DeFi Development’s CHAD Funding Plan Points to More Solana

Solana per share (SPS) rose more than 20% in the third quarter, while net asset value per share increased more than fourfold and cash doubled from the prior quarter. Chief Marketing Officer Pete Humiston cited Solana’s price move and CHAD’s launch in part as contributors. CEO Joseph Onorati said Solana rose from approximately $70 to $120 during the period, and the company discussed the quarter in an October business recap.

Onorati said the common stock outperformed Solana by about three times in August and by about 1.5 times for the third quarter overall, illustrating the leveraged exposure the company seeks. The common stock offers amplified exposure to both Solana price increases and decreases; CHAD is intended for income investors.

What does CHAD change?

CHAD, a variable-rate perpetual preferred instrument without a fixed maturity, was the quarter’s biggest highlight. It closed at its $10 par value 48 calendar days after trading began and has traded around that level since reaching par.

The company has begun issuing additional CHAD through an at-the-market (ATM) program, which sells shares at prevailing market prices. “We intend to issue them only at $10,” CFO and COO John Han said. The company is using some proceeds to buy more Solana, although it does not plan to disclose the amount raised through the program in the short term.

CHAD currently carries a 14% dividend rate, paid daily, while the company’s organic yield covers aggregate CHAD dividends by approximately five times. Management characterized the issuance as non-dilutive to common shareholders. The division is plain: CHAD offers income; the common stock amplifies Solana volatility.

The board approved a CHAD buyback program that could cover the entire issuance if management determined a repurchase served shareholders’ interests. Onorati said there was no short-term intention to use it. The option exists; the near-term intention does not.

The larger convertible debt matures in 2030, while CHAD is perpetual. Onorati said both forms of financing are unsecured, meaning they lack asset collateral, and neither has a margin-call (forced-liquidation) level that would force the company to liquidate its Solana position.

How does the Solana treasury work?

DeFi Development simplified its on-chain activities earlier in the year and now relies primarily on stake looping (staking, borrowing and repeating the trade). The company stakes Solana into dfdvSOL, uses that token as collateral on lending platforms including Kamino and Jup Lend, borrows Solana against it, and repeats the process.

Onorati said the method increases staking yield, while accounting complexity contributed to scaling back other activities. The company is seeking additional Solana lenders at rates that support the strategy. The yield benefit comes with added accounting complexity; the trade-off is explicit.

Dan Kang, chief strategy officer and head of investor relations, said shareholder-letter sensitivity analyses use a 5% income assumption for CHAD dividend coverage, below the company’s historical yield. DeFi Development has historically earned roughly 200 to 300 basis points, or two to three percentage points, above base Solana staking rates.

From Aug. 12 to Sept. 30, SPS rose more than 20% with Solana’s price held constant; including the price effect, growth reached triple digits. Kang said convertible debt was not in the money, meaning it did not qualify for equity treatment, so the company excluded it from the SPS share-count denominator while treating it as debt in net asset value.

Where does the growth come from?

“Expanding CHAD is the company’s biggest growth opportunity,” CEO Joseph Onorati said. The company could consider swapping convertible debt for CHAD in the future, although its present focus remains organic growth. Expansion, rather than a debt swap, is the near-term priority.

Onorati also highlighted CHADx, a tokenized version of the preferred stock created by xStocks, a Kraken company. CHADx traded more than $1 million in volume on the Solana decentralized exchange Orca on the preceding day, approximately three times CHAD’s volume in the traditional market that day.

Exponent, an interest-rate trading platform on Solana, has also listed a CHADx market. Onorati called the initial on-chain activity encouraging while emphasizing that CHAD remains in its early stages. The numbers are promising; the operational record is not yet long.

DeFi Development Corp. (NASDAQ: DFDV) is a digital-asset company building a Solana-based treasury and decentralized finance ecosystem. Its strategy centers on acquiring and holding Solana as a core treasury asset while generating additional value through staking, validator operations and participation in the Solana network. The company also develops infrastructure and applications intended to support decentralized finance on Solana.