Inside Maple Finance’s Meteoric Rise - Sid Powell

Transcript

They're not going to do it out of benevolence or some underlying belief in the technology. They're going to do it because you help them earn a bonus at the end of the year. And so you better make sure it's a damn good bonus for them. Defi has just grown its resilience as a whole, as a category. What kind of advice do you have for for founders who are in a situation like that or perhaps are are headed for one and don't yet realize it? You know, the idea that Ethereum would just sell itself, I think is mistaken and you actually have to have I think Salon has done a much better job of this than Ethereum. Welcome back to the rollup. We are your hosts. I'm Andy. I'm Robbie. And this is your home to learn from the biggest guests, the brightest minds at the tip

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[Music] Introducing asset runes, the future of decentralized finance. Stable coins natively on Bitcoin. Hedge against volatility. Diversify your portfolio. All directly from your Bitcoin wallet. Secured by ZK Technology. This is asset runes available now exclusively on Starknet. I probably spoke to Sid for the first time when I was like 21 in in like 2020 or something or 21. Um, you know, so a lot has a lot has changed since then. We got him up here now, Sid. Good to see you again, man. Congratulations on on

some of the recent success. No, thank you. Thank you. I appreciate it. It's been Yes. I I think we've had pretty good momentum so far this year, but I don't take it for granted. It's certainly a lot of grinding behind the scenes. Yeah, man. So, look, I I gotta I I gotta tell you that I started this this poll two weeks ago or so. It was like, uh, how long will the revenue meta last? And I got absolutely blasted on Twitter for it, you know, but but the options that I put were less than three months, less than six months, less than a year, less than two years. I think I should have put more than two years. Um yeah, but a lot of people paid like less than three or less than two years, which assumably is like more like it's going to last forever. Um I do feel like you

guys have been building for this moment of of people actually caring about let's just say revenue and such more so than others. Um, I'm just curious like what's the state of things with regards to your view of how the market is assessing different DeFi protocols based on different onchain metrics and kind of like how you're viewing it from the founders perspective or the builder's perspective as far as like what the north star is or one or two things to really kind of focus on in terms of metrics.

It's a good question. I'd say it's kind of my view on it has shifted over the last 12 months. If you'd asked me Andy, 12 months ago what I was focused on, I would have said it was 90% TVL and then maybe 10% or less revenue. Like we're we certainly paid attention to it because that's what pays to keep the lights on. Uh but I would have said that, you know, us internally and then also the VCs and the funds and everybody who who holds our token, what they cared about more was TVL. And now I would say it's kind of shifted. I don't know if it's hit 5050 yet, but nowadays anytime I talk to a fund, whether it's a liquid fund, kind of looking at the token, one of our existing venture backers or just the community, what comes up more

and more is is the revenue side of things. Uh, so I'd say it's maybe not quite 50/50, but we've gone from 9010 to maybe like 60 6040, getting close to to 50/50. And I think across the board, the other thing that we hear as well is every liquid fund we're talking to is kind of trying to identify revenue producing teams and protocols and focusing on that rather rather than TVL because unfortunately we've seen that in a lot of cases you have this massive explosion of TVL that then quickly evaporates once a team or a protocol launches their token. So it's it's not sticky. It's not a durable business and that's what they're using revenue as a proxy for now.

Okay. and and I've been kind of using the the mental model for these funds and for these investors who are now really trying to get get you know a bit more exposure to these types of assets as look I mean it was the it was the new administration in the states came in and really just kind of catapulted people out of this mindset that I almost kind of I don't blame Andre Cron's medium blogs back in the day but like he really kind of started this like this is a useless governance token do not buy like you know what I mean, right? Which would have been straight out of would have been straight out of uh the memo from his lawyer, right? Is like you have to tell everybody that's worthless so that you don't get sued. Exactly. Right. And that was a state of affairs which

looking back on it was so silly. So that happened and then and then the other kind of thing that I'm pointing to is obviously just like the success of Hyperlid, the model there, the token etc. So that just changed the way that that the market has has thought about uh tokens and DeFi in general. And it seems like that's also coming at a time where uh there's also kind of the power law hitting the market in a in a stronger way than ever as far as the performance dispersion of different assets uh in the altcoin market broadly. Yeah, I think so. And you you have uh I think a couple of things kind of contributed to it and and to kind of the rise of the the let's call it the revenue meta, but you had a lot of uh L1's and L2s that were valued

at, you know, 2 to three billion last year or in private rounds in 2023 and 2022 and uh a lot of those are now valued at, you know, two to 300 million FTV because they never landed re like they never landed users or or activity on their chains. And so meanwhile you you've seen the uh you've seen the interest flip to now where you want to own the kind of the app because that's where the customer relationship is which is where you can kind of charge revenue and you've seen I think where we've tried to position ourselves is we think that DeFi protocols are going to outperform memes this year because I I I similar to you similarly to you I think memes were an equal and opposite reaction to if you do a D5 protocol you

get sued into oblivion. And so you know a lot of people did useless value tokens but in a world where you can build real protocols that have real revenue and real businesses that are sustainable I think there's going to be less oxygen for for memecoins and so I think uh we are trying to position ourselves to stand out by being a DeFi protocol that has revenues. The only way I know how to do a business for for 20 years that'll have it survive is if you can generate revenues to pay for everything for the 20 years. Otherwise, you're effectively just on a melting ice cube. And so, we, you know, we value independence and being in control of our own destiny. So, we we want to continue

to generate revenues. And I think there's maybe going to be half a dozen DeFi protocols that can do that. And so, we want to be part of that pack. And uh and so I I think that that's that's how we are trying to stand out. And I think that's that's going to be the play for this year for for teams who are successful. Yeah. Yeah. I agree. I mean, I think that that that's going to keep happening. I I don't discount that there will be select memes that do well. I mean there always will be, but I I think this dispersion is going to hit harder on like I like yeah some of these L1 L2 tokens um some of these kind of infrastructure style plays which are seemingly just trying to figure it out as well because I think a lot of them

have to figure out how to almost like dog food their own technology and then build applications on top of what they already have that like attract some sort of users. Well, shifting shifting gears here uh more in towards like uh the nitty-gritty of DeFi. Um so you've kind of prioritized Maple around stable coin growth, private credit market, taking share away from banks in general, uh asset management shifting onchain as well. Um I'm curious like at the at the kind of like intersection of of of all three of these you must be working with different teams and and uh protocols that are specialized or do well in enabling you to do this. you know who the the most

important to the maple finance best story uh you know whether it be infrastructure providers yield partners etc you know and kind of how have these partners really helped you succeed uh it's it's a really good question it's a very broad question I'll I'll do my best to kind of answer it uh succinctly so I think where we've seen the most growth this year has been on syrup USD And a lot of that success has been due to our DeFi partnerships. So I I would attribute a lot of the success and and and the kind of the value in partnerships there to you know we got we got syrup USDC on boarded as collateral to Moro and Oiler. Uh so those were

really important partnerships. Um our first major DeFi partnership there was Pendle. So they helped with hedging and and also speculation on the interest rates. And then more recently, we've had a really large partnership with uh with Spark and uh and the Sky ecosystem and we want to continue growing that. We view them almost as the central bank of the DeFi space and uh and uh and then recently about 2 3 weeks ago we we launched on uh Salana and that the big the big partnership there has uh has been Camino. So Syrup USDC is in the lending market there and uh and has been able to be looped. So there's a number of partners, but I think those DeFi

partnerships have probably been the the biggest driver of our growth over the last nine months. Uh and then in terms of infrastructure, we are not only DeFi, we we actually have a lot of CFI partners and I think that's one of our our unique differentiators is we can accept collateral in a qualified custodian. So we do a lot of work with Anchorage, uh with BitGo, uh Copper. So I think that custodial infrastructure has been really important for us in serving uh you know serving institutional borrowers. So they post us Bitcoin or Soul or ETH or XRP and and we send them loans on chain. But we couldn't do that if we didn't have these custodial partners. Innovating finance global institutional and onchain deep

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part of the business that I recall more so than ever previously from 21 and 22. But I think this expansion stable coins and also just into more uh in into more like uh into more markets that anybody can participate in has has really served you guys well. Obviously, there's been this kind of like power cohort of D5 protocols as well that have really emerged uh you know given the ones that you've named as well as on the C5 side. One question that I have Yeah. Yeah. Go ahead. I was I was I was going to say and and I think one of the interesting trends we've seen is that some of the DeFi protocols who have done really well lately have kind of uh had this almost hybrid CFI defi approach where there are aspects that are quite centralized and

then there are aspects that are fully on chain. I think hyperlid and Athena are two of the other ones that really come to mind in a strong way. Yeah. Yeah, definitely. I mean that the you know the puck is going there, right? So, I mean, teams that are skating towards RWA's in institutions, it's very clear. Um, and I mean, the the news the last three months looking back, you know, to to where we were has been uh shocking in the best way possible. Um, okay. So, one thesis that I have is around opinionated applications, right?

So there is a world where application reaches enough product market fit on a given shared state on a given chain like Ethereum like Salana and you have enough of a sticky user base actually go and basically create your own uh your own chain or your own um app chain etc. You have the application being the core of it. uh the chain like the you know like the bottom of the funnel and you basically build this thing out as like as a as a uni chain as a you know as a Maple chain. Will Maple ever launch a chain or is that just not something that you're thinking about?

Uh it's a good question. I would I would not launch a chain for the sake of launching a chain. I think we would launch one if we found that it was the answer to a big problem for us. Right now, the the main things in front of us, you know, we're trying to keep the blinders on this year and so our goals are deploy more cash into loans. So, we we we've been growing exceptionally fast and that means that uh we we build up cash that we we are trying to deploy and make sure we stay, you know, as as close to fully utilized as possible. and then uh and then has been to uh get E syrup USDC crosschain and then also grow the uh the the TVL through growth of the the Bitcoin deal product. But uh I think the

to do an app chain we would have to see there's very low friction and bringing in new deposits and and also that it doesn't uh upset our borrowers who are used to taking down funds from us on at the moment Ethereum but maybe another chain in future. So, uh, I don't need I don't need the same speed advantage that a hyperlquid or that a DYDX needs. Like we're not a high frequency protocol. So, I have less of an impetus to go and start an app chain to reduce cost and and and improve speed. The people who come to us for loans, they they get one, you know, maybe every week or every every few weeks. It's not it's not a high frequency type operation. And so, that, you know, that kind of protects us

on that front. Yep. Yeah. Yep. Good point. Yeah, I think more around like sovereignty of of of um you know excessive gas fees or things of this nature. But you know if people are moving large sums of capital I think what probably matters to a lot of your users is more about um you know censorship resistance and these types of properties. Yeah. Exactly. And the other point I'd add is where we where we've had some interest before has been the idea that we could have synthetic assets that represent your your assets in custody. Like if you post $100 million of Bitcoin to uh to Anchorage that we could give you like a synthetic receipt for that so that everyone can track it

for transparency. That's kind of been the that's so far been the biggest um plus that we've looked at for an app chain. But but otherwise we don't feel tremendous pressure. We just want to focus on kind of growing the core business. Yeah. Yeah. Um, one, when you're looking at the landscape of being a founder, right? You're looking at going through the last bare market, um, you know, hunkering down, gritting through that. What kind of advice do you have for other founders who have gone through um you know long bare markets, have gone through uh you know uncomfortable situations on chain, who have you know you know had to persevere in the way that syrup has in the way that that Oiler has and the way that a

lot of DeFi has just grown its resilience as a whole as a category. What kind of advice do you have for for founders who um you know are are in a situation like that or perhaps are are headed for one and don't yet realize it because it it just kind of jumps out at you. I tell you that. Yeah. It it never happens when you expect it. I'll tell you that. So uh I I'd kind of put put three three points or three key kind of points. Some of them are tactical, some of them are philosophical. So on the tactical point, I think when you're going through a crisis, take the worst take take all the medicine you can up front. So we had to do layoffs and then everyone who stayed had to do salary reductions post FDX, but we did it up

front. We didn't do paper cuts where you do one round of cuts and then you wait a couple of months and you do another. We took all the we took all the medicine and and ripped off the band-aid up front. And I think that was important. One, to give people certainty that there wasn't going to be another round. to just transparency and and we we got it out of the way quickly. So so there wasn't any lingering dread. Uh but it also gave us the most optionality because we started saving we saved the most money rather than trying to like you know hope and pray um that things would get better. So take take your negative you know take your medicine up front. The second thing I' I'd say is you know focus on what you can control and and keep everyone on the team

aligned to a north star. it was really important to to keep morale up and uh you know and know that we were still building towards something much bigger. And then the uh the third point I would say is you know there's exactly zero great businesses out there that have not gone through a period of major setback right like you look at Amazon their stock cratered 97% after the dot crash uh you know you look at Facebook they had this crisis point with the shift to mobile you look at I mean how many near-death experiences has Tesla had same with SpaceX so there there's exactly zero great businesses that have not gone through one of these moments I would just say almost expect that it's going to have to happen to And uh and your key is most businesses are not incredibly successful in the

first 5 years. So you actually have to plan to be doing this for 10, 20, 30 plus years. Like look at um look at Jensen Huang from Nvidia, right? He's one of the longest serving CEOs in the market. Most of their success has been in the last 10 years, right? He uh he he wasn't benchmarking himself against everyone else at year six. And so I think that's the way to operate. Do it for the long term. Man, I think taking the pain early is something that I've learned in in life that it's hard to do. Goes for everything. Goes for relationships for just kind of cutting losses for because you get caught in like this like sunk cost theory where or sunk cost bias, right? Where it's like, oh man, I can't I can't cut this because

ah just, you know, but it's like no no like man, you know, even just saving 1% 10% is better than losing, you know, 99.9%. You know what I mean? Sometimes you can't finish the day with a win, but you just have to not lose, not suffer an L during the day. And so, and but you just accumulate those over time. You you get up and you keep you keep grinding through every day. And Sid, one last thing for you as well on the advice side for uh working with expanding out of cryptonatives and into institutional uh basically capital and that kind of world. What what kind of advice do you have for founders who are also looking to um break into that world more with their protocol? You know, when it goes to communicating with with these uh you

know, more traditional financial firms, when it goes to uh kind of understanding what they want and need, you know, maybe you could just provide a bit of insight as to what you found like, you know, uh relationship wise, strategy wise, and really what these institutions want uh you know, and then how you're going about providing it for them. Yeah, it's a it's a good question and it's one that a lot of people are dealing with like as we're seeing more interest from institutional and traditional Wall Street players in in what's going on in DeFi and crypto uh you're going to have to navigate it more. So, I think expect it to take a while. You know, we you know, we we recently had the announcement of of closing a deal with Caner, but that you

know, that was months of work and and a lot of negotiation and kind of prep behind the scenes. Congrats. expect it expect it to take a take a long time. Uh also in terms of selling I think a lot of people focus too much on expounding on the virtues of their tech and the tech doesn't sell itself. Instead what you have to do is show how whatever you're producing aligns with their self-interest. So in our case, you know, if we're borrowing from someone, we're we're paying interest and uh so we're we're we're generating revenue for them and we're showing how the relationship can scale. And so I think really emphasizing how the relationship can scale because for a lot of these

businesses, they're very large and there's an imbalance where most of the crypto teams trying to work with them are going to be startups or or pretty close to startups. And so you have to sell them on investing in the the future scalability of the relationship and tying it back to their self-interest. They're not going to do it out of benevolence or some underlying belief in the technology. They're going to do it because you help them earn a bonus at the end of the year. And so you better make sure it's a damn good bonus for them. And that's going to come from from you being able to show this is going to be a large relationship in future or a show that's going to generate them some revenue.

Yeah. Yeah, man. They want to see like Well, yeah. First of all, tech techwise I I think a lot of us overindexed on, you know, how much of the tech these these would care about. In fact, I think a lot of us overindex on how much Ethereum would win these relationships versus the the other chains. Like I was quite shocked, frankly, to see Black Rockck's build go to Avalanche and Salana so fast. Like I I just remember thinking back in the day like, "Oh, wow. It's just it's just Ethereum because like no, no, no. They want they want to expand where anybody is and they also will likely want some sort of like permissioned chains as well. That's like on the tech. Yeah. Yeah. It's uh it's Peter Thiel's point, right? Like the

product doesn't actually sell itself. You have to uh you have to have really good you have to invest in sales. And uh you know even if you look at somebody like Elon Musk, he always talks about how he doesn't have marketing team. Well that's because he is you know one of the best marketers in the world, right? And so, you know, the idea that Ethereum would just sell itself, I think, is mistaken. And you actually have to have I think Salon has done a much better job of this than Ethereum. Uh, and Ethereum's kind of recogniz I think the Ethereum Foundation is recognizing that now, but you actually have to be selling the product and you have to have dedicated sales teams. It doesn't it doesn't just go and sell itself. Well, Sid, man, I hope you guys hit that goal of four bill AUM by the end of the year.

Um, and I hope you double your monthly revenue, and I hope that token keeps going up, man. Thanks, Andy. Thanks for coming on and uh appreciate your time and hopefully see you next week in the city, man. I'll be around. Yeah, would love that. Thanks for having me on, Andy. Cheers. Cheers, man. Speak soon. Peace.