Disclaimer – I work for Kinesis and am an officer of the company. None of the information provided here is secret. All is public information. What I am doing here is tying some of this together for my readers.

First, I want to point you to my boss’s latest video in case you have not seen it. This gives you an overview of the value proposition ahead. What I want to do here is connect some dots for you to start to see the bigger picture.

Second, I am also a KVT holder. So, I am speaking my own book here. So take this into consideration when reading is that I have a vested interest in more people knowing what is going on with Kinesis.

Third, you have to realize none of this is financial ADVICE, but what it is, is what I see as an investor in what the KVT is and what it does, and sharing with you what I think is a great value proposition. Understand that with the below, I am sharing public information only, and providing sample numbers to show the mechanics and not projecting revenues or profits. I needed to point this out as an extra layer here because I want you to take this to someone who is telling you to take this to a financial advisor and NOT trust what I am saying here. Do your own due diligence. Run YOUR numbers. I’m just giving you an idea of what I am seeing as an investor, and how I am valuing things based on all public information. This is not forward-looking information, but one possible scenario of many that could unfold. Now that it is out of the way….

Let’s get to it.

What is a KVT?

Kinesis is a privately owned company. It is owned by Thomas Coughlin, who is my boss. Prior to working for Kinesis, I worked in the DoD for 15 years running a large IT team under US CYBERCOM. I was an investor in Kinesis going back to perhaps 2020. Not only was I a wild fan of Kinesis, but at times I would be critical of them. None of this had to do with anything other than the slow release of information. I wanted more and more info. When were more products coming out? When can I buy more KVTs?

What is it? Now that you understand the company is privately owned, and that I was an investor prior to working for them, let’s get into what they are, and why you should care.

In the equities world, you buy shares of a company. Most of us are familiar with public companies and “shares” of ownership. When investing in a company, you look at their 10k, their balance sheet, and take a look at their slide decks. In this world, Kinesis allows people to participate in the company success with purchasing a portion of their fee pool. This fee pool is divided into several categories, like holder yield, velocity yield, etc. There is a KVT yield – which is divided into 300,000 chunks, and each chunk is called a KVT. Or, Kinesis Velocity Token. So to own a KVT means you own 1/300,000th of the share of the KVT fee pool. The KVT fee pool is CURRENTLY at 20% of the total fees collected, or MFP. Master Fee Pool.

Let’s just use an example quickly. Assume in one month, $1.5m was collected into the MFP. 20% or $300k of this, goes to the KVT holders. Since there are 300,000 KVTs, each KVT holder is given $1 yield in that month. If you extrapolate that over 12 months, that’s $12. If a KVT cost you $100 to buy, then this is a 12% ROI for KVT holders when you see $1.5m into the fee pool.

Currently, a KVT is around $400 or so, give or take. That means that using this example, it’s a 3% ROI if the KVT is $400. However, let’s assume you think that in the future, the yield go from $1.5m to $6m in a month. This would mean that, in the future, a $400 KVT would then yield 12% ROI. Meaning, if you bought NOW at $400 you then secured an asset that will be paying you 12% ROI.

So, much of the KVT value over the years has been speculative on what fees will be coming in – from a variety of governmental projects we work with, but also from organic transactions on our exchange.

One change Tom is making is that the KVT percent of the fee pool is going from 20% to 30%. Meaning, if you bought at $400 anticipating a 12% ROI, now that turns into an 18% ROI. This, fundamentally, should “re-rate” the price.

Now, I have been using small scale numbers and approximations to show you how the numbers work, but I have not discussed the catalysts or underlying things which turn this into an amazing thing to do your own due diligence on.

Yields on gold

One of the things that attracted me to Kinesis was the fact that they paid a holder’s yield on gold and silver. Set at 15% of the MFP, the idea was this – if you are a rich guy who vaulted your gold and silver – you pay someone to vault that now. It’s an asset you held to potentially shield you from inflation, but there was a cost center with it. Not only did Kinesis remove the cost for you, but they decided to pay you a yield. This yield was not given based on them leasing out your gold, but rather a passive yield based on the volumes of the exchanges. Last year, we paid out something over 4% to gold holders, on average. This had some significant spikes and valleys based on usage, so this doesn’t mean it will be 4% this year. Or, it could end up as 6% this year.

But that was based on the holder’s yield.

In the above video, Tom had discussed that he would be offering a 10% yield on gold, if someone wanted to pledge their gold for a period of time. Let’s just use more round numbers again. Assume you have $1m in gold you deposited. If you “pledged” this to us, at the end of one year, you would get a 10% yield on this. Pledging it doesn’t mean it is locked in the traditional sense – at any given point in time you can sell your gold, you would just forfeit the 10% yield at the end of the term. So you could take that $1m and turn it into $1.1m.

How do we give 10% to these people? Watch the video and Tom goes over how we will do this.

10% yield on gold?

The gold market

While these numbers change daily, the gold market as a whole is approximately $27T and trades about $227B per DAY. The gold market is YUUUUUGE.

Let’s have some fun KVT math here. Let’s assume we get 1% of the gold market trading daily. That’s $2.27B per day. On our exchange. Buys and sells. I don’t care if gold is $2000 or $10,000 per oz. Friction. Let’s assume that over 60 days, we then have about $70B in gold trading on our exchange.

We charge fees of .22% for a transaction. Extremely low cost. This means you take $70B and times it by .0022. This gives you $154,000,000. KVT holders get 30% of this. That’s $46.2 million. That’s $154 in a month for one KVT. Times that by 12. That’s $1,848 in a year paid in gold and silver, given to you – for a KVT that costs like $400 or $500 today. Let’s assume that happens all the time. Forever. That’s nearly 4-5x on your investment, every year, forever.

However, let’s reverse engineer this. If you invest now in things like Treasuries and get a 5% return, it means if you have $1m you put into Treasuries, you get $50,000 per year in yield. Simply put, it implies the value of the treasury is approximately 20x its yield.

If you are getting yields of $1,848 per year, at 5%, that implies that a KVT is worth nearly $37,000. But if a KVT today is selling for $400, then it means that you can buy a KVT today, and IF we hit that 1% of the gold market trading, that the KVT would be worth about 92x what you are paying for it today. Give or take, but suffice it to say, that is a MASSIVE move.

Products

Now, I led with the gold market here, and 1% of the gold market trading. But….you are missing out on some very interesting products and items.

  • Indonesia. We worked with Indonesia and up to 100 million people there could be buying as little as .1g of gold per month to save. We have worked with them for about 8 years to get this product going.
  • Velocity yield. We pay a velocity yield to defeat Gresham’s law. This incentivizes people to SPEND their gold and silver. At the pump. At grocery stores.
  • Debit card. We have a virtual debit card atm hooked in with Google Pay, and soon to be with Apple Pay. Use your debit card to sell 40 different digital assets at POS (point of sale). So, you choose on the app to use dollars first, then gold, then silver, then bitcoin, etc. Your spending at the pump or anywhere with your debit card means that you ear velocity yield and get paid back yield at the end of the month.
  • Stablecoin suite. We provide a 7.5% yield on our stablecoin, backed by UST and fully attested. We have like $12B backing it, so users can send USD and buy C1USD. This can earn 7.5% if you just hold it there, or perhaps buy gold with it and pledge that for 10% yield. Or, do some Forex trading to sell C1USD for C1JPY or the like. Maybe you are doing some travel and you can use your debit card in Japan, and select C1JPY to spend in Japan.
  • Lat American country. There’s an announcement incoming, so I do not want to talk about this here, but know another nation state is joining us in partnership.
  • 23 commodity coins. Ever wanted to invest in oil, but don’t want a futures account through your brokerage which adheres to weird trading hours? You will be able to buy and trade 23 different commodities. Backed by the real thing. Think of the amount of trading this will bring?
  • We also have bullion products and jewelry we sell.

Ramifications on industry

  • Imagine you have $10m you vault in gold. Anywhere in the world. It costs you money. But now, Kinesis will take your gold and give you 10% per year, if you pledge it into the system. Again, see the video from Tom on how this works.
  • Imagine you get 1-3% to lease your gold out. Now, WE will give you 10% instead of the 1% or so.
  • Imagine you have thousands you put into a Pax Gold or Tether Gold for exposure to gold. You would need like 100-400 oz to redeem it. Instead, you buy Kinesis KAU on an exchange, send it to us, and get 10% yield if you pledge to us. Assume you want to redeem it. you can redeem as little as 100g.
  • Imagine you are a US pension fund and have 1% exposure to gold. Your pension fund is not legally allowed to own junk bonds, but it is permitted to own gold. They take out the gold they have from a local depository and move it to Kinesis and pledge it for a year. The pension fund can get 10% return on this.

What may start to happen is that Kinesis Money starts to act like a giant electromagnet to start sucking in a lot of gold. I mean a LOT of gold.

Things to consider

  • We haven’t really even started marketing yet.
  • We have massive projects coming online
  • We have been doing gold and silver since 2011, and have been in the crypto/digital asset realm since 2018. We are not only a survivor, but an industry leader in the space.
  • KVTs are investments in the fee pool. If you think the above may drive much higher fees coming into the fee pool, then you can do your own KVT math to see if it’s worth it. At 1% of the gold market trading on our platform, the possible implied value of a KVT is $37,000. Now, consider the ramifications of our company hitting the marketing button – soon – and advertising this 10% yield to the entire world??
  • Soon, the CLARITY ACT may pass. We are GENIUS ACT compliant, and with the CLARITY ACT coming – and potentially passing, this will significantly reduce risks for digital assets by introducing regulatory frameworks and continuing to fight money laundering.
  • FTX scarred the entire industry for years. More on this below, but we do NOT use leverage. Everything we have is backed 1:1 in vaults and audited by Bureau Veritas.

Types of digital assets

I spent the early years of crypto discussing these, ad nauseum. I put on a hat like a biologist and did the classification of assets and then looked at “crypto” to do the same thing.

What you would say 5 years ago is “crypto exchange”. What I would more carefully market this as today is a “regulated digital asset exchange”. We are regulated by CIMA. With this, we all have anti-money laundering training. For the sake of this writing, there are 4 major types of digital assets.

  1. unbacked. This is where it all started with bitcoin. These “digital tokens” are where the industry started, then exploded to like 20,000 coins at one point. These coins all are untethered to anything in the real world. While you may have “bitcoin maxis” and the like, the major element with this class is that it gave us the technology of the blockchain. Think of this like a public ledger of who owns what. You buy someone’s space on a blockchain, and that is called a “token”. What FTX did – and what other exchanges did, and others continue to do – is allow trading on leverage. What happens is that these tokens are so volatile, that people could either be millionaires or be wiped out in seconds. The highly speculative nature of these along with many exchanges offering massive leverage led to most of the FTX-like issues you have heard of. Kinesis offers trading of some of the largest unbacked tokens, but does not offer leverage. Consider this – you have Bitcoin somewhere. Send it to us, then trade it to a market maker for C1USD, then buy KAU or KAG or KVT with it. Or – maybe you like bitcoin a LOT and you sell your KAU to get into bitcoin. We are agnostic on the prices – we offer the exchange.
  2. asset-backed digital currency (ABDCs) – this is the term I came up with in 2021 when talking with the late great Jim Forsythe. What these are is what Kinesis was more or less built from. Every token of KAU (gram of gold) is backed by gold in our vaults. We have massive piles of gold in our vaults, and when you mint from us, it takes ownership from our pile of allocated gold to the users’ pile of allocated gold. When you buy gold from someone else on the exchange, there is a small fee we charge in friction. Title of that KAU is transferred from them to you on the blockchain. We do not have any title to your assets, and we do not have them on our balance sheets.
  3. Stablecoins. Today, if you want to send USD from the US to Australia, it could take 5-7 days by doing a wire for $30-$75 and pass through like 5-6 big banks. Stablecoins are pegged to the dollar (or whatever other fiat) and are backed by dollars and treasury notes. The idea here is that you put money on exchanges around the world. Then, if you want to send USD from the US to Australia, it takes .07 seconds and ownership of that stablecoin is transferred. Anything you hear bad about “crypto” today is meant to derail regulated digital asset exchanges
  4. Real World Assets -this is where you have buildings or properties tokenized. This is still in its infancy, and I can’t talk much about it, but it is coming soon!

Now, the KVT doesn’t fit really into any of them and there are many types of things like this many companies do. But for the sake of what are most commonly used in this industry, these 4 types can help you at least wrap your arms around the 101 of this.

With that all being said, is a KVT at $400-$500 today kind of a steal? I think so. I have put quite a bit of capital into it, and I left a DoD job after 15 years to come work for this company because I believe in it so much. While I have never sold a KVT, I have given away fractions of a KVT to others based on my conviction of what is to come, and to provide my close family and friends a stake in the game.

It is my believe that once the word gets out on this, they will be bought up quickly.

Fun fact. If you understand that there are 300,000 KVT – and you look on our exchange, there are only about 100-120 for sale at any time. This means that no one wants to sell these, and the only people that are, seemed to have either gotten over their skis and need some quick cash or have been invested for a long time with Kinesis and need to move money to other assets. Most of us are die hard believers, and it’s REALLY cool working for a company where everyone is a die hard believer.

In Tom I trust 🙂