Note 10. Staking Revenue

The Company participates in staking activities on the Avalanche network through validator arrangements with Chorus One AG, Tarmac Labs Inc., and ParaFi Technologies LLC. Under these arrangements, the service providers operate and maintain validator node infrastructure, including monitoring and reporting services, under the direction of the Company. The Company sets the contractual staking terms, which could range from 14 to 365 days. The Company retains ownership and control of its staked AVAX tokens at all times through the staking process.

The Company earns staking rewards in exchange for delegating digital assets to support network validation activities on the Avalanche blockchain protocol. Staking rewards consist of block rewards, transaction fees, and, where applicable, supplemental protocol incentives. Rewards are distributed directly by the Avalanche protocol to the Company’s designated wallet. See Note 4 for the Company’s revenue recognition policy for staking rewards.

Agent Considerations

Staking Activities

The Company engages third-party service providers to facilitate staking activities on its blockchain nodes. While the Company determines the amount of AVAX staked and the timing of staking and unstaking, the third-party service providers control the underlying infrastructure critical to the staking process, including node availability and the ability to meet the network’s uptime requirements necessary to earn staking rewards. Accordingly, the Company has determined that it is the agent in these arrangements and recognizes staking rewards on a net basis as revenue. Staking revenue, net of fees, for the three and nine months ended September 30, 2026 was as follows:

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Liquid Staking Activities

Separately, the Company participates in liquid staking by staking AVAX through third-party liquid staking protocols rather than operating its own validators. In connection with these activities, the Company receives liquid staking tokens, including stAVAX and sAVAX, representing claims on underlying staked AVAX and accumulated staking rewards. Unlike the Company’s traditional staking activities, liquid staking rewards are not distributed separately while the liquid staking tokens are held. Instead, staking rewards accrue through increases in the respective AVAX-to-stAVAX and AVAX-to-sAVAX exchange rates and are realized upon redemption of the liquid staking tokens for AVAX. For the nine months ended September 30, 2026, the Company recognized $910,987 of revenue from liquid staking rewards upon redemption, consisting of $660,693 related to stAVAX and $250,294 related to sAVAX, in the accompanying unaudited condensed consolidated statements of operations. No liquid staking rewards were recognized during the three months ended September 30, 2026 because all stAVAX and sAVAX had been redeemed prior to July 1, 2026.

Service Fees

Validator node operators are compensated based on a percentage of staking rewards earned, generally ranging from 2.5% to 3.0%. Fees under the Chorus One and Tarmac arrangements are settled in AVAX and measured at fair value at contract inception. Fees under the ParaFi arrangement were invoiced monthly and settled in fiat currency through June 30, 2026; beginning in July 2026, ParaFi fees are invoiced in AVAX and settled in AVAX. Fees paid to third-party node operators are netted against gross staking rewards, with the resulting net amount recognized as revenue in the period the staking rewards are earned, because the Company acts as an agent in these arrangements (see Note 4). Fees paid to third-party service providers also include custody, staking and tri-party fees charged by the Company’s custodians, which are not based on a percentage of staking rewards. As a result, fees as a percentage of gross staking rewards for interim periods may differ from the rates charged by node operators.