an institutional yield strategy on-chain. It's not a tokenized version of STRC; it's a tokenized yield strategy, which is a very different value proposition, because the yield is fully managed in-house by a provider with a proven track record. We're also happy to soft-announce the product we'll focus on after STRC: GPU yield financing. Here's how that works. Our main backer at Solstice is Deus X Capital, and among its 40-plus portfolio companies are multiple leading AI companies. So in our own backyard we have access to some of the leading GPU financing solutions in the world. We can tokenize that yield and make it one-click simple to access different risk levels, yield opportunities, tenors and so on. Delta-neutral is an amazing strategy, but we all know the basis has been compressed a bit. It's a great, sustainable strategy with a very low risk profile because of its Sharpe ratio. We're going to add more strategies along the risk curve and really fill it out, so that any user anywhere in the world can come to Solstice and have one-click access to the yield strategy they choose.

Hodl Up: Speaking of STRC, and correct me if I'm wrong, I think another protocol did something similar with STRC and received a lot of criticism. I don't remember the exact details, but how are you approaching it differently?

Ben: There are a lot of different tokenized versions of STRC out there from a lot of protocols. We're not a simple tokenized equity play or a tokenized private credit play. It's a tokenized yield strategy. What does that mean? We manage the yield in-house, and we show you exactly where we allocate the investments. We use a very specific, in-house-developed, white-labeled solution for bifurcating the risk into senior and junior tranches, and we offer it with hedged downside protection. That type of yield strategy as a tokenized play isn't something we're seeing in the market. STRC USX is the first of its kind, and that's what we're going to see evolve more and more.

Hodl Up: This might be a bit unrelated, but the whole theme, not just of Proof of Talk but of crypto right now, is institutions. Everything is suits and ties. Look at us. I'd rather do this in a beanbag wearing a hoodie, being comfortable, but that's the theme. Though you can't beat this view. My point is that yields are normalizing for the average retail user as well. For a very long time that was the whole selling point of why people should keep their money in DeFi and not in banks. Now, with yields normalizing and banks venturing into crypto as well, TradFi and crypto are basically merging. So where does that leave the retail user?

Ben: It's important to note that yields are normalized in some respects. However, there are a lot of very specific yields you can access much more seamlessly, with lower fees and with self-custody of the assets, that you don't get in TradFi. The second part is compounding value. eUSX is a perfect example. You could invest once in a delta-neutral product in TradFi and get similar yields. The difference is that you can go do things with your eUSX in DeFi. You can go into PT/YT systems on Exponent. You can go to Kamino and borrow or lend against that asset. You can keep optimizing your capital along the chain, so it's maximum capital optimization at every single point. You can't do that in TradFi in a similar way, because the structures don't exist like they do in DeFi. That's also one of the major reasons we built so much in the Solana ecosystem: composability is natural to that L1 ecosystem. That's what allows this capital optimization, which isn't accessible in TradFi at all.

Hodl Up: That's true. And I think that's the whole idea behind Solstice, right? "Take your yield back." You're literally doing that for retail users. I think one of the main selling points for our industry right now, which even some bankers are loving, is that everyone can be a participant in the financial world, and that's crucial if you want the market to keep growing. Capitalism.

Ben: Exactly. The thing I love about DeFi is that all users should expect more out of it. Specifically compared to TradFi: whatever you expect from a financial advisor or a financial management platform in TradFi, you should expect more from DeFi, because DeFi can deliver more. We're proving that day by day, and that's why we're seeing continued institutional participation in Solstice, and why we're on a direct trajectory alongside lots of our peers in the industry. Users are expecting more, and DeFi is delivering more.

Hodl Up: So where do you see Solstice in the next few years? You've been growing exponentially since we last spoke. And I'm saying this as a retail user, not as someone doing the podcast right now.

Ben: We're institutional now.

Hodl Up: Yeah. I didn't expect this level of growth. I did believe in Solstice when we had our first conversation, but to me this level of growth is almost too much, because I've seen crypto projects promise things and not deliver, and you've kept your promises. So where do you see yourselves in the next two years?

Ben: First, I'll give credit to the entire global Solstice team. It's an incredibly hardworking team. You didn't ask about the hours they're putting in right now; they're probably not too happy with me in that regard. But they're a fantastic group of individuals. Bottom line: we're building yield solutions that are able to scale. $500 million in TVL is great, it's fantastic, and we're grateful to hit this point, but we have solutions that can scale to billions, and that's what we want to show. Very few protocols in the space have scaled beyond tens or maybe hundreds of millions before they start to cap out. Yield solutions that can scale to billions are what will take our industry to its next evolution. That's what we're looking to do. We'll have a wide risk curve with multiple products along it, all easily accessible, and SLX will be woven across all of that yield. On top of that, we'll see lots of new institutions participate because of the new yield opportunities coming about. And through it all, we'll hold to the same DeFi principles we built the company on: the ability to scale transparently. That's why I see Solstice going much farther.

Hodl Up: Speaking of Solstice, if I'm not mistaken, the launch was planned for the winter solstice. Is that correct?

Ben: Oh yeah, it was planned for the winter solstice. We tried to keep the solstice theme across the board, but as anybody in the industry knows, the TGE process has a lot of moving parts. For us it meant coordinating over 48 partners to ensure a successful launch.

Hodl Up: I was going to ask, because that's poetic, and in a PR sense it's brilliant in my opinion. But do you think you could have gotten more out of it if the timing had been different?

Ben: I think it was the right timing. We saw a major bear market over the last Q4 and Q1, and coming out of that, Bitcoin is obviously going through a bit of an identity crisis in the market. But what's quietly building underneath is DeFi activity. More institutions, more capital flowing, more user integrations and more developer activity than ever, and that's happening quietly in the background. While Bitcoin still has the spotlight, DeFi is about to take it on a very large, global scale, with Solstice as one of those players alongside a great group of companies in the DeFi industry.

Hodl Up: Should we expect Ollie Bearman to rep Solstice again?

Ben: Yes, we very much loved that, and you should definitely expect more Solstice integration with the F1 scene. Our parent investor, Deus X Capital, proudly sponsors Ollie Bearman, and we were very grateful to support him and the Haas team.

Hodl Up: Well, Ben, thank you so much again for your time. It was a huge pleasure and a very insightful conversation, because as I said, we became Solstice users after our discussion back in Abu Dhabi, so it feels like a full circle. And I mean this in every sense: we should ignore the noise. People can say whatever they want, and I know you said the price chart isn't the best indicator of how healthy a project is, but even if you look at that, you've done remarkably well. The price is well above the TGE price. Congrats on everything.

Ben: That means the world. From a user perspective, that's what we care about most. We sit down with a lot of our users to understand what that journey looks like, and it's great to hear the feedback, and great to see you guys again in a beautiful location. I don't think we could have picked a better view anywhere. It's picturesque, and that's what Solstice is as well.

Hodl Up: We're going to have to take some professional pictures right here.

Ben: Absolutely.

Hodl Up: All right. Thank you, Ben.