Great. Good morning. We're gonna get going here. First fireside chat of the day in the digital asset infrastructure space. We've got the team from IP Strategy, CIO Phil Blows and CEO Justin Stiefel. Gentlemen, welcome. I guess to begin with, maybe the story, the name's not a household one. Maybe if you guys kinda dive in, kinda maybe the protocol, the equity vehicle, kinda just give people a general background, and we can jump into things. Thanks. Sure. The Story Protocol is a Layer 1 blockchain, purpose-built, designed to get intellectual property registered on chain to allow creators to create, track, and collect. In the growing age of AI, lots of scraping is happening. Creators and content owners are upset about it, and also because creators continue to create every day, there's gonna be a need to continue to allow them to have an easy onramp where it's immutable who owns what. It's really the only blockchain that takes the actual asset and gets it registered on chain, where most of the other blockchains are digital representations. This is taking copyrights. NIL is a big space that's emerging quickly. If you've been watching the news, name, image, likeness, patents or trademarks. Because it's Layer 1, it allows Layer 2 and Layer 3 apps to be built on it to allow very creative people to figure out ways to monetize it. IP Strategy is the Nasdaq entity that partnered with the Story Foundation on the PIPE last year and set up one of the larger validators in the network, earning revenue from that, and also on the hunt for IP-based assets to figure out how to acquire and monetize. Maybe just to add, yeah, so being a Layer 1 blockchain, it enables us to build our own validator. This was a decision that the public company made as opposed to going to a third-party validator where often you have to pay 20% of your revenues to that validator for their kind of software services. We had the internal expertise to be able to build something of our own. Given it's a newer blockchain, often you find the emission rates or the yield that we're able to generate on the treasury is actually quite a bit higher than you'd find with your typical Solana or Ethereum that. We are generating in excess of 10% just through our validator. Also we have a yield enhancement layer that we put on top, which is using derivatives, covered call strategies, that's generating more like 50%-60% per year, depending on volatility. It enables us to generate significant cash flows at very, very high margins on for the Nasdaq vehicle. Can you kinda talk about how the protocol kinda solves the core problem of fragmented IP ownership? Something I wanna contextualize in the digital asset space, I think there's pros and cons. Obviously, Senate's going through some things with trying to get legislation passed. There's a lot of meme coins. Just to be clear, this is not a meme coin. It's probably the farthest thing from it. There's a lot of utility to it. Maybe if you could speak to that. Sure. And then maybe dovetail into, I know we're gonna talk about rights, but also AI and how that thematic plays out. Sure. When you think about intellectual property, the easiest thing is copyright. There are three buckets of intellectual property: patents, trademarks, copyright. For a patent, you invent something, you have to go fight with the government. Do I get the patent granted or not? For a trademark, it's really the source of the good or the service. As an identifier, you have to go to the trademark office and ask for that. They may or may not give it to you, certain rights and restrictions. For copyright, it's self-effectuating. If you create something, if you draw something, if you are a newspaper, if you are a musician, and you create something and you publish it, you have both common law and statutory copyright. You don't need to go to the Copyright Office and ask for permission to own this thing. You can, but you don't need to. Now you can take and layer those on and register them on the blockchain to allow yourself to track usage, go into the smart contracts, set terms of who has access rights, what are the rights, how can it be used, how do you want it to be restricted, what are the payment terms, how do you wanna be paid, derivative rights, derivatives on derivatives, and so on. That's the basic idea and premise of it. There's not really another blockchain designed to do this. Other blockchains that are financially built or engineered, you might be able to build Layer 2 or Layer 3 apps, but this is really about taking the intellectual property at the very core base of the rails and then allowing smart people to create lots of different programs and different ways to monetize it. When you think about AI, right now the battle with AI companies is, are they legally allowed to go scrape and monetize? If you're an artist that has music rights, publishing rights, or performance rights, you don't want some of these AI companies scraping your music to make derivatives of it. Okay? The next big thing coming is NIL. If you're watching the news right now, name, image, likeness, not protected by Copyright Act. It's totally separate from Copyright Act. You're watching AI make videos and music of people that we all know in the space with no real copyright protection. The ability for people, if you believe, like I do, that people are inherently creative by their nature, and they're gonna continue to create, and people want to continue to get compensated for their works, you have to acknowledge that in the digital world, things accelerate, and the battle continues to grow, and they need a way to register that I own this is mine in a digital way, and the ability to track it, and the ability to go enforce who uses it and how to get paid. That's the entire premise of how this was designed. We've seen some pretty big brands already engage with the blockchain as well. You know, for the first time last year, we allowed people to go and actually be able to get exposure and revenue from, say, Justin Bieber's catalog through one of the protocols that's been built on the Story blockchain. 'Cause this is an asset class that's quite challenging to get exposure to unless you're putting money into a PE fund which has very high minimums. As retail investors for the first time getting exposure to these interesting assets has proved very popular, and we've seen, you know, artists like, you know, BTS and Miley Cyrus as well coming into it. I think one of the ones that we're really excited about is we've all seen this big scraping of data from the internet to build these large language models. What's really coming next is how do we train robotics? It's not as easy as just being able to, you know, just go on the internet. You need videos of people doing specifically labeled activities that you can use to train these robotics. Poseidon, which is one of the new projects that's been built on the Story blockchain, has been doing just that, going out and collecting kind of labeled video content at scale, registering it on the blockchain, and then selling it to AI companies that are training robotics. This is gonna be an explosive area that's gonna continue to grow as we see this sort of the robotics become more commonplace in everyone's household. I think, Justin, on a few calls you've mentioned that programmable IP is sort of the fourth leg of the AI ecosystem, and I think you've mentioned after real estate, chips, and power. I guess why do you say that, and how does Story capture that opportunity? Sure. We hear a lot about AI. The last couple years it's just AI all around us, and people have been focused on one of three things. Real estate. Do I have real estate? Do you have the data centers? Are you gonna be able to build them? What's the cost? Computing power. How many chips do you have? What's the cost? How fast are they? How quickly do they become obsolete? The third leg was always electricity. Do you have access to reliable electricity? How much is it gonna be? What's the cost to run the data center? Am I driving up rates on the consumers around me? Really the fourth leg that was missing was how do you track ownership of all of this IP that the AI learning models are scraping? Really this solves the fourth leg of what people thought was a three-legged system. Real estate, chips, electricity, and now property rights, because people don't like their stuff being stolen. This is an emerging battle that will continue to grow, and thankfully, the IP protocol is here to solve it. Can you give us some context on kind of the number of IP registrations? Just give some people some context on network transactions, number of accounts on the Story Protocol platform. I know there's been a lot of usage, but do you feel like there needs to be a seminal moment where you sign, maybe not you guys, but the protocol signs with a large brand- Yeah -to kind of brand the platform? First off, IP is an $80 trillion asset class worldwide, so big market. There are now almost 100 million transactions that have been done, and this Layer 1 blockchain is just over one year old. It was just launched February of last year, it's still in its infancy and growing. 5.6 million pieces of IP registered, 13 million accounts. Just most recently announced a partnership with Genome bank at Ohio. When we think about copyright, the obvious things are music, artwork, drawings, but copyright also includes datasets. In partnership with Story and Genome.io, now 15,000 datasets of DNA have been registered on the Story blockchain, and that DNA and all the data has been anonymized but is now searchable for pharmaceutical companies and others in the biogenomics space. That was just announced two weeks ago, so that's an exciting opportunity. The second part of your question was? The second part of the question was really around. Oh, a seminal name? A brand name? Yeah. Do you feel like there needs to be this transcendent moment where the protocol or, you know, Story? Sure. Again, when we think about the Story Layer 1, it's like a freeway. It's a toll road. On the toll road, lots of people are gonna get pieces of property to build gas stations and restaurants and shopping malls. The Story 1 is the freeway. They are working with some of the bigger brand names to figure out how to get bigger licensing deals brought on. These people that are building Layer 2 and Layer 3 apps are in discussions that we may not know about until they're publicly announced on how to get some of those bigger seminal names. That's the beauty of being involved with the actual core infrastructure. We are gonna be able to get a piece of everything that happens, and we don't necessarily have to be responsible for doing it all. We're kind of expecting this Cambrian explosion of creativity with IP to appear fairly soon because, you know, up until now it's, as we say, it's been very challenging to be able to go out and just say you wanted to use something to do with Miley Cyrus's IP. You have absolutely no idea who to go to as an individual creator, and it'll cost you a lot of money to go via a lawyer and actually go and actually use this stuff. However, if this IP is on chain and you've got those terms of engagement right in front of you, all of a sudden anyone knows how to use it. I mean, I'm not sure what other people have found with things like Claude Code, but the more you use it, the more you end up using it is what I'm finding, and it kind of compounds on itself. Think we're gonna see the same thing with IP usage. If I hear you guys correctly, I mean, I think one of the things that attracted us to the Story, no pun intended. Is this really kind of an under the radar way to play AI thematic, but you're not betting on ultimately is it Justin or Phil's frontier model that wins? You agnostically enable protection of content models data. Is that a fair assessment? As long as people are creating things and registering things on chain and wanting to use things that are belonging to other people, we win. It's that simple because they ride our rails. Great. Can you talk about maybe Justin, you've got a legal background, just who are like, if there are alternatives to Story, what are they? And then what are your alternative means other than the legal route and paper trails that we kinda know about in terms of protecting your IP going forward, especially as it pertains maybe to AI? Yeah. Well, the AI battle right now is big. It's big companies that are battling against AI. It's big content companies like Disney, who did a deal recently with one of the larger AI companies, and then the same day went and filed the cease and desist against Google. That's all bigger than the average person's gonna ever be involved with. If you're a small creator, and you create a song, and you wanna get it loaded somewhere, there's lots of different platforms you can load that song. But then how do you protect yourself in the event of one of the AI models finding your song and using it to make a derivative work and make money at your expense? That's where loading it, showing the world you own it, setting terms in the smart contract for who can and cannot use it and how to get paid. Having really smart people come along with a new Layer 2 or Layer 3 idea that none of us think about today, and they find your song, and they wanna use it, and they see in the smart contract how to pay you, that's a good thing. That marketplace will continue to grow as more technology advances. Right now, prior to Story AI, as Phil noted, if you wanted to use Miley Cyrus's song, you have to find out who has the publishing rights to the song, who has the performance rights to the song 'cause in music there's two types of copyright, performance and publishing rights, and then there's derivative rights, and now there's remixing rights. You've gotta find out who owns those rights 'cause it's not always the same person all the time because they're being bought and sold and transferred. Then you've gotta sit and negotiate and figure out how to do it, and it was all old school paper and PDF, and here it can be digitized, automated, and the workflow can be seamless and reported back to you in real time. Great. Can we touch maybe on a little bit on your business model, how you guys actually make money, the validator business yields? Phil, you touched on your accelerating yields with some hedging and derivative strategies. I guess maybe for the audience, when you guys speak about a P&L, like how does that actually work? Do you guys get paid in tokens, and it's accounted for from an accounting treatment as non-cash? Is it cash? Is it all predicated on the movement price of the token? Yeah. The core treasury itself is 53 million tokens of the IP token. You know, obviously, the price of that fluctuates. You know, I think since we did the transaction back in August last year, I think it hit a peak of $15 per token, and, you know, it's been down as low as $0.60. It's been incredibly volatile, but what's remained consistent throughout that period is the yields which we can generate. When we create a validator, we stake our tokens, so it's very similar to the Ethereum or Solana blockchain. It's not a proof of work blockchain. It's a staking structure. Depending on how long you're willing to stake those tokens for determines the yield that you can earn, so anywhere between currently 10%-20% per year. That's paid to you in real time in tokens. We're unlocking, you know, one block a minute, which is sort of eight tokens a minute. You know, what we can then do is use that at that point to either sell it to pay for the, you know, the cost of the vehicle, and we can do that in the open market. It's a very liquid token. It's, you know, it's one of. It does trade off of $100 million worth of transaction volume a day across the network. That allows us to turn it into cash at the cost basis that we obviously earn it in real time, which is obviously as you're doing it every minute, quite an arduous process. We have, you know, really good software partners who help us sort of calculate all of that and stay compliant. What we will find is the more the token rallies, the more the ecosystem grows, the higher our earnings come in. I think the sort of final part of our strategy, which we want to, you know, which we're beginning to now explore further, is how do we take the revenues that we're currently generating through validator and diversify slightly by going out and buying cash flowing IP that we feel we can actually increase the value of? If we get it right, what we should be doing is finding fairly unloved IP that's yielding somewhere in the region of 15% per year. By bringing it on the blockchain, you know, come up with new revenue streams, make it more popular, increase its underlying value and the revenue that it produces. That's kind of the third pillar of our strategy alongside holding the token, the validator business, and this sort of cash flowing IP is what we'll be doing in the future. You know, I think that's gonna give us a big degree of diversification. You know, we have the ability to when we're assessing what opportunities are kind of in our range, our cost of capital is essentially the validator yield, which is around 10%. So anything we can find over and above that, it's worth selling our tokens 'cause we don't, you know, 'cause we can reinvest it at a higher rate. That's kind of one area that we're exploring further now. Could you maybe give, without divulging company secrets, maybe like an example of that? Then would you just take all of those IP assets and put them on chain and hence the flywheel? Maybe I don't think people might understand kind of the tokenomics and the flywheel of like how actually if Phil had a piece of IP and he wanted to use Story, how that actually works. People have to purchase and license your rights get paid out in the token itself. I mean, there's a couple of different ways of doing it currently. I mean, what we've seen with, say, the Miley Cyrus and Justin Bieber kind of catalogs that were brought on chain, what happened there was almost a pure tokenization effort. You know, that was IP that has cash flows, you know, associated with it, which got wrapped up in a token. Anyone can buy that token. Each token has a share of the revenues that gets paid out in real time, you know, using the blockchain technology. You know, for an example where we might go as a business and buy a, say, you know. One of the things that we see a lot of at the moment is kind of soundtracks to computer games, which sound like a small niche area, but are incredibly high yielding, have been very, very consistent. You know, bringing that soundtrack, registering it on chain, and then essentially saying to the audience of creators, "You know, if you want to use this piece of IP, you can embed it in your product, and then you can pay this royalty every use that you have." All of that happens on chain automatically. That's how we would take that bit of IP that we have, bring it on chain, get distribution from a different audience of creators who then increases the revenue that it produces. If you think about music, for example, the current and old school way of tracking music is one of the two big licensing arms will send reps out into the field and do random samples. They'll walk into bars and restaurants and stores, and they'll figure out what music is playing. Then you get this letter in the mail that says, "Hey, one of our reps was there. They see you have so many seats," or, "They see that you are playing music. You don't have a license. Send us this agreement and a license, because then we send the check and the royalties out to all the people in our catalog." That is a very old school way of doing it. This now with the blockchain and the ability to track and tag, right now the estimates are that anywhere from 6% or more of the royalties that should be going to music artists are not being properly captured, identified, and paid. As more of it gets tagged online, they can start to earn really almost 100% of what they're due because the digital asset will track itself. The token itself's been caught up in the crypto winter like everything else. I guess I have two questions. Obviously with the CLARITY Act, there's chatter about that, you know, moving forward. Whether true or not, we don't know that. Does that have any kind of impact on the token? I guess maybe can you speak to with your discount to NAV trading where it is, what kind of, you know, tools do you have as a company to kinda be shareholder friendly? Yeah. I think when you hit a specific size in the digital asset space, just like in stocks, you get caught up with the macro moves. You know, we get programmatic buying and selling of the top 100 tokens a lot. I think given that we are, you know, one of the smaller cap tokens in that sort of top 100, you know, we're gonna have a higher beta, much more volatile than Bitcoin. Unfortunately, in as much as the good work that's going on, we get caught up in the general malaise that we've seen in the last six months with Bitcoin. I think, you know, it's always been cyclical. Anyone who's been in crypto, you know, has got the gray hairs to prove that it's hugely volatile, it's cyclical. It's sort of four-year cycles around the Bitcoin halving, all this kind of stuff. Whether that holds true this time around, we didn't think it would, but it, you know, lo and behold, it did, you know. We'll see how the market develops. Obviously, you know, there's a lot of macro risk out there right now, which is weighing heavily on things. In terms of the discount to NAV, obviously, you know, we're trading at the value of a shell right now. You know, we have $35 million worth of assets that sit on our balance sheet. We are making 10% yield on that at fairly high margins. All of that is being kind of discounted currently. We announced that we were gonna buy back 1 million shares, you know, recently, so that's one kind of way we can close that value gap. The other is just to continue to compound and talk about the, you know, the revenues that we're making. You know, as much as we wanna get out there, we wanna shout about this, you know, we wanna prove ourselves through the numbers. We're not a passive DAT anymore. You know, you see these passive DATs, they have assets that sit on their balance sheet, which they're expecting to trade at a premium. It's not gonna happen. You know, what we are is we have an asset on our balance sheet, but we have real cash flows generated from the treasury, but also from real world assets that we're gonna purchase. It's a very different proposition from what we see elsewhere in the market. I guess last one to maybe wrap it up. The next 12, 24 months, what is the roadmap? What kind of KPIs should investors kinda focus on for you guys? I think the roadmap for us is gonna be obviously watching the token, watching the continued good work that Phil and the team have been doing on the validator, 'cause that, the uptime is almost 100%. I think NIL is gonna be a big thing. We're actively in talks about that right now because it's topical. College football season's around the corner. Everybody acknowledges that that system is fundamentally broken and is in need of urgent repair. Because NIL is not protected by copyright, it sits in a world all its own and is screaming to be digitized and registered. I would be looking at NIL. I think also looking to see what type of assets we might be able to acquire to get on the balance sheet. For example, music rights or movie rights or video rights that we then get registered. Every time something gets registered and every time something gets interrogated in the blockchain, it's more validator work, and that's the flywheel effect that you talked about. Great. I guess on that note, we're up on time. Phil, Justin, I appreciate it. Thank you. Much appreciated.