Galaxy is looking to become the Strategy of the Solana ecosystem: a bit more aggressive than Strategy, actively pursuing yield through yield farming strategies like staking, or opportunistic market making (whatever that means).
Strategy bootstrapped an entire ecosystem of yield-enhancing Digital Asset Treasury companies.
This is very interesting. Galaxy does not want to be just a general investor in the Solana ecosystem. They want to create their own unique yield strategy like Micro Studies. They may want to generate income not only from staking but also through different methods like yield farming, market making. If this is implemented, not only Galaxy but the entire Solana ecosystem will have a yield-based treasury network. Much like Ethereum's DeFi ecosystem.
Now the question is whether such aggressive yields can be sustainable in the long term or whether they will only bring good returns in bull markets but will have a higher risk in bear markets.
Finally, if they really think about it, how much does their strategy work?
I don't know much about shitcoins, nor do I care to know; I'm not interested. I don't know how this company will do it.
In the case of Strategy, I'll explain how it generates the “aggressive” yield of its products. If we refer to yield as such, which would be the overall return, at least to date, MSTR has achieved twice the yield of bitcoin (understood as CAGR) due to its ability to borrow at 0% or almost 0% to buy bitcoin. That's mainly it, then there's been the ability to attract more capital from various markets with the other products it has been releasing.
If we take the latest product, STRC, the yield, in this case understood as a dividend, which it will pay in cash each month, comes from the arbitrage between the profitability of bitcoin and the stability of the product's price. STRC will maintain a price of around $100. If we take a very conservative estimate that bitcoin will grow by 25% annually over the next 10 years, they can pay a 9% dividend and the other 16% is return on common stock. We would have to see what happens in bear markets, for example, but they have that covered.
