A DeFi model for the energy bottleneck: Daylight CEO Jason Badeaux

Transcript

But the best performing alts or many of them have been lending yield focused businesses that are scaling uncorrelated yields in DeFi markets because DeFi is now entering this phase of growing up. What's up everybody? It's LG Doo here and welcome to the Milk Road Show, the daily crypto show where the market makes less sense every day, but somehow the opportunities keep [music] getting bigger. Today is January 7th, 2025. We are recording this on January 6th, 2025. And listen, we spend a lot of time on this show arguing about price cycle narratives, but we never ever talk about how crypto is actually going to revolutionize a lot of old systems that have been built in the world. One, for example, is the energy grid, which is quietly breaking, as a lot of people know. And the way that the energy grid

is financed has not evolved in decades. And that's what today's conversation is actually about. We have Jason Batau, the co-founder and CEO of Daylight, joining us to explain how crypto is actually starting to play a real role in funding energy infrastructure and why this might be one of the most important places blockchain shows up outside of the markets, outside of just price action. Today's episode is brought to you by Reserved ETFs, the onchain equivalent of ETFs. Chain Link links web 3 to Wall Street and Bridge sends stablecoin payments instantly simple, global, friction-f free. And I am also joined by my co-host Kyle Reedhead, the co-founder and owner of Milroad. Here we go. Kyle, welcome back to the show. And Jason, welcome to the show for your first appearance ever.

>> Amazing. Thanks for the invite, guys. Excited to be here. >> Okay, listen. I we need to understand because we always ask people like, "What do you think about the market, blah blah blah, but honestly with you, Jason? Uh I think we have a more direct question. What the hell is daylight and how does it work and what is it doing to solve the energy crisis?" >> It's a it's a really great question, right? And there's a few parts to this and we'll kind of break down each part, but at its core, Daylight sells more reliable and affordable power to homeowners while scaling new energy capacity for power grids. That is our northstar in our mission is to be the largest and fastest energy asset developer on power grids that we can possibly be. As we think about the constraints of kind of the next decades,

electricity is now really the limiting constraint to the industries and progress that we are all looking to push forward. Whether that's AI and compute growth, uh electric vehicles and autonomous fleets, robotics, reshoring of manufacturing and industrial capacity, all these things are straining electricity grids and straining demand for electricity in a way that we haven't seen in decades and decades really since the initial kind of buildout of the grid. For the last 20 years, energy demand growth has been pretty much flat in the US and developed markets because efficiency gains and globalization offshoring manufacturing just resulted in this world where energy demand was pretty consistent for electricity and now that's totally changing. But the problem is serving all that new demand is incredibly difficult, especially from

a centralized development perspective. There's something called an interconnection uh queue and review study you have to go through if you're building a massive power plant. That used to take two years. It now takes upwards of five before you can even start constructing your project. Then you have the construction phase. There's now 2-year wait times for transformers and critical equipment. So you're looking at this massive 6 7 8 9 wait time to get new energy capacity on power grids. And distributed energy uniquely offers a better, faster, and cheaper way to get new energy capacity on power grids. Right? We can put solar on homes, batteries in homes in a matter of months instead of a matter of years. We can aggregate those so that they can actually through software work together to support power grids and provide

energy to the grid in a way that a traditional power plant would. And uniquely unlike large utility scale energy development, it provides immediate and measurable savings and reliability to the individual that's hosting it. Right? The individual gets power cheaper than they're getting it from the grid. They get backup power from the infrastructure that's on site in their home. And we still get an asset that we can use to support the grid. So we think the future of energy development is distributed and dist and decentralized. And so as a business that is our core function and our core focus. We use crypto behind the scenes to really scale this. We'll talk a lot about what we're building and why, but that is our core focus is building and scaling new energy capacity for power grids. Milk Road is hiring a head of product. If you've built real products

and you think like an owner and you want full control over tools, research, and community used by millions of investors, this role is for you. Check the link below and apply today. help help me understand and and our listeners understand why we have such an energy problem. I'm sure a lot of our listeners are like, "Yeah, my electricity bill has gone up over the last 5 10 years, especially in some states. It's gotten really bad." In some states, you can't even get energy. I think it was California was like out of energy for like three 3 days a couple weeks ago, right? So, it's it's obviously a problem. Is it the AI data center buildout? We've heard a lot about that over the last few months. They're using up a ton of energy. Or is there more? Why do we have such an energy strain right now?

>> It it's really it's it's kind of an all the above problem, right? It's the growth in data center buildout and compute loads. It's the growth in electric vehicles and autonomous vehicles. It's the growth of new manufacturing capacity or manufacturing reappearing. All these things are beginning to strain grids. And you couple that with an increasing amount of the supply mix of electricity is renewable. So it's more built. It's it's less controllable than ramping up coal plants, ramping up natural gas plants. So we have more variability on the supply side. We have new demand patterns, right? Heating, electric heating growth through heat pumps is growing rapidly. Electric vehicles are growing rapidly. That changes the profile of electricity demand. And the aging of the grid itself is another massive problem. A huge portion of the

grid, a majority of it is really at or past useful life. And utilities have a responsibility to update this. And they actually have an incentive to update this in a way that doesn't really correlate with lowering costs. actually increase in cost to to customers because of the way their business model works through something called a rate base. They effectively get a 10% guaranteed yield from governments on every dollar of capex they spend. And so of course they want to spend as much capex as possible to increase the yield they're getting on every dollar of spend. So all of these things are coupled both the aging of aging and replacement of transmission and distribution infrastructure growth in energy demand from all these new sources and then increased variability of supply is just creating this really interesting storm that we haven't seen before in

electricity markets and that's reflecting through increasing power prices. The EIA a month or two ago just released data uh tracking electric retail rates to customers. The residential in market from 2024 to 2025 averaged across the US. This is not the highest markets. This is just average across the US. Average residential electric retail rates from September 2020 24 to September 2025 increased by 7 12%. The the government and its official statistics reporting is now saying that inflation was muted except for rising electricity costs, right? It's just like that is now like something they are reporting. And so this is becoming one of the critical storms that the I think the the progress the next 10 years and 20 years are facing is how do we solve

this bottleneck problem? I think the administration's facing it. I think a lot of people are starting to think about energy and energy affordability as a huge talking point for the next election. And I think a great example of this was two massive data centers. The plans for those data centers, one was in I think Ohio and I can't remember where the other one was, were cancelled. These are like Microsoft scale data centers were cancelled because city councils and their local populations were too concerned about the potential impact on electricity costs over the long term from building out these new data centers.

>> Um so there is now a legitimate uh kind of ground swell grassroots push back against development of of data centers and and growth that we need to resolve or else I think we're we're in a lot of trouble as a country. >> And the grid you keep saying the grid. This is like basically what powers most of our homes today. And is this run by the government? This is run by private companies that's subsidized by the government or is it kind of different everywhere? >> It it's it's a mixture. So, you know, and it depends on on the market that you're you're operating in, >> right? >> We focus in largely deregulated power markets. The majority of the US lives in in deregulated power markets. There's different means of deregulation, but you typically have a quasi government nonprofit entity that is operating the

grid and the market for power. And then you have private entities that are supplying power or generating power and then private entities that are potentially even supplying power to the end customer where they can actually choose who their electric supplier is. So what you see in most of these deregulated markets, it's kind of centralized control over the transmission and distribution infrastructure and then competition on generation and competition and electric supply. >> Okay. And the issue right now is they're not really doing a good job in terms of like innovating and trying to create more efficient means of bringing in energy uh and providing that to their you know to the residents of wherever they are. uh and instead they're kind of just like like a government wasting a bunch of money kind of slow moving and as a result energy costs are going up

because we're not really producing more energy or getting more efficient at at that at providing that energy yet energy demands are going up like absolutely crazy and that's probably just going to continue to accelerate I would imagine year-over-year especially as AI and and data centers and all that continue to build out. Well, not only are they not doing it, but utilities are incentivized to not do it, right? And that that's kind of core root of the problem is that the problem won't change until the utility business model is basically totally reworked or replaced by something better. And you know, we're starting to see that emerge.

>> And when you say distributed electricity, this is like kind of what you guys are trying to do. Um, and this is the thing that's been talked about for a long time with renewable energy, which is instead of relying on the grid to get your energy. You know, people who live away from the grid where they're nowhere near it, they just get their own energy. They do it from solar panels or they might do it from wind or they might do it from, I don't know, whatever. This is kind of what you're saying is let's do that at scale um and create instead of this huge grid that is very inefficient and, you know, not really incentivized to provide lower prices for for people. Instead, if we distribute it, everyone kind of can get their own energy and we don't have to rely on this

big grid anymore. Is that kind of the idea of what daylight is trying to do? >> Well, I think it goes a step further. It's not that we aren't trying to rely on the grid. It's that we are trying to make the grid much more efficient by building it in a more distributed fashion. Right. Whenever we install solar and storage on a home, that home is not disconnecting from the grid. The majority or nearly all of their consumption is now being offset by the local production, but they are still importing and exporting. they're still able to, for instance, we're take we're able to take the batteries and export them through the existing wires back into the grid to support the grid when it needs capacity. And so our nodes are going from purely a consumptive, you know, uh, connection to the grid to one that is much more of a proumer. They're

producing their electricity, they're consuming it, they're storing it, and they're sharing it. And all that is optimized depending on, you know, the price signals of the market in order to actually support the grid in the best way possible and support the savings of the homeowner and their reliability. Can Can you Hold on, LG. I'll let you ask a question for this. I just want one more question. Someone that's using daylight, like in my home, what are you doing? You're putting solar panels on my roof, putting a battery in my garage, and then I can like charge my car and do all the things in my house via that battery, but I'm also still connected to the grid, or like walk me through the like the setup of what this looks like to be in this distributed energy system rather than just on the grid.

>> Yeah, so whenever you subscribe to Daylight, you get solar and storage installed in the home for no cost. uh and you begin buying the power that we generate from that hardware versus the majority of your power from the utility itself. So it's kind of like this hardware as a service model where we're installing the hardware, you're buying the output of that hardware, which is the power that we're generating and that is priced at a pretty significant discount to what your local utility is. So right now our average discount to our customers is about 30%. So the customers getting a 30% discount to their local utility rate immediately. That's immediate savings. They're getting backup power from the battery when they need it when there's a storm or there's a potential threat of a power outage and they're not having to buy the hardware uh in order to do so, which it can be

prohibitively expensive for for many many people. We size the systems to try to offset as much of the power as possible and and it the power consumption as possible and it it changes based on you know the market and and the way we kind of maximize savings for the the homeowner. But the general idea is that we are attempting to cover the majority of your energy consumption with the production from the system. Now that does not mean that one for one you are covered by the production. What that means is you know solar produces during the day. Excess may be stored in the battery. You may use the battery at night. We may discharge the battery to the grid to support the grid. So instead you're importing from the grid, but you get credits from the utility for that export that we did that's offsetting

your import from the grid. So, it's really just this big credit and debit system, if you're familiar with how accounting credit and debiting works. It's crediting and debiting power flows and using that to maximize your savings as a homeowner, while also creating a, like I said, a new asset that we can utilize to support the grid. Very small at one home level, but when there's many thousands of homes connected is the size of a traditional power plant. Uh, and we can orchestrate that all together to support the grid. >> Okay. Okay. So, just one clarification cuz I was like, you almost lost me there, but so basically you're you're bringing in energy from solar, it goes into a battery and what you're saying is you either use that energy or that energy goes back to the grid and you sort of almost like you you sell it or

as you said take credits to go to the grid. So, you're actually generating some revenue, let's call it, or some income from that energy that you had that you're not actually using. Is that kind of what you meant by the input output? >> Again, this is very variable by market and we're getting really into the weeds here. uh and the the the sav the >> the savings maximization is very dependent on what are like the local tariff regimes by the utility in that market. So in markets that have something called net metering >> we can export your solar to the grid or we can export from your battery to the grid and we get credits from the utility at the retail electricity rate for every kilowatt hour that we export. So if the retail electricity rate is 30 cents and you import a kilowatt hour of

electricity, you pay 30 cents for it. And then we send one excess kilowatt hour from your solar system to the grid, they credit you 30 kil 30 cents for that kilowatt hour and they net out at zero. So your net payment to the utility is zero. So because the system is sized for your total consumption, if it's sized correctly, you should always net out pretty close to zero based on the imports and exports. you could run the entire system and not consume a thing from it, but you're pushing out all of your you're covering all your consumption with the export to the grid. Now, other markets don't have net metering. In those markets, we're maximizing your savings by using the battery to to run your home and extending the battery life through the night or through the evenings or through the mornings before the sun or after the

sun is uh is producing through your solar system. So again, this is just a big optimization problem that ingests what is the tariff regimes, what are power prices, and how do we maximize those savings to the homeowner while also maximizing revenue to the network by supporting the the the grid and effectively using our our batteries to arbitrage power prices or provide distribution reliability to utilities. ETFs provide investors with a structured, disciplined, and diversified approach to crypto, which is cool, but the world is moving on chain. We need a crypto native equivalent. That's exactly what Reserve's decentralized token folios [music] bring to the table.

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How much of this unit provides the the daily or annual use of electricity of of an average American household? like how much how much are you actually able to fulfill with this device or with the the panels and the battery? >> Our target our target is as close to 100% as possible in most markets. Some markets you may actually go slightly above and other markets you may go slightly below. And it all goes back to what do we need to do to optimize the savings for the homeowner and the reliability for the homeowner. Um that is always like the critical function >> and and what do you need to scale this? Because you're already giving me some of the challenges that it's like every MUN is different. you're going to encounter, you know, so many different levels of red tape and policy and everything. How

do you actually scale this to be nationwise or nationwide or even global, which is I'm assuming is something you want to do? >> I think that's all fairly navigable, right? It it's at the end of the day, it's it's it's math and and these systems operate the same whether they're in California or New York. What's different is to your point, how what is the the regulations and what are the tariff regimes associated with that utility or that energy market. All of that I think is fairly navigable with the right team that is building out the playbooks for each of those markets. The constraint to this is actually this gets us into crypto is is just I think capital access and capital availability.

The distributed energy space is one that has been very niche from a financing perspective for a very long time. There are small private credit funds that specialize in this space. There's, you know, smaller securitization markets that participate with very large companies like Sunun, but overall it's a pretty niche market. And what we are looking to do with daylight and day is create a new kind of capital markets layer for distributed energy specifically using DeFi rails. Um and so you know I think a great parallel to this is what Figure is doing in the HELOC market. If you're familiar and following what Figure's done around their tokenized helock products, Figure identified a unique market that had very niche financing capabilities and they built a marketplace and and are building

and executing now on a marketplace that's built on DeFi Rails and DeFi liquidity for financing that asset class and then built the business to dog food that marketplace with the intention of expanding that financing marketplace down the road. Daylight and DFI are operating very similar. We're building this new capital markets layer that's inherently built on DeFi rails and plugged into DeFi liquidity and then building the actual operating business that is using those rails and dog fooding those rails and bringing originations, bringing yield, bringing contracts to that platform. And then over time we expect to expand and open that up to new forms of distributed energy, new geographies of distributed energy where we don't specialize as you mentioned and allow other organizations and other teams to plug in and utilize this energy defy uh you know yield

infrastructure borrowing lending infrastructure we're building to scale their business uh with the capital needed to scale. >> Well, help me understand why you need the sort of like DeFi and lending layer and all that for this. Isn't it as simple as if I want to use daylight, I can just pay for the solars and the batteries and away we go. And now I get 30% discount on my energy and I never have a blackout. Why do I need this like capital layer that you're talking about? Like help me understand the problem so that we can see how crypto is is helping with this.

>> Well, you don't need the capital as the customer, right, Kyle? But I need the capital as daylight the business in order to fund the $35,000 system that I put in your home and then replicate that over hundreds of thousands of homes. Um a huge if we're talking about the capital just to build out solar and storage on every home in the US, we're talking about close to $3 trillion of capex. >> Um and so you need a new capital market system in order to finance this buildout. our core belief and it seems to be repeated now and I think is becoming quite common knowledge when you look at what the SEC is doing when you look at what the Fed's doing hearing uh you know um JP Morgan start to talk about their efforts is that the world is moving on chain and if you're going to

build a new capital markets business I think the highest alpha opportunity is to build it on chain and be the first to plug in a new unique kind of industry product into DeFi and then capture and own that industry as the financing layer for it for for the next hundred years as kind core financial infrastructure. >> I understand now because the the customer isn't actually buying any of this. You're buying it all. We're just sort of well, we don't pay anything for it. You just install it and away we go. >> Exactly. >> If if crypto didn't exist, how would you finance this? Or could you even finance this? Would this just not even be possible? Or like how hard would this be? How difficult would this be to to finance this?

>> You certainly can. And there are businesses that that have done this, but they're much more bespoke. And if you spent any time in the world of private equity or private credit, you know how painful these systems can be. You know, for example, you would typically go and build out a warehousing line or or have multiple warehouse partners. They would have very specific bilaterally negotiated all different uh advance rates, LTV requirements, terms that they allow their warehouse to be drawn when those cycles have to be paid back. All of them are have different terms. You would have maybe a forward funds flow buyer or a private credit fund that's standing behind that warehouse line where you can sell those assets to.

again all bilateral bilaterally negotiated what they're willing to pay and lend against and then ultimately you would have the securization market which is you know Sununs and and now a company called Palmetto are really the two companies in the space that have access to it today where you would take these you know well seasoned assets that have been held either on your balance sheet or in the warehouse or in with the the the private credit funds and then you would securitize those assets and sell them off as a securization tunch and so it's just a really I think clunky inefficient market and it also totally locks out anyone from being able to access this really interesting and novel um yield stream which is energy related yields. If you want access to energy directly today, you can buy utility stocks, right? You can buy independent

power producer stocks, but those are all, you know, really wrapped in a corporate wrapper, right? You're not actually accessing the underlying commodity. Whereas these these private infrastructure funds or private credit funds are getting direct access basically to the yield stream itself. And so by tokenizing this and building on DeFi rails, number one, you can just build a marketplace that functions as the marketplace functions and lenders and borrowers can come to it and clear transparently. It's not bilaterally negotiated. It's just enforced according to the rules of the marketplace. Think about a right. If I want to borrow, if I want to borrow USDC against my ETH, I go to the market, the market quotes me a price. If I want to borrow it, I can. If I don't, I don't. If I want to close it out, I can. If I want to continuously roll it into perpetuity, I can. It's

just a constant clearing marketplace of borrowers and lenders. I think many markets are going to move from these bilaterally negotiated um you know p private private contracts to something that looks much more like an actual liquid marketplace. uh and also of course expands access to this asset class to everyone whether they're institutional or not to get access and start to build portfolio exposure to to interesting new things whether it's helocks with figure whether it's you know GPUs with USDI whether it's energy with daylight does this already give you access to more capital as well this is the thing like obviously the onchain financial market is eventually going to give access to way more capital because it's global and there's no restrictions

and all that kind of stuff. But today it's definitely much smaller than the traditional world. So is that an issue today for you or is there is there certain ways where all the capital that exists that could buy the stuff already is able to do it on chain or like is there that friction problem of like they've got to get on chain first and get their capital on chain and then they can go and interact with this. Like how does that work today? >> Well, I think if you're building this correctly, you're merging both and DeFi infrastructure into your marketplace. And we can talk a little bit about how that that could potentially happen. Again, I I've used an example a few times, but I think figure is the closest to having figured this out where they have rails for tradi to participate. And by the sec, you know, the second half of

2025 have really been executing on how they're integrating DeFi as a separate trunch of capital into that. But I also would push back that there's not enough capital in DeFi. I actually think that the fastest growing financial products in all of human history have been built on DeFi. Athena is a hedge fund, right? People like to call it a stable coin, but it's a hedge fund. Uh it's a tokenized hedge fund position. It's a fantastic product. No hedge fund in history, none of them that you ever met have ever gone to 78 billion of TVL in in 15 months. Zero. Literally zero. And so if you build what I think is really compelling about these uh about DeFi is if you build compelling financial products that users can trust that they can verify that have differentiated

yield streams that are not available in DeFi today then you can go and scale much faster than you can in the the traditional financial markets significantly faster. I also think by being early to these markets again all signs are pointing to the whole finance industry is coming on chain. We know how network effects in crypto work today. It's about liquidity. It's about what's accepted as collateral. It's about where can I cross compose these assets. There is going to be lendiness to being early to DeFi. And so if you are the energy bank of DeFi, you are going to be the energy bank of DeFi for the next hundred years.

>> If you try to come and compete with us after we've already built the network effects around liquidity and composability and crossc collateralization, you will not be able to compete with us because our assets will be so much more useful in this new financial system than yours. And so I think number one, you can get much more capital than you can in traditional finance. Number two, as you think about building a business that is a 10 billion, hundred billion dollar business, you want to be the first to build and own that market infrastructure. Uh because you will become the standard just through network effects of those assets. >> I wouldn't mind actually just zooming out for a second, Jason. So I don't know Kyle you had like a more in-depth question but I want to understand again a lot of our audience we are we are

retail investors maybe a little bit more elevated than that maybe looking to get into the game. I think for them maybe you can just zoom out and explain from a crypto perspective again as people that are long-term holders of you know some of the majors and are always looking for something new and interesting to kind of get into. A, I want to know, okay, how can they actually use your product, right? And you can you can kind of circle back on the yield and you already told us a little bit about that, but maybe a little bit more straightforward like really the consumer pitch and also what kind of opportunity should people be looking for in this sector because obviously you understand it really well. You know what's going on. You you you're referring to uh a figure which Michael Tennibomb came on the show two days ago.

He was on Monday uh to tell us about [laughter] kind of funny, right? Uh, so clearly there's a theme this week for us, but I think we want to know as people start to understand these things, and it might be a little bit over their heads. It's definitely a little bit over mine. From an investor's perspective, how do I get exposure to this kind of stuff? And and and what how what do I need what kind of trends do I need to follow to actually stay on top of it outside of listening to to interviews with you? >> Well, I think first, all this is not financial advice, so not telling anybody to >> emphasized many times at Milk Road. Don't you worry. [laughter] I think one of the big trends of 2026 in in crypto and DeFi is going to be the proliferation of these new types of

tokenized yield streams. If you look back at 2025, it seems like the meta was very much trading, trading, trading. Launch as many meme coins as you can trade those meme coins. Pump them, dump them, pull out your liquidity. I think that game has played out. People are tired of it and the industry is actually kind of forced the industry to kind of mature. We've seen some of the best performing alts. I think you guys mentioned, you know, markets been pretty ugly, but the best performing alts or many of them have been lending yield focused businesses that are scaling uncorrelated yields in DeFi markets because DeFi is now entering this phase of growing up. And so when you look at Maple Finance and and the growth of Syrup USDC and and the performance of the syrup token, you look at Sky and what they're doing with OEX accelerating

new protocols and becoming the central bank of crypto to basically lend at the prime rate to protocols that are then building new composable assets in DeFi. I think this is really the trend for 2026. And so as people are studying the markets, I think the most interesting thing to do is to find the teams that are executing on a vision and a mission to bring these uncorrelated interesting composable new yield streams to DeFi. Not in like the classic like, you know, 2018 sense of, hey, we're going to tokenize everything. I can buy a I can buy a fraction of the Empire State Building. That's [laughter] not super super interesting in my opinion. Yeah, >> I think what is interesting is these, you know, broader composable products that that, you know, similar to an a pool represent my LP position in a

broader pool where there's cash flows coming from something that's uncorrelated with crypto markets that is being used as collateral and that I have this overcolateralized lending position that is now generating yield from this this new source. Obviously, as like an investor, you want to go and study these sources, learn about them as much as you can. Thankfully, we have, I think, all the tools in the world at our fingertips now to learn about these, whether it's like Claude or Chad GBT or Gemini deep research, you know, documentation that teams are putting out and the content that they're putting out. But as I as I kind of make my own personal decisions of allocations, it's about which of these yield streams do I think are durable and interesting? Have the protocols been designed in an interesting way where I feel comfortable with with kind of their their

mechanisms? of course things happen in in DeFi and crypto but you know kind of understand how they've designed the system and then and then make allocations you know sized appropriately. So that's how I I think about it. But I think this trend USDA is a great example, right? You know, there's 650 700 million of TVL, something in that ballpark. Huge swell of excitement around GPU collateralized lending and it's taking all the work we've done in DeFi for the last, you know, five, six years, uh, and taking that infrastructure and taking those learnings and applying it to new types of collateral, new types of cash flows, and new types of markets. That's going to be the most exciting thing over the next year, I think.

>> [gasps] >> Can you um get a little bit more specific and help me understand how I how I actually allocate to this? Is it a token? Is it like an ERC20 token that I'm just buying and I'm holding in my MetaMask wallet? Um and that's giving me yield. And so that's the first question. Second question is like what kind of yield can I expect from this? Um and then can I do things with it? Is it composable? Can I go put it in a or in Morpho or something and get some stable coins uh from it? like can I do things with it or will I be able to if I can't today? >> Yeah, it's not live today, but we're actually planning to launch the pre-eposit vault in the coming weeks.

So, it's going to be a very exciting time when users can first start to get access to what we're launching. >> We are launching both a marketplace that is more permissioned if you think like you know a horizon style or figure democratized prime style where there's this kind of direct relationship between lenders and borrowers. Borrowers are whitelisted. their collateral is defined, you know, in the terms of service and that's collateral we're talking about are these these energy contracts and then we'll have the tokenized composable liquidity layer what we're calling grid and grid will be that composable asset that is built on this yield stream from the marketplace and so exactly what you're talking about right it's composable in DeFi uh ideally we'll be incentivizing really deep you know uh um dex liquidity really deep lending liquidity building a robust

marketplace around this whether it's you know interest rate volatility with Pendle, whether it's um stuff that Cork's doing to kind of incentivize new methods of like managing duration risk around these products. We'll be building a really robust ecosystem. We're seeking to build a really robust ecosystem around um around the grid token and the grid ecosystem uh to make it as maximally useful as possible in DeFi like we've talked about. Now, this grid token is not the equity of daylight, correct? This is just your this is like your USD for Athena, but it is not your ENA. Will you have a token or will you tokenize um daylight or will you end up being a public company or like how do you think about that side of things?

>> It's a great question. I don't know how much I can reveal today uh about our thinking but you know we we started as a a deepend protocol and we've talked a lot about the the the DeFi elements of what we're building but our core vision has always been like how do we build a more community focused and like communityowned energy network because at the end of the day it's the homeowners that are building and expanding and hosting infrastructure that are helping us scale to capital providers that are helping us scale and so you know I I we're we're interested in kind of exploring you know what does what what what makes the most sense for the company and what makes the most sense for the network as we scale in order to kind of meet what what we're seeking to do. Like we said, you know, community

ownership has been kind of core to what we we really want to do. Um, so I think later this year, hopefully that'll become more apparent what our plans are. >> Great. Kyle, I'm pretty happy to wrap up there. Jason, I feel like this has been a great conversation. Kyle, did you have any other questions for Jason? I feel like you're you're deeper in the weeds here, especially as our as our AI kind of investing guru so far, although we have many others on the team that have joined recently, but uh and AI is not really related to what Jason's doing, but energy is obviously a huge part of it, right? And this is all kind of part of one bigger equation. >> Exactly. It's a great way to put it actually, LJ, the way the way you just said, I think a lot of people often

times miss, you know, we talk a little a lot about the residential market because that's where we're focused today. It's the longest tale. We think it's the most interesting. It's the most scalable from like a repetition standpoint. every project's about the same even though there's a little bit of nuance compared to like a CNI business. But to your point, it's bit part of one bigger puzzle. The more energy capacity we bring onto power grids through our homeowner network, the more energy is available for new loads to connect in, whether that's data centers or, you know, new manufacturing facilities. And so just because the asset is not going, you know, we're not we're not putting coal plants or natural gas plants or nuclear plants at data centers does not mean we are not part of trying to solve that broader problem which is energy availability on power grids.

>> What is the adoption like? I don't know what you can tell us in terms of the numbers of daylight. But is this a thing where you go talk to are you guys like boots on the ground knocking on doors like the old days and just be like hey do you want to sign up to this thing and is it like people like yeah it's a no-brainer. It seems like a no-brainer, but I'm just curious like what is the adoption like for this? >> Yeah, so we actually kicked off uh our energy subscription product, which is this kind of power purchase agreement product in November of 2025. So, we're just getting rolling. We are primarily originating through a B2B TTOC embedded fintech product line. So, we basically make our financing and origination platform available to local solar companies in our core markets and their origination partners. And they're going

through and selling on the ground under their own brands. They're acting as the installer of record. So they're contracting for the installation of the hardware and they're using Daylight to finance that with the homeowner at which point we take over kind of that customer relationship. So we're scaling through this B2B TOC embedded fintech product. We will increasingly focus more on direct originations as well through our own website, their own app, their own referral programs. Um and it'll be exciting to see that kind of scale over 2026. Stable coins are the biggest use case in crypto right now. But let's be real, using them on chain is still way too complex. That's exactly the problem Bridge is solving. Recently acquired by Stripe. Yep, that's Stripe, Bridge helps businesses send, store, accept, and

launch stable coins instantly. Explore the future of global financial infrastructure at milkroad.com/bridge. Where did this is complex company? Where did this start from? Like were you an energy guy first or are you like a DeFi guy first that was like I need to find a way to create a vault. What's the best way to do it? Oh, it's energy. Or was it I need to create an energy thing and help solve the problem here and you know this new capital markets thing in DeFi is a way to help solve that. What started this? >> It's the it was the latter. So I started my career in investment banking in the energy and power group doing M&A debt capital markets moved into private equity investing in infrastructure services focusing in power and it became very evident that you know this was going to be a problem. We need to build

much more energy. We need to make it much more available. Uh power prices are going to continue to rise. Reliability is going to continue to decline. So can we build a product that is better for homeowners? that is better for people that are most affected by all the progress happening over here but are really affected by that potentially can we make something that's better for them that also helps solve the problem uh that we're facing as a society and so that was the genesis of the the idea is what can we build there when you study what is the problem set to solve for I think it's two things like we've talked about right it's capital capital capital markets and capital availability and then incentives and behavior adjustments and getting people to really buy in and be excited about the type of product that you're building in an industry that

tradition traditionally is kind of boring and and utility uh right >> and so we you know helium was a big big inspiration uh figure was a big inspiration as we just studied these businesses that were executing across crypto as a new operating system for financial markets it became clear that it can solve many of these problems that we're looking to solve while still kind of sitting behind the scenes and building just a great customer experience on top of it >> very cool anything else we're missing Jason anything that we should be aware of when we try to wrap our heads around around this space or do you think that we've covered most of it.

>> I think we covered most of it. >> Jason, what's the biggest regulatory risk andor development that you want to see? We talked about like you guys, you know, uh policy at different levels, but is there anything obviously it's going to be a big year hopefully for policy for crypto? Is there anything that you're like that's that's the bill we need this bill to come through or is that or does it not really apply to you guys? >> I think I mean it certainly applies. We we're I think huge fans of where Clarity is trying to head. We would love to see the Clarity Act pass. that I think is probably one of the more transformative pieces of capital markets legislation since probably the securities act. And so I think it will just be absolutely transformative for our markets. The stuff that the SEC is doing, the stuff

the Treasury is doing, putting out, you know, innovation reliefs, talking with the industry, this is all great, but we, you know, seeing it codified in law would be exciting. Funny enough, actually, compared to everyone else in the crypto industry, a lot of our policy focus over the last year has been on the one big beautiful bill because it had pretty significant reworkings of tax credits for energy. >> Yeah, exactly. For um supply chains for energy because not only are the tax credits reworked, but uh how much components of a project can come from China, you know, changes every year and that affects your tax credit eligibility. So, we unfortunately have a pretty complex regulatory apparatus and quite a few consultants that help us kind of across both sides of this market, but um it's certainly been an interesting year for policy for us.

>> I'm sure it will be this coming year as well. Jason, thank you so much for coming on the show, man. Uh very excited for what you guys are doing. Thank you for uh taking like 40 minutes to to to to answer our questions about exactly how it works. Uh and cool to see this kind of stuff coming into crypto, man. both whether you're somebody who wants the panels up on your house and the battery in your house or you uh you just want to you know get into the protocol and your your pre-eposits coming up later this month. >> Thanks so much for having me. This has been been awesome. I actually didn't mention this at the beginning but I think I signed up for Milk Road on the day that it launched. >> Hell yeah. Let's go. >> Uh so I think I'm a day one subscriber

to the newsletter. >> I love that. That would have been great to say at the beginning of the episode. >> I know. I know. I just thought about it. But it it it uh it's super exciting to finally be here after being a day one subscriber. You should sign up to Milk Road AI, too. A lot of good stuff in there, man. Think stuff that would be related to to some of the stuff you're doing. A lot of energy talk in there. And Milk Road AI Pro, which launches uh this weekend. Anyways, Jason, thank you so much for coming on and uh maybe we'll see you again sometime. Either way, we'll see. I'm sure we'll see in the headlines. We'll see more about Daylight uh as as the year goes on. >> Awesome. Thanks, guys. If y'all are making swaps or trades right now, highly

recommend you check out Milkroad Swap. This is a DEX that we built in partnership with Cow Protocol. Why did we build it? not to make money, just honestly so we could have a place to do our swaps for the lowest fees that we could find. This is the fees on Ethereum, Arbitum, and Bass are only.15% fees. Uh this is a huge difference from uh other centralized exchanges that charge half a percent or even up to 1.2% fees on their swaps. Also, you can swap on Salana all at swap.mmillgrow.com.

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