TON Strategy recognized US$ 15.019 million in staking revenue in the 2nd quarter, but continuing operations consumed US$ 10.640 million in cash in the 1st half, according to the results report sent to the Securities and Exchange Commission (SEC).
The company said that the period's rewards amount to an annualized gross yield of approximately 17%. The percentage, however, is not net return to the shareholder nor a measure of total costs.
Accounting profit and cash
Profit before taxes from continuing operations totaled US$ 83.535 million in the quarter, driven by a net gain of US$ 82.8 million in the fair value of digital assets. Operating profit was US$ 479 thousand.
The balance sheet shows that staking revenue came from the receipt of 9,438,177 Gram, the native token of the TON blockchain previously called Toncoin. Gram was treated as non-monetary consideration, allowing revenue to be recognized before the rewards turned into cash. In the cash flow reconciliation for the half-year, the company deducted nearly US$ 19 million related to this non-monetary component.
At the end of June, TON Strategy ended with about US$ 29 million in cash and restricted cash, with no debt, but staking did not cover the cash needs of operations in the period.
According to the company, the increase in rewards came mainly from Catchain 2.0. The April upgrade reduced the mainnet block interval from about 2.5 seconds to approximately 400 milliseconds, which generates about 6.25 times more blocks per second. Since reward creation is defined per block, more blocks can issue more tokens to validators, although the result depends on protocol settings, the amount of Gram staked, and the token's price.
The company held 230.5 million Gram on June 30, with 229.9 million staked. Citing TonStat data from August 4, it states that the position represents about 4.4% of the supply and approximately 35% of all Gram staked. BitGo and Blockchain.com manage and stake the holdings through dedicated pools, and may use third parties to operate the validator infrastructure.
Sustained cash generation, according to the document, requires that the Grams maintain sufficient value to cover expenses in the face of changes in network conditions, and also a reduction in cash usage by continuing operations.
