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- [00:02]
A
Thanks listening. We got Mike Silagazi from Etherfi back on the podcast. Mike, welcome back to the show.
- [00:07]
B
Hey, thanks for having me on again.
- [00:10]
A
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 Neobank whole revolution that started in 2024 and moved on into 2025. Really kickstarted the whole neobank platform I think first, first just with the whole retaking 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, Let me know. Tell me about this second act coming down the pike for etherfi.
- [00:59]
B
Yeah, I mean I guess it's sort of like the third act, right? Our first product was the, 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, you know, our liquid vaults. So that was kind of like you've got the yield layer but then you want to deploy it into defi to earn higher rewards, higher risk. 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 neobank. 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 that 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 but you know, continue to be able to use, you know, interact with the normal financial system while getting the benefits of, 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 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. Very few normies kind of broke through the pain and onboard. And so what we're releasing now is not only is it the next generation of that, but more excitingly 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 these 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 institution. So in other words, it's not just like recreating what existed before. 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.
- [04:20]
A
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 Ether five product suite?
- [04:29]
B
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 stable coins, could hold usdc, usdt, you called could hold eth. You could hold like you know, a wrap version of, of hype and Bitcoin very crypto assets. We are now changing that to where you will now be able to hold tokenized stocks. So huge range of tokenized stocks. You'll be able to hold metals, so gold, silver, 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 really is now Becoming not just a general, you know, crypto wallet but you know, wrapped in a smart contract safe. But you, you can actually just hold any, you know, any of the more tradfi tokenized tradfi assets. So that's pretty exciting. First, you know, first time I think crypto Neobank 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. One, any, any you know, stables that you deposit now earn yield if you choose to, to opt in. So now you deposit your USD, you're just gonna be getting 2 or 3% interest on it because it'll just automatically be loaned out for you. So you, that's a higher rate than you, you 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, this AAVE market that you can now borrow 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'd be better that, but 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 S&P 500 tokens in there, take out a loan, buy some more tokens, do all this stuff that you do in defi. But now with, with tradfi assets, which is super exciting. And then the other big thing is like super comprehensive fiat Rails, 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 normally do need to do for the bank. 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.
- [08:14]
A
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- [12:55]
B
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 pump fun, there's, you know, whatever, even centralized exchanges. Like you just have like casino version one, casino version two. Casino. It's just like casino with different, like window dressing, you know, like polymarket. Oh, gamble on the weather now. Okay, like, and, and that's. It's super profitable, right? Like the casinos make tons of money. Gambling, especially in, you know, in a gambling type type market is, it's a huge industry and it's very profitable. 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 tokens in the gutter, you know, we talk about things we're doing to improve that as well. But like 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 real, you know, the real economy on, 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 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, 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 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 gambly 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. I want to learn a little bit
- [16:06]
A
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 the 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.
- [16:30]
B
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 on that. 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 had 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.
- [17:15]
A
Do you guys like, kind of opinionatedly show like X oxen 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 selling. Not selling, but displaying. Giving the option to buy to our users.
- [17:31]
B
Yeah, because we need to make a choice about which ones are enabled as collateral on the AAVE 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 the choice that's being made.
- [17:57]
A
I see. Okay, let's go into the AAVE side of things. Talk to me about the AAVE spoke model. We've never done an episode on AAVE 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 grittier details after that.
- [18:14]
B
Yeah, so AAVE is AAVE before. Just the new iteration of AAVE that, you know, they 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. 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. And this market is very much not meant to be used the same way that other AAVE markets or other defi lending protocols have been used. Like, what I mean specifically is other defi markets are very degen 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 and you don't
- [19:30]
A
want that because you don't want to be like too far on the, in the operations of risk management. You to do risk management, but that's not your, that's not your specialty. You're going to like, keep it a little bit more moderate.
- [19:41]
B
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 a's, worked across like pretty insane market conditions. No, we, we just don't want our users to get wrecked like an exchange, like a centralized exchange or pump fund or whatever. And I, 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. 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 either fry, I mean, we've had a much more limited, you know, ability to borrow for, for your, your card against, like this, against like, Ethan, like other basic assets. In the entire time the, 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. 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 where like, even a 40% price move won't, like, won't kill you, 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 D gen. This is really meant to be like a personal finance tool.
- [22:04]
A
So as assets flow into this aave. What is it called? Not. Not a spoke spoke. It's an a spoke hub. It's a hub.
- [22:15]
B
It's a hub. And then there's. There's going to be multiple spokes coming out of it to start with. Just one.
- [22:21]
A
What are the what are the spokes then in that case?
- [22:23]
B
Well, for now just one. There would just be the one main spoke because it's being launched on optimism. We, we've talked about them about launching another spoke specifically dedicated to more defi activity on optimism. I think I can say that. Okay.
- [22:40]
A
Okay. So like say, say my Etherfy 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 a market and so I borrow some money. Who is lending me that money? Who's on the other side of that borrow lend equation?
- [22:59]
B
So either other users who are depositors in this Ethereum market or. Well, I guess other users is the short answer. They can be. Anybody in the world can deposit into the market. So it's totally permissionless for basic sample users or, or anything. I mean you deposit, it's just an open market. So you can be a cash user, an Etherfly user or anybody. You could be a financial institution looking to earn yield in like a pretty low risk market. So anybody can deposit. Borrowing is limited just to cash users. So that's sort of the, the idea. So you're borrowing from a wide variety of depositors. We have a few partners that are actually going to be depositing some of their treasury as sort of a way to help facilitate the growth of the market. So there's going to be a variety of players that participate.
- [23:52]
A
So etherfi is using aave4 to be like a matchmaking platform for its own users for borrowing and lending. So it's like a what a bank does but doing it bankless.
- [24:05]
B
Yeah, exactly, that's exactly right. That's. I mean a bank gets together, takes your deposits, you know, gambles in 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 and then other users can use that to, to take out a loan and you know, do whatever, whatever they want to do.
- [24:31]
A
Is this a new revenue line item in the Etherfi pnl like this makes money for Etherfi?
- [24:38]
B
Yeah, for sure. So both the swaps on assets makes money and this lending market also makes money.
- [24:48]
A
Okay, okay. So you take a little bit of the fee of the lending yield and then when somebody likes the same as
- [24:54]
B
AAVE, any AAVE market there's always a right.
- [24:57]
A
AAVE's sharing some of their economics with you. I'm sure AAVE gets a little bit too.
- [25:01]
B
Yeah, that's right. I think this is public. There was a, you know, an AAVE governance proposal. So it's 80 20. So Etherfry keeps 80%. AAVE gets a 20% rev share for the, the infra.
- [25:10]
A
Cool. And then the, the swapping feature. How, how does that actually work? Is that, is that. Whose software is that?
- [25:20]
B
It's. Yeah, it's pretty sophisticated. It involves a number of remote vaults that are integrated with your primary vault on, on Optimism and anything that's deposited. Whatever. I'm going, I'm nerding out here. In terms of the specific partners we use, we primarily are using a partner named ENSO and they, they're doing a lot of the routing and optimal, you know, optimal routing to give you the best price on your swaps and the prices you get are actually really great. I mean in many cases you'll get a. I, maybe even I can make a strong statement that in most cases you'll get a better price on this than you would get in like a centralized exchange or, or just randomly doing a swap on chain. It's. Yeah, it's pretty, 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 in, 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. Right to, to do something this is really meant to feel, you know, as good as in a centralized exchange.
- [26:33]
A
Talk about the rollout plan for this gen 2 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.
- [26:46]
B
Yeah, so everyone can get their hands on it. It's. It's live already.
- [26:49]
A
It's it.
- [26:49]
B
That's it. Yeah, as soon as we announce it, it's. It's live. Yeah, we're not doing like a free announcement and then. No. So it's just, it's live. You can use it. New users immediately get in. Existing users will be sort of rolled into it over a period of, I mean like a week or two. So if, if you're an existing account holder, you'll slowly kind of have it enabled, but new users get it immediately.
- [27:15]
A
Where does the product go from here? So we've got these two new primitives into the Etherfi app. Are there next steps or is that just like too soon to talk about.
- [27:24]
B
I mean there's, there's so much stuff that we're doing. So there's. So we're calling this release Ether Price Summer. Yeah, whatever. It's just a goofy, goofy name. 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, I think this is, this actually inspired a lot by what founder of Airbnb had this now very famous speech called Founder Mode and he talked about how they organized and structured their releases. And so we, I was really inspired by that. So we're kind of following that model anyway, so next release is going to be called etherfi Autumn. It. There's going to be a lot of polish and improvements that we're doing there, including both Summer and Autumn 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 previously. You know, Etherfry just is like still very like defi feeling. And then the other big thing for Autumn coming up is going to be a lot of what we call sort of a social layer. 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, to collaborate and interact socially, I guess, in a financial sense with others. And we're doing some cool stuff there again, stuff that you couldn't like, I'm sort of spilling the beans I guess a little bit here. But like imagine you could just like yeah, like if you want to send someone money with like 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. Like you send somebody 10 bucks and they just like they open the, you know, 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 now is like self sovereign so to speak. You can like send it to somebody else. And now, you know, your, your grandma in India or whatever can now go and like use that to buy stuff, 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 because I just think that's when the magic happens and that's how you actually get people to re, you know, replatform.
- [30:05]
A
When Ether Fi 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 use a terrible word? And now like stablecoins and on ramps 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 on ramps and off ramps.
- [30:38]
B
Yeah, like they went, I guess eventually maybe they'll converge on something that's, that's good look. Yeah, play, rewind the clock like two years. Yeah, there were some crypto on ramps, 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 aggregators that are out there that can like create a somewhat smoother experience. Like the KYC is less painful instead of 4%, maybe you're paying like 25 basis points, you know, like it's less bad, like reaches a lot better, you know, currency support. My honest take is that like, I think it's just a question of when, you know, we, we get there is if you're really serious about this, you gotta 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, not just Ether Fi, 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.
- [32:11]
A
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?
- [32:19]
B
Yeah, that's the end game. I mean that's, that's for sure the end game. 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 rail 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, you know, you tap your crypto payment thing and it just exchanges stable coins or, or crypto assets directly. Now, it's very hard to do that in a compl. Client way and all that, but then you're really like that. That's going to be super seamless. I don't think it is. And maybe I'm wrong, but because there are people that are trying to do this already, I think WalletConnect is trying to do that. Even Circle was kind of going down that path a little bit. 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. Right. 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. Amex, I think, is 100 million accounts, something like that. Like, that's maybe just enough where you can have the sort of the lounges and the terminal integrations where like 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. So 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.
- [34:02]
C
Right?
- [34:02]
A
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.
- [34:15]
B
Yeah, that's right. And at that point, the power dynamic between individuals and governments really changes dramatically. Because when you have. Let's go. I mean, when you have an asset that's unseasonable, because right now, look, we're still transacting in dollars. Right? And stablecoins are a lot more free than bank deposits. But you're still transacting in dollars. Those dollars are inflated. They can be seized. It's much more difficult to do it, but they can be. But when people are truly transacting peer to peer, I mean, it becomes really hard to fund forever wars by printing money. Right.
- [35:02]
A
This is the original crypto bitcoin vision.
- [35:04]
B
Yeah, yeah. And so you have to build quite a tower 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, you know, a couple years ago it was like, how do we get from here to, like, something that, you know, normal humans actually, actually use?
- [35:22]
A
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 over $25 billion cross chain using post quantum signing and has run over five years on mainnet 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.
- [36:19]
C
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 Naito. 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 podcast, YouTube, Apple, Spotify, or find a link in the show Notes. There's a new episode waiting for you now.
- [37:06]
A
You talked about updates to the etherfi Token as well. Let's talk about a little bit about that. What's going on over in the token world.
- [37:14]
B
Yeah, so we, there's been a lot of debate, you know, back and forth around token value accrual and, you know, and we've participated to some degree in that. We had buybacks previously. What we're doing now with, with Ethi 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 Ethi. And so now it's not so much this sort of discretionary thing, you know, how much is it going to be, you know, this month or next month? It's just baked into the protocol and in a programmatic way, which we think should create a lot more confidence in terms of like, what is this token for? What's the value? Like, how does it connect to the health of the protocol and the company? I think, well, others have done this kind of thing before and that's almost like the only instance where buybacks have actually worked is in cases like Hyper Liquid, like, I guess Pump Fund, I think, is doing something similar where it's just baked into the, into the product. And so that creates a level of trust and confidence for people that, you know, want to hold the, the asset.
- [38:29]
A
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?
- [38:38]
B
Yeah, well, that's always been the case. I mean, all our transactions, everything's on chain, so there was no.
- [38:44]
C
Right.
- [38:44]
B
I suppose, I suppose, like the interchange rate specifically and a few other brands, but we, we generally are pretty transparent about that with, we do these analyst calls, at least quarterly, where we just give a full, you know, transparent view of where things are at.
- [39:00]
A
It was never a secret. It was always open.
- [39:02]
B
Yeah, that's right. I mean, it's kind of hard to, to.
- [39:06]
A
To keep it as secret business.
- [39:08]
B
Yeah, yeah, yeah.
- [39:09]
A
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.
- [39:19]
B
Yeah, absolutely. I mean, look, what would be so nice, and this is where, you know, it would be nice of the Ethereum protocol was focused on exclusively on this kind of stuff. It would be nice if privacy was just built into Ethereum. We are working with optimism to roll out a privacy layer on Etherfi that should hide like some of the basic information, information like Balances and. And transactions. 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 that requires, you know, doxing, and obviously you just see the number, the quantities. You don't know what, you know, what the person is buying or where or anything like that. So. So there's, you know, there's a level of privacy, but we want to take it, you know, to a next level where everything is private by default. Again, I mean, this is, I think, one of the most valuable things that Ethereum could do at the network level is integrate a true privacy layer. That works, but in the meantime, as I said, we're working with optimism to just roll that out as an additional feature that we'll have.
- [40:34]
A
Mike, this is all my questions. This is pretty exciting. As I kind of said, I do see Etherfi as a canary for Ethereum at large. Etherfi is kind of just like wrapping the Ethereum super app into a consumer product and selling it to the world, 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. What's the next verb you think that will come into the Etherfi app?
- [40:59]
B
Thanks. Verb. Yeah, that's an interesting way to think about it. I wonder if there's some social element that could be turned into a financial, you know, verb. Maybe that's probably. That's kind of the direction, like, going.
- [41:15]
A
Yeah, Goss.
- [41:16]
B
Yeah, there we go. Yeah. No, I think, like, I think it's exciting. I hope I. I mean, I hope other. And I'm sure other people will try to replicate this, and that'll be good because, like, this is a, you know, just Neo banking. Forget banking. Just neo banking is a $300 billion revenue industry today that's, I don't know, about 300 times larger than Defy today. Like, that's the opportunity. All this gambly that we're doing is a distraction, really. So the sooner we can get past that, the sooner I think the. The actual benefits of crypto start to accrue.
- [41:57]
A
Mike, congrats on the release. I hope the best for you guys. Thanks for coming on the show and telling me all about it.
- [42:01]
B
Great, thank you.
- [42:02]
A
Bangladesh Station. 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,
- [42:28]
B
Sam.