CRYPTO 101 | Ep. 679: How Institutions are Using Crypto by Innovating Crypto Treasuries
Hosts: Bryce Paul & Brendan Viehman
Guest: Patrick Woods, CEO of Delph X
Date: September 30, 2025
Episode Overview
In this episode, Bryce and Brendan sit down with Patrick Woods, CEO of Delph X, to explore how institutions are innovating within the realm of crypto treasuries. The discussion unpacks how traditional structured credit products are being adapted to crypto, why fully collateralized and transparent hedging solutions are critical for large players, and what the future of institutional crypto adoption might look like. The episode focuses on bridging traditional finance best practices with the needs of a new era of corporate digital asset treasuries.
1. Patrick Woods’ Background and Crypto Onboarding ([01:26]–[03:30])
- Patrick's Experience: Three decades across capital markets, including investment banking and stockbroking, before founding his own advisory firm.
- Early exposure to crypto through the Toronto scene and Ethereum's developers.
- Attended the first Consensus conference in NY (2012), connecting with many who now lead major crypto firms.
- Crypto Allure: Attracted to the blockchain and smart contract side (specifically Ethereum), more than speculation.
- Took several crypto-related firms public; eventually took the helm at Delph X after previous management faltered.
"For me, to be quite frank, the allure of crypto was really more on the blockchain side. I really liked Ethereum. I thought smart contracts was a brilliant thing." — Patrick Woods [01:58]
2. The Gap in Current Crypto Treasury Practices ([03:30]–[04:58])
- Market Opportunity: Noticed a serious lack of robust hedging/insurance options for crypto treasuries.
- Product Innovation: Delph X adapted their structured product knowledge (from the credit markets) to provide capital buffer protections, particularly addressing downgrade risks for large holders (insurance companies, institutions).
- Key Differentiator: Most existing solutions (like MicroStrategy, Solana treasuries) are focused on alpha-seeking, but do not provide active, securitized hedging.
"No one out there is actively hedging their portfolio in a securitized way...you're not worrying about your counterparty...we built out our product line, expanded it to crypto. And we think what we've got now is a product which provides a hedging cushion in bad markets." — Patrick Woods [04:58]
3. How the Delph X Solution Works ([11:32]–[12:06])
- Structured as a Service, Not a Product: They issue fully collateralized, private placement securities that act more like disaster insurance for digital asset treasuries.
- Investor Choices: Institutions decide on their desired protection levels; Delph X simply facilitates as agent, not as decision-maker.
- Fully Collateralized: The protection seller’s collateral is held in short-term Treasury bills with US Bank as custodian, minimizing counterparty risk.
- Regulatory Nuance: Not a derivative, but a security (under 4A2), making it accessible for institutions with constraints on derivatives exposure.
"We're not a derivative because we're fully collateralized...we're technically, like I said, a 4A2 security and we fall under that program banner...a hedge that's not a derivative. It's actually a real security and that's how it's viewed." — Patrick Woods [12:06]
4. Tradeoffs for Hedged Institutional Crypto Portfolios ([13:21]–[15:29])
- Cost of Protection: Historical context—buying 15% out-of-the-money protection on Bitcoin would have reduced CAGR from 84% to 69% over the last decade.
- Peace of Mind: Such strategies are attractive for capital preservation-focused investors who can accept some upside loss in exchange for volatility reduction.
- Institutional vs. Retail Needs: Large treasuries require structurally different risk management tools compared to retail investors.
"Had you put this protection on over that 10 year period, your CAGR would have come down to 69. But you would have been able to sleep a lot better too." — Patrick Woods & Brendan [14:02–14:15]
"Why should they have to hedge risk in the same way that retail does?" — Brendan [16:41]
5. Market Dynamics & Future Product Plans ([18:10]–[21:03])
- Need for Differentiation: As treasuries proliferate, safety and transparency become key competitive factors.
- New Asset Class Metrics: Market expects more volatility arbitrage, with treasuries like MicroStrategy becoming some of the most traded stocks.
- Roadmap: Delph X is blockchain-agnostic (planning for Ethereum, Solana, etc.), sees first-mover advantage, but anticipates competition from Wall Street giants.
- Innovation Window: "At least a one year head start" before likely imitation by banks.
"Somebody like Goldman or JP Morgan is going to rip us off at some point. So you know that, that always happens. But... we are first mover advantage guys..." — Patrick Woods [19:32]
6. Systemic Risks: Leverage and Boom/Bust Cycles ([21:03]–[27:14])
- Boom & Bust Risks: Proliferation of treasury companies may tempt riskier behaviors to compete (echoes of DeFi boom & bust).
- Counterparty Risk: OTC options expose treasuries to uncertain counterparties; Delph X’s fully collateralized approach solves this.
- Lessons from 2008: Drawing parallels with the financial crisis—lack of transparency and collateral caused mayhem; ensuring collateral is key to stability.
"If you have something bad happen, you need to know...you're going to get paid... that's where our product makes a difference." — Patrick Woods [23:17]
"AIG Lehman, a bunch of other guys were writing protection and they had no collateral to support it... So, I think if you have full collateralization and transparency and, and once again the assurance that you're going to be protected, that money's there for you, then... we're on the right path." — Patrick Woods [37:35]
7. The Evolution of Volatility and the Changing Role of Crypto Treasuries ([27:14]–[31:25])
- Bitcoin’s Volatility Trajectory: As more institutional, capital-preserving products launch, BTC’s downside volatility may shrink; upside volatility remains possible due to demand/supply imbalances.
- Wider Market Access: More institutional products encourage conservative capital pools to enter crypto.
- Altcoin Treasuries: Proliferation across even meme/low-product coins; question if every crypto needs a treasury company.
"It might not be as volatile on the downside as it has been in some cases in the past. But I think on the upside, I think it could be incredibly volatile." — Patrick Woods [29:15]
8. Market Consolidation, Crowded-Field Dynamics & Future Outlook ([32:51]–[34:45])
- Not All Treasuries Are Created Equal: Some projects (e.g., Sharplink) flopped, but the “treasury play” is a popular model—expected coming consolidation.
- Equities & Structured Products Appeal: Many investors can’t (or won't) hold raw crypto—products like Delph X’s offer a familiar bridge.
"Most people don't have the time and patience to worry about keys and all this other stuff. So, so yeah, there is like a big, big market of people who want to be involved." — Patrick Woods [36:31]
9. Identifying Bubbles: Narrative Economics & Crash Signals ([36:57]–[38:53])
- Narratives Rule: Overexuberant (or despondent) narratives often signal cycle peaks or troughs.
- Key Warning: If narrative becomes too bullish, it's time for caution; vice versa at pessimistic extremes.
- Tethering Back to 2008: Full transparency and collateralization are safeguards.
"If the narrative gets too, too buoyant, then you know, you know, there's going to be, you know, somebody's going to get kicked in the pants." — Patrick Woods [37:35]
10. Final Thoughts & Bull Market Outlook ([38:53]–[40:41])
- Delph X expects strong performance ahead for core crypto assets, especially as current NAVs compress and market consolidates.
- Patrick advocates for always hedging large corporate treasuries, even at the cost of upside: "Look like a superstar if the market crashes and you got hedged."
"If I was going to build my own bitcoin treasury right now, I sure as heck would give up a little bit of upside in return for the peace of mind...if...that event happens, everyone's going to want to pile into my thing because...he had a hedge, nobody else did." — Patrick Woods [40:10]
Key Quotes
- On New Product Innovation: "Wall Street's asleep. They haven't invented...anything new in 20, 30 years." — Patrick Woods [04:54]
- On Product Advantage: "Our collateral is always there. You're guaranteed to get paid when a bad moment happens. OTC options, other strategies...I don't think they offer the same thing." — Patrick Woods [23:17]
- On Market Structure and Risk: "Do people need to get their yayas out with their volatility out in the altcoin world? And could it be a rise of all this volatility in altcoins?" — Brendan [29:09]
- On Narrative-Induced Bubbles: "Narrative plays everything on this...if the narrative gets too, too buoyant, then you know...somebody's going to get kicked in the pants." — Patrick Woods [37:35]
Notable Timestamps
- Background & Crypto Origins: [01:26]–[03:30]
- Credit Hedge Product Overview: [03:32]–[04:58]
- How Product Works (Structure): [11:32]–[12:06]
- Cost vs Peace of Mind: [13:21]–[15:29]
- Macro Market Trends & Future Offerings: [18:10]–[21:03]
- Counterparty Risk & 2008 Parallels: [23:17]–[27:14]
- Volatility Evolution: [29:09]–[31:25]
- Bubbles, Narrative, and Lessons: [36:57]–[38:53]
- Bull Market/Crypto Outlook: [39:14]–[40:41]
Conclusion
In a landscape where institutional adoption of crypto assets accelerates, Delph X’s approach to merging traditional financial hedging with fully collateralized, transparent structures stands out as a potential bedrock for the digital asset treasury revolution. Patrick Woods’ insights illuminate the unique challenges and opportunities facing large-scale crypto holders—and reinforce that robust, trusted safeguards are essential as the market matures further.