Consumer Apps on Ethereum

Transcript

Okay. Good. [Music] All right. Uh hello everyone. Uh thanks for uh thanks. Oh wait, I'm not supposed to move around. Okay. Uh yeah, thanks. Thanks for coming. Uh my name is Mike. I'm the founder and CEO of uh EtherFi. Um uh maybe just as a quick show of hands for context for me, how many people uh know what EtherFi is? Oh, wow. Cool. That's great. Um, how many people have actually used it? Uh, staking or otherwise? Nice. Awesome. Wow. Thanks, guys. Um, uh, okay. So, I mean, I'll talk more about, uh, Ether Fi, but what I wanted to talk about is, um, uh, really about the scale of the opportunity to build, uh, real products,

consumer apps for, uh, people, uh, rather than focusing on kind of all the gambly stuff that uh, you know, most of crypto and DeFi is focused on today. So, I'll start off with a question. uh which is uh if you look at the revenue generated by some of the largest uh DeFi protocols um out there, you know, ballpark, how much revenue do you think all of DeFi generates? So, think of a number in, you know, in your own mind. Yeah, maybe net of emissions, it's probably negative. Uh so uh but uh u uh you know if you look at the the top protocols and this is you know a selection if you sort DeFi llama by uh

by TVL um give or take these are the ballpark numbers I think maybe it's higher these days because token prices have gone up a little bit but uh you know you have a that generates 60 to 100 million in revenue uh per year again depending on you know token prices u uh lido does about 50 to 70 million again depending on the price of ETH uh Maker or Sky um you know I think at their at their peak they were doing close to 500 million in uh in revenue um these days I think that number is is you know ballpark uh approximately right um and then etherfly we did about 26 million last year this year we'll probably do around maybe 50 to 70 um um so these are you know on the one hand you can look at

that and say like these are pretty good numbers um and uh most of these protocols are actually profitable uh uh you know generate revenue. So that you know you take a step back and think okay that's impressive. Maybe if you add all of DeFi maybe if you if you're super generous and you classify Pump Fund as DeFi um and you add all of it up maybe it's about a billion dollars uh a year in revenue uh give or take. Again that that sounds impressive so keep that number in mind. Uh, and here's Zenesk. Completely random, very boring company. Most of you probably don't even know what it is.

It's a random help desk company. One of hundreds of help desk companies out there. Uh, they do about a billion and a half in revenue. Uh, there's literally thousands, probably tens of thousands of companies uh, just like it. So after you know uh 10 years in DeFi, all of DeFi generates uh less revenue than one uh random help desk company from the early 2000s. So on the one hand you can look at that and say well you know there's uh maybe that means DeFi is not you know not that impressive. Um um but I I think really what this shows is there's an opportunity here, a huge opportunity to actually generate uh to build products

that touch a lot more people and generate substantially more revenue uh and you know get probably to a thousandx of the the size that we're we're at today. Uh so to use you know the old cliche, we're early. We're still believe it or not uh super early. But what we need to do is to stop with the gambly uh casinos are a big business, but if you look at casinos as you know a part of the global economy, uh you know, it's a rounding error, right? Like I I don't even know if it's 1% of it's probably significantly less than 1% of the of the global economy. So the opportunity to build uh products for real people, real services that they actually use uh is uh is massive. I mean there's there's uh you know a thousandx

of growth uh uh left to go here. So that's you know in a very high level sense that's one of the things that we're focused on at Ethery. One is obviously, you know, creating a great protocol that has users and and generates um, you know, lots of revenue, but also as a demonstration that it's possible to build uh, you know, real projects that uh, that are sustainable that actually survive by providing real services um, uh, to to users rather than, you know, just the usual sort of ponzomic uh, uh, type of recycling. And so the market that that EtherFI is focused on um I guess to for those of you that aren't familiar with with Etherfi, what we're focused on uh building is uh what we call a DeFi bank

um which is to say basically an endto-end alternative to traditional banking. So if you imagine as a user if you've used Revolute or or New Bank or Chime or any of the you know the neo bankanks that are out there um and then you know you download the the Etherfi app um you know it starts to look very similar that's that's the direction that we're going in basically everything that you get from your traditional uh you know banking service but um all fully self-custodial uh integrated into DeFi uh and of course much lower fees and higher rewards because it's, you know, it's plugged into this um uh this ecosystem. So, that's that's what we're building. Uh we've got a number of products that I I'll briefly talk about. Um uh but

that's the long-term vision is to to uh disintermediate and uh swap out the traditional banks. Uh and so how big a market is that? Well, today or I should say last year, last year the neo banking space, so that's just you know the neo banks like Revolute, Chime, New Bank, etc. uh that market size was about 150 billion. So give or take 150 times larger than all of DeFi. Um and that market is growing super fast. It's adding you know 50 times DeFi every year uh at its current rate of growth. Um so uh you know the opportunity here again is is substantial by focusing on real users and I wish I actually had some slides from our you know our cache

product launch recently because um uh you know it what it demonstrates is that you know we are we actually do have a good shot at taking a big uh you know slice of this market um because what we put together is this suite of three products. Uh most of you if you you know learned about Etherfy in the early days probably know about our first product which was Etherfy stake. So that was our staking uh liquid staking product that had restaking baked into it. It lets you stake now it's ETH BTC and and now USD. Uh we have our liquid product uh which is uh a series of DeFi strategy vaults that deploy assets into DeFi and kind of put it on autopilot. So instead of you having to micromanage uh your you know

DeFi positions and kind of wire up your own financial derivatives, you can click you know one button in the app and deploy it and get uh you know a nice riskmanaged DeFi position. And then finally, Ether Cash, which is a uh non-custodial uh wallet vault and a credit card attached that lets you either spend your your crypto or actually borrow against your your DeFi positions and and vaults. And so pulling it all together, what it's meant to do is the the three core services that most people get from from their traditional banks, uh, which is to be able to save your money, to be able to invest your money, and then to be able to spend and and borrow. Um, uh, and we've had pretty good growth.

This is an old slide. We're actually at around 7 billion in uh, uh, in deposits uh, and continuing to uh, to grow. uh you know our our staking assets are uh I think it's probably fair to say the most widely integrated in DeFi probably around 500 different DeFi integrations uh at this point um um we're either the number two or three asset on a um again depending on the uh on the day um uh very yeah very widely uh integrated so so it's been great and again I think that focus on providing like core user utility has uh uh has paid off. Um and arguably as importantly, we actually generate revenue. So last year, these this is our you know quarterly revenue

numbers. Uh uh we did about 26 million in revenue um profitably. So we actually generated net income on this stuff and that includes actually token buybacks that are incorporated in the protocol. So net of token buybacks, net of emissions, net of everything. We actually generated um uh revenue and this year I think conservatively we'll do at least 50 million probably uh pro probably closer to 60 or 70 um uh obviously highly correlated to the price of ETH uh these days. Um um and uh and you know substantial fees. So we we drive uh roughly 200 million or more in in fees through the uh through the platform. So, lots of room for uh uh for margin expansion there. So, that's my

call to action. I'm sure most or most of you guys are are builders. Uh uh my call to action is build build products for real people. Uh forget about the panzenomics stuff. Uh the opportunity is a thousand times larger to uh uh to actually build stuff that uh that matters. So, uh great. I think uh we have some time for uh for Q&A. Uh, so if you have any questions or or you want to heckle or whatever, uh, go for it. I have a question about the cash product. You said it's like a credit card that you can use um your crypto with. Is there any kind of a tool because in some jurisdictions, including in the US, anytime you use crypto to buy something, that's a taxable event and you have to pay um, capital gains on it.

So does that include a tool for you to generate a report that you can send to the IRS? Um, yeah. So there is reporting but um uh for people that are concerned about that and I guess I should say I'll say two things. One I'm definitely not a tax lawyer so don't listen to anything I say as advice. Um but and every jurisdiction is different. Um so my understanding is in the US you're okay to borrow against your crypto assets. That's not a taxable event. Uh in Australia for example it is a taxable event. So every jurisdiction is different, but in the US um you can borrow against your ETH or BTC and and spend that and you're not you're not realizing the gain on those assets. So with the cash card, you can do that. Um

and that's um for yeah for for a lot of users that is the the the benefit is they just deposit their staked assets uh you know in the vault and then just spend and kind of go about their life. So you're actually So you're actually So like if I put USDC like if I supply then I can borrow something else against that USDT or something and I can spend that and it's not a taxable event because I've borrowed it. Is it? Yeah. So if you deposit ETH for or for example if you deposit into the liquid strategy vaults like the USD vault I think is doing about 10%. So, if you deposit a bunch of 10% APR, um, if you deposit a bunch of USD into that vault, that can continue yielding and then you're spending and

you're not realizing that tax or if you deposit ETH or BTC, then you can spend against that. Obviously, I mean, uh, liquidation risk, don't leverage, etc. Lots of all the caveats. Any feedback for any card users? What do you What do you love or hate about it? One more countries. One more countries. Uh, which countries?

Dubai. We support Dubai. Yeah. Um, I don't know about Lithu Lithuania. I would a um uh soon actually. I mean, I guess the yeah, the answer is actually soon. We're we're about to onboard um a BIN sponsor uh that will allow us to issue um uh Eurobased cards and then I think we actually have pretty much full coverage of of Europe. So, that should be uh conservatively two months away.

Uh I had a question just on like the road map. Um there obviously a lot of cards seems to be quite a big thing going out at the moment with Metam Mask and Argent and all these different sort of providers. Um what is like the next step for you guys and what's going to what do you think the winning card is going to get first? Yeah, that's a that's a great question. I mean I would actually say that uh it's not going to be a winning card. Like in the same way that staking as a standalone product is just not very interesting. I mean, there's probably 20 different staking solutions out there. Um, probably hundreds if you include the various node operators that you can stake with. So, staking, for example, in and of itself is just not that interesting. In the

same way, a a credit card, I mean, most crypto cards are terrible if you've ever used them, but that's not even the point. Even if you make a great crypto card, in of itself, that's just not that excuse me, not that interesting. Um, I think the real value of our platform is the integration. So specifically, you can, you know, you can stake your asset, you can on-ramp with fiat, you know, buy some ETH, uh, stake your assets, put it into DeFi, and then use a card to actually, uh, borrow against it or spend it. Um, you know, as well as, uh, you know, all the other nice features around that. So, so the real value of EtherFI is the the vertical integration of the entire product suite,

not like any any one product. That's um I think one of the really um uh I mean I want to say surprising but in some ways it's not surprising. One of the uh quirky and somewhat surprising things about DeFi is that the way it's evolved is, you know, you have thousands and thousands of different protocols and all of them do, you know, one very narrow thing and that's been kind of the template, right? There's like the CDP protocol, there's the DEX, and there's lending and, you know, derivatives, interest rate swaps, per etc. Um, and that's that the reason that maybe one could say it's not that surprising is because that's the right structure for power users when you have a very small

number of very sophisticated users that, you know, love playing with these financial Legos and, you know, wiring up their own financial derivatives, right? Because that's what you're doing. Like if you put money into Athena and then put that into Pendo and then you put that into a I mean, you're literally wiring up your own derivatives. Um, and that is not uh something that, and I'm probably being conservative here, 99% of people want to do. Most people uh will destroy themselves immediately if they try to do that. Um, and uh and most people don't even want I mean, I I'm a power user and I don't really want to do that, you know, full-time. Um, I'd rather put that on on autopilot. Um, so naturally, just as we saw, I guess in

the, you know, when computers first became popular, people the, you know, the the early adopters love to build their own machines and buy the CPU and the motherboard and the video card and your own case and you'd assemble it and that was super fun. But, you know, 99% of people aren't going to do that. Um, so as that market matured, more comprehensive kind of integrated products started to, you know, to become more popular. And I think we're going to see that in DeFi. Uh we already see that in CFI, right? Exchanges are kind of starting to play this role. I don't really think that um um I mean exchanges are basically casinos. Uh so uh I I don't know that people are going to go to the casino in order to like all right, I want all my banking services to

come from this. But we certainly see that vertical integration taking place with with exchanges. Uh and I think we're going to see much more of that in DeFi. I mean we're there's a few examples of that and that's directionally what uh you know broad consumer adoption is going to is going to look like uh is these integrated services. Okay. Well, no more questions. Uh thanks everybody. Yeah, hopefully uh this was interesting and uh yeah, check it out at ether.pfi. Bye.

Thank you.