EtherFi’s Next Act: Stocks, Loans, and Global Banking | Mike Silagadze

EtherFi is expanding from a crypto-native neobank into a broader financial account built around DeFi. Mike Silagadze joins David to break down the next version of the product, including tokenized stocks and metals, Aave V4-powered credit, yield-bearing balances, global fiat rails, and a much more normie-friendly experience. --- 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotify-premium --- BANKLESS SPONSOR TOOLS: 🔓NEAR | TRADE CONFIDENTIALLY, GET 20% BACK https://bankless.cc/near-pod 🔑BITKEY | GET 10% OFF USE CODE: BANKLESS | #bitkeypartner https://bankless.cc/bitkey ✈️COINBASE ONE CARD | EARN 5% BACK IN BITCOIN https://bankless.cc/coinbase-one-card 🎯THE DEFI REPORT | ONCHAIN INSIGHTS https://thedefireport.io/bankless --- TIMESTAMPS 0:00 EtherFi’s Next Act 4:20 Stocks, Yield, and Credit 9:48 Building Beyond the Crypto Casino 16:05 Tokenized Assets and Aave V4 22:03 How EtherFi’s Lending Market Works 26:32 EtherFi Summer and What Comes Next 30:05 From Fiat Rails to Crypto Payments 37:05 ETHFI Buybacks, Privacy, and the Endgame --- RESOURCES Mike Silagadze https://x.com/MikeSilagadze --- Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures

• 0:02Speaker 00

  Bankless Nation, we got Mike Sligazi from EtherFi back on the podcast. Mike, welcome back to the show.

• 0:06Speaker 01

  Hey, thanks for having me on again.

• 0:10Speaker 00

  So there is something brewing, as I hear, over in EtherFi, EtherFi land. Maybe for just listeners who haven't been paying attention to what's going on in EtherFi. EtherFi really pioneered the neo-bank whole revolution that started in 2024 and moved on into 2025. Really kickstarted the whole neo-bank platform, I think. First, just with the whole re-staking thing and then allowing people to do a lot of cool stuff in DeFi, hold assets in EtherFi, deploy them into DeFi and also spend them. Starting to like really chip away at the TradFi banking system and allow some of the bankless ideas to manifest into a consumer app. As I hear it, Mike, you guys have a second act coming.

• 0:54Speaker 00

  Let me know, tell me about this second act coming down the pike for EtherFi.

• 0:59Speaker 01

  Yeah, I mean, I guess it's sort of like the third act, right? Our first product was the yield layer. So it's almost like, okay, we had to like create a version of, this is not a perfect analogy. We had to create a version of T-bills that allowed us to build on top of that all the other stuff that, you know, users come to expect from, you know, from a financial, from TradFi. And so staking was the first yield layer, DeFi strategy vaults. We were actually, I think, the first or one of the first protocols to have protocol-owned vaults. Now that's like pretty common, but we introduced our liquid vault. So that was kind of like, all right, you've got the yield layer, but then you want to deploy it into DeFi to earn higher rewards, higher risk.

• 1:45Speaker 01

  So we introduced that. Then we launched the sort of the wrapper around that with the, you know, the crypto credit card that created the first, I guess, proto-version of a non-custodial crypto neo-bank. And today, I mean, we're still the largest, I think, yeah, if you look at all the crypto card programs, we're by far the largest non-custodial one. And I think the one that sort of creates the most integrated packaged experience for users that achieves what I, what I think is sort of the holy grail of DeFi, which is truly allowing people to get off of their traditional banking rails, to have self-custody over their assets, but not make any sacrifices,

• 2:27Speaker 01

  but, you know, continue to be able to use, you know, interact with the normal financial system while getting the benefits of DeFi and, you know, in self-custody. So, so that was like the first version of it. But, but that first version was still very crypto-forward, I guess. What I mean by that is you still needed to know a lot about crypto to use this, this product. Even just the, the way the app, the product was presented, it was very crypto-jargony. And so it was great for DeFi natives, for people that, you know, day-to-day, you know, use DeFi. They're comfortable depositing into Aave or whatever. Very difficult to use for normies.

• 3:12Speaker 01

  Very few normies kind of broke through the pain and onboarded. And so what we're releasing now is not only is it the next generation of that, but more excitingly, and the reason I'm excited about it is that it is much more normie-friendly. So someone genuinely could not know anything about crypto and should be able to navigate it and get all the benefits without really having to have any familiarity with the sort of the underlying tech. And secondly, it actually allows people to do stuff that they would not be able to do with their traditional financial institutions. So in other words, it's not just like recreating what existed before.

• 3:57Speaker 01

  It's actually using the power of DeFi to let you do stuff that, you know, you previously wouldn't, wouldn't have been able to, to do, which is, I mean, that's how you get, I think, crypto adoption. Is A, it has to be normie-friendly and B, there has to be like a why there, right? Like, okay, I'm pretty happy with, you know, my Chase account. Why do I need to use this thing? And so hopefully now we, you know, we have that for, for people.

• 4:20Speaker 00

  What is all of that stuff? What's the meat on the bone? What is the cool things that you guys are adding into the EtherFi product suite?

• 4:28Speaker 01

  Yeah, so there's a bunch of things. The first thing is, I guess, the current limitations or previous limitations of EtherFi is you could only hold a pretty small number of select crypto assets. Like you could hold stablecoins, could hold USDC, USDT, you could hold ETH, you could hold like, you know, a wrapped version of a pipe and Bitcoin, very crypto-y assets. We are now changing that to where you will now be able to hold tokenized stocks. So a huge range of tokenized stocks, you'll be able to hold metals, so gold, silver,

• 5:09Speaker 01

  all that great stuff, along with pretty much any token that you want, any, like, any of the majors that you'd, you know, you'd want to hold. So it really is now becoming not just a general, you know, crypto wallet, but can, you know, wrapped in a smart contract safe. But you, you can actually just hold any, you know, any of the more TradFi, the tokenized TradFi assets. So that's pretty exciting. First, you know, first time I think crypto neo-bank has allowed people to, to do that. Same benefits, same non-custodialness, you know, goodness. The second thing that we're, we're adding is an Aave V4, an integrated Aave V4 market. So what that means is twofold.

• 5:54Speaker 01

  One, any, any, you know, stables that you deposit now earn a yield if you choose to opt in. So now you deposit your USD, you're just going to be getting 2% or 3% interest on it because it would just automatically be loaned out for you. So that's a higher rate than you're, you know, get from your, your bank typically. And you can actually take out loans against your entire portfolio value. So basically imagine a bank that looks at like what's in your checking account, what's in your crypto wallet, what's in your, you know, your brokerage account, package it all together and effectively give you a line of credit that you can now, from this, now this Aave market, that you can now borrow

• 6:38Speaker 01

  at, I think, what I think is going to be a very competitive interest rate. Obviously it's dynamic because it's, you know, it's a, it's a DeFi market, but I think it'll be better, that's certainly better than any loan you can get in, in TradFi. And then when you take out that loan, you could of course do anything you want with it. You could spend it, you could loop. In other words, you could, you know, put some SPY, like SP500 tokens in there, take out a loan, buy some more tokens, do all this stuff that you do in DeFi, but now with TradFi assets, which is super exciting. And then the other big thing is like super comprehensive fiat rails,

• 7:19Speaker 01

  very broad network support. So in other words, now you'll be able to deposit from, from Tron, from Solana, from Tempo, from whatever. So you'll be able to just deposit from, from anywhere. And we're going to support, I think, like 70 different currencies. So basically, you know, your Indian rupees, your Colombian pesos, anything you want, you'll be able to do in and out with really like either no fees or lowest fees on the, on the market. So now you can literally, you can deposit your salary. You'll have a named account, deposit your salary into EtherFi, goes into your non-custodian account, buy your tokenized stocks, your metals, take out loans, basically do everything. Get a credit card, great, great cash back, everything that you'd normally do, need to do for the bank,

• 8:03Speaker 01

  but now you're a global citizen, you're not, you know, tied down to, you know, a particular financial institution or, or, you know, government regime.

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• 9:38Speaker 00

  and see if you're approved today with no impact on your credit score. Or just visit Coinbase.com/Banklist. Terms apply. That's Coinbase.com/Banklist for more information. I want to take a step back and talk about what this means for Ethereum and why I'm seeing EtherFi as a bit of a canary of where Ethereum as a whole is in its arc. The, the Gen 012 that you explained for EtherFi, where you started with one, a primitive. And at Bankless, we really like our money verbs. The first primitive that you started with is saving. We allowed you to get yield on your Ether, the yield layer. You can call it like the, the bond layer, the savings layer, the savings primitive.

• 10:21Speaker 00

  That was the first money verb that EtherFi really pioneered with the whole like LRT movement.

• 10:30Speaker 00

  It expanded, it evolved, a new layer came on top of that that is spending. So with the integration of stablecoins, an asset that came to Ethereum and the EtherFi card, you could add a new money verb into the EtherFi app. Now you can also spend, so you can save, now you can spend. And I think with this Gen 3, this new evolution of the EtherFi financial experience, you get to add a few more, two more money verbs come to mind. Invest, you get to invest now inside of the EtherFi app. You can buy tokenized stocks, you can buy gold, and then you can also margin or get a loan. Margin, I think, maybe margin's a verb, whatever. And so now you can also get a loan.

• 11:14Speaker 00

  And so we are adding on the money verbs into the EtherFi financial experience, like the NeoBank Plus experience. And why I think this is important, like I think maybe crypto natives might have listened, heard you just now and be like, Mike, why is this exciting? I've already been able to get an AVE loan, I've already been able to buy tokenized stocks. It's not for you, it's for the rest of the world. It's for everyone else who is still stuck inside their like non-United States financial system that don't have these opportunities and need a bundled product, seamless bundled experience to come together in order to get them and break them free from their bank. And so with all of these things all being put together, it's illustrative to me of

• 11:57Speaker 00

  all the primitives of Ethereum that have grown up and become pretty mature, one by one by one. This seems that, according to EtherFi, that the tokenized stock primitive on Ethereum is ready for mainnet, is ready for like deployment into a consumer app. And we can scale that out to the rest of the world. And not only that, but also so is margins and loans as well. And because all of this is in one place on Ethereum, like Ethereum is the super app, it's easy for EtherFi, the NeoBank Plus, to wrap up the Ethereum experience and sell it to the rest of the world. So I think, I think with that framing, I want to throw that back to you because I

• 12:40Speaker 00

  think, again, if a listener was just listening to you, it's like, we've had AVE for years, Mikes, like, no, no, no, no. This is now a seamless unified financial experience being like bundled up and being offered to the rest of the world by EtherFi. I'll throw, I'll throw it back to you.

• 12:55Speaker 01

  Yeah, the way I would describe it, and I'm probably overstepping a little bit here, but like, think of it as like the first non-gambling crypto consumer app. If you think about like all the crypto consumer apps, because there are lots of them, right? You know, there's PumpFun, there's whatever, even centralized exchanges. Like you just have like casino version one, casino version two. It's just like casino, different like window dressing, you know, like polymarket, oh, gamble on the weather now, okay. Like, and that's, it's super profitable, right? Like casinos make tons of money, gambling, especially in, you know, in a gambling type market, is, it's a huge industry and it's very profitable.

• 13:38Speaker 01

  And the ease of creating these, you know, casino variations and launching tokens, which again in itself is, you know, like a microcosm of, okay, we're launching a little gamble unit that we then get to, you know, take a rake off of, that's what meme coins, you know, basically were. So that basically sucked all the oxygen out of like the real shit. Because like any builder going into crypto was like, okay, do I spend, you know, five years building like a real consumer product and it's fucking hard? And you could tell on our token, like our business is 100 times better than it was when our token first launched, but like the token's in the gutter. We, you know, we talk about things we're doing to improve that as well.

• 14:20Speaker 01

  But like, it's, it's really hard, like it's way harder to build a real product versus like build some other gambling bullshit thing. And so it sucked all the oxygen out of the, the real, you know, the real economy on, on the blockchain and just didn't leave any room for this, this kind of stuff. And, but, you know, being just, I don't know, pigheaded or whatever, we just said, no, we're actually just going to build a real consumer app that's usable day to day, that actually helps people in their day to day lives. Not about gambling, not about speculation, but more personal finance. And just like grinding away for years, like it's been three years, you know, it's, and

• 15:02Speaker 01

  we're, I mean, we're still not even close to, you know, where, where it needs to be. So like, that's, that's why I think this is important, because this is, you know, the first version of the product that I can see at least tens of millions of users using. You know, the V1 of it was like, okay, it's, it's good for crypto people, maybe a few hundred thousand users, but this version with the fiat, easy fiat, you know, on and off ramps and like all these integrations, I can see tens of millions of people using it. And then there's a version, you know, a version further on that a billion people might, might actually be able to do. And once you have like these large businesses that, you know, create value, generate lots

• 15:43Speaker 01

  of revenue, that's going to create an ecosystem that brings other players in. And then I think at some point, there's going to be a tipping point where the gambling nature of the crypto universe becomes like a, you know, a little 10% sliver rather than this sort of 90%, you know, sleeve that, that we have today.

• 16:05Speaker 00

  I want to learn a little bit more about the specifics behind each of these two primitives, the invest and the margin primitives. Let's talk about the tokenized stocks element. How are you deciding, how is EtherFi deciding what tokenized stock provider or what tokenized stocks show up in the app? How are you like displaying that? What choices have you made? Who's the service provider in the background? Just fill in some of the details there.

• 16:29Speaker 01

  Yeah, that's a, that's a great question. So, I mean, first of all, it will be permissionless, so you'll be able to, I'll talk about the way it'll be, you know, soon after versus what it is today. Eventually, I mean, you'll be able to use ONDA, you'll be able to use X stocks, whatever is on Ethereum, anything on Ethereum, you'll be able to, to use it. Day one, we're launching with, with X stocks. A lot of reasons for that, honestly, it's just, we have a good relationship and have a good partnership with those folks. So, so we're launching with X stocks being the, the primary, you know, the primary option there. And then there'll be a number of, you know, commodities, so tokenized gold assets that are available as well.

• 17:14Speaker 00

  Do you guys like kind of opinionatedly show like Xoxin or like the tokenized gold assets more than like others? Yeah, you just like are selecting like, here are the quality ones that we feel comfortable, so like, not selling, but displaying, giving the option to buy to our users?

• 17:30Speaker 01

  Yeah, because we need to make a choice about which ones are enabled as collateral on the AVE market. And so that's the choice that we're making, is there's a risk curator that's making those decisions and then, and then there's a bunch of like wiring that needs to be done for liquidations and, you know, setting the risk parameters on each of these assets. So, so that's kind of a choice that's being made.

• 17:57Speaker 00

  I see, okay, let's go into the AVE side of things. Talk to me about the AVE spoke model. We've never done an episode on AVE spokes, so I think we would need to help understand like what that construction means. So walk me through what that is and we can get into some of the nitty or gritty or details after that.

• 18:13Speaker 01

  Yeah, so AVE is, AVE before, just the new iteration of AVE that, you know, they've recently released, that's, you know, growing really nicely, is a very flexible system. Like you could, you could create these isolated markets where you only, you know, borrow and lend one asset versus another. We're using it in a, at least for now, in like a, a pretty simple way where it's one market, where you, you know, all your portfolio stuff goes into this one market and we just, we set risk parameters and thresholds around each asset in terms of what you can do with it.

• 18:54Speaker 01

  And this market is very much not meant to be used the same way that other AVE markets or other DeFi lending protocols have been used. Like, what I mean specifically is other DeFi markets are very DGEN heavy. So it's like, okay, you can like lever up 10X on this market, you can like loop, you know, your assets, you know, super aggressively, you, you know, take it all the way right up to, you know, the, the limit, and then if the price changes by a few percent, you get liquidated and it's very like aggressive.

• 19:29Speaker 00

  And you don't want that because you don't want to be like too far on the, in the operations of risk management. You are going to do risk management, but that's not, that's not your specialty, you're going to like keep it a little bit more moderate.

• 19:41Speaker 01

  It's actually, that's actually not the reason. I mean, we certainly could do the risk management to, I mean, it's, it's clearly worked, right? For, like AVE's worked across like pretty insane market conditions. No, we just don't want our users to get wrecked. Like an exchange, like a centralized exchange or PumpFun or whatever, you know, I mean, I'll stand by this, like it's a wood chipper, like you just feed users into it and they just, all of them come in, everyone loses money and they just like, you know, they, they get wiped out and they go and they earn a little bit more and they put some more in, it's just, it's a casino, like that's the business model. It just fucking feed the users into, into this machine.

• 20:22Speaker 01

  And like, we, we go out of business if we do that, we cannot do that. We need our users to stay solvent and like make reasonable decisions. So with EtherFi, I mean, we've had a much more limited, you know, ability to borrow for, for your, your card against like this, against like ETH and like other basic assets. In the entire time that, you know, we've been around, like, The amount of assets liquidated is like a few thousand dollars. So like this is out of like, I think $200 million in these vaults. We've only ever had to liquidate a few thousand dollars worth of assets. Like that's, and that's a win.

• 21:03Speaker 01

  Like we, we could have like dialed up the risk profile and like, we would have made tons of money on liquidations. But like, then we, you know, wipe out our own users. So, so this market is very, meant to be much more conservative. No 10x leverage. And, and in fact, there's two, the difference with this market versus others is there's actually two thresholds. One threshold above which it will not let you borrow anymore or spend anymore. And then a much higher threshold where you get liquidated. Whereas in other markets, there's just one threshold, just keep borrowing all the way to the end. And then if you, you know, click over your, you get wiped out. In our case, we, you have like one conservative threshold. Uh, where like even a 40% price move won't like, won't kill you.

• 21:46Speaker 01

  Um, and then another much more aggressive threshold where you get to actually liquidate. So it's just a different use case. We're like, we're not looking for people to come here and like, you know, lever up and, you know, go max, max DJ. And this is really meant to be like a, a personal finance tool.

• 22:04Speaker 00

  So as assets flow into this AVE, uh, uh, what is it called? Not, not a spoke, spoke. It's another AVE spoke.

• 22:14Speaker 01

  It's a hub. It's a hub and then there's, there's going to be multiple spokes coming out of it. To start with just one.

• 22:21Speaker 00

  What are the, what are the spokes then in that case?

• 22:23Speaker 01

  Well, for now, just one, there would just be the one main spoke. Um, because it's been launched on optimism.

• 22:31Speaker 01

  Uh, we, we've talked about them about launching another spoke specifically dedicated to more DeFi activity on optimism. I think I can say that.

• 22:39Speaker 00

  Okay, okay. Uh, so like, say, say I'm my, I'm an EtherFi user. I have, I'm buying, I'm buying some stocks, got some Tesla, got some gold. Now I have like a line of credit because of this AVE market. And so I borrow some money. Who is lending me that money? Who's on the other side of that borrow lend, uh, equation?

• 22:58Speaker 01

  So either other users who are depositors in, in this EtherFi market. Um, or, well, I guess other users is the, the short answer. So they can be, anybody in the world can deposit into the market. So it's totally permissionless.

• 23:13Speaker 00

  For basic stablecoin users.

• 23:15Speaker 01

  Uh, or, or anything, I mean, you deposit, it's just an open market. So, uh, you can be a cash user and EtherFi user or anybody. It could be a financial institution looking to earn yields in like a pretty low risk, um, uh, market. Uh, so anybody can deposit. Um, uh, borrowing is limited just to cash users. So that's sort of the, the idea. So you're borrowing from a wide variety of, uh, depositors. We have a few partners that are actually going to be depositing, um, some of their treasury. As sort of a way to help facilitate the growth of the, the market. So there's going to be a variety of, uh, uh, players that participate.

• 23:51Speaker 00

  So EtherFi is using AVE V4 to be like a matchmaking platform for its own users for borrowing and lending. So it's like a, uh, what a bank does, but doing it bankless.

• 24:04Speaker 01

  Yeah, exactly. That's exactly right. That's, I mean, a bank gets together, takes your deposits, you know, gambles it on mortgage bonds or whatever, in some opaque black box. And then every few years, they get bailed out. In this case, you know, it's fully transparent. You can choose to participate or choose not to participate. But if you choose to participate, you deposit, you earn a bit of interest. Uh, and then other users can use that to, uh, uh, to take out a loan and, you know, do whatever, uh, whatever they want to do.

• 24:31Speaker 00

  Is this a, uh, new revenue line item in the EtherFi P and L? Like this makes money for EtherFi?

• 24:37Speaker 01

  Yeah, for sure. So both the, uh, swaps on, on assets, uh, makes, uh, makes money. And this lending market, uh, also makes money.

• 24:47Speaker 00

  Okay, okay. So you, you take a little bit of the fee of, of, uh, the lending yield. And then when somebody like takes.

• 24:53Speaker 01

  Which is the same as AVE or any AVE market, there's always a.

• 24:56Speaker 00

  Right, AVE is sharing some of their economics with you. I'm sure AVE gets a little bit too.

• 25:01Speaker 01

  Yeah, that's right. I think this is public. Uh, there was a, you know, an AVE governance proposal. So it's 80 20. So EtherFi keeps 80%, AVE gets a 20% rev share for the, uh, the infra.

• 25:10Speaker 00

  Cool. And then the, the swapping feature, uh, how, how does that actually work? Is that, uh, is that, whose software is that?

• 25:18Speaker 01

  Um, it's, uh, yeah, it's pretty sophisticated. It involves a, a number of remote vaults that are integrated with your primary vault on, on optimism. Um, and, uh, anything that's deposited, whatever, I'm going, I'm nerding out here. Um, in terms of the specific partners we use, uh, we primarily are using a, a partner named Enzo. Uh, and they, uh, they're doing a lot of the routing and, uh, uh, optimal, uh, you know, uh, optimal routing to give you the best price at your swaps. And the prices you get are actually really great. I mean, in many cases you'll get a, I, I, maybe even I can make a strong statement.

• 25:57Speaker 01

  In most cases you'll get a better price on this than you would get in like a centralized exchange or, uh, or just randomly doing a swap, uh, on chain. Um, it's, uh, yeah, it's pretty, uh, uh, it's pretty great. And it feels, we're working really hard to make it feel instant. Like this is why people, you know, use centralized exchanges is you go away and you tap once and you're done and it's, it's instant. Whereas in DeFi, you know, it's like a one minute ordeal, uh, right? To, to do something. Uh, this is really meant to feel, uh, you know, as, as good as in a centralized exchange.

• 26:32Speaker 00

  Talk about the rollout plan for this, uh, gen two of EtherFi. How, how, we are at A, how do we get to B? B where it's like fully released, everyone can get their hands on it. Talk about the details there.

• 26:45Speaker 01

  Yeah, so everyone can get their hands on it. It's, it's live.

• 26:48Speaker 00

  Already, that's it.

• 26:49Speaker 01

  Yeah, as soon as we announce it, it's, it's live. Um, yeah, we're not doing like a free announcement and then, no, it's just, it's live. You can use it. Um, new users immediately get in. Existing users will be sort of, uh, rolled into it, uh, over a period of, uh, I mean, like a week or, or two. So if, if you're an existing account holder, you're still gonna have it enabled, but new users get it, um, immediately.

• 27:14Speaker 00

  Where does the product go from here? So you've got these two new primitives into the EtherFi app. Uh, are there next steps or is that just like too soon to talk about?

• 27:23Speaker 01

  Uh, I mean, there's, there's so much stuff that we're doing. Um, so there's, so we're calling this release EtherFi Summer. Yeah, whatever, it's just a goofy, goofy name. Uh, we're, we're going to be doing these like packaged releases, probably at least three times a year. So instead of just like releasing like little features here and there, we're going to try to sort of have more, you know, themes and like, uh, I think this is, it's actually inspired a lot by what, um, uh, founder of Airbnb had this, uh, uh, now very famous speech called Founder Mode. And he talked about how they organize and structure their releases. And, uh, so we, I was really inspired by that. So we're kind of following that model. Uh, anyway, so next release is going to be called EtherFi Autumn.

• 28:05Speaker 01

  Um, it, there's going to be a lot of polish and improvements, uh, that, uh, that we're, we're doing there, including, um, both summer and, and autumn, uh, will have a much more normie friendly brand. Which is just like the way we talk about the product, the way the website looks, just much more normie friendly. Uh, previously, you know, EtherFi just is like, is still very like DeFi feeling. Um, and then the other big thing for autumn, uh, coming up is going to be a lot of, uh, what we call sort of a social, uh, layer. Uh, I won't maybe spill the beans too much on exactly what the features are going to be, but it's just going to make it much easier for you to,

• 28:43Speaker 01

  to collaborate and, and, uh, you know, uh, interact, uh, socially, I guess, uh, in a financial sense with, uh, with others. And we're doing some, uh, uh, some cool stuff there. Again, stuff that you couldn't, um, uh, like, I'm, I'm sort of spilling the beans, I guess, a little bit here. But like, imagine you could just like, yeah. Um, like if you want to send someone money with like, you, you have a Chase bank account, you want to send somebody money, right? Like they, they need to have a bank account, they need to have something to receive it. And imagine you could almost like just send somebody a fully functional account.

• 29:21Speaker 01

  Like you send somebody 10 bucks and they just like, they open the, you know, uh, the, the message or the, the, the money that you send them. And like, okay, they now have a fully functional account. They can literally, they can go spend it, they could send it to somebody else. And it's like, you've literally like taken this like concept of like a unit of money and just like, it, it now is like self sovereign, so to speak. You can like send it to somebody else. And now, you know, your, your grandmine India or whatever can now go and like use that to buy stuff. Um, uh, which again is sort of taking this idea that look, with DeFi, you can just do things that are impossible in TradFi. And we're going to like really double down on that. Cause I just think that's when the magic happens and that's how you actually get people to re, you know, replatform.

• 30:05Speaker 00

  When EtherFi started, we were in a much different place in Ethereum and with stablecoins than where we are today. Like this is before TradFi got all horny over stablecoins. Do you, you use a terrible word. Uh, and now like stablecoins and onramps have also just gotten more sophisticated. Talk to me about the on-ramp ecosystem and how it's improved and what solutions it maybe has provided for you. But also what problems you guys still have at EtherFi with onramps and offramps?

• 30:37Speaker 01

  Yeah, like they went, uh, I guess eventually maybe they'll converge on something that's, that's good. Look, um, yeah, play, rewind the clock like two years. Yeah, there were some crypto onramps, but they were just horrible, right? Like 3%, 4% fees, super slow. You have to KYC, you know, multiple times over to, to do anything. Your account would get banned, you know, randomly all over the place. The world we are today is there's now enough, uh, aggregators, uh, that are out there that can like, create a, a somewhat smoother experience, like the KYC is less painful. Instead of 4%, maybe you're paying like 25 basis points.

• 31:20Speaker 01

  Uh, you know, like it's less bad, like it reaches a lot better, you know, currency support. Um,

• 31:28Speaker 01

  My honest take is that like, it's just a question of when, you know, we get there is if you're really serious about this, you got to fully vertically integrate the stack like you can't, you can't just package up a bunch of integrators because it just, it is both expensive because like every layer takes a fee and it just doesn't create a good experience because like, you know, the sort of KYC data sharing boundaries always create, you know, tons of user friction. So I think anybody, and there will be many, not just EtherFi, but anybody who's serious about this is going to fully vertically integrate all the way down to at some point, having a bank charter in one or more regions.

• 32:11Speaker 00

  Does that mean that you guys are just kind of navigating around the on-ramps and you guys are just getting banking relationships directly? Is that what's going on?

• 32:18Speaker 01

  Yeah, that's the end game. I mean, that's, that's for sure the end game. Um, you know, that's, and look, actually, that's not the end game. The end game is great. You have this beautiful seamless experience and then you sort of open up a parallel, you know, payments array where it just, it's crypto to crypto. You're not even going through the TradFi system. The merchant has a POS, a point of service, you know, terminal, you, you know, you tap your crypto payment thing and it just exchanges stable coins or crypto assets directly. Uh, now it's very hard to do that in a compliant way and all that, but then you're really like, that, that's going to be super seamless. I, I don't think it is,

• 33:02Speaker 01

  and maybe I'm wrong, but because there are people that are trying to do this already. I think Wallet Connect is trying to do that. Even Circle was kind of going down that path a little bit. Um, but I think the level of adoption needs to be much higher, like with, even with 10 million customers, unless they're all in the same like city almost.

• 33:21Speaker 00

  Right, right.

• 33:22Speaker 01

  It's just not enough, you know, you don't have enough scale, like even if you're Amex scale, like that's just like, you know, that's barely there, right? Uh, Amex, I think is a hundred million accounts, something like that. Um, like that's maybe just enough where you can have the sort of the lounges and the terminal integrations where like a, a merchant, whether online or, you know, or retail is going to be willing to make the investment and deal with the hassle of integrating yet another, you know, thing. Um, so, uh, I think that's the end game. The end game is pure crypto to crypto. It's just, but I think that's like a couple of years out at least.

• 34:01Speaker 00

  Right, right. Yeah, we need complete crypto ubiquity for that, for the on-ramps to become just obsolete and invalidated and irrelevant because we're all staying inside of the crypto ecosystem. I think that's what you're saying.

• 34:15Speaker 01

  Yeah, that's, that's right. And you know, at that point, you're, um, you know, the power dynamic between individuals and governments really changes dramatically because when you have.

• 34:25Speaker 00

  Let's go.

• 34:27Speaker 01

  I mean, when you have like an asset that's unseized, because right now, look, we're still transacting in like dollars, right? And, um, stable coins are a lot more free than, uh, you know, bank deposits. Um, but it, you know, it's, you're still transacting in dollars. Those dollars are inflated. Uh, they're, they can be seized, you know, it's much more difficult to do it, but they, they, they can be, but like when people are truly transacting peer to peer, I mean, that's, uh, it becomes really hard to fund, you know, forever wars by printing money, right?

• 35:00Speaker 00

  Right, right. This is the original crypto Bitcoin vision. Yeah.

• 35:05Speaker 01

  Yeah. And so it's, you know, it's a, you have to build quite a tower to, to get there. But at least for the first time, we can see, we can see what the top of that tower looks like. Whereas, uh, you know, a couple of years ago, it was like, how do we get from here to like something that, you know, normal humans actually, uh, actually use?

• 35:22Speaker 00

  I've been trading crypto for almost a decade and I've used so many different wallets, exchanges, aggregators, different front ends over the years, and I'm always kind of looking for the same thing, just one interface with deep liquidity across a bunch of chains and assets where I can access all the markets like perps, earn yield, trade confidentially, and still control all my own funds. And I've never really found this experience and I'm always switching wallets, juggling gas fees and just getting eaten by slippage. Near.com is not that. It feels fundamentally different to me. I can do everything I want from any chain and I keep all my activity confidential. I can even earn yield confidentially. It's the way crypto should work. The near.com wallet is powered by Near and it's moved

• 36:03Speaker 00

  over $25 billion cross-chain using post-quantum signing and has run over five years on main net with zero downtime. Near.com is simply the best way to be on-chain and be in control. Get 20% of your trading fees back using the bankless link in the show notes, not investment advice.

• 36:18Speaker 02

  Some exciting news. We are launching a new podcast to help people figure out the crypto cycle, how to navigate it. The best crypto cycle investor I know, his name is Michael Nato. He runs the DeFi Report. This is the guy that sent me a sell alert before the 10-10 price drop happened. His cycle analysis has been absolutely on point. I've been following him for years and this year we started recording weekly podcast episodes. Each one, we get into his portfolio, what he's holding, the market structure, entry targets, fair market value of Bitcoin and Ether and where we are in the cycle. There's new episodes that are released every Wednesday. They're 30 minutes, they're short, they're punchy. I think this crypto cycle is harder to navigate than most, so let's do it together. Go subscribe to this podcast, search the DeFi Report wherever you get your podcasts,

• 37:01Speaker 02

  YouTube, Apple, Spotify, or find a link in the show notes. There's a new episode waiting for you now.

• 37:06Speaker 00

  You talked about updates to the EtherFi token as well. Um, let's, let's talk about a little bit about that. What's going on over in the token world?

• 37:13Speaker 01

  Yeah. So we, um, there's been a lot of debate, uh, you know, back and forth around token value accrual. And, you know, and we participated to some degree in that. We had buybacks previously. Um, what we're doing now with, with ETHFi is doing what we're calling programmatic buybacks. So basically every action within the product now has a portion that generates revenue, has a portion of that that programmatically goes to buying back ETHFi. And so now it's not so much this sort of discretionary thing, you know, how much is it going to be, uh, you know, uh, this month or next month. It's just baked into the protocol in a, in a programmatic way, uh, which we think, uh, should create

• 37:57Speaker 01

  a lot more confidence in terms of like, what is this token for? What's the value? Like, how does it connect to the, the health of the, you know, the, the protocol and the, uh, and the company? Uh, I think, um, well, others have done this kind of thing, uh, before, and that's almost like the only instance where buybacks have actually worked is in cases like Hyperliquid, like I guess PumpFun, um, I think is doing something similar, um, where it's just baked into the, into the product. And so that creates a level of trust and confidence for people that, uh, you know, want to hold the, the asset.

• 38:29Speaker 00

  Does that also give people a bit of a view into the actual financials of EtherFi? Because you can like back your way into the data, right?

• 38:37Speaker 01

  Yeah. Well, that's always been the case. I mean, all our transactions, everything's on-chain. So there was no, um,

• 38:43Speaker 00

  Right.

• 38:44Speaker 01

  I suppose, uh, suppose like the interchange rate specifically and a few other brands, but we, we generally are pretty transparent about that. Uh, we do these analyst calls, at least quarterly, um, where we just give a full, you know, transparent view of where things are at.

• 39:00Speaker 00

  It was never a secret. It was always open.

• 39:02Speaker 01

  Yeah, that's right. I mean, it's kind of hard to, to, to keep it a secret.

• 39:06Speaker 00

  To hide an on-chain business. Yeah.

• 39:08Speaker 01

  Yeah.

• 39:08Speaker 00

  Yeah. What about privacy with EtherFi? I suppose like as EtherFi gets more and more users and more and more transaction volume comes into the EtherFi app, privacy becomes a bigger and bigger issue?

• 39:18Speaker 01

  Yeah, absolutely. Um, I mean, look, what would be so nice, and this is where, you know, it'd be nice if the Ethereum, uh, uh, protocol was focused on exclusively on this kind of stuff. It'd be nice if privacy was just built into Ethereum. Um, um, we are working with optimism to roll out a privacy layer on EtherFi that should, uh, uh, hide, uh, like some of the basic information, information like balances and, and transactions. Um, I mean, at this point, it's not like they're public, right? It's, it's like anything in DeFi. Like, yeah, if you know the wallet address, but, um, that requires, you know, doxing. And obviously you just see the number, the quantities. You don't know what, you know,

• 40:03Speaker 01

  what the person is buying or where or anything like that. So, uh, so there's, you know, there's a level of privacy, but we want to take it, uh, you know, uh, to a next level where, where everything is, uh, is private by, by default. Again, I mean, this is, I think, one of the most valuable things that Ethereum could do, um, at the network level is, um, integrate a true privacy layer that, uh, that works. But in the meantime, as I said, we're working with optimism to just roll that out as an additional feature, uh, that, uh, that we'll have.

• 40:34Speaker 00

  Mike, this is all my questions. This is pretty exciting. Uh, as I kind of said, I do see EtherFi as a canary for Ethereum at large. EtherFi is kind of just like wrapping up the Ethereum super app into a consumer product and selling it to the world, uh, which, I mean, it's, it's bullish that we've gotten this far. We've got spend, we've got save, we've got invest and margin. Uh, what's the next verb you think that will come into the EtherFi app?

• 40:58Speaker 01

  The next verb, uh, yeah, that's an interesting way to think about it. Um, I wonder if there's some social, uh, element that, that could be turned into a financial, uh, you know, verb. Um, maybe that's probably, that's kind of a, uh, direction.

• 41:13Speaker 00

  Gossip.

• 41:14Speaker 01

  It's going, yeah.

• 41:14Speaker 00

  Gossip.

• 41:15Speaker 01

  Yeah, there we go. Um, yeah, no, I think, uh, like, I think it's exciting. I hope, uh, I, I mean, I hope other, and I'm sure other people will, uh, try to replicate, uh, this and, uh, that'll be good. Cause like this is a, you know, just neo-banking, forget banking, just neo-banking is a $300 billion revenue industry today. Uh, that's, I don't know, about a 300 times larger than DeFi today. Um, like that's the opportunity. Um, all this gambling shit that we're doing is, uh, a distraction, uh, really. So, uh, the sooner we can get past that, the sooner I think the, the actual benefits of crypto start to accrue.

• 41:56Speaker 00

  Mike, congrats on the release. I hope the best for you guys. Uh, thanks for coming on the show and telling me all about it.

• 42:01Speaker 01

  Great. Thank you.

• 42:02Speaker 00

  Bankers, as you guys know, the deal, crypto is risky. You can lose what you put in, but the institutions are here, so we are going even further west. This is the frontier. It's not for everyone, but we are glad you're with us in the bank journey. Thanks a lot.