https://lex.substack.com/p/fintech-why-is-goldman-sachs-leaving

Hi Fintech Futurists — 

You’re the best, today’s agenda below.

1. DIGITAL BANKING: Apple’s Credit Card Partnership With Goldman Sachs Could Be Over. Why Apple Pay Will Still Thrive (link here)

2. LONG TAKE: Can Affirm beat Klarna in the BNPL market? (link here)

3. PODCAST CONVERSATION: Bringing MetaMask to the next billion users, with Agoric CEO Dean Tribble and MetaMask Co-Founder Daniel Finlay (link here)

4. CURATED UPDATES: Payments, Lending, Digital Investing

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Digital Investment & Banking Short Takes

DIGITAL BANKING: Apple’s Credit Card Partnership With Goldman Sachs Could Be Over. Why Apple Pay Will Still Thrive (link here)

Apple and Goldman Sachs have decided to end their Apple Card partnership, with Apple offering Goldman Sachs an out. Given that Goldman and Apple extended the partnership until 2029 just last year, it is surprising that Apple is offering Goldman an early exit, and suggests that a new partner has already been found. Goldman Sachs is also pulling the plug on its credit card partnership with General Motors. Consumer lending is not Wall Street business after all. 

Goldman Sachs has a difficult consumer banking history, relevant to the end of the Apple Card partnership. Lloyd Blankfein, former CEO of Goldman Sachs, believed that the bank’s enterprise value trailed behind its rivals due to a lack of established consumer infrastructure — at this time, financial firms wanted to be seen as tech companies, were launching neobanks and roboadvisors, and looking for higher multiples. To address this, Goldman ventured into the consumer business in 2016 and acquired GE Capital Bank’s US online deposit platform, bringing in $16B in deposits. Shortly after, they launched Marcus, Goldman Sachs’s digital bank.

From there, Goldman embarked on a series of mergers and acquisitions, targeting consumer-focused fintech companies and integrating their engineering and product teams. Notable deals included Honest Dollar in 2016, and hiring 20 employees from SMB lender Bond Street Marketplace in 2017. In January 2018, Goldman Sachs acquired the team behind credit card startup Final, with the expectation that they would contribute to the development of the Apple credit card.

They also purchased personal finance startup Clarity Money for $100MM in April 2018, although it was later shut down in 2021. Then, in 2019, Goldman Sachs partnered with Apple to launch the Apple Card, and acquired RIA company United Capital for $750MM. Fast forward a few more acquisitions, and Goldman Sachs acquired BNPL lender GreenSky for $2.24B.

Overconfidence in temporary market condictions, from zero-interest rate policy to fintech public market overvaluation drove the M&A activity. Take, for instance, the J-curve presented by Goldman Sachs to investors in January 2020. It projected short-term losses in consumer banking, followed by breaking even in 2022 and subsequent profitability. The reality proved to be more harsh for all of us.

As we approach the end of 2023, the impact becomes apparent. Goldman’s consumer banking business has lost approximately $4B since 2020, and potentially $5+ billion since 2016. The company recently decided to sell off a significant portion of its Marcus loan portfolio at major losses, GreenSky for a $500MM+ loss, and Creative Planning, which emerged from the $750MM United Capital acquisition.

We thought that the embedded lending technology services would survive. But perhaps there is less tolerance for tech-forward loss leaders, and now Goldman is terminating its credit card partnerships.

As for Apple, given its vertical integration into Apple Pay, it is unlikely that the Apple card will be shut down. The company has been shifting its focus towards generating more revenue from services, which includes payments and banking. The deal between Apple and Goldman strongly benefitted the tech company, similar to how record labels were subsumed by the iTunes distribution deals in the early 2000s.

Further, Apple held the pen to approve applicants, resulting in higher loan losses that outweighed the income generated from the savings account. Last year, the Apple Card faced unexpected challenges with subprime borrowers, resulting in Goldman experiencing a significantly higher net charge-off rate (2.93%) compared to JPMorgan and Bank of America. Even Capital One, the largest subprime player among major banks, had a lower charge-off rate. Furthermore, over a quarter of Goldman Sachs’ card loans were granted to subprime consumers with FICO scores below 660.

When considering potential partners for Apple, two names emerge: Synchrony Financial and American Express. Synchrony, being the largest issuer of store credit cards in America, has experience working with big tech companies like Amazon. Many of their users fall into the subprime category with lower credit scores. Meanwhile, American Express has expressed concerns about the loss rates associated with the Apple Card. At the end of 2022, American Express had the lowest loss rate among major banks. If an Amex-Apple deal were to happen, which feels unlikely, American Express would probably lower credit limits, especially for subprime customers, close accounts that are at risk of defaulting, and revise the approval process.

Looking at the bigger picture, the choice of Apple’s partner, whether it’s Goldman Sachs or another provider, is not the crucial factor. The fact is that Apple has proven that tech companies are becoming the storefront of everything to everyone.

👑 Related Coverage 👑

Blueprint Deep Dive

Long Take: Can Affirm beat Klarna in the BNPL market? (link here)

Earlier this year we wrote on the ~80% drawdown in valuations of BNPL providers. At the time, we highlighted an uncertain macro environment and increased interest rates as key threats to the sector. Many of the same challenges persist today, yet both Affirm and Klarna exceeded investor expectations in the latest quarter after posting a narrowing loss and growth in revenues and customer spending.

Affirm’s share price gained 14% on the news, partially recovering the decline over the past year. This week we take a peek under the hood of the Affirm model, analyzing its performance under higher interest rates and identifying why it trails other BNPL providers. We touch on Affirm’s renewed strategy with the Affirm Card and expansion to the SMB segment, and discuss whether it can win in an increasingly crowded US market. 

Read Long Take

🎙️ Podcast Conversation: Bringing MetaMask to the next billion users, with Agoric CEO Dean Tribble and MetaMask Co-Founder Daniel Finlay (link here)

In this conversation, we chat with Daniel Finlay – Co-Founder of MetaMask, and Dean Tribble – Co-Founder and CEO of Agoric. a non-custodial Ethereum wallet, allowing users to store Ether and other ERC-20 tokens and make transactions. Further. With the growth of DeFi and NFTs over the past year, MetaMask has increased in prominence as an entry point for novice users. So much so that its user base is now over 20 million monthly active users.

Agoric is a Proof-of-Stake chain utilizing secure JavaScript smart contracts to rapidly build and deploy DeFi, comprised of a team who are experts in smart contracts. Agoric was founded on open-source principles which look to build a public economy.

Listen to Podcast

Curated Updates

Here are the rest of the updates hitting our radar.

Paytech

• ⭐ Paysend Raises $65MM In Latest Funding Round, Including Strategic Investment From Mastercard

• Swift Connects Instant Payment Systems To Bring 24/7 Processing Across Borders – Finextra

• ECB Further Delays Deadline For Launch Of Unified Collateral Management Platform – Finextra

• Visa Joins €8.5MM Funding Round In Enfuce – Finextra

• CBA Rolls Out Payment Orchestration Platform – Finextra

Lending

• ⭐ LendInvest Completes £410MM BTL Mortgage Securitisation, Its Largest Ever – Altfi

• Rich Data Co Raises $17.5MM In Series B Round To Expand In North America – IBS Intelligence

• Banxware Raises More Than €15MM Series A – Altfi

• Nucleus Commercial Finance Lands £200MM Funding From NatWest – Altfi

Digital Investing

• ⭐ Robinhood Brings Its Stock-trading Platform To The UK, Its First International Market – TechCrunch

• Plum: The AI-based Fintech App Announces Partnership With Eurobank, Snaps €10MM Funding – Tech Funding News

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Gm Fintech Futurists —

Today we highlight the following:

1. DIGITAL ASSETS: Tokenized Cash Fintech Fnality Raises $95MM Led By Goldman And BNP Paribas (link here)

2. CURATED UPDATES: Financial Institutions and Adoption; DeFi and Digital Assets; Blockchain Protocols; NFTs, DAOs and the Metaverse

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DIGITAL ASSETS: Tokenized Cash Fintech Fnality Raises $95MM Led By Goldman And BNP Paribas (link here)

Fnality, which is building tokenized versions of major currencies collateralized by cash held at central banks, raised $95MM in a Series B funding round led by Goldman Sachs and BNP Paribas. This is a big deal — traditional FX transfers are expensive because currencies have to flow through the global correspondent banking system. A tokenized alternative would allow for a new payment infrastructure to function. 

Global banks collaborate to fulfill their clients’ orders, establishing direct relationships for major currency pairs. However, less frequently traded routes often involve multiple intermediary banks, resulting in increased costs and delays. Additionally, settlement risk, in which one party to a currency trade fails to deliver the currency owned, can result in significant losses and undermine financial stability. 

“Almost 50 years after the Herstatt bankruptcy, nearly a third of deliverable FX turnover remains subject to settlement risk, according to new data from the 2022 BIS Triennial Survey. While this share is unchanged from the 2019 Survey, settlement risk has increased in absolute terms in line with the growth in FX turnover. That is, $2.2 trillion was at risk on any given day in April 2022, up from an estimated $1.9 trillion in April 2019.” – Bank of International Settlements (BIS)

Out of the fintech players, Wise is the standout disruptor in the FX market, increasing its share of US consumer FX volume between 2019 and 2021, and outperforming Moneygram, Western Union, and Paypal’s Xoom. Looking ahead, the next decade will provide new competition, particularly as financial primitives like stablecoins and their surrounding infrastructure mature, introducing even more cost-effective and rapid alternatives.

DeFi, with its blockchain-powered, Payment versus Payment (PvP) transactions, ensures simultaneous execution of trade legs, eliminating credit risk during settlement. These “atomic” transactions are more reliable — at least theoretically — than the traditional rails, which depend on counterparty fulfillment. In addition, transaction costs will continue to decrease with scaling solutions like zero-knowledge rollups like Taiko and zkSync. 

Fnality, a promising contender backed by many major banks, is built on the R3 Corda blockchain and operates through jurisdictional Fnality Payment Systems (FnPS), such as the Sterling FnPS, US Dollar FnPS, and Euro FnPS. These systems use a settlement asset for real-time wholesale payments with near-instant peer-to-peer settlement, collectively forming the Fnality Global Payments network. Fnality’s ‘single pool of liquidity’ concept is compelling because it enables real-time PvP capability and atomic Delivery versus Payment (DvP) transaction settlement. This allows participants to manage their cash and collateral portfolios from one central source, eliminating fragmented capital allocation.  

Several proofs of concept have already been implemented, including a cross-chain FX settlement with Finteum which was executed in under 10 seconds; a DvP ‘repo’ settlement with HQLAX; and a tokenized securities issuance in partnership with Nivaura, which settled payments for a digital asset with central bank-backed currency. Many of these initiatives started in the 2019 “digital asset” and “enterprise blockchain” narrative cycle.

JPMorgan has also been implementing cost-effective cross-currency payments through initiatives like JPM Coin, and thereafter Onyx, which facilitates the transfer of dollars and euros globally. And while Fnality and JPM Coin may not introduce groundbreaking tech compared to Uniswap, they play a crucial role in meeting the institutional demands for robust payment infrastructure in cross-border transactions in emerging markets. These markets require a reliable on-chain cash asset with the credit risk characteristics of central bank money. Hence Fnality is important not only for establishing trust and transparency but also for implementing necessary regulatory safeguards.

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Curated Updates

Here are the rest of the updates hitting our radar.

Financial Institutions and Adoption 

⭐ JP Morgan’s Onyx Teams Up With Avalanche To Streamline Portfolio Management – The Defiant

Standard Chartered Investment Arm Launches Tokenization Platform – CoinDesk

Infura Taps Microsoft And Tencent For Decentralized Web3 Infrastructure Network – The Defiant

Coinbase Launches On-Chain KYC Verification To +100MM Users – The Defiant

DeFi and Digital Assets

⭐ Blockchain.com Closes $110MM Raise – CoinDesk

⭐ Crypto Futures Funding Rates Normalize After Bitcoin Drops To $35.6K – CoinDesk

⭐ Tokenization Firm Superstate Gets $14MM Investment to Bring Traditional Funds On-Chain – CoinDesk

New Stablecoin Issuers Embrace On-Chain U.S. Treasuries As Collateral – The Defiant 

Crypto Giant OKX Goes Live With Off-Exchange Derivatives Trading – CoinDesk

Solana-Based Stablecoin Remittances Get A Boost With CFX Labs’ Fresh $9.5MM Fundraise To Expand Globally – CoinDesk

Sushi’s ‘Smart Pools’ Hope To Boost LP Efficiency – Blockworks

dYdX Tokenomics Scrutinized As Staking Goes Live – Blockworks

Blockchain Protocols

⭐ Comparing Layer 2 Launches: An On-chain Analysis Of Liquidity Providers – The Defiant

⭐ Chip Company Ingonyama Raises $20MM In Seed Round – CTech

Blockchain Startup Kinto Plans ‘First KYC’d’ Ethereum Layer-2 Network After Raising $5MM – CoinDesk

Terraform Labs Acquires Data Company Pulsar Finance – The Defiant

NFTs, DAOs and the Metaverse

Disney Reveals NFT Platform With Dapper Labs, Including Star Wars and Pixar – Decrypt

MakersPlace & Transient Labs Debut Digital Provenance Tech For Physical Art – nftnow

National Hockey League Comes Around To Digital Collectibles, Using Sweet Platform – CoinDesk

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• Read our Disclaimer here — this newsletter does not provide investment advice and represents solely the views and opinions of FINTECH BLUEPRINT LTD.

• Contributors: Lex, Laurence, Matt, Farhad, Daniel, Michiel, Bo

https://lex.substack.com/p/fintech-black-ore-an-ai-automating

Hi Fintech Futurists — 

You’re the best, today’s agenda below.

1. FINTECH: Black Ore Emerges From Stealth With $60MM In Funding To Bring AI To Financial Services (link here)

2. LONG TAKE: An Obituary For Mint.com, Which Inspired A Fintech Revolution (link here)

3. PODCAST CONVERSATION: Engineering The Dollar From ETH And Perpetuals, With Ethena Labs Founder Guy Young (link here)

4. CURATED UPDATES

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Digital Investment & Banking Short Takes

FINTECH: Black Ore Emerges From Stealth With $60MM In Funding To Bring AI To Financial Services (link here)

Black Ore, an AI fintech startup, has emerged from stealth mode after securing a $60MM funding round. The company dedicated the past two years to developing its tech architecture and training its models. Eyal Shinar, the CEO of Black Ore, is a repeat fintech founder, having previously built Fundbox, a $1.1B fintech unicorn that powers payments and lending solutions for SMBs.

Black Ore’s product, Tax Autopilot, is designed to streamline the tax process by using AI to accelerate federal and state tax processing for individuals. The platform lets accounting firms upload tax documents and data, where algorithms transform data and calculate the tax return. It generates both the tax return and supporting workpapers, with a review workflow. Black Ore supplements this tech with a team of CPAs, who conduct a preliminary review of the machine labor before returning final documents to the accounting firm for submission.

During an interview with Bloomberg, Eyal Shinar, the CEO of Black Ore, discussed the company’s tech stack. While Tax Autopilot uses Machine Learning and Computer Vision (a subset of machine learning that enables computers to analyze videos and digital images), Black Ore partners with a third party for Language Model Models (LLMs) due to the cost associated with building their own.

However, Shinar emphasized that while LLMs play a role, they account for only 10% of Black Ore’s proposition. Tax regulations involve domain-specific terminology, so LLMs have to be augmented to capture the nuances and intricacies of tax-related language with the required precision.

Black Ore’s $60MM Series A is large relative to fintech trends, but par for the course for AI startups. However, the company’s products align more closely with other wealthtech / personal financial management (PFM) deals we have encountered. There are a variety of financial planning software solutions that use AI to automate financial processes, including tax-related tasks — notable examples include Range, which secured $12MM in its Series A funding round, Canoe Intelligence, which raised $25MM in its Series B, and Conquest Planning, which raised $24MM (CAD).

There is about $10B of annual revenue at play in the tax preparation market. AI opens up ways to reduce meaningful parts of the workflow and make automation far more powerful. For now, the hybrid approach of human and machine collaboration will do the job. The substantial funding round for this company reflects such potential, as well as the oligopoly in tax that could be disrupted. Further, relevant machine learning and generative models could be used in more complex use cases down the line as well, growing the TAM. There are also ways to plug into downstream parts of the industry, like financial and wealth planning, which could bring in product revenues around assets.

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Blueprint Deep Dives

Long Take: An Obituary For Mint.com, Which Inspired A Fintech Revolution (link here)

Intuit’s decision to shut down Mint.com marks the end of an era for one of the original pioneers in personal financial management (PFM) software.

Mint’s intuitive platform revolutionized how users interacted with their finances, offering a seamless experience that aggregated personal banking and investment information. Despite its innovative start, Mint’s growth stagnated over the years, leading Intuit to transition users to Credit Karma, a platform with a stronger emphasis on financial product offerings. As Mint.com sunsets, we reflect on its significant contribution to making financial oversight accessible and user-friendly, as well as bootstrapping the embedded finance movement.

Read Long Take

🎙️ Podcast Conversation: Engineering The Dollar From ETH And Perpetuals, With Ethena Labs Founder Guy Young (link here)

In this conversation, we chat with Guy Young – the CEO and Founder of Ethena Labs, the crypto infrastructure company building USDe which is the first-ever scalable stablecoin not reliant on existing banking institutions alongside a permissionless ‘internet bond.’

Prior to Ethena, Guy spent nearly a decade working in the traditional finance industry across investment banking, hedge funds, and private equity firms, most recently at Cerberus Capital Management, a $50bn investment fund.

His most recent position was Head of Principal Investments at a Cerberus affiliate, where he led the firm’s expansion into Australian markets and oversaw strategic investments across banking, specialty finance, insurance, fintech, and more.

Listen to Podcast

Curated Updates

Here are the rest of the updates hitting our radar.

Banking

• ⭐ Dubai Investments Raises Stake In UK Digital Bank Monument To 16.93% – Gulf News

• Goldman Sachs Bids To Offload GM Credit Card – Finextra

• ANZ Plus Launches Digital Home Loans, Plots Expansion – Financial Review

Insurtech

• Insurtech Startup Flitter Raises €3.5MM For Expansion And Profitability By 2024 – Tech.EU

• Allianz invests In US Insurtech NEXT – Insurance News

• Insurtech Lemonade Surpasses 2MM Active Clients – Crowdfund Insider

Lending

• ⭐ Klarna Studies ‘Eventual IPO’ After First Profit In 4 Years – Financial Times

• OakNorth Bank Enters Business Banking With High-touch Current Account As It Hits £10B In Cumulative Lending – Altfi

Wealthtech

• ⭐ Private Investment Management Platform Arch Raises $20MM – Finextra 

• Danish Wealthtech Startup Performativ Snags €5.5MM – Finextra

•  Era, AI-Powered Wealth Management Platform Founded by Stripe Alumni, Announces $3.1MM Seed Led by Northzone – Businesswire

• Prosper Raises £3.2MM Angel Round To Build The Wise Of Wealthtech – Angel News

Financial Operations

• ⭐ Cloud Payments Firm Volante Raises $66MM In Strategic Funding – Finovate

• N26 To Close Operations In Brazil – Altfi

• Fintech Investor Acton Capital Launches New €225MM Fund – Altfi

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• Read our Disclaimer here — this newsletter does not provide investment advice and represents solely the views and opinions of FINTECH BLUEPRINT LTD.

• Contributors: Lex, Laurence, Matt, Farhad, Daniel, Daniella, Michiel

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https://lex.substack.com/p/defi-andreessen-bets-on-transparent

Gm Fintech Futurists —

Today we highlight the following:

1. BLOCKCHAIN INFRASTRUCTURE: Lyft Veteran Dor Levi’s smlXL Wants To Make Blockchains More Accessible—And A $13.4MM Funding Round Led By a16z Should Help (link here)

2. CURATED UPDATES

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BLOCKCHAIN INFRASTRUCTURE: Lyft Veteran Dor Levi’s smlXL Wants To Make Blockchains More Accessible—And A $13.4MM Funding Round Led By a16z Should Help (link here)

Blockchain data and infrastructure company smlXL (pronounced “small-XL”) has emerged from stealth with two flagship products, evm.codes and evm.storage, and 15,000 monthly visitors — impressive, considering there are just over 20,000 monthly active developers in the blockchain space. The company provides a service that helps developers understand code onchain, as well as run more performant code in the future.

Let’s touch on the Ethereum Virtual Machine (EVM) and smart contracts — the computational brain of Ethereum. The EVM plays a vital role in executing transactions and managing data storage and memory. Smart contracts are compiled into EVM bytecode, consisting of operands and opcodes, which are predefined instructions executed by the EVM. This bytecode can be challenging to interpret as it is written in the hexadecimal numbering system, and this is where smlXL’s product, evm.codes, comes into play. It serves as an interactive reference for EVM opcodes. For a more technical explanation, see here. 

The company’s core product, evm.storage, allows users to explore Ethereum contract storage and state at any block height, view variables and their corresponding values for verified contracts, navigate complex storage structures such as nested mappings, arrays, and structs (a way to group related variables together in one place), and review the storage history of specific variables, including changes to token balances and corresponding transaction hashes. smlXL is also expanding the coverage of evm.storage to include unverified Solidity contracts and plans to add the capability to trace and simulate transactions across multiple blockchains.

Looking ahead, smlXL envisions transforming its product into a Google-like search function. It aims to treat smart contracts as APIs, and collections of smart contracts as applications. Ultimately, smlXL intends to make interacting with smart contracts a user-friendly experience.

We are also intrigued by the potential of smlXL’s products in optimizing gas consumption. By exploring different storage structures, developers can visualize the gas costs associated with specific opcodes, which will allow developers to reduce costs for end users. 

While smlXL can point to its $13.4MM funding round led by a16z as proof of legitimacy, they are not the only player in the space. Cymbal offers a “human-readable” Ethereum block explorer, while Space and Time (SxT) raised $20MM at a $300MM valuation, and provides a decentralized data warehouse with indexed blockchain data. Subsquid is another notable blockchain indexing platform. After all, the number of active wallets engaging with dApps has surpassed 20MM, so there’s a lot more demand for efficient smart contract analysis. 

👑 Related Coverage 👑

Curated Updates

Here are the rest of the updates hitting our radar.

Financial Institutions and Adoption 

⭐ Thailand’s Kasikorn Bank Buys Majority Stake In Satang Crypto Exchange For $103MM – CoinDesk

BitGo Granted German Crypto Custody License By BaFin – CoinDesk

SEC Served PayPal Subpoena ‘Relating’ To Firm’s Stablecoin – Decrypt

St.Galler Kantonalbank Works With SEBA Bank To Offer Swiss Customers Bitcoin, Ethereum – CoinDesk

DeFi and Digital Assets

⭐ Uniswap DAO Signals Approval for $12MM Investment In Ekubo’s Governance Token – Cryptonews

Circle Curbs Stablecoin Minting For Retail Users, Moving Closer To Tether’s Practice – CoinDesk

Cubist, Led By Computer Science Professors, Releases Wallet-as-a-Service ‘CubeSigner’ – CoinDesk

EigenLayer Launches Voting Contest To Onboard New LSTs – The Defiant

Stablecoins Set To Succeed Where BTC, ETH Failed: Pantera – Blockworks

Hashflow Turns On ‘Fee Switch’, Redistributing 50% Of Revenue To Stakers – The Defiant

Blockchain Protocols

⭐ Crypto Venture Funds Variant, 1kx Lead $6MM Funding Round For ZK-Meets-AI Startup Modulus – CoinDesk 

⭐ Zero Knowledge Infrastructure Provider Toposware Secures $5MM Seed Round – NFTGators

⭐ How A Ph.D. Student’s Research Paper Turned Celestia Into $345MM Blockchain Project Overnight – CoinDesk

NFTs, DAOs and the Metaverse

⭐ Aera Protocol Opens to General Availability with $8MM Token Sale Led by Bain Capital Crypto – PR Newswire

Web3 Game Studio Moonveil Entertainment Secures $5.4MM In Seed Round – The Block

Rarible Introduces RaribleX: A Marketplace For Web2 Brands – nftnow

Phantom Wallet Now Lets You “Mint Moments” Into NFTs Instantly – nftnow

Yuga Labs Awarded $1.6MM In Landmark Ryder Ripps NFT Case – Blockworks

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Gm Fintech Futurists —

Today we highlight the following:

1. PROTOCOLS: Cross-Chain Oracle Network Supra Raises $24MM (link here)

2. NFTs: IYK Raises $16.8 Million to Power Token-Enabled Fashion With NFTs (link here)

3. CURATED UPDATES

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PROTOCOLS: Cross-Chain Oracle Network Supra Raises $24MM (link here)

Supra, a cross-chain oracle network, has secured $24MM in funding from Animoca, Coinbase Ventures, HashKey, Prosus Ventures, Razer, and Valor Equity Partners, among others. The company has introduced initiatives like DORA, an oracle protocol, and HyperNova, a trustless bridge designed to address cross-chain bridging.

There is a phenomenon known as the “blockchain oracle problem,” which states that smart contracts lack direct interaction with data and systems beyond their native blockchain. This makes sense because blockchains by their very design are only aware of what transpires on their own chain. Oracles, which connect blockchains to external systems in order to access data from the real world, come into play to address this gap, acting as a conduit to source, verify, and transmit external (off-chain) information to smart contracts within the blockchain. Practically speaking, an oracle can function as a bridge for moving data and assets between blockchains. 

Supra’s base is IntraLayer, a vertically integrated Web3 stack that unifies blockchains by merging oracles, bridges, and smart contract platforms into one platform via a hub-and-spoke model. By deploying a dApp on Supra, the dApp is immediately enabled as a cross-chain application. For example, integrating an Ethereum dApp’s smart contract with IntraLayer allows connectivity with smart contracts on Aptos, Avalanche, Arbitrum, and other chains within the framework.

As for the oracles, Supra offers DORA, a distributed oracle agreement solution incorporating consensus algorithms and aggregating representative value price data from Byzantine Fault Tolerant (BFT) algorithms. BFT means the network will continue functioning correctly even if some validators crash or deviate from the protocol (such deviant validators are called Byzantine). For a complete outline of Supra’s oracle architecture, see here.

As DeFi evolves, it embraces a multi-chain future, yet the current go-to method for transferring assets across different chains — multisig bridges — falls short of the ideal. They consist of staked bridge nodes, which sign and aggregate events on a source chain, relaying them with the signatures of their agreement to a destination chain for corresponding actions. However, this shifts security reliance from the source chain’s Layer 1 to the bridge nodes. In comparison to L1 blockchains, multisig bridges have a lower number of validators, which reduces the level of ‘decentralized trust’ in the system. In other words, such network exposures are susceptible to hacks. And on top of that, bridging is quite time-consuming, causing users to anxiously await unnecessarily risky operations to complete. 

With the growing number of users exploring different networks, we are witnessing cross-chain transaction developments via oracles, account abstraction, intent-based architectures, Flashbots’s SUAVE, and features like MetaMask’s Snaps. Supra is working on a bridgeless solution via its HyperNova protocol, which directly verifies the source chain’s consensus. Verifying the consensus involves aggregating public keys from block attestation and validating the aggregate signature. This verification is essential when interacting with other chains to guarantee the accuracy of the information being transferred from the source chain. 

While we believe no single company will achieve an instant breakthrough, as different networks have varying architectures and consensus mechanisms to consider, each progressive development contributes to a cumulative effect. This opens the door to more dependable price discovery, resulting in tokenized assets with live data feeds, on-chain asset management, cross-chain gaming, decentralized identity aggregation, and interoperable CBDCs. All of which we see as part of the bright new future of financial services.

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NFTs: IYK Raises $16.8 Million to Power Token-Enabled Fashion With NFTs (link here)

NFT infrastructure startup IYK has raised $16.8MM in seed funding from investors including a16z, 1kx, Lattice Capital, Art Blocks founder Erick Calderon, and other high profile investors and crypto influencers.  IYK’s offering is centered around deepening fashion brands’ relationships with their customers by merging the digital and physical worlds. Using a combination of their platform and near field communication (NFC) chips, brands can connect each piece of clothing with tokens or NFTs. For example, consumers could scan the chip on a smartphone to redeem an on-chain certificate of authenticity, or the (chip embedded in the) clothing may grant access to exclusive events.

IYK has already worked with clothing leaders like Adidas and Billionaire Boys Club, and Web3 companies including Coinbase and Pudgy Penguins. Each brand can take a slightly different, though resonant, approach. Adidas created collaboration experiences to develop 512 t-shirts, each of which were assigned an NFT with an “Alter Ego”. 9dcc, a clothing brand created by crypto influencer Gmoney, leverages the technology for authenticating its pieces, as well as providing owners with access to a loyalty program. Meanwhile, MNTGE partnered with IYK to give consumers access to a digital twin of the physical clothing which can be used in the metaverse. 

The IYK platform does not require a specific application or device, removing any friction for brands and consumers alike. Each chip can be customized to enable a broad range of features, and typically uses the familiar double-click activation on iPhones to activate its NFC capabilities. On Thursday IYK launched a self-serve model to order the NFC chips so that they can be embedded as each brand prefers. A smart move for a company that intends to become a platform.

On the surface, the technology is simple — attach chips to clothing and allow consumers to redeem on-chain benefits linked to the piece. But the beauty lies in being able to develop differentiated products and deeper brand connections. Fashion brands like Supreme rose to fame by focussing on exclusivity, releasing limited clothing editions to intensify the feeling of scarcity. With NFC chips attached to tokens or NFTs, clothing can now act as your pass into communities, a tally of your brand engagement, an undeniable proof of authenticity, or even a lottery system for highly sought-after prizes. The possibilities for brands are infinite, and those that are able to leverage the technology effectively will be able to empower and engage consumers. While the base NFT market may appear to be struggling, with monthly trading volume is down 81% since the start of 2022, IYK’s capabilities open up an entirely new horizon for the NFT space. 

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Curated Updates

Here are the rest of the updates hitting our radar.

Financial Institutions and Adoption 

⭐ CMCC Global Raises $100MM For Hong Kong-Based Blockchain Companies – CoinDesk

IMF Says Unregulated Crypto Could Lead To An “Alternative Financial System” – The Defiant

Anchorage And Eaglebrook Link Up In Bid To Boost Crypto SMA Access – Blockworks

LayerZero And Conflux Partner To Build Blockchain-Based SIM Card Ecosystem For APAC Region – Crypto Daily

DeFi and Digital Assets

⭐ Savings DAI Surpasses $1B TVL, But DAI Remains In Decline – The Defiant

Manifold launches $50MM MEV-optimized LST – Blockworks

Contango Launches Decentralized Perpetuals Leveraging Aave – The Defiant

How Blockchain Capital Invests And Spencer Bogart On The Future of Crypto And DeFi – The Defiant

Helium Hotspots Go Live In Bid To Turn Miami Network Profitable – Blockworks

Aave Poised For Multi-Chain Governance Overhaul – The Defiant

Blockchain Protocols

⭐ Blockchain Developer OP Labs Delivers ‘Fault Proofs’ Missing From Core Design – CoinDesk

HeLa Labs Launches Stablecoin-Powered Layer One Blockchain Network – GlobeNewswire

Stellar, PwC Publish ‘Framework’ To Judge Emerging Market Blockchain Projects – Cointelegraph

NFTs, DAOs and the Metaverse

Boss Beauties Announces Acquisition Of BFF – nft now

​​Ledger And Sotheby’s Team Up For Digital Art Exclusives – Decrypt

Mark Zuckerberg and Lex Fridman Record Podcast in the Metaverse – nft now

MoMA Launches ‘Postcard’ NFT Art Project – Decrypt

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Today we highlight the following:

1. DAOs: Nouns Fork: Disgruntled NFT Holders Exit With $27 Million From Treasury (link here)

2. DEFI: Former a16z Execs Raise $25MM For Bastion Web3 Startup (link here)

3. CURATED UPDATES

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DAOs: Nouns Fork — Disgruntled NFT Holders Exit With $27 Million From Treasury (link here)

Big changes are happening at NounsDAO, as a fork splits the community and treasury in two. NounsDAO is a decentralized autonomous organisation (DAO) governed by the holders of Noun NFTs. Nouns, which are pixel artwork NFTs not unlike Crypto Punks, are sold in a daily auction with all proceeds going to the DAO treasury. Every tenth Noun created is not sold, but reserved for the project’s founding team as compensation.

The treasury is governed by “Nouners” — Noun holders — who have a proportional voting power over the treasury dependent on the number f Nouns they hold. The Nouns NFT collective has branched out to create projects built around the Noun artwork. 

Late last Friday, over half of the Noun holders (472 out of 846) opted to leave the DAO via governance, collectively withdrawing more than $27MM in ETH from the DAO’s $49MM treasury. The result will be two separate DAOs with their own respective governance processes. Those leaving the DAO will return their original NFT and receive a replacement NFT with identical artwork to be used for voting in the new DAO. The new NFT will also feature the ability to “ragequit” and withdraw the corresponding share of the treasury in return for burning their Noun NFT. Those choosing not to go with the fork will continue as normal, while the returned NFTs will go to the treasury and may be redistributed to incentivise growth of the Nouns brand.

Note that the fork was only possible due to a change to the protocol this year, which enabled NFT holders to propose a fork and reclaim a share of the treasury if over 20% of holders backed the decision.

Since their first auction in August 2021, Nouns has been one of the most financially successful NFT projects, particularly due to the innovative financial mechanics behind the project and, more recently, its marketing. Already, Nouns have inspired 3D-printed clothing and produced a movie called Rise of Blus.  Other efforts have included a parade float at the 2023 Rose Parade, a comic book series, esports team, and a cameo in Bud Light’s Super Bowl commercial. 

The broader NFT market has continued to slump — secondary market Noun prices are down from highs of $267k to $58k today. NFT sales are at a two-year low while still trading about $100MM a week in volume on Ethereum. 

Co-founder Seneca summed it up like this: “One of the lessons from the fork is that in the game of Nouns, if you don’t use the treasury, it will inevitably get captured.” This sounds to us like the doctrine of subsidiarity may be at play — the responsibility that you refuse to take on behalf of yourself will be taken up by tyrants and used against you.

Were those who initiated the fork perhaps acting against the “tyranny” of trapped capital in the Noun DAO’s treasury? Or were they activist raiders seizing financial opportunity?

The fork also exemplifies the ethos of Web3 and the ability to equitably part ways through DAO governance, splitting the treasury proportionally amongst the remainers and the leavers. While a signal against the direction of NounsDAO, we see this as a small victory for DAO governance working the way it should.

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DEFI: Former a16z Execs Raise $25MM For Bastion Web3 Startup (link here)

Bastion, a Web3 orchestration startup founded by former a16z executives Riyaz Faizullabhoy and Nassim Eddequiouaq, emerged from stealth mode following a $25MM seed funding round. Leading the round was a16z crypto, with participation from Nomura’s Laser Digital Ventures, Alchemy Ventures, Aptos Foundation, Isos7 Venture Fund, Not Boring Capital, Robot Ventures, Sancus Ventures, and the NFT platform Autograph.

Bastion functions as a Web3 orchestrator, integrating blockchain infrastructure tailored for institutions. The platform offers (1) a blockchain wallet API with custodial features, enabling subscriptions, loyalty programs, and gaming experiences; (2) a “Smart Transaction Routing” system that selects when to leverage a blockchain, optimizing interactions for efficiency and cost-effectiveness; and (3) user analytics that capture data from both on-chain and off-chain activities. We found the following quote instructive:

Bastion maintains the wallets private keys, allowing for on-chain transfers while also making password recovery simple for end-users. Rather than entering a 12 or 24-word seed phrase, users seamlessly log in to their accounts using their web2 credentials without ever realizing Bastion and blockchain technology are working on the back end.

Bastion’s platform is somewhat analogous to MetaMask Institutional, which provides digital asset custody integrations and monitoring/reporting tools within a portfolio dashboard. Other notable competitors include Fireblocks, a custody solution provider that has partnered with BNY Mellon, HSBC, and Nubank. Coinbase Institutional, which BlackRock and a16z use, also offers trading, custody, financing, platform development, and liquidity provision.

The chunky $25MM investment comes at a time of substantial digital asset outflows, which reached $54MM last week, the fifth consecutive week of outflows, with 77% originating from the US. Moreover, crypto venture funding has declined this year, with only $283MM raised in August; a stark contrast to the monthly average of $1.8B+ in funding throughout 2022.

Despite these trends, Bastion’s focus on serving institutional clients is unsurprising when considering Coinbase’s financials. The exchange’s quarterly report reveals that a relatively small group of institutional market makers significantly contributes to the trading volume on Coinbase’s platform. During the six months ending June 30, 2023, institutions accounted for $202B in trading volume compared to $35B from consumers. Nevertheless, the net revenue generated from consumer transactions in the same period surpassed that of institutions by 17x. This suggests that Coinbase has potentially conquered the retail market, leaving the institutional space as the final battleground.

As for Bastion specifically, the company benefits from not needing to spend $14MM on a Superbowl ad to attract customers, despite the lower transaction revenue from institutions. Additionally, as institutions like Standard Chartered, Citi, Deutsche Bank, and BNY Mellon roll out their staking or tokenization services, these could be Bastion’s subsequent offerings. Still, given the negative experiences with custodial services, we are not sure the shortcut is worth it.

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Curated Updates

Here are the rest of the updates hitting our radar.

Financial Institutions and Adoption 

⭐ Crypto VC Blockchain Capital Scores $580MM For Two New Funds – The Block

⭐ Sino Global, Coinbase And Libra Alums Start $60MM Web3 Fund – CoinDesk

Nomura’s Laser Digital Starts ‘Bitcoin Adoption Fund’ For Institutional Investors – CoinDesk

Citigroup Unveils Token Services For Institutional Clients – CoinDesk

Crypto Arm of Standard Chartered Is Launching A Staking Service – Decrypt

Deutsche Bank To Delve Into Crypto Custody, Tokenization With Taurus – CoinDesk

U.S. SEC’s Crypto Enforcement Chief Warns More Charges Coming To Exchanges, DeFi – CoinDesk

Sony Unveils Plans To Develop Blockchain – The Defiant

DeFi and Digital Assets

Native USDC Rolls Out Across Polkadot Ecosystem – The Defiant

LayerZero Taps Google Cloud Oracle For Message Verification – The Defiant

German Finance Heavyweights Develop Fully-Insured Crypto Staking Offering, Plan 2024 Release – CoinDesk

Lido’s Staked Ether Tokens Can Soon Be Used on Cosmos, IBC Blockchains – CoinDesk

BitGo, Swan To Form Bitcoin-Only Trust Company – CoinDesk

Blockchain Protocols

⭐ A Year After Ethereum Merge, Net Supply Down Nearly 300K Ether – CoinDesk

Polygon Targets Q4 For MATIC Token Migration – The Defiant

NFTs, DAOs and the Metaverse

⭐ Magic Eden Introduces ‘Compressed NFTs’ to Slash Minting Fees – nft now

Bitcoin Metaverse Token Coming From Animoca Game Studio – Decrypt

Mila Kunis’ Stoner Cats Banned From NFT Marketplaces After SEC Charges – Decrypt

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https://lex.substack.com/p/defi-vitalik-buterin-publishes-paper

The Fintech Blueprint is a newsletter authored by me, Lex Sokolin, and a small group of brilliant researchers who focus on frontier technologies impacting the future of financial services. I am glad you are here. Was this email forwarded to you? You deserve your own:
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Gm Fintech Futurists —

Today we highlight the following:

1. PROTOCOLS: Blockchain Privacy and Regulatory Compliance: Towards a Practical Equilibrium (link here)

2. DIGITAL ASSETS: MetaMask To Be Usable Outside The EVM Ecosystem With Snaps Launch (link here)

3. CURATED UPDATES

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PROTOCOLS: Blockchain Privacy and Regulatory Compliance: Towards a Practical Equilibrium (link here)

Vitalik Buterin, in collaboration with a team of researchers from Chainalysis, the University of Basel, and a relatively new protocol called Privacy Pools, has published a paper that aims to tackle the challenges surrounding privacy and regulatory compliance within blockchains using Privacy Pools. The protocol is a forked successor of the now-sanctioned coin mixer, Tornado Cash. Our previous discussion on the future of Tornado Cash mentioned: “Of course we can also imagine the splintering of Tornado Cash into a thousand clones, forked and displayed on decentralized front ends.” Privacy Pools has since been formed and dubbed “the Tornado Cash sequel.”

As you know, every interaction with a smart contract is permanently recorded on the blockchain, potentially linking individuals to their public keys through transaction analysis. The immutability of these transactions has led to the rise of privacy protocols like Tornado Cash, allowing users to deposit and withdraw funds using different addresses, effectively concealing the connection between deposits and withdrawals on the blockchain. However, legitimate users had limited options to disassociate themselves from potential illicit activities. While Tornado Cash did introduce a compliance feature to validate the source of withdrawals, its reliance on a centralized intermediary hindered its widespread adoption.

Privacy Pools offers a different approach: instead of relying solely on zero-knowledge proofs to connect withdrawals to prior deposits, users can showcase their membership in a specific group of deposits called an “association set.” This set is defined by users through a shared Merkle root as a public input. In simpler terms, Privacy Pools enable users to prove where their withdrawal could have come from, either by confirming its connection to a set of deposits (membership proofs) or showing it has no links to certain deposits (exclusion proofs).

Importantly, Privacy Pools doesn’t directly confirm that an association set is a subset of previous deposits. Instead, users must provide two zero-knowledge proofs: (i) a proof that their transaction exists in the total pool of transactions (i.e., a Merkle branch into the root of the total set of coin IDs), and (ii) a Merkle branch into the proof that their transaction belongs to the association set root.  

As we previously mentioned in our Tornado Cash long take, and as Simon Taylor highlighted in his newsletter, there’s a need to restructure anti-money laundering (AML) tools within blockchain ecosystems, pushing governments to establish their own guidelines for issuing some form of on-chain warrant as a legitimate basis for compromising a user’s privacy. Privacy Pools is one such example of this gradual restructuring. Another example is Zcash, a privacy-focused blockchain-based payment network that employs ZK-SNARKs for shielding transactions. Silent Protocol, which enables pseudonymous privacy for dApps via its own framework, EZEE (Economical Zero Knowledge Execution Environment), could also be a player in this space. We envision a time when autonomous blockchain-powered identity and data management solutions will become the optimal choice for preserving and showcasing data privacy. In the meantime, we are pleased to see another creative attempt at enhancing both individual privacy and regulatory compliance in the blockchain space.

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In this 30-minute session, we will discuss:

• Key global money movement challenges that hinder market expansion

• How platforms can unlock new market opportunities and build new revenue streams

• Best practices from industry experts on how fast-growing companies like Public.com and Ramp are expanding their operations to international markets

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DIGITAL ASSETS: MetaMask To Be Usable Outside The EVM Ecosystem With Snaps Launch (link here)

Web3 wallet MetaMask has introduced “Snaps,” a new feature aimed at expanding MetaMask’s reach to non-EVM blockchain networks. There are now 34 Snaps available, all created by third-party developers and audited by ConsenSys. A day after MetaMask’s announcement, Coinbase Prime launched its own Web3 wallet.

In simple terms, think of Snaps as customizable mini-apps inside MetaMask that users can install. Technically, they’re JavaScript programs that run in an isolated environment, but we digress. They “wake up” in response to messages or events and shut down when idle. For example, the Sui Wallet Snap would wake up if you were buying NFTs on the Sui network or performing a transaction on one of Sui’s dApps. 

If you’re wondering why this matters – Web3 wallets are designed to be interoperable, allowing users to interact with various dApps and blockchains. This eliminates creating separate wallets for each network, simplifying the user experience. Until now, MetaMask and other Web3 wallets have served only EVM-compatible blockchains like Binance Smart Chain, Polygon, and Optimism, mainly due to Ethereum’s dominance, developer familiarity with the EVM, and interoperability. However, with Snaps, users can interact with non-EVM blockchains, including Cosmos, Solana, Tezos, Starknet, Sui, and 29 others. 

MetaMask is also constructing a system that incorporates smart contracts to facilitate its registration approach, allowing users and auditors to participate in vetting new Snaps. 

Snaps eliminates the friction that has long deterred potential users of non-EVM blockchains from joining the ecosystem. As for MetaMask specifically, Snaps intertwines with MetaMask’s recent Software Developer Kit (SDK) offering, which integrates gaming protocols. With Immutable and Polygon forecasting up to 100MM Web3 gamers by 2025, MetaMask wants to capitalize on all those extra transaction gas fees. Since multi-chain interoperability expands the utility of all networks, this little “feature” could change the trajectory of non-EVM-compatible blockchains, and certainly enhances the utility of the MetaMask platform for its 30MM+ users.

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Curated Updates

Here are the rest of the updates hitting our radar.

Financial Institutions and Adoption 

⭐ Franklin Templeton Joins Spot Bitcoin ETF Race – CoinDesk

⭐ Binance.US CEO Has Left, Crypto Exchange Cuts 1/3 Of Workforce – CoinDesk

Coinbase To Integrate Bitcoin Lightning Network In Bid To Drive Adoption – Blockworks

Coinbase And Aave Form Coalition To Promote Tokenized Assets – The Defiant

Crypto Exchange Bitget Establishes $100MM Pot To Fund Ecosystem Growth – CoinDesk

BaFin-Licensed Crypto Custodian Finoa Will Offer Regulated DeFi – CoinDesk

Offchain Labs, Espresso Systems Link Up On Transaction Ordering Tech – Blockworks

DeFi and Digital Assets

⭐ MetaMask ‘Sell’ Feature Enables Ethereum Users To Cash Out – The Defiant

⭐ You No Longer Need 32 ETH To Stake On Coinbase Cloud – Blockworks

⭐ FTX Can Begin Selling Its Digital Assets, Bankruptcy Court Rules – Blockworks

CFTC Fines Opyn, ZeroEx And Deridex – The Defiant

Squid Enables One-click Cross-chain Swaps On Cosmos – Blockworks

 Crypto Safekeeping Specialist Fireblocks Introduces Non-Custodial Wallet Service – CoinDesk

Blockchain Protocols

⭐ Hello Holesky, Ethereum’s Newest Testnet – CoinDesk

Ether Turns Inflationary As On-chain Activity Slides – The Defiant

NFTs, DAOs and the Metaverse

⭐ Animoca Brands Raises $20MM For Metaverse Project Mocaverse – CoinDesk

Arcade Facilitates $1.1MM Loan Against Supreme T-Shirt Collection – The Defiant

⭐ Shape your Future

Curious about what is shaping the future of Fintech andDeFi? 

At the Fintech Blueprint, we go down the rabbit hole to help you innovate and compete. 

Sign up to the Premium Fintech Blueprint newsletter and get access to:

• Wednesday’s Long Takes on Fintech and Web3 topics with a deep, comprehensive analysis

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https://lex.substack.com/p/defi-coinbase-launches-new-crypto

The Fintech Blueprint is a newsletter authored by me, Lex Sokolin, and a small group of brilliant researchers who focus on frontier technologies impacting the future of financial services. I am glad you are here. Was this email forwarded to you? You deserve your own:
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Gm Fintech Futurists —

Today we highlight the following:

1. PROTOCOLS: MakerDAO Co-founder Proposes Fork Of Solana Codebase For Native Chain (link here)

2. INSTITUTIONAL ADOPTION: Coinbase Creates New Crypto Lending Service Geared Toward US Institutions (link here)

3. CURATED UPDATES

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PROTOCOLS: MakerDAO Co-founder Proposes Fork Of Solana Codebase For Native Chain (link here)

MakerDAO is gearing up for the grand finale of its Endgame journey by launching NewChain, a native blockchain for Maker. The protocol’s co-founder, Rune Christensen, wants to launch NewChain as a Solana fork, highlighting Maker’s transition from Ethereum’s Solidity foundation to the Rust-based codebase of Solana. In response to Christensen’s proposal, Vitalik Buterin liquidated his remaining 500 MKR tokens, amounting to approximately $580,000. 

The Endgame is a long-term plan to enhance Maker’s tokenomics for a resilient ecosystem — a theme that gained prominence during the Tornado Cash sanctions. Thus far, the journey involved creating SubDAOs within MakerDAO, decentralized units with distinct governance processes for decision-making. Later phases emphasized improving governance with AI tools and encouraging active governance participation via the Sagittarius Lockstake Engine (SLE), which incentivizes MKR holders to engage in governance by locking tokens and delegating votes. In the final phase, MakerDAO is set to unveil NewChain — a blockchain designed to house the back-end elements of the Maker Protocol and SubDAOs. 

Under this plan, user-facing products and systems will remain unchanged; they will remain on Ethereum, L2s, or other networks, but they will all be connected to NewChain via a two-stage Gravity Bridge, a software stack that allows blockchains to interact with other blockchains. What makes NewChain significant is its capacity to facilitate hard forks, offering recourse for addressing technical failures within the ecosystem. 

The key question is: Why Solana? Crypto researcher Hasu suggests an EVM-based rollup as an alternative. Options like Optimism Superchain and Arbitrium’s Orbit are compelling in this case. However, Christensen emphasizes that EVM-based solutions might not align with Maker’s specialized back end needs. Solana advocates will also remind you that Solana’s Virtual Machine (SVM) can handle tens of thousands of contracts in parallel and has local/neighborhood fee markets. Unlike typical priority fees that spark gas wars, Solana’s blockspace structure prevents isolated “hotspots” (e.g., NFT mints) from dominating blockspace.

On the other hand, note that out of approximately 2000 Solana validators, the top 30 together control more than a third of the total stake, meaning that collusion for network manipulation is theoretically possible. Add to this the fact that the network experienced an 18+ hour outage in February of this year, causing widespread concern about the security and resilience of the network. For example, if the top 30 validators were to go offline simultaneously, the entire Solana network would halt. Furthermore, with the eventual launch of Ethereum proto-danksharding and the maturation of L2s (e.g., Arbitrum, Optimism, Polygon 2.0, Linea, Taiko, zkSync), Solana’s once-dominant throughput advantage is poised to diminish. 

Ultimately, the Solana fork proposal sparked tension between the Ethereum and Solana communities, not the least of which was Buterin’s MKR token sale. Critics have pointed to concerns of centralization and reliability. Regardless of the chosen network, the Endgame journey revolves around extensive infrastructure development and will serve as a case study in trying to move from a single, well understood product (a decentralized stablecoin) to a broad brand-based fractal DAO.

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INSTITUTIONAL ADOPTION: Coinbase Creates New Crypto Lending Service Geared Toward US Institutions (link here)

Coinbase has launched a new crypto lending service for US institutional investors, following the collapse of prior lenders Celsius, BlockFi, Voyager, and Genesis. The service has already attracted $57MM in investments from Coinbase Prime clients. Coinbase Prime, a prime brokerage platform, offers trade execution and asset custody for institutions. In traditional finance terms, we are talking about leverage and margin.

The formerly vaunted, now-defunct crypto lending firms essentially tried to emulate traditional banking practices without all the capital and liquidity buffers. They accepted crypto deposits, promised depositors high yields — as high as 20% — on their holdings, and then ventured into unsecured lending. This strategy seemed successful while the crypto market was at record highs, as the collateral appreciated in value. But once the market crashed, the risky loans to crypto hedge funds like Three Arrows Capital (3AC) were suddenly exposed.

Further complicating the picture, the SEC classified these interest-bearing products as unregistered securities, leading to BlockFi’s $100MM settlement and Celsius receiving a cease and desist order for its “Earn” program. These events, alongside inflation and Fed rate hikes, triggered a cascade effect, and the lending companies started falling like dominoes.

Coinbase itself previously explored lending, including its retail products Coinbase Borrow and Coinbase Lend. The former enjoyed a short lifespan but stopped providing new loans In May 2023. The latter was never launched due to SEC intervention, as it threatened to sue the exchange if it proceeded with the product. 

This new service is a departure from prior efforts as it caters only to institutional investors, possibly making it subject to lighter SEC scrutiny due to the institutions’ more sophisticated risk management capabilities. The service will allow lenders to loan Coinbase crypto assets and receive collateral, such as Bitcoin or USDC, exceeding the value of the loan.

The lending service announcement comes as Coinbase’s stock price is up 130% YTD, and its L2 Base is among the most promoted projects in the admittedly fickle blockchain community. Also, with the recent SEC losses against Ripple, Grayscale Investments, and Uniswap, there’s excitement among institutions about Bitcoin Spot ETF possibilities.

The move is an important component of Coinbase’s strategy for Coinbase Institutional to be the first choice for any US institution venturing into crypto. The exchange has recently received regulatory approval to offer eligible US customers direct access to crypto futures. It also acquired One River Digital Asset Management (ORDAM) for $100MM and FairXchange, a derivatives exchange registered with the US Commodity Futures Trading Commission, for $275MM.

Note that even with its stock price soaring this year, Coinbase saw a nearly 60% drop in transaction fee revenue compared to the previous year. Hence, these offerings are all part of a strategy to pivot away from the traditional brokerage model and embrace new fee-based revenue streams.

👑 Related Coverage 👑

Curated Updates

Here are the rest of the updates hitting our radar.

Financial Institutions and Adoption 

⭐ London Stock Exchange Group Plans Blockchain-Powered Digital Markets Business – Decrypt

⭐ Steve Cohen’s Point72 Ventures Leads $15MM Fundraising In Swiss Fintech GenTwo – CoinDesk

Genesis To Shutter Crypto Trading Desk For U.S. Market – CoinDesk

South Korean Banking Giant Partners With BitGo, Opens Doors To Crypto – Decrypt

Coinbase Creates New Crypto Lending Service Geared Toward Large Investors – CoinDesk

DeFi and Digital Assets

⭐ Lido Dominance Prompts Warnings About Liquid Staking Derivatives – Decrypt

Starknet Foundation and Argent Form Startup Studio – The Defiant

SOMA Finance To Issue The First Retail Compliant Digital Security – CoinDesk

Swift Could Support Interconnected CBDCs Via Chainlink – The Defiant

MetaMask Introduces Bank And PayPal Cash-Out Options – Decrypt

Blockchain Protocols

⭐ Future Ethereum Upgrades Could Allow Full Nodes To Run On Mobile Phones: Vitalik Buterin – Decrypt

Multibillion Dollar Oracle Tool Chronicle To Expand Outside Of MakerDAO Ecosystem – CoinDesk

NFTs, DAOs and the Metaverse

⭐ Taxing The Metaverse – Georgetown Law Journal

Yuga Labs Offers Bitcoin Prizes To Solve Ordinal Puzzles – Blockworks

Casio Dropping Free NFTs To ‘Co-Create’ Virtual G-Shock Watches – Decrypt

Yuga’s Otherside Gears Up For ‘Legends Of The Mara’ Open Beta Launch – NFTnow

SEC Settles Landmark NFT Enforcement Action For $6MM – The Defiant

Roofstock OnChain Sells Third Property As An NFT – NFTnow

⭐ Shape your Future

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At the Fintech Blueprint, we go down the rabbit hole to help you innovate and compete. 

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• Archive Access to an array of in-depth write-ups, spanning across 15+ topics and encompassing over 50 Fintech and DeFi brands

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• Read our Disclaimer here — this newsletter does not provide investment advice and represents solely the views and opinions of FINTECH BLUEPRINT LTD.

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https://lex.substack.com/p/defi-grayscales-spot-bitcoin-etf

The Fintech Blueprint is a newsletter authored by me, Lex Sokolin, and a small group of brilliant researchers who focus on frontier technologies impacting the future of financial services. I am glad you are here. Was this email forwarded to you? You deserve your own:
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Gm Fintech Futurists —

Today we highlight the following:

1. POLICY: Biden Administration Unveils New Crypto Tax Reporting Rules (link here)

2. DEFI & DIGITAL ASSETS: Grayscale Victory Against SEC Clears Path for Spot Bitcoin ETFs (link here)

3. CURATED UPDATES

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POLICY: Biden Administration Unveils New Crypto Tax Reporting Rules (link here)

A newly proposed U.S. Treasury Department rule looks to require crypto exchanges, both centralized and decentralized, crypto payment processors, and some digital wallets to report the exchanges and sales of digital assets on their platforms to the IRS. The tax reporting form, named Form 1099-DA, is primarily aimed at simplifying the process for taxpayers on crypto gains, an area fraught with complexity. However, it will also have the effect of requiring digital asset brokers to abide by the same information reporting rules as brokers of other financial instruments, like stocks and bonds, potentially greatly increasing the KYC barriers for accessing DeFi in the US. 

The proposal came as part of the 2021 Infrastructure to Investment and Jobs Act – a $1T bill that included the provision of increased tax reporting requirements for all digital asset brokers and for digital asset transactions greater than $10k. U.S. government revenue from these new rules is estimated at nearly $28B over the next ten years. 

While the rules may help crypto users to comply with tax laws, it will likely have a considerable impact on the operations and accessibility of DeFi applications. Protocols like Uniswap would be deemed a broker under the rules, requiring a new user interface for U.S. citizens requiring individual transaction tracking and reporting. MetaMask users would no longer have the anonymity of a self-custodial wallet. All multisig users would be deemed brokers, exposing the identities of (also known as “doxxing”) many anonymous investors and DAO leaders. 

The financial, economic, and cultural effects of these rules are widespread, but also difficult to enforce. Feedback on the proposal is still open until October 30th and the rules will not come into effect until the 2026 tax season, providing ample time for appeal. We expect nearly all affected parties have will begin planning operational changes to comply, appear to comply, or attempt to circumvent the new rules. Given that this applies to the biggest companies in crypto, from Coinbase to ConsenSys, we expect forceful pushback, particularly on the definition of a digital asset broker as that definition may have even wider implications. 

👑 Related Coverage 👑

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DEFI & DIGITAL ASSETS: Grayscale Victory Against SEC Clears Path for Spot Bitcoin ETFs (link here)

Grayscale Investments, an asset manager holding 3.4% of the circulating Bitcoin supply, has won a legal fight against the SEC over its bid to establish a Bitcoin exchange-traded fund (ETF). In 2022, the SEC turned down Grayscale’s proposal, asserting that an ETF linked to Bitcoin lacked the necessary mechanisms for detecting fraudulent activities.  

In response to the rejection, Grayscale sued the SEC for rejecting its product while approving two similar Bitcoin Futures ETFs last year. The DC Circuit Court of Appeals sided with Grayscale, affirming that “the denial of Grayscale’s proposal was arbitrary and capricious.” This marks another significant courtroom setback for the SEC.

Currently, the Grayscale Bitcoin Trust (GBTC) is the largest Bitcoin fund, allowing US investors to access Bitcoin through stocks instead of crypto exchanges. However, people generally lean towards a Bitcoin Spot ETF over a fund like GBTC, as ETFs closely mirror the actual value of Bitcoin, while trusts lack this precision. 

In ETF operations, Authorized Participants (APs) facilitate ETF share creation and redemption, maintaining the balance between market price and net asset value (NAV). Through an arbitrage mechanism, if an ETF trades at a premium, APs would create new ETF shares and then sell these newly created shares in the market, aligning the price closer to the NAV. Whereas in GBTC’s setup, shares can be traded at a premium or discount compared to the actual Bitcoin price without a set mechanism to address this. This structural difference is what makes ETFs preferable to the fund structure under which GBTC currently operates. 

In fact, since March 2021, GBTC shares have consistently traded at a discount, at one point hitting a 45% markdown from the underlying asset value. Purchasing GBTC at a discount means receiving fewer BTC than spot buying with the same USD amount. Plus transaction fees of 200 basis points for the privilege of holding the instrument.

The broader idea is that the Bitcoin Spot ETF goes beyond mere price alignment; it’s about leveraging the ETF standard to participate in the investment management value chain. As we stated in our long take, a BlackRock or Fidelity ETF with a 25 basis points fee and $50B in assets sounds pretty feasible to us as a destination. With the court’s decision, we just got a lot closer to that destination.

👑 Related Coverage 👑

Curated Updates

Here are the rest of the updates hitting our radar.

Financial Institutions and Adoption 

⭐ Elon Musk’s X Obtains License To Enable U.S. Crypto Payments – The Defiant

Gemini Opposes Genesis Bankruptcy Plan: ‘Woefully Light On Specifics’ – CoinDesk

Binance Delists Sanctioned Russian Banks From Peer-To-Peer Service – CoinDesk

Visa And Mastercard Distancing Themselves From Binance Unlikely To Hurt the Crypto Exchange – CoinDesk

Prime Trust Filing Reveals Cascade Of Failures That Led To Bankruptcy Filing – Decrypt

Tornado Cash Arrests Spur Privacy Debate – Blockworks

DeFi and Digital Assets

⭐ dYdX Community Votes On Appchain Migration and V4 Deployment – The Defiant

⭐ Aave Launches sDAI Pool As MakerDAO Weighs Reducing Yields – The Defiant

Friend.tech Revenues Plummet 90% As Social App Hype Cools – Decrypt

Robinhood’s Crypto Wallet Adds Bitcoin And Dogecoin – CoinDesk

Lido Set To Complete Final Token Unlock – The Defiant

DEX Traders Turn To Telegram Bots To Gain An Edge – The Defiant

Blockchain Protocols

⭐ Base Set To Receive 118MM OP Tokens Over Six Years In Governance Agreement – The Block

Shiba Inu’s Highly Anticipated Shibarium Bridge Is Now ‘Fully Functional’ – CoinDesk

NFTs, DAOs and the Metaverse

⭐ OpenSea Unveils Standards For Redeemable NFTs – The Defiant

Doodles And Crocs Announce Exclusive Footwear Collaboration – NFT Now

$PEPE Multisig Mysteriously Transfers Out 16 Trillion Tokens, Investors Concerned – NFT Now

⭐ Shape your Future

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At the Fintech Blueprint, we go down the rabbit hole to help you innovate and compete. 

Sign up to the Premium Fintech Blueprint newsletter and get access to:

• Wednesday’s Long Takes on Fintech and Web3 topics with a deep, comprehensive analysis

• Office Hours, monthly digital roundtable discussions with industry insiders

• ‘Building Company Playbook’ series, offering insider tips and advice on constructing successful fintech ventures

• Enhanced Podcasts with industry leaders, accompanied with annotated transcripts

• Archive Access to an array of in-depth write-ups, spanning across 15+ topics and encompassing over 50 Fintech and DeFi brands

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• Read our Disclaimer here — this newsletter does not provide investment advice and represents solely the views and opinions of FINTECH BLUEPRINT LTD.

• Contributors: Lex, Laurence, Matt, Farhad, Daniel, Michiel, Bo

  Leave a comment

https://lex.substack.com/p/defi-friendtechs-revenue-is-plummeting

The Fintech Blueprint is a newsletter authored by me, Lex Sokolin, and a small group of brilliant researchers who focus on frontier technologies impacting the future of financial services. I am glad you are here. Was this email forwarded to you? You deserve your own:
👉subscribe here.

Gm Fintech Futurists —

Today we highlight the following:

1. DEFI & DIGITAL ASSETS: friend.tech Crosses 100,000 Users As Crypto Community Debates Its Longevity (link here)

2. DEFI & DIGITAL ASSETS: Binance.US Looks to Crypto Startup MoonPay as Alternative After US Banks Cut Ties (link here)

3. CURATED UPDATES

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DEFI & DIGITAL ASSETS: friend.tech Crosses 100,000 Users As Crypto Community Debates Its Longevity (link here)

After lying dormant for three months, friend.tech, a decentralized social media dApp that lets people buy “shares” of X (formerly Twitter) users, has attracted 100,000+ users and generated $2.7MM+ in revenue within the past week. 

Previously, friend.tech was known as Stealcam – a social dApp that enabled users to upload images that were then transformed into NFTs on Arbitrum. The catch was that you couldn’t view the pictures until you “stole” them by purchasing them with ETH. The platform yielded tens of thousands of dollars for some influencers. However, by April, the leading earners experienced complete income stagnation. Subsequently, in May, the developers rebranded it as friend.tech.

Built on Coinbase’s L2 Base, friend.tech lets users tokenize their persona by selling “Keys” of themselves to their followers, allowing the followers to “own” a portion of their friend.tech persona. These shareholders then gain direct messaging privileges—hence the name “Keys.” The Key’s price appears tied to follower count and engagement levels. And if your friend gains popularity, their Key’s value rises, and vice versa. The platform levies a 10% transaction fee, divided evenly between friend.tech, and the account holder.

Concerns about the app’s viability arose due to the absence of a privacy policy. Notably, Banteg, a core contributor to Yearn Finance, raised doubts by sharing publicly scraped data – wallet addresses on Base and corresponding Twitter usernames for over 101,000 friend.tech users – via a now-deleted repository on GitHub. Friend.tech defended itself, asserting that the data was publicly available, not leaked. The other concern revolves around the nature of Keys. This setup raises the possibility of these Keys being deemed securities by the Securities and Exchange Commission (SEC), mainly if the dApp gives the impression that owning them could yield anticipated profits.

Now, onto the big question: Is friend.tech here to stay? Remember, emphasizing a creator’s value over their content isn’t novel. Friend.tech is just a new spin on BitClout (now called DeSo). BitClout, on its Proof-of-Work blockchain DeSo, scraped X accounts, mainly from social media influencers. These accounts were integrated into the platform and linked with individual bonding curves. Users could share updates and images, financially reward others’ posts, and trade “creator coins”—personalized tokens with values tied to individuals’ reputations. Sound familiar? Based on the number of imported followers, it generated implied market caps of all those accounts en masse; Elon Musk hit $38MM.

BitClout’s initial interest drew $200MM+ in Bitcoin deposits. Fast forward and the initial excitement dwindled – BitClout’s creator coin trading volumes plummeted, concerns about unauthorized monetization of Twitter profiles surfaced, and a final blow was dealt by Anderson Kill P.C.’s privacy-related lawsuit.

Maybe friend.tech won’t get sued like BitClout did, but its fees and revenues have already tumbled over 5x in just two days. Crypto is no stranger to short-lived projects – a few weeks ago, there was another PEPE rally, whose gains have already practically vanished. Outside of crypto the same stands true, Marcus Aurelius emphasized the transience of things, Kierkegaard delved into aesthetic stages, and Plato examined the concept of “mania.” Financial markets and DeFi follow many of those principles and friend.tech will need to truly differentiate itself and garner creator adoption if it is to avoid the same fate as BitClout did.

👑 Related Coverage 👑

🤓 Insights Report

Before we move onto our next topic, we would like to highlight an Insights Report from Fintech Nexus and Brighterion, a Mastercard company. In their survey of 100 financial institutions, they explore how financial institutions are using artificial intelligence for transaction fraud monitoring in the dynamic digital landscape.

AI Perspectives: Transaction Fraud

DEFI & DIGITAL ASSETS: Binance.US Looks to Crypto Startup MoonPay as Alternative After US Banks Cut Ties (link here)

As the regulatory cases against Binance.US proceed, the US-branch of the crypto exchange has seen an exodus of US banking partners. In turn, for the past month, US customers have been unable to withdraw or deposit dollars on the platform. The charges brought against Binance.US include operating unregistered exchanges, broker-dealers and clearing agencies; providing a misrepresentation of oversight and trading controls on the Binance.US platform; and offering and selling unregistered securities. When the allegations were made Binance.US had over $2B in AUM, commanding a market share of over 22% in March, but this figure has since dwindled to 0.7%. 

Enter MoonPay, a crypto payments fintech that allows business and retail customers to on-and-off ramp between fiat and cryptocurrencies with a range of payment methods, including debit, credit, local bank transfers, Apple Pay, Google Pay and Samsung Pay. Notably, the payments firm is backed by a range of celebrities, with Justin Bieber and Ashton Kutcher, among others, joining their most recent round of funding last April. Its most significant previous round raised $555MM in late 2021 at a $3.4B valuation, but its internal valuation has since sunk 72%. 

MoonPay is now providing Binance.US users with an alternate mechanism for converting dollars to crypto. Users can use any of MoonPay’s supported payment methods to buy the stablecoin Tether, which can then be swapped for other cryptos on Binance. The drawback is that MoonPay is performing KYC compliance checks for users in the US to avoid any unnecessary repercussions from the Binance.US lawsuits. 

There has been little regulatory movement on the cases brought against Binance, or even fellow accusee Coinbase, since the cases were filed. Ripple’s XRP win last month was a move in the right direction, assuming it survives a potential appeal, and the SEC now seems to be moving their sights over to AI. The regulatory uncertainty looming over Binance.US at best deters users, who likely fear a repeat of FTX, and at worse could see it shut out of the world’s largest crypto market. But at least in the short term, business goes on thanks to MoonPay. 

👑 Related Coverage 👑

Curated Updates

Here are the rest of the updates hitting our radar.

Financial Institutions and Adoption 

⭐ Binance US Renews Banking Push With MoonPay Deal – Blockworks

Crypto Exchange EDX Markets Taps Anchorage As Custody Provider – CoinDesk

Gemini Moves To Dismiss SEC Lawsuit, Claims Accusations Flawed – Blockworks

DeFi and Digital Assets

⭐ Spark Protocol Users Max Out $200MM DAI Debt Ceiling – The Defiant

⭐ EigenLayer Pulls In $160MM Of Deposits Within Two Hours – The Defiant

BNB Token Stumbles To 1-Year Low Amid Mounting Scrutiny Over Binance – CoinDesk 

Nodal Power Raises $13MM To Power Bitcoin Mining Centers With Flared Methane – Blockworks

Balancer Depositors Pull Nearly $100MM In Crypto After Vulnerability Warning – CoinDesk

Coinbase Gets A Stake In Stablecoin Operator Circle And USDC Adds 6 New Blockchains – CoinDesk

Wintermute Proposal To Borrow YFI Draws Fire From DeFi Community – The Defiant

Blockchain Protocols

⭐ Risc Zero Introduces ‘Type 0’ zkEVM To Make Zero-Knowledge Tech More Accessible – Blockworks

⭐ dYdX Declares War On MEV Ahead Of Appchain Migration – The Defiant

Shiba Inu Plans Shibarium’s Public Restart Days After Botched Launch – CoinDesk

Starkware To Open-Source ‘Magic Wand’ Of Its Zero-Knowledge Cryptography Next Week – CoinDesk

Maple Finance Eyes Asian Expansion With $5MM Investment, Returns To Solana – CoinDesk

NFTs, DAOs and the Metaverse

⭐ NFT Platform Recur To Shut Down Despite $50MM Raise And Big Name Backers – Decrypt

Bored Ape Investors Sue Yuga Labs, Sotheby’s, 28 Others As NFT Prices Plunge – CryptoPotato

Billionaire Mark Cuban Says NFT Marketplace OpenSea Making ‘Huge Mistake’ With New Royalty System – The Daily HODL

Ex-OpenSea Exec Receives 3-Month Sentence In NFT Insider Trading Case – Decrypt

‘Synergy Land’ RPG On Polygon Gives Off ‘Animal Crossing’ Vibes – Decrypt

⭐ Shape your Future

Curious about what is shaping the future of Fintech andDeFi? 

At the Fintech Blueprint, we go down the rabbit hole to help you innovate and compete. 

Sign up to the Premium Fintech Blueprint newsletter and get access to:

• Wednesday’s Long Takes on Fintech and Web3 topics with a deep, comprehensive analysis

• Office Hours, monthly digital roundtable discussions with industry insiders

• ‘Building Company Playbook’ series, offering insider tips and advice on constructing successful fintech ventures

• Enhanced Podcasts with industry leaders, accompanied with annotated transcripts

• Archive Access to an array of in-depth write-ups, spanning across 15+ topics and encompassing over 50 Fintech and DeFi brands

Upgrade to Premium

• Read our Disclaimer here — this newsletter does not provide investment advice and represents solely the views and opinions of FINTECH BLUEPRINT LTD.

• Contributors: Lex, Laurence, Matt, Farhad, Daniel, Daniella, Michiel, Bo

Leave a comment

https://lex.substack.com/p/defi-flashbots-raises-at-1b-valuation

The Fintech Blueprint is a newsletter authored by me, Lex Sokolin, and a small group of brilliant researchers who focus on frontier technologies impacting the future of financial services. I am glad you are here. Was this email forwarded to you? You deserve your own:
👉subscribe here.

Gm Fintech Futurists —

Today we highlight the following:

1. DEFI & DIGITAL ASSETS: Ethereum Software Infrastructure Provider Flashbots Raises $60MM (link here)

2. INVESTING: Metaverse Giant Animoca Brands Plunges $30MM Into Crypto ‘Super App’ hi (link here)

3. CURATED UPDATES

To support this writing and access our full archive of newsletters, analyses, and guides to building in the Fintech & DeFi industries, subscribe below.

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DeFi Short Takes

DEFI & DIGITAL ASSETS: Ethereum Software Infrastructure Provider Flashbots Raises $60MM (link here)

Flashbots, the prominent MEV research and development firm, has raised $60MM in a Series B funding round led by Paradigm, a crypto-focussed investment firm. Investors in the round were selected based on their reverse pitches, highlighting the hype surrounding Flashbots, and its valuation is reportedly now over $1B.   

Maximal extractable value (MEV) is Flashbots’ bread and butter. MEV is the value that can be extracted by blockchain network operators by re-ordering or previewing pending blockchain transactions to realize the most cost-efficient ordering. Techniques like front-running transactions are common, whereby fees are paid to move ahead in the ordering, but it comes at the cost of deteriorating the average end-users experience.  

Flashbots focuses on mitigating the negative externalities posed by MEV, with a primary focus on Ethereum. Its products include Flashbots Auction, a marketplace for transaction ordering; Flashbots Data, its dashboards for MEV data; MEV-Boost, a solution for minimizing the negative impact of MEV through proposer-builder separation that is used by many validators on Ethereum; and Flashbots Protect, an RPC endpoint protecting against frontrunning and failed transactions. 

This round, in particular, will help fund its SUAVE (Single Unifying Auction for Value Expression) platform. SUAVE aims to be an independent network that can perform the roles of a decentralized block builder and act as a mempool (the list of pending transactions). At a high level, developers can use it to create intra-block applications, which can be designed in ways that provide users with custom benefits like cheaper or more private transactions than otherwise could be completed on Ethereum.

In a time when AI investments are all the rage, we’re not surprised to see Flashbots bring the limelight back to crypto. Its current offering makes it a foundational tool for Ethereum validators, which manage almost 19% of all circulating ETH via staking. Its focus for the future, SUAVE, is also attracting much attention. The solution can provide a unified sequencing layer for many layer 2s as they look to become progressively decentralized, solving a critical technical challenge for one of the most hyped areas in Web3. Both the present and future are looking rosy for Flashbots. 

👑 Related Coverage 👑

INVESTING: Metaverse Giant Animoca Brands Plunges $30MM Into Crypto ‘Super App’ hi (link here)

Metaverse gaming company Animoca Brands has invested $30MM in Web3 neobank “hi,” founded by Sean Rach, the former CMO of Crypto.com. Before the investment, “hi” had partnered with Mastercard to launch a debit card that allowed users to customize avatars using their own NFTs. 

As for Animoca, the company had initially announced the development of the Animoca Capital fund with a goal of $2B in November. However, in January, they scaled down this target by 50% and have just reduced the target by an additional 20%, settling at $800MM.

The “hi” platform offers crypto trading via credit card and bank transfers. Current listed tokens include BTC, ETH, SOL, and 100+ cryptocurrencies. The neobank offering also provides instant fiat top-ups, and fee-free money transfers. Currently, “hi” has 3.6MM members and is in phase one of its plan. 

During phase one, which is slated for completion within the next 18 months, “hi” intends to introduce equity, ETF, crypto derivatives trading, and venture into Gamefi. The fintech also needs to address several highlighted challenges include KYC problems, the 40% annual yield generated on their native token, and concerns about the legitimacy of Google Play and App Store reviews.

Phase two will introduce DEhi, a decentralized non-custodial wallet, for holding and accessing NFTs and dApps. “hi” also plans to unveil the “hi Protocol” (hiP), a Layer-2 Sidechain for Ethereum that boasts scalability, EVM compatibility, and a proof-of-humanity identity (PoHI) mechanism. At the core of PoHI is a Zero Knowledge Set Membership (ZKSM), which leverages ZK technologies to identify users without revealing their identities. 

We see “hi”’s neobank infrastructure as the main motivation behind this investment. Animoca’s users will be able to make direct transactions with tokens from within the ecosystem, such as Sandbox’s SAND token. “hi” debit cards can be used to trade these tokens online or in real life, and the wallet can build on its Gamefi specific functionality, similar to its customizable NFT avatars feature. 

For Web3 as a whole, we emphasize the need for secure banking infrastructure, which should precede ventures into gamified financial projects. The negative reviews on “hi” exemplify the importance of establishing a reliable foundation and also the nascent stage of Web3 banking. If “hi” is to establish itself as a prominent player in this area it has issues to address on its KYC processes. But if it can effectively leverage PoHI and this partnership with Animoca effectively it could become a hallmark for banking in the age of Web3 gaming. 

👑 Related Coverage 👑

Curated Updates

Here are the rest of the updates hitting our radar.

Financial Institutions and Adoption 

DCG Says It’s Close To Reaching Agreement On Genesis Chapter 11, Appoints New CFO – The Block

WisdomTree To Leave ‘No Stone Unturned’ With New Blockchain-Native App – Blockworks

DeFi and Digital Assets

⭐ DeFi Exchange Curve Finance Confirms Various Ethereum Pools Hacked & Justin Sun, DCF God And Others Line Up To Buy Curve Finance Founder’s CRV Token – Decrypt 

⭐ PancakeSwap To Share Trading-Fee Revenue With CAKE Token Stakers – The Block 

dYdX Proposal To Slash Token Issuance Wins Early Support – CoinDesk 

zkSync Era welcomes PancakeSwap to the ecosystem – Blockworks

Arkham Bounty Unearths $160MM In Alleged Terra Wallets – The Defiant

Blockchain Protocols

⭐ Gitcoin’s Layer 2 ‘Public Goods Network’ Goes Live On Mainnet – The Block 

Celo Network Welcomes Google Cloud Validator To Its Network – Blockworks

SHIB Devs Begin Testing Shibarium To Ethereum Bridge – Decrypt 

NFTs, DAOs and the Metaverse

Gucci Reveals Rewards for Vault Material NFT Holders – Decrypt 

Arbitrum DAO’s First Grants Programs Take Shape – CoinDesk

Shape your Future

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At the Fintech Blueprint, we go down the rabbit hole to help you innovate and compete in Fintech. 

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• Monday Fintech Short Takes, with weekly coverage of the latest fintech, digital investing, banking, and payments news via expert curation and in-depth analysis  

• Wednesday Long Takes on Fintech and Web3 topics with a deep, comprehensive, and insightful analysis without shilling or marketing narratives

• Thursday DeFi Short Takes, weekly analysis of developments in the crypto space, including digital assets, DAOs, NFTs, and institutional adoption 

• Access to the Podcasts with industry leaders on building leading companies in Fintech and DeFi along with value-added data-driven, annotated transcripts

• Full library of the weekly in-depth write-ups on 15+ topics and 50+ Fintech and DeFi brands, offering deep, comprehensive, and insightful analysis without shilling or marketing narratives

• Exclusive Deep Dive reports into Fintech business models and brands that transform the Fintech and DeFi space 

• Access to our CEO & Founder focused ‘Building Company Playbook’ series, offering insider tips and advice on constructing successful fintech ventures.

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• Read our Disclaimer here — this newsletter does not provide investment advice and represents solely the views and opinions of FINTECH BLUEPRINT LTD.

• Contributors: Lex, Laurence, Matt, Farhad, Daniel, Daniella, Michiel

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https://lex.substack.com/p/fintech-who-will-be-disrupted-by

Hi Fintech Futurists — 

Before we delve into our regular newsletter, we have some exciting news for you:

This Wednesday, July 26th, we will be releasing the 7th edition of our Building Company Playbook.

🚀 In Playbook #7, we will be exploring:

• The essential role of an exit strategy in your fintech journey and its impact on your venture’s success

• How to evaluate and decide between different exit options—sale, merger, or IPO

• How to navigate and overcome potential exit obstacles

• Insider tips and insights on negotiating an advantageous exit deal

To gain access to this upcoming chapter AND the previous six editions of the Building Company Playbook, upgrade your subscription today:

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As always, thanks for your time and attention. Today’s agenda is below.

1. PAYMENTS: FedNow Is Finally Live In The US (link here)

2. LENDING: Fintech Lender TP24 Secures £345MM For SME Revolving Credit (link here)

3. LONG TAKE: Growing financial engagement with messaging in Coinbase Wallet, Venmo, and the super apps (link here)

4. PODCAST CONVERSATION: How to build an investment fintech with over 3 million members in 3 years, with Public Founder Leif Abraham (link here)

5. CURATED UPDATES

In Partnership: Webinar on Alternative Credit Data — Real World Results to Reduce Default Rates

Over the past decade, consumer lenders have taken small steps towards incorporating alternative data into their underwriting. Today, we are at a pivotal point where we can redefine how lenders consider creditworthiness. In this session, you will learn what types of data have the most impact, how lenders are incorporating this data into existing credit models, how it is impacting default rates, and more.

👉 Join us on July 26 at 2pm ET by registering below.

Register Now

Digital Investment & Banking Short Takes

PAYMENTS: FedNow Is Finally Live In The US (link here)

The US banking infrastructure has grappled with the challenge of outdated payment rails for years. Systems like Automated Clearing House (ACH) transfers are notorious for their lengthy processing times. Moreover, many legacy payment systems are limited to operating during fixed “business hours,” the definition of which has been changing since the advent of the internet. On top of that, these payment rails often fail to provide real-time transaction visibility. To address these challenges, the Federal Reserve launched FedNow—a system for instant payments.

Each day, customers (i.e., the banks and credit unions) get their end-of-day balance reports and can access intraday credit during the service’s business day. FedNow also provides liquidity management transfers for instant payment services, alongside optional features like fraud prevention tools, request for payment capability, and tools for handling payment inquiries. Unlike private money-transferring services like PayPal or Venmo, FedNow services are not directly offered to consumers. The service has been adopted by 35 banks and credit unions, including JPMorgan Chase and Wells Fargo, along with the US Department of the Treasury’s Bureau of the Fiscal Service. Furthermore, 16 service providers, including Finastra, FIS, Jack Henry, and Temenos, are supporting FedNow payment processing. Some speculate this could be an early glimpse of a Central Bank Digital Currency (CBDC) in the making.

The payment systems in the US were set up long before digital payments became the standard. While they have reliably served us for decades, their lack of speed and flexibility no longer align with the demands of today’s fast-paced world. Fintech companies have stepped in to breathe new life into these antiquated rails — companies like Stripe and Plaid created new payment rails on top of the existing infrastructure. Industry giants like Visa have partnered with PayPal, which owns Venmo, to facilitate digital payments across different apps. And we’ve seen an emergence of blockchain-powered stablecoins, like USDC, which can enable cross-border transactions. There are thousands of paytech solutions. 

FedNow’s grandiose entrance into the deceivingly saturated chasm of the payment industry signals its ambition to become the ultimate all-in-one solution for financial institutions across the US. A similar trend can be observed with Pix in Brazil, a payment method developed by the Central Bank of Brazil that enables transactions to occur in less than 10 seconds, any day, any time.

Pix made waves after its launch in November 2020, outperforming debit and credit transactions within one year. Within six months, Pix catered to nearly 120MM consumers, becoming a favorite among 70% of Brazilian adults and 60% of businesses. The platform now handles 3B transactions per month. 

In contrast, the US has a different tale. Before FedNow, RTP held the fort for instant payments, but its usage remained relatively low. Despite 300 banks participating, RTP’s volume is just 150MM transactions per month, less than 5% of the volume seen in Brazil. Possible reason? The US consumer’s strong preference for credit cards and their addictive loyalty programs.

Opinions on FedNow are sharply divided — with some viewing it as a potential threat to freedom, while others hail it as a commendable technological initiative. In Brave New World, the World State wields a state-controlled payment network to regulate and manipulate the populace’s behavior and consumption, something that is a fear of CBDC opponents around the world. That’s likely overblown.

We think that this payments infrastructure is a boon to financial services, and sorely needed, helping the US catch up with Pix and open banking across Europe and the UK, as well as WeChat in the East. Most likely, wires and ACH will be in part replaced by instant payments. Card networks may be threatened to some extent where embedded finance integrations are concerned, but long term credit card usage is unlikely to decline. As it relates to crypto, FedNow is not tokenized or programmable money, and to that end does not play in the same arena as stablecoins or protocol currency.

👑Related Coverage👑

LENDING: Fintech Lender TP24 Secures £345MM For SME Revolving Credit (link here)

Fintech lender TP24 raised £345MM in debt funding, led by Barclays and M&G Investments, to offer flexible credit solutions to small-and-medium-sized enterprises (SMEs) across the UK, Netherlands, and Australia. The funding package comprises £200MM in warehouse financing from Barclays and £40MM in mezzanine funding from M&G. Moreover, Barclays has allocated an additional £105MM to facilitate lending operations tailored to SMEs in Australia. 

​​TP24’s CreditLine offers asset-backed lending for B2B SMEs. Specifically, it allows SMEs to use their receivables as collateral — the revolving line of credit is calculated against an SME’s debtor portfolio (B2B invoices), providing working capital. Eligible UK SMEs can access flexible revolving loans from £250,000 to £5MM if they have been operational for three years and have a debtor base of over £350,000.

During times of crisis, smaller companies often need help accessing liquid cash, the lack of which hinders their ability to operate effectively and efficiently. A recent World Economic Forum report on SMEs emphasized that in 2022, the top concerns for SMEs were survival and expansion (67%) and funding and access to capital (24%). In this context, TP24’s CreditLine system emerges as a welcome solution for SMEs with limited credit history, offering an alternative to those who do not meet more stringent criteria of traditional bank loans.

While some research suggests that firms accessing P2B (peer-to-business) loans are often “high-quality” firms with access to bank financing, it is useful to remember that banks, including those like Silicon Valley Bank (SVB) that cater to specific sectors, are not immune to macroeconomic fluctuations. The collapse of SVB exposed its specific niche of business customers to external shocks, disrupting their operations and underscoring the importance of alternative financial solutions.

In the UK, fintech lenders like TP24, OakNorth, and iwoca excel in providing swift loan approvals, often taking only 24 hours to process applications. OakNorth provides instant credit analysis and real-time portfolio insights, and iwoca specializes in microlending for small businesses. However, there are trade-offs. 

While fintech lenders offer prompt and flexible financing options, they often come with higher interest rates. For instance, iwoca’s annual interest rate hovers around 40%. Similarly, TP24 imposes a yearly interest rate, a one-off upfront fee based on the approved credit amount, and a facility fee that on a combined basis can be far in excess of a traditional bank APR. In contrast, traditional players like HSBC and Barclays offer small business loans at lower APRs, 7.1% and 10.4% respectively (albeit for only £25,000). And yet, despite these more competitive rates, 75% of SMEs with working capital needs opt for digital-only banks as their primary financial institution. 

New entrants always lean into faster approval times, more permissive lending practices, and alternative data. Sometimes that leads to lower interest rates, like in Krea’s collaboration with Klarna Kosma, Klarna’s platform for banks and fintechs, where Swedish SMEs received loan offers that were 15% larger and carried a 4% lower interest rate than the market. That said, there are plenty of cautionary tales of fintechs blowing themselves up through poor underwriting and missing a credit cycle (e.g., OnDecK). Only time will tell.

👑Related Coverage👑

Blueprint Deep Dives

LONG TAKE: Growing financial engagement with messaging in Coinbase Wallet, Venmo, and the super apps (link here)

The intersection of finance and technology has led to innovative ways of mixing attention, commerce, and finance, epitomized by entities like Shopify and Venmo. The success of these platforms hinges on understanding how to mix engagement and financial product within their business model. Crucially, financial services are moving beyond being just transactional machines, by increasing user engagement and developing strategies to improve customer retention. The next frontier, as highlighted by Coinbase’s integration of the XMTP protocol for messaging, is developing a persistent digital identity for users, emphasizing the growing significance of interoperability and privacy in the evolving world of Web3.

Read Long Take

PODCAST CONVERSATION: How to build an investment fintech with over 3 million members, with Public Founder Leif Abraham (link here)

In this conversation, we chat with Leif Abraham – co-CEO and Founder of Public, an investing platform used by millions and valued at over $1.2 billion. Founded in 2019, Public now serves 3+ million customers and has raised hundreds of millions of dollars from Greycroft, Accel, Lake Star, Tiger Global, and many more. The company has quickly risen to become one of the most popular financial applications in the United States by blending stock trading, crypto investing, and community discussions. The recent acquisition of Otis suggests the company will enable fractional investing in assets like cars, art, and NFTs in short order. 

Before Public, Leif was the founder and CEO of a business called AND CO, a SaaS platform for freelancers. AND CO was acquired by Fiverr to become Fiverr Marketplace in 2018. To round off the serial nature to Leif’s entrepreneurial journey to date, prior to AND CO, Leif founded ‘Pay With a Tweet’ – a novel software solution that allows users to provide digital content on websites for the price of a social media share – which was acquired by HanseVentures in 2013, and again acquired by Aklamio in 2017.

Listen to Podcast

Curated Updates

Here are the rest of the updates hitting our radar.

Neobanks

• ⭐ bunq Hits 9MM Users In Europe, Doubles Deposits In Four Months – Altfi & Neobank bunq Launches Cash Back And Savings Interest – PYMNTS

• Acquisition Of PAYPT Finance Ltd – GST Technologies

• JPMorgan To Expand Online Bank Chase To Germany – Finextra

• BaFin Extends AML Controls At N26 – Finextra

• Myanmar’s Shadow Government Backs Launch Of Crypto-based Bank – Cointelegraph

Payments

• ⭐ Thunes Extends Its Series C To $72MM With Visa Backing – Altfi

• Paytm Revenue Climbs 39% As Mobile Payments Become More Mainstream – PYMNTS

• Mondu Partners With Acquired.com To Bring Its B2B Payment Services To More European Businesses – Acquired

• Nuvei And Plaid Team To Expand Pay-by-Bank – PYMNTS

Digital Investing

• ⭐ Allfunds Launches Private Asset Investments Platform – Fund Selector Asia

• LendInvest Co-founder Christian Faes Launches US-based “Fix and Flip” Lender – Altfi

• FusionIQ Integrates With Wealth Management Platform Blueleaf – Fintech Futures

• Savvy Wealth Unveils Fully Integrated, AI-Powered Advisor Platform Designed For Modern Financial Advisors – Businesswire

• Kuflink Gets £35MM Institutional Debt Funding – Mortgage Professional America

AI

• ⭐ Meta and Microsoft Introduce The Next Generation Of Llama – Meta

• ⭐ Unstructured, Which Offers Tools To Prep Enterprise Data For LLMs, Raises $25MM – TechCrunch

• FedML Raises $11.5MM To Combine MLOps Tools With Decentralized AI Compute Network – Medium

• Hammerspace Nabs $56MM For Its Data Orchestration Platform – SiliconANGLE

• Sam Altman’s Worldcoin Eyeball-scanning Crypto Project Launches – TechCrunch

Shape your Future

Wondering what’s shaping the future of Fintech, Digital Wealth and Web3? 

At the Fintech Blueprint, we go down the rabbit hole to help you innovate and compete in Fintech. 

Sign up to the Premium Fintech Blueprint newsletter and get access to:

• Monday Fintech Short Takes, with weekly coverage of the latest fintech, digital investing, banking, and payments news via expert curation and in-depth analysis  

• Wednesday Long Takes on Fintech and Web3 topics with a deep, comprehensive, and insightful analysis without shilling or marketing narratives

• Thursday DeFi Short Takes, weekly analysis of developments in the crypto space, including digital assets, DAOs, NFTs, and institutional adoption 

• Access to the Podcasts with industry leaders on building leading companies in Fintech and DeFi along with value-added data-driven, annotated transcripts

• Full library of the weekly in-depth write-ups on 15+ topics and 50+ Fintech and DeFi brands, offering deep, comprehensive, and insightful analysis without shilling or marketing narratives

• Exclusive Deep Dive reports into Fintech business models and brands that transform the Fintech and DeFi space 

• Access to our CEO & Founder focused ‘Building Company Playbook’ series, offering insider tips and advice on constructing successful fintech ventures.

Upgrade to Premium

• Read our Disclaimer here — this newsletter does not provide investment advice and represents solely the views and opinions of FINTECH BLUEPRINT LTD.

• Contributors: Lex, Laurence, Matt, Farhad, Daniel, Daniella, Michiel

Leave a comment

https://lex.substack.com/p/defi-court-rules-against-sec-tokens

Gm Fintech Futurists —

Today we highlight the following:

1. PROTOCOLS: Ripple, Crypto Industry Score Partial Win In SEC Court Fight Over XRP (link here)

2. DEFI & DIGITAL ASSETS: Aave’s Dollar-Pegged GHO Stablecoin Hits $2.5M Market Cap After Just 2 Days (link here)

3. CURATED UPDATES

To support this writing and access our full archive of newsletters, analyses, and guides to building in the Fintech & DeFi industries, subscribe below.

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DeFi Short Takes

POLICY: Ripple, Crypto Industry Score Partial Win In SEC Court Fight Over XRP (link here)

On July 13, 2023, Judge Analisa Torres from the US District Court for the Southern District of New York published a long-awaited decision in the SEC v. Ripple Labs court case. The anticipation surrounding this headline has been a source of narrative drama and price speculation for years, and carries far reaching implications. Back in 2018, the Securities and Exchange Commission (SEC) sued Ripple, claiming that its activities involving sales and distributions of its native token, XRP, broke the rules because Ripple didn’t register the asset as a security under Section 5 of the Securities Act of 1933.

The court examined three methods of Ripple’s XRP sales to determine if an investment contract existed: (1) Ripple directly sold XRP to institutional buyers with written contracts (Institutional Sales); (2) Ripple sold XRP on digital asset trading platforms using trading algorithms (Programmatic Sales); and (3) Ripple distributed XRP as payment for services to individuals, employees, and third parties (Other Distributions). Ripple did not file registration statements or financial reports for these sales/distributions with the SEC. 

In the end, the court ruled that the institutional sales were indeed securities transactions, specifically “investment contracts” under the Howey test, which defines an investment contract as involving the investment of money in a common enterprise with the expectation of profits from the efforts of a third party. Institutional investors paid Ripple, linking their money to the enterprise’s success and expecting profits, thereby satisfying the Howey test’s prongs. 

However, programmatic sales on digital platforms didn’t need registration and weren’t unregistered offerings. Other distributions didn’t meet the “investment of money” prong. And hence, the court also determined that the XRP token itself did not meet the definition of a security, leading Binance, Coinbase, Kraken, and other platforms to quickly relist XRP. To read more about the legal aspects, see here for Skadden’s analysis and here for Davis Polk’s. 

SEC Chair Gary Gensler had a mixed reaction to the judge’s decision — satisfied with “protecting” institutional investors and dismissing Ripple’s fair notice argument, but not thrilled about the judge’s stance on retail investor use of exchanges and lack of expectations of profits. However, do not expect Gensler to have a change of heart and soften his approach to crypto enforcement. Bill Hughes, the director of global regulatory matters at ConsenSys, mentioned that Gensler’s tough cop routine is central to his persona and won’t be abandoned because any signs of weakness would be politically untenable — more regulatory pressure is already in play.

Critics argue that the SEC lacks clear guidance for the crypto industry, yet discussions continually revolve around the subjective Howey Test. We’ve observed various alternatives, like the 2018 framework by Peter Van Valkenburgh, Research Director at CoinCenter. It considers variables within the cryptocurrency’s software and community, aligning them with the prongs of the Howey test to determine if a cryptocurrency resembles a security. The framework suggests that more prominent decentralized cryptocurrencies like Bitcoin, pegged cryptocurrencies, and distributed computing platforms like Ethereum don’t easily fit the security definition or pose significant consumer risks. However, smaller, questionably marketed or designed cryptocurrencies may fall within that definition. 

In summary, the Torres decision was a strong blow to the SEC’s efforts to regulate by enforcement — in particular showing the world that just because a regulatory agency, or its boss, has a view does not mean that this view is correct or will be upheld in court. Some thing really are questions of law, and we expect legislation to be the best sensible way to solve this deadlock between industry and securities regulators. Other geographies, like Europe, are well on their way, while the US plays politics with its future economy.

👑Related Coverage👑

DEFI & DIGITAL ASSETS: Aave’s Dollar-Pegged GHO Stablecoin Hits $2.5M Market Cap After Just 2 Days (link here)

DeFi lending protocol Aave has launched the GHO token, an algorithmic stablecoin, on the Ethereum network. This milestone comes as a result of near-unanimous approval of a governance proposal from the community on July 14. 

Stablecoins are digital cash equivalents whose value is typically pegged to a fiat currency. They were developed to allow investors to reduce volatility in their crypto portfolios and preserve value without having to offramp entirely from the crypto capital markets. Algorithmic stablecoins generally refer to pegged currencies that attempt to tranche risk and function like a structured product, where the top tranche is pegged, and the other tranches work like equity buffers.

Aave v3 users on the Ethereum network now can generate the GHO stablecoin using their assets deposited within the Aave protocol. GHO is designed with a fixed interest rate of 1.5%, which was determined by Aave DAO. Unlike centralized stablecoins, which are backed by corporate entities, GHO is issued and managed by AaveDAO, a respected decentralized autonomous organization with multiple product. Fees generated from GHO are channeled into Aave DAO’s treasury, and of course add leverage into a leverage protocol.

One of the leading stablecoins, DAI, developed and managed by MakerDAO, requires users to keep separate vaults for each collateral type that is swapped for DAI tokens. GHO stands out from stablecoins like DAI by allowing multiple collateral types to be deposited in a single transaction for minting.

The value of GHO is intended to remain stable through market participant behaviors. According to Aave, if the value of GHO were to exceed $1, the market participants would engage in arbitrage to bring the value back to $1, as swapping GHO for other stablecoins would be profitable. On the other hand, if the value of GHO were to drop below $1, it would become profitable to repay the debt, leading to a decrease in GHO’s total supply and aiding in restoring the peg. This is a standard approach for stablecoins. However, algorithmic stablecoins are inherently fragile, facing challenges in maintaining stability and relying on price-stabilizing arbitrage from independent actors — both of which can be unreliable during extreme market volatility. Think LUNA & UST.

Despite Aave’s substantial Total Value Locked (TVL) of $5.8B, the launch of GHO has experienced a slow start to date — $4.6MM borrowed. For context, crvUSD, another similar collateralized stable from an early DeFi protocol looking to issue loans, has a TVL of $145MM. But both GHO and crvUSD pale in comparison to DAI, with whom they are effectively competing, with assets of $4.6B. One possible reason for the low adoption of GHO could be its 1.5% interest rate. In contrast, crvUSD offers a higher average interest rate, and DAI provides a savings rate of 3.5%. That is still peanuts compared to the 5%+ interest rates on just USD in a bank account.

Regardless of the cause, the launch numbers do not present a favorable outlook for the idea of proprietary stablecoins within every DeFi protocol. Perhaps we have enough stablecoin lenders out there already.

👑Related Coverage👑

Curated Updates

Here are the rest of the updates hitting our radar.

Financial Institutions and Adoption 

⭐ Crypto VC Firm Polychain Capital Raises $200MM For Fourth Fund – CoinDesk 

Crypto Wallet Provider Gnosis Launches Self-Custodial Visa Debit Card – Decrypt

FalconX and CF Benchmarks Partner To Provide Regulated Access To Crypto Derivative Markets – The Block 

DeFi and Digital Assets

⭐ Uniswap Releases DEX Aggregator Protocol – The Defiant

⭐ Lens Protocol Releases Version 2, Integrating ‘Open Actions’ And ERC-6551 – The Block 

Arkham’s ‘Dox-to-Earn’ Platform Offers Bounty On $415MM FTX Mystery – Decrypt

Coinbase Wallet Adds Chat And USDC Payment Features – The Defiant

Synthetix To Go Head-To-Head With dYdX, Aevo With New DEX Proposal – Blockworks 

Blockchain Protocols

⭐ Chainlink’s Interoperability Protocol, Connecting Blockchains To ‘Bank Chains,’ Goes Live – CoinDesk 

⭐ Polygon Introduces New POL Token To Replace MATIC – The Defiant

Crypto Exchange Binance Finalizes Bitcoin Lightning Network Integration – Decrypt 

Oasis Launches Ethereum-Compatible Privacy Blockchain Sapphire – Cointelegraph 

NFTs, DAOs and the Metaverse

⭐ Digital Art Platform Prohibition Taps Arbitrum To Democratize Generative Art – CoinDesk 

OpenSea Suspends Trading Of EtherFi NFTs – The Defiant

NFT Music Service Backed By Snoop Dogg Leads With $20MM – Blockworks

Yuga Labs’ Intensifying IP Takedowns Spur CryptoPunk Backlash – Blockworks 

Shape your Future

Wondering what’s shaping the future of Fintech, Digital Wealth and Web3? 

At the Fintech Blueprint, we go down the rabbit hole to help you innovate and compete in Fintech. 

Sign up to the Premium Fintech Blueprint newsletter and get access to:

• Monday Fintech Short Takes, with weekly coverage of the latest fintech, digital investing, banking, and payments news via expert curation and in-depth analysis  

• Wednesday Long Takes on Fintech and Web3 topics with a deep, comprehensive, and insightful analysis without shilling or marketing narratives

• Thursday DeFi Short Takes, weekly analysis of developments in the crypto space, including digital assets, DAOs, NFTs, and institutional adoption 

• Access to the Podcasts with industry leaders on building leading companies in Fintech and DeFi along with value-added data-driven, annotated transcripts

• Full library of the weekly in-depth write-ups on 15+ topics and 50+ Fintech and DeFi brands, offering deep, comprehensive, and insightful analysis without shilling or marketing narratives

• Exclusive Deep Dive reports into Fintech business models and brands that transform the Fintech and DeFi space 

• Access to our CEO & Founder focused ‘Building Company Playbook’ series, offering insider tips and advice on constructing successful fintech ventures.

Upgrade to Premium

• Read our Disclaimer here — this newsletter does not provide investment advice and represents solely the views and opinions of FINTECH BLUEPRINT LTD.

• Contributors: Lex, Laurence, Matt, Farhad, Daniel, Daniella, Michiel

Leave a comment

https://lex.substack.com/p/fintech-collective-gets-50mm-to-build

Hi Fintech Futurists — 

You’re the best, today’s agenda below.

1. PERSONAL FINANCE: Collective Raises $50MM To Build A Financial Management Platform For Freelancers (link here)

2. AI: Prolific Raises $32MM To Train & Stress-test AI Models Using Its Network Of 120K Human Contributors (link here)

3. LONG TAKE: Starbucks and Nike NFT strategy, with potential for $1B in additional revenue (link here)

4. PODCAST CONVERSATION: How embedded finance leader Synapse grew to powering 10MM+ consumers, with CEO Sankaet Pathak (link here)

5. CURATED UPDATES

To support this writing and access our full archive of newsletters, analyses, and guides to building in the Fintech & DeFi industries, subscribe below.

Subscribe now

Digital Investment & Banking Short Takes

PERSONAL FINANCE: Collective Raises $50MM To Build A Financial Management Platform For Freelancers (link here)

Collective, a platform providing freelancers bookkeeping, payroll, and tax advice, has raised $50MM in a funding round led by Gradient Ventures, Innovius Capital, The General Partnership, General Catalyst, QED, Expa, and Better Tomorrow Ventures. This brings the total amount raised by Collective to $82MM. The company serves thousands of members across the US, with a waitlist exceeding 100,000 freelancers.

By leveraging OpenAI’s GPT-4, the platform automates tasks like expense categorization and bank reconciliation. In addition, Collective offers monthly bookkeeping, administration, S-Corp formation, annual business tax filings, and quarterly tax support — essential functions but also administrative headaches. The primary objective is to eliminate the need for self-employed individuals to rely on multiple separate tools, streamlining their financial management processes for a monthly membership fee of $299. Remarkably, the company claims that its members saved an average of $10,000 in taxes in 2021 by using its platform.

The freelance workforce in the United States has reached 70MM individuals, and it is projected to surpass 85MM, or 50% of the total workforce, by 2027. The global freelance population is also set to grow as nearly 60 countries now offer digital nomad visas. While there are several personal finance management platforms available like april, Invoice2Go, and FreshBooks, Collective distinguishes itself by catering to high earners and automating a broader range of processes, akin to those found in an enterprise-level finance department. However, the $3,000 annual fee for Collective limits its total addressable market (TAM), particularly considering that many tax management startups fail to provide a substantial ROI in terms of actual savings. 

Hence, Collective plans to collaborate with companies such as Google and Meta to offer its services as a benefit to contractors. This B2B approach could find a toe-hold in the market, given that in 2021, Google employed over 150,000 temps and contractors, surpassing the number of full-time employees at its parent company, Alphabet. Collective’s large raise and apparent traction puts traditional service providers on notice, who will have to step up their game and cater to the needs of the freelance workforce. The question is whether Collective can capture the niche and expand to scale before that happens.

AI: Prolific Raises $32MM To Train & Stress-test AI Models Using Its Network Of 120K Human Contributors (link here)

Data platform Prolific has secured $32MM in funding from Partech and Oxford Science Enterprises (OSE). Building upon its previous seed round of $1.4MM through Y Combinator (YC), Prolific has developed a system that leverages a network of 120,000 human participants to inform and stress test AI models. This approach directly tackles the challenge of AI models underperforming due to inadequate training data.

The Prolific platform integrates with custom and third-party annotation tools, enables the creation of individual or group tasks with audio, video, and games for simultaneous participation, and automates repetitive tasks like approving submissions, messaging participants, and processing bulk bonuses. Organizations such as Google, Stanford University, University College London (UCL), and Oxford University currently use Prolific’s participant network. For instance, UCL employed Prolific to aid in detecting deep fakes for a human perception study. The platform facilitated the collection of high-quality human data, distinguishing it from research reliant on publicly available data.

Platforms like Prolific and CloudResearch are addressing a critical need in the field of data science. Despite the soaring demand for data scientists — expected to create 11.5MM jobs by 2026 — professionals spend excessive time spent on mundane tasks like extracting and formatting data with SQL. This challenge is magnified by the influx of unstructured data, requiring extensive processing efforts. This directly impacts fintech companies, which meaningfully leverage AI already.

Generally speaking, AI is driving the transition to modernization, and its influence extends far beyond chatbot applications, permeating fraud prevention, payment processing, and process automation. Understanding that all these advancements hinge on the availability of usable data, platforms like Prolific have an important place in the AI value chain — at least while humans are needed to map our behaviors into the great computer hivemind for processing. Once that’s done, hold on to your universal basic income!

Or not. There is some evidence that the current AI hype cycle is slowing down, with darlings like Jasper starting to shrink their workforces despite the mammoth raises at the beginning of the year. Yet more granular, focused, and niche players — like those targeting financial services workflows and data sets — are likely to be both less expensive on a valuation basis, and more resilient around product economics.

👑Related Coverage👑

Blueprint Deep Dives

Long Take: Starbucks and Nike NFT strategy, with potential for $1B in additional revenue (link here)

Traditional brands are entering the Web3 ecosystem through an NFT gateway. Among the leading innovators are Starbucks, teasing the public rollout of its Odyssey program, and Nike with its .swoosh community. This week we dissect the NFT strategies in the context of an increasingly digital customer base and the growing virtual environments built by the likes of Fortnite and Roblox. We also briefly touch on the underlying enablers and advancements in user experience and transaction speed.

Read Long Take

Podcast Conversation: How embedded finance leader Synapse grew to powering 10MM+ consumers, with CEO Sankaet Pathak (link here)

In this conversation, we chat with Sankaet Pathak – founder and CEO of Synapse, the largest regulated banking-as-a-service platform that provides payment, card issuance, deposit, lending, compliance, credit and investment products as APIs to more than 18 million end users.

After having emigrated from India to study Computer Engineering, Mathematical Sciences, and Physics at the University of Memphis. His experience of not being able to open a bank account due to his immigrant status, prompted him to launch a financial services company that could reduce barriers to entry for underbanked or unbanked individuals. Through his efforts, Sankaet found that the true barrier to entry was an outdated infrastructure which kept everyday folks from accessing best-in-class financial products. Today, Synapse services over 1.8 million end-users and processes over $10 billion in deposits. Many of Synapse’s clients are early to late stage FinTech companies offering innovative financial solutions that are both accessible and affordable for end users.

Listen to Podcast

Curated Updates

Here are the rest of the updates hitting our radar.

Neobanks

• ⭐ Papara Becomes Turkey’s First Fintech Unicorn With Beka Finance Deal – PYMNTS

• Monzo Eyes Merger With Danish Neobank Lunar – Altfi

Payments

• ⭐ Apple’s Tap To Pay Arrives In The UK With Revolut And Natwest First Out Of The Gate – Finextra

• Swift Pilots Instant Payments Across Currency Zones – Finextra

Digital Investing

• ⭐ Investing App Robinhood Expands with Retirement Account Options – PYMNTS

• Nutmeg Losses Swell 55% Two Years After JP Morgan Acquisition – Altfi

• US investing Fintech Public Launches In The UK – Altfi

AI

• ⭐ Google’s Bard Chatbot Finally Launches In The EU, Now Supports More Than 40 Languages – TechCrunch

• Musk’s Giant-Killing AI Project Is Starting Small With Huge Goals – PYMNTS

Shape your Future

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At the Fintech Blueprint, we go down the rabbit hole to help you innovate and compete in Fintech. 

Sign up to the Premium Fintech Blueprint newsletter and get access to:

• Monday Fintech Short Takes, with weekly coverage of the latest fintech, digital investing, banking, and payments news via expert curation and in-depth analysis  

• Wednesday Long Takes on Fintech and Web3 topics with a deep, comprehensive, and insightful analysis without shilling or marketing narratives

• Thursday DeFi Short Takes, weekly analysis of developments in the crypto space, including digital assets, DAOs, NFTs, and institutional adoption 

• Access to the Podcasts with industry leaders on building leading companies in Fintech and DeFi along with value-added data-driven, annotated transcripts

• Full library of the weekly in-depth write-ups on 15+ topics and 50+ Fintech and DeFi brands, offering deep, comprehensive, and insightful analysis without shilling or marketing narratives

• Exclusive Deep Dive reports into Fintech business models and brands that transform the Fintech and DeFi space 

• Access to our CEO & Founder focused ‘Building Company Playbook’ series, offering insider tips and advice on constructing successful fintech ventures.

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• Read our Disclaimer here — this newsletter does not provide investment advice and represents solely the views and opinions of FINTECH BLUEPRINT LTD.

• Contributors: Lex, Laurence, Matt, Farhad, Daniel, Daniella, Michiel

Leave a comment

https://lex.substack.com/p/defi-geminis-15b-lawsuit-against

Gm Fintech Futurists —

Today we highlight the following:

1. FINANCIAL INSTITUTIONS: Gemini Lawsuit Accuses Barry Silbert And Digital Currency Group Of Fraud (link here)

2. DEFI & DIGITAL ASSETS: Multichain Bridges Exploited for Nearly $130M Across Fantom, Moonriver and Dogechain (link here)

3. CURATED UPDATES

To support this writing and access our full archive of newsletters, analyses, and guides to building in the Fintech & DeFi industries, subscribe below.

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DeFi Short Takes

FINANCIAL INSTITUTIONS: Gemini Lawsuit Accuses Barry Silbert And Digital Currency Group Of Fraud (link here)

Crypto exchange and custodian Gemini, the largest creditor of bankrupt crypto lending firm Genesis, a Digital Currency Group (DCG) subsidiary, has taken legal action against DCG and its founder, Barry Silbert, for failing to agree on a restructuring deal for Genesis’s troubled unit. Previously, Gemini had partnered with Genesis on Gemini Earn, a service enabling Gemini customers to earn annual percentage yields ranging from 0.45% to 8% through the Earn program.

The program worked similar to the mechanics of securities lending, where assets are borrowed by parties wanting to go long or short beyond their buying power. Genesis loaned these customer deposits from Gemini Earn to various investors, including Three Arrows Capital (3AC), which is now defunct and, of course, cannot return the loan.

DCG currently has a total debt of $3.3B owed to creditors, with $1.2B owed to hundreds of thousands of Gemini Earn users. According to Gemini founder Cameron Winklevoss, in June and July of 2022, Silbert, DCG, and Genesis deliberately misled creditors, Earn users, and Gemini by disseminating false information. They claimed that DCG had absorbed the $1.2B losses resulting from the collapse of 3AC in May 2022. However, apparently, Digital Currency did not bear these losses but instead created a long-term promissory note without providing any capital to Genesis. DCG responded to these allegations with its own spin on Twitter.

In response to these events, Cameron Winklevoss made a “final offer” in the debt-restructuring negotiations with Genesis: $1.465B in forbearance payments denominated in USD, BTC, and ETH. The breakdown of debt payments is showcased below. DCG was given until May 1st to pay the first $630MM, but they defaulted on their obligations. Another deadline was set for July 6th, which DCG also failed to meet, leading Gemini to file a lawsuit against the company. In February, it appeared that Gemini Earn users were close to recovering their funds, as Gemini announced that the parties were close to reaching an agreement. According to the negotiation, Gemini would contribute up to an additional $100MM to Earn users. However, DCG missed the $630MM payment in May and once again defaulted on the final offer in July, leading to the lawsuit.

The water gets even muddier with the SEC accusing Genesis and Gemini of offering unregistered securities to the public, suspending the Earn program. Some have drawn parallels between this case and the infamous Enron fraud, where deceptive accounting tactics were employed to mask debts and inflate profits, ultimately leading to bankruptcy and significant investor losses. In question are the ways in which assets were categorized, usage of accounting to paint a different picture from underlying reality, and conflicts of interest.

Both Gemini and DCG / Grayscale / Genesis used to be seen as darlings of the crypto industry, having built large businesses on some of the more secure aspect of the crypto asset class — the largest and most liquid asset, Bitcoin, and regulated financial institutions providing capital markets services around it. It took the collapse of Terra/Luna, and the liquidation cascade of 3AC and FTX for the questionable lending practices and poor risk management to be exposed.

It is what happens after the investment losses that is the hard part — the desire by entrepreneurs to reframe the story, cover up the hole, save the company by getting just a little bit more time. If only the SEC would let GBTC convert into an ETF and get the asset managers make their investment loss whole. But the market stays irrational longer than you stay liquid. And this is where people keep crossing the line from ethical and bankrupt to fraudulent and illegal.

👑Related Coverage👑

DEFI & DIGITAL ASSETS: Multichain Bridges Exploited For Nearly $130MM Across Fantom, Moonriver And Dogechain (link here)

Multichain, a cross-chain router protocol that allows users to perform token swaps between any two chains freely, has halted services after being hacked for more than $130MM. The protocol is sizable, supporting over 25 chains, 1,100 tokens, and with $1.26B in total value locked. The exploit impacted primarily WBTC, DAI, USDC, ETH, and LINK tokens, and it was first identified by Peckshield, a blockchain security firm, after noticing token outflows of c. $102MM from the Fantom bridge. Large values of tokens were reported as being bridged to unidentified addresses, flagging concerns amongst crypto sleuths.

Acting quickly, the stablecoin issuers of USDT and USDC, Tether and Circle respectively, blacklisted five addresses. These addresses accounted for $67.5MM (c. 50%) of the funds stolen. Despite these efforts, phishing attacks have been rife, with one account posing as the Fantom Foundation tweeting a malicious link that garnered 50k views and 5k retweets under the guise of an airdrop to cover losses.  

While the details of what exactly happened have not been released, security experts believe it is the result of a private key compromise. This private key is likely a master key that has control over the bridge connections with Multichain. Adding to the mystery is that the CEO, Zhaojun, went missing just over a month ago. Without his access Multichain is unable to gain the necessary access for specific server maintenance. There is further speculation that Zhaojun and some of his team are being detained by Chinese authorities.

This hack is one of the biggest in the space this year in which we have seen $330MM stolen in Q1 and $314MM in Q2, according to CertiK. DeFiLlama reports that DeFi projects specifically have lost $527MM. Importantly, it shows how nascent security still is in a space that is a prime target for digital attacks and the impact it can have on the underlying protocols. The Fantom ecosystem in this instance has suffered a substantial loss of TVL, a token dump and a halt of lending due to this attack on a single dApp. If crypto is to prosper, it needs better security measures, accountable teams and less dependencies on singular dApps.

We used to say that hacks are the costs of battle-testing onchain financial software, and that investors get compensated with high returns for their high risks. However, it seems that the same types of failures continue to hit bridges and DeFi apps that rely on oracles or flash loans. Immature protocols will always exist as they are getting built out, and adversaries will always be incentivized to go after the honeypot. To that end, solutions must come in the form of profoundly different architecture.

👑Related Coverage👑

Curated Updates

Here are the rest of the updates hitting our radar.

Financial Institutions and Adoption 

Polygon Labs Names New CEO After Foundation Previously Ditched That Role – The Block

UK Advancing ‘Digital Securities Sandbox’ Keying In On Crypto Tech – Blockworks

DeFi and Digital Assets

⭐ Lido And Rocket Pool Duel Over Centralization Concerns – The Defiant

Aave Governance Will Migrate 1,600 ETH To wsETH And rETH – Blockworks 

USDC Issuer Circle Launches Programmable Web3 Wallet – The Defiant

Ethereum Welcomes Another ZK Rollup To Mainnet – Blockworks

CowSwap Enables Complex Swaps With ‘Hooks’ – Blockworks 

Blockchain Protocols

⭐ Consensys To Launch Linea zkEVM Mainnet At EthCC – Blockworks 

Avail Offers To Bridge The Data Availability Gap For Ethereum Rollups – Blockworks

AI Can Now Move Bitcoin With New Lightning Labs Tools – Decrypt

Mantle Network Is Voting To Form A $200MM Ecosystem Fund – The Block 

NFTs, DAOs and the Metaverse

Arbitrum DAO Locks Up $770MM In ARB Tokens Into Vesting Contract – The Block 

Tom Brady’s NFT Startup Autograph Shifts Strategy Amid Struggles – CoinDesk 

FTX Partnership To NFTs In New ‘Virtual Ballpark’: MLB’s Crypto Journey Continues – Blockworks

Andy Murray’s Wimbledon Tennis Data Transformed Into NFT Artwork – Decrypt

Web3 Apps Gained Users In June Despite Regulatory Challenges – The Defiant 

Shape your Future

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At the Fintech Blueprint, we go down the rabbit hole to help you innovate and compete in Fintech. 

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• Monday Fintech Short Takes, with weekly coverage of the latest fintech, digital investing, banking, and payments news via expert curation and in-depth analysis  

• Wednesday Long Takes on Fintech and Web3 topics with a deep, comprehensive, and insightful analysis without shilling or marketing narratives

• Thursday DeFi Short Takes, weekly analysis of developments in the crypto space, including digital assets, DAOs, NFTs, and institutional adoption 

• Access to the Podcasts with industry leaders on building leading companies in Fintech and DeFi along with value-added data-driven, annotated transcripts

• Full library of the weekly in-depth write-ups on 15+ topics and 50+ Fintech and DeFi brands, offering deep, comprehensive, and insightful analysis without shilling or marketing narratives

• Exclusive Deep Dive reports into Fintech business models and brands that transform the Fintech and DeFi space 

• Access to our CEO & Founder focused ‘Building Company Playbook’ series, offering insider tips and advice on constructing successful fintech ventures.

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• Read our Disclaimer here — this newsletter does not provide investment advice and represents solely the views and opinions of FINTECH BLUEPRINT LTD.

• Contributors: Lex, Laurence, Matt, Farhad, Daniel, Daniella, Michiel

Leave a comment

https://lex.substack.com/p/defi-sec-war-on-stablecoins-and-tusd

Gm Fintech Futurists —

Today we highlight the following:

1. DEFI & DIGITAL ASSETS: TrueUSD Depegs On Binance.US, Drops To 80 Cents Against Tether (link here)

2. GAMEFI: Mythical Games Raises $37MM For In-game Marketplace In Series C Round (link here)

3. CURATED UPDATES

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DeFi Short Takes

DEFI & DIGITAL ASSETS: TrueUSD Depegs On Binance.US, Drops To 80 Cents Against Tether (link here)

TrueUSD’s TUSD, a stablecoin pegged to the US dollar, is being shorted by traders due to concerns that it might depeg as a result of problems at the underlying custodian, Prime Trust. 

Shorting a trade is where an investor borrows assets and sells them, hoping to buy them back at a lower price before returning the borrowed assets. This investment strategy can be profitable if the trader is able to buy the assets back at a lower price, as the only cost incurred is the cost of borrowing. However, it can be disastrous if the asset increases in price after the short sale has been executed. The price of pegged tokens rarely varies and almost never moves materially higher, so attacking a stablecoin peg can be an attractive strategy for traders (e.g., Soros and the Bank of England).   

Speculation kicked off after Nevada’s Financial Institutions Division issued a cease-and-desist order, which suspended deposits and withdrawals at Prime Trust. The Nevada regulator has since filed to take over Prime Trust and freeze all of its businesses, with the exchange now owing clients over $85MM in fiat and $69.5MM in crypto. Due to the seizure, TrueUSD was unable to provide a complete attestation to their reserves for a brief period, causing Ripcord, a service tracking TUSD reserves, to report discrepancies. On the back of this news, TUSD briefly depegged on June 10th and 14th to as low as $0.993. At this time, over $4MM in short positions against the stablecoin were opened on Aave, a decentralized exchange. 

Prime Trust is reportedly closely connected with Binance and its ongoing lawsuit with the SEC. Binance has been shown to favour TUSD after regulators cracked down on their own stablecoin, BUSD. Overall, there are concerns that stablecoins will be the next prime target of the SEC due to their critical role within the DeFi ecosystem. This follows the narrative that Gary Gensler, Chair of the SEC, is attempting to dismantle crypto infrastructure within his domain.  

Another narrative worth considering is that central bankers promoting Central Bank Digital Currencies (CBDCs) may feel threatened by independent stablecoins, which essentially provide a similar service (stable fiat onramps) without government involvement or control. It could be that as CBDC efforts develop, governments will look to remove stablecoin equivalents. 

What we do know is that stablecoins require custodians and the SEC is targeting them at pace. BUSD came under fire with the SEC’s lawsuit against Binance, leading Paxos to halt minting the BUSD token.  Separately, the popular stablecoin USDC depegged following the collapse of SVB, and now TUSD is in the firing line. With $138B in Total Value Locked (TVL), stablecoins are arguably crypto’s killer app by delivering the US dollar across the world without a KYCed bank account. If the SEC and other regulators like Nevada’s Financial Institutions Division continue to obstruct them, it will have an adverse impact on the broader crypto industry and its users worldwide.

👑Related Coverage👑

GAMEFI: Mythical Games Raises $37MM For In-game Marketplace In Series C Round (link here)

Mythical Games, the Web3 game studio behind the mobile game NFL Rivals, secured $37MM in Series C1 funding, with an additional $20-30MM expected later this year. Scytale Digital led the Series C1 extension round, joined by new investors ARK Invest, Animoca Brands, MoonPay, Proof, and Stanford Athletics. Previous investors, including a16z and WestCap, also participated. The company previously raised $150MM in a Series C round in November 2021, valuing it at $1.25B. 

Getting an extension of a round from nearly two years ago and not calling it a Series D is odd — we assume this is done to keep valuation flat to that moment of time.

Beyond producing blockchain-based games, Mythical Games’ Platform allows developers to build or integrate blockchain-based play-to-earn (P2E) features economies into their games. Play-to-earn games feature an economy where players can earn real-world rewards by playing the game. Typically, highly skilled players can earn items of value in P2E games that they can then sell or trade to other players, often for currency that can be transferred for fiat.

Mythical’s platform features include a peer-to-peer marketplace, which facilitates trading and paying for game items across various public blockchains, supporting fiat and crypto transactions. The platform also provides an NFT and token management system, automatically tokenizing game items on the blockchain and synchronizing them with the marketplace. This system offers the ability to incorporate on-ramps to public blockchains, which theoretically reduces friction for would-be players to enter and exit the network by allowing them to convert fiat currency into tokens and transfer assets to other networks.

The Mythical Platform is built on a permissioned blockchain dubbed the Mythical Chain, using a Proof of Authority (PoA) consensus mechanism. Validators play a key role, validating transactions, agreeing on block validity, and collectively securing the network. Permissioned blockchains also typically have greater liveliness compared to fully open decentralized systems. But while liveliness is one of the benefits of permissioned chains, it comes at the expense of decentralization. Given that Mythical is optimizing for low-cost, responsive games, not decentralized game economies, we think this is a reasonable tradeoff. 

Early P2E gaming platforms typically focused on users purchasing in-game assets, which could then be used to earn the native token. But these token economies were largely unsustainable once growth and usage of the native token dwindled the respective native token prices collapsed. One example is StepN, whose monthly active users (MAU) statistic has dropped from 705k at its peak in May 2022 to 44k a year later. Mythical Games is trying to avoid this outcome by prioritizing gameplay — reminiscent of traditional games — while incorporating blockchain-based innovations as a secondary objective. MetalCore, for instance, is meant to rival the design of popular games like Halo and Call of Duty. 

The positive long-term trend for Mythical lies in establishing a gameplay-centric culture. By focusing on making the game enjorable, the company can cultivate a player base that wants to be part of the ecosystem and add value. This in turn should lead to usage of the platform’s peer-to-peer marketplace and ownership aspects, distinguishing it from traditional Web2 games where players lack control over the assets they earn.

While we have not yet seen tokenized game economies work at scale, we are excited to see more producers experiment in the space as gaming provides the brightest example of digital objects being actively used.

👑Related Coverage👑

Curated Updates

Here are the rest of the updates hitting our radar.

Financial Institutions and Adoption 

​​⭐ The State Of Web3 Perception Around The World Report – ConsenSys

​​⭐ NEAR Foundation Partners With Alibaba Cloud to Accelerate Web3 Growth in Asia – CoinDesk 

Singapore’s MAS Proposes Design Framework for Interoperable Digital Asset Networks – CoinDesk 

BitGo Cancels Prime Trust Acquisition, Users Report Frozen Withdrawals – Decrypt

DeFi and Digital Assets

Proposal Urges Mantle To Allocate $72MM To Lido Finance – The Block

Terra Classic Revival Plans Continue As 6 Engineers Aim to Revive LUNC Ecosystem – CoinDesk 

SAP Clients Testing Circle’s USDC To Fix Cross-Border Payment ‘Hassle’ – Decrypt

Blockchain Protocols

​​⭐ ZkSync: Matter Labs Releases ZK Stack For Building ‘Hyperchains’ – The Block 

NFTs, DAOs and the Metaverse

​​⭐ Metaverse Projects Attract 44% Of 2023 Web3 Investments – The Defiant

​​⭐ Web3 Game Gods Unchained Joins Fortnite, League Of Legends On Epic Games Store – The Block

CyberKongz Introduces ‘Stakeless Staking’ With ERC-721x – The Defiant

Soccer Franchise FC Barcelona Scores World Of Women for Upcoming NFT Release – CoinDesk 

MakerDAO Snaps Up More US Treasury Bonds – Blockworks

Azuki Expands With New 20K Ethereum NFT Collection, Elementals – Decrypt

Shape your Future

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At the Fintech Blueprint, we go down the rabbit hole to help you innovate and compete in Fintech. 

Sign up to the Premium Fintech Blueprint newsletter and get access to:

• Monday Fintech Short Takes, with weekly coverage of the latest fintech, digital investing, banking, and payments news via expert curation and in-depth analysis  

• Wednesday Long Takes on Fintech and Web3 topics with a deep, comprehensive, and insightful analysis without shilling or marketing narratives

• Thursday DeFi Short Takes, weekly analysis of developments in the crypto space, including digital assets, DAOs, NFTs, and institutional adoption 

• Access to the Podcasts with industry leaders on building leading companies in Fintech and DeFi along with value-added data-driven, annotated transcripts

• Full library of the weekly in-depth write-ups on 15+ topics and 50+ Fintech and DeFi brands, offering deep, comprehensive, and insightful analysis without shilling or marketing narratives

• Exclusive Deep Dive reports into Fintech business models and brands that transform the Fintech and DeFi space 

• Access to our CEO & Founder focused ‘Building Company Playbook’ series, offering insider tips and advice on constructing successful fintech ventures.

Upgrade to Premium

• Read our Disclaimer here — this newsletter does not provide investment advice and represents solely the views and opinions of FINTECH BLUEPRINT LTD.

• Contributors: Lex, Laurence, Matt, Farhad, Daniel, Daniella, Michiel

  Leave a comment

https://lex.substack.com/p/defi-uniswap-v4-and-its-new-hooks

Gm Fintech Futurists —

Today we highlight the following:

1. DEFI AND DIGITAL ASSETS: Uniswap Update & “Endless” Possibilities (link here)

2. PROTOCOLS: Blockchain-Based, AI Compute Protocol Gensyn Closes $43MM Series A Funding Round Led By a16z (link here)

3. CURATED UPDATES

To support this writing and access our full archive of newsletters, analyses, and guides to building in the Fintech & DeFi industries, subscribe below.

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DeFi Short Takes

DEFI & DIGITAL ASSETS: Uniswap Update & “Endless” Possibilities (link here)

Uniswap is growing its capabilities with the launch of V4, the fourth major release of the world’s leading decentralised exchange (DEX). Uniswap accounts for approximately 48% of all DEX trading volume and has $3.9B in total value locked (TVL), or 9% of the total TVL ($43B) across all DeFi. This release builds on previous Uniswap releases dating back to its original launch in November 2018. V2 was released in May 2020 just in time to power the “DeFi Summer” wave, and V3 followed in March 2021 with much more sophisticated trading and market making tools. 

With V4, Uniswap is focused on increased efficiency and customisability. There is a new type of smart contract, known as “hooks”, that allow developers to build their own features onto existing liquidity pools. An example is the creation of time-weighted average market makers, which allow for buy orders to be spread out over time, in effect providing automated daily cost averaging.

V4 also reduces gas transaction costs — Uniswap claims up to 99% cost savings — using “singleton” contracts and flash accounting, whereby all pools live within a single contract and are thus materially more efficient. Lastly, V4 introduces dynamic fee tiers, allowing pool creators to set fees at more competitive rates, drawing on the cost savings from the “singleton” architecture. 

With Uniswap V4, developers can leverage the network effects and security of the Uniswap platform, and build on its new customisation capabilities, allowing developers to avoid building a custom automated market maker from the ground up. V4 opens the doors for AMM innovation across the community, acting as a testbed with significantly lower development requirements. 

From a competitive standpoint, the launch of V4 comes after Uniswap V3 became open source in April and its Business Source License expired. Now anyone can freely copy the V3 protocol, commonly referred to as forking. V4 will not be forkable for some time, defending Uniswap’s position on the market. Notably, this caital markets engine rivals Coinbase in trading volume, showing the capacity of DeFi to match more traditional solutions.

👑 Related Coverage 👑

PROTOCOLS: Blockchain-Based, AI Compute Protocol Gensyn Closes $43MM Series A Funding Round Led By a16z (link here)

Gensyn, a proof-of-stake Machine Learning Compute Protocol, has raised $43MM in a Series A funding round led by a16z. The protocol enables users to provide their compute resources for developers creating AI tools. Data centers, desktops and laptops, and eventually smartphones will be able to contribute resources, allowing users to monetize idle compute power. Gensyn projects an 80% reduction in costs via its network, competing against the mounting costs of the likes of AWS and Google, as well as other machine learning infrastructure projects like TesnorFlow and PyTorch — important since GPU costs are one of the main barriers to AI scale.

The solution targets a key problem associated with utilizing unused compute power by verifying that the computational task has been executed properly by using a token-based cryptographic verification network model.  While the approach is not yet public, we assume it follows principles from the original Gensyn litepaper.

The method comprises four participants: submitters, solvers, verifiers, and whistleblowers. Submitters initiate tasks and solvers execute AI model training. Once a Solver finishes a task, they record its completion on the blockchain and publicly share their “proof of learning”. Verifiers then retrieve verification tasks from a shared task pool, akin to the Ethereum mempool, and execute computational tasks to re-run specific proof segments and compute distances. Whistleblowers then use the output to validate the consistency between the verification and the proof in return for a reward.

The native token will be used in a staking and slashing mechanism, with actors staking tokens to participate under the threat of slashing their stake for malicious behaviour.

The fundraise comes just a month after Nvidia reached a $1 trillion valuation, spurred in part by its chips being an integral component of AI system GPUs. Unlike its other embattled tech peers, Nvidia trades on 35x revenue — we are in an AI hype cycle and compute resources are increasingly in demand. For context, ChatGPT generated 1.8B visitors in April and other competitors like Google’s Bard or Bing AI have been gaining traction. As AI models become commonplace and grow in complexity, so will their computational demands. Companies like Gensyn, which try to use Web3 mechanism design to support AI growth, are of particular interest to us.

👑Related Coverage👑

Curated Updates

Here are the rest of the updates hitting our radar.

Financial Institutions and Adoption 

​​⭐ Swift To Explore Cross-Chain Transfers With Major Banks – The Defiant

⭐ New Worldwide Tax Standard Includes Cryptocurrencies And CBDCs – Decrypt 

Robinhood Moves To Cut Support For Cardano, Polygon And Solana – Decrypt 

Vitalik And CryptoRelief Mobilize $100MM To Combat Future Pandemics – The Defiant

Crypto.com Suspends US Institutional Exchange Service – Cointelegraph

House Republicans Try To Oust Gensler With New Bill – Blockworks

DeFi and Digital Assets

​​⭐ MetaMask Institutional To Integrate With Fireblocks MPC Platform – Cointelegraph 

Polemos Launches Platform For Collateral-Free Digital Asset Rental – Blockworks 

Arbitrum Onboards Norway’s Digital Krone – The Defiant

Blockchain Protocols

Figment Capital Wants To Bring Distributed Validator Technology To Sequencers – Blockworks

Bitcoin Payments Firm Strike Moves Custody In-House After Ditching Third-Party Services – CoinDesk 

NFTs, DAOs and the Metaverse

​​⭐ Kraken NFT Marketplace Launches With Support For Ethereum, Solana And Polygon Collections – CoinDesk

Ether.fi Launches NFTs Backed By Staked ETH – The Defiant

HyperPlay Raises $12MM In Series A Funding Round – Cointelegraph

Shape your Future

Wondering what’s shaping the future of Fintech, Digital Wealth and Web3? 

At the Fintech Blueprint, we go down the rabbit hole to help you innovate and compete in Fintech. 

Sign up to the Premium Fintech Blueprint newsletter and get access to:

• Monday Fintech Short Takes, with weekly coverage of the latest fintech, digital investing, banking, and payments news via expert curation and in-depth analysis  

• Wednesday Long Takes on Fintech and Web3 topics with a deep, comprehensive, and insightful analysis without shilling or marketing narratives

• Thursday DeFi Short Takes, weekly analysis of developments in the crypto space, including digital assets, DAOs, NFTs, and institutional adoption 

• Access to the Podcasts with industry leaders on building leading companies in Fintech and DeFi along with value-added data-driven, annotated transcripts

• Full library of the weekly in-depth write-ups on 15+ topics and 50+ Fintech and DeFi brands, offering deep, comprehensive, and insightful analysis without shilling or marketing narratives

• Exclusive Deep Dive reports into Fintech business models and brands that transform the Fintech and DeFi space 

• Access to our CEO & Founder focused ‘Building Company Playbook’ series, offering insider tips and advice on constructing successful fintech ventures.

Upgrade to Premium

• Read our Disclaimer here — this newsletter does not provide investment advice and represents solely the views and opinions of FINTECH BLUEPRINT LTD.

• Contributors: Lex, Laurence, Matt, Farhad, Daniel, Daniella, Michiel

https://lex.substack.com/p/defi-wallet-as-a-service-provider

Gm Fintech Futurists —

Today we highlight the following:

1. BLOCKCHAIN PROTOCOLS: Solana Launches ChatGPT Plugin (link here)

2. DEFI AND DIGITAL ASSETS: Magic announces $52MM Strategic Funding Round led by PayPal Ventures (link here)

3. CURATED UPDATES

To support this writing and access our full archive of newsletters, analyses, and guides to building in the Fintech & DeFi industries, subscribe below.

Subscribe now

DeFi Short Takes

BLOCKCHAIN PROTOCOLS: Solana Launches ChatGPT Plugin (link here)

The Solana Foundation, the entity behind Layer-1 blockchain Solana, has integrated into conversational AI through a ChatGPT plugin. When GPT-4 was announced, we described how the large language model (LLM) could produce basic Solana smart contracts. And shortly after, Solana released its Solana Audits AI, an LLM that tries to detect smart contract vulnerabilities. While the ChatGPT plugin focuses more on the end-user, we like the direction of bringing emerging technologies together.

Solana has integrated ChatGPT into a Remote Procedure Call (RPC) node, which allows users to access blockchain data and execute transactions across various networks. Notably, RPCs enable features such as account information retrieval (e.g., balance, owned assets), transaction reading, access to the floor price of NFT collections, and token purchases, listings, and transfers.

The chain has been on the decline, with shrinking developer interest. Its monthly NFT sales volume reached its lowest point in 21 months at just under $43MM. To put this into perspective, Bitcoin’s Ordinals sales volume was nearly 5x that last month. 

While the integration may be a way to try and get new attention to the ecosystem, we still like it. Experiments like this mark the start of an extraordinary collision, where the gravitational forces of blockchain and AI intertwine, igniting a burst of innovation. Other companies, like Omni, have also been plugging in chatbot into DeFi functionality.

AI could help Web3 build more reliable and resilient smart contracts, generate better interfaces for NFT design and minting. In turn, Web3 offers to AI decentralized storage and computation, as well as an economic chassis for ownership, financial services, and digital property rights. These changes may take some time, but — you know — time is relative.

👑Related Coverage👑

DeFi and Digital Assets: Magic announces $52MM Strategic Funding Round led by PayPal Ventures (link here)

Magic, a non-custodial wallet-as-a-service provider (WaaS), has raised $52MM in a round led by PayPal Ventures and joined by Volt Capital, Cherubic, Synchrony, KX, and Northzone. Since launching in 2018, the Web3 player has raised over $80MM, acquiring enterprise customers like Macy’s, Deloitte, Mattel, and Immutable.

Magic’s value proposition is to help users interact with Web3, without any of the frictions of non-custodial wallets. Typically, non-custodial wallets require their owners to safeguard a seed recovery phrase, as well as a fair amount of technical expertise.

Instead, a vendor can use Magic’s SDK to spin up addresses on behalf of users. This allows wallets to be created instantly using emails, SMS, social accounts, or federated logins, with the wallet acting as an extension of the enterprise company’s (e.g., Starbucks or Apple) standard login interfaces. These firms can then offer Web3 propositions like NFTs / tokens for ticketing, memberships, collectibles, and customer loyalty programs without requiring their users to go through a Web3 onboarding process.

This works. Magic has created over 20MM unique wallets, with over 130,000 developers using its SDK. It can support the production of over 2,000 wallets per second, as compared to 80-100 by its competitors. This scalability is an important selling point for major brands looking to provide Web3-based perks to their customers during product promotions or seasons where surges in adoption may occur.

This is a new commercial market segment, and therefore does not pose a competitive threat to leading non-custodial wallets like MetaMask. Unlike MetaMask and other general-purpose wallets, Magic’s wallets are not meant to act as a single interface for managing all your digital assets. Instead, they are brand-specific, much like a retailer’s iPhone or Android app, and designed to simplify interactions with company-specific Web3 features. Magic wallets are important because they open Web3 accessibility, removing the technical barriers too often associated with the space, and can be a significant unlock for growth.

  👑Related Coverage👑

Curated Updates

Here are the rest of the updates hitting our radar.

Financial Institutions and Adoption 

⭐ Proposed 30% Crypto Mining Tax Dropped In US Debt Ceiling Deal – Blockworks

Fahrenheit Wins Bid For Bankrupt Celsius, Will Acquire Up To $500MM In Liquid Crypto – Blockworks

Digital Currency Group Pulls The Plug On its Institutional Trading Platform – Blockworks

Cronos Labs Launches Second Cohort Of $100MM Web3 Accelerator – Cointelegraph 

DeFi and Digital Assets

⭐ Etonec And Mina Foundation To Create ZK-Powered Compliance Tool By Year’s End – CoinDesk

Crypto Lender Compound Deploys On Ethereum Layer-2 Arbitrum – Decrypt 

Crypto Storage Firm Qredo’s Revamped Self-Custody Wallet Goes Live – CoinDesk

Tornado Cash Governance Control Set To Be Restored As Voters Approve Proposal – Cointelegraph 

Stargate Community Proposes Removal Of Fantom USDC Pool To Mitigate Risks – Cointelegraph 

Blockchain Protocols

⭐ BNB Chain Expected To Undergo ‘Luban’ Upgrade in June. Here’s all You Need to Know – CoinDesk 

Panic Over $1.5B DeFi Bridge Multichain Shifts To Fantom – Decrypt 

NFTs, DAOs and the Metaverse

⭐ BNB NFT Marketplace Tabi Raises $10MM In Angel Funding – Cointelegraph 

MakerDAO Mulls Proposal To Boost DAI Savings Rate – The Defiant   

F1 Ticket Provider Platinum Group Introduces NFT Tickets for Global Racing Event – CoinDesk 

Core DAO Is Using Bitcoin To Solve the Blockchain Trilemma – Blockworks

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https://lex.substack.com/p/defi-ripples-250mm-institutional

Gm Fintech Futurists —

Quick note on format before we get into it. We have combined the Blueprint Short Takes and the Digital Wealth editions to create an issue focused on digital investing, banking, and payments sent out on Mondays.

This Thursday edition is our dedicated email focused on DeFi, digital assets, and blockchain protocols. We hope this change helps you make the most of the Blueprint, and as always we welcome any feedback.

Today we highlight the following:

1. DIGITAL ASSETS: Ripple Acquires Crypto Custody Firm Metaco For $250MM In Tokenization Push

2. WEB3: StepN Becomes First Blockchain Gaming App To Integrate Apple Pay & Axie Infinity Rolls Out ‘Lite’ Version of Crypto Game on Apple App Store

3. CURATED NEWS

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Digital Assets & DeFi Short Takes

DIGITAL ASSETS: Ripple Acquires Custody Firm Metaco For $250MM In Tokenization Push & Rolls Out CBDC Platform for Governments, Financial Institutions (link here and here)

Ripple Labs, the parent firm of the Ripple protocol and maintainer of the XRP ledger, has acquired digital asset custody company Metaco for $250MM. Metaco had previously secured $17MM during its Series A in 2020. Competitor Anchorage Digital raised a similar amount in its own Series A one year prior, but was valued at $3B at the height of the crypto markets in 2021. The acquisition price suggests pressure both on valuations and ability to go-to-market. 

Metaco’s platform integrates custody, trading, and tokenization. The product uses multi-layered security architecture for its custody services and has multiple vault types — (1) cold vaults are used for long-term asset storage and manual processes, while (2) hot vaults facilitate rapid transactions. It also offers direct order execution and smart order routing. Unlike other custodians, the company has a tokenization service, supporting users that may want to convert liquid or illiquid assets (e.g., art or real estate) into digital tokens. 

Given Ripple’s institutional business model, the company has worked with Santander, Bank of America, and PNC to leverage the XRP currency and the XRP Ledger. Ripple is also trying to cater to institutions and governments seeking to manage and customize CBDCs and stablecoins through its CBDC platform. Whether or not this strategy worked is another story. Similarly, Metaco has partnered with Citi, DZ Bank, DekaBank, and BNP Paribas, among others, targeting their services at large financial institutions.

Metaco is competing with a variety of others, like Taurus, which raised $65MM in February. While tokenization services are a core value proposition from both firms, demand for security tokens has not reached the mainstream levels seen in public onchain assets like NFTs or protocol tokens. Perhaps this can change as meaningful assets classes — i.e., Treasuries — are brought onchain by dedicated protocols.

We also note the ongoing lawsuit between Ripple and the SEC as it relates to categorizing XRP as a security. Leaning into the ability to support securitized assets via a custodian could have multiple underlying reasons.

👑 Related Coverage👑

WEB3: StepN Becomes First Blockchain Gaming App To Integrate Apple Pay & Axie Infinity Rolls Out ‘Lite’ Version of Crypto Game on Apple App Store (link here and here)

This week, the Apple app store introduced two of the biggest Web3 play-to-earn games — Axie Infinity and STEPN.

Axie Infinity is a Pokemon-like game featuring creatures called Axies, represented by NFTs. Users earn tokens by breeding and selling Axies through staking and investing in digital land. On the other hand, STEPN rewards users with tokens for walking and running in the real world, while owning specialized NFTs that represent sneakers. Both games have been massively popular in the NFT gaming space.

However, both projects have faced significant challenges due to unsustainable tokenomics and the market downturn, culminating in the crash of their in-game marketplaces. For instance, Axie Infinity’s monthly user count is down from 2.8MM in January 2022 to 380k this past month — a decline of about 85%.

Apple and Google’s app stores have historically been challenging venues for NFT acquisition and trading. Both charge a 30% fee for in-app purchases, including on NFTs, leading to a prohibitive tax on users. Since NFTs are tradable assets by default, this significantly impacts transaction volume, and marketplaces like Magic Eden have disabled in-app purchases as a result.

STEPN and Axie have made different compromises to make their games work on mobile. STEPN allows users to purchase NFTs using an in-app currency known as Sparks — while this bypasses cryptocurrencies, prices are higher than those denominated in their native token with a 43% reported markup. Axie instead provides players with free non-NFT starter characters, moving away from the model of buying or renting NFTs to play. Perhaps NFTs will become available in the mobile game for users that own NFTs in the web version.

Despite the compromises, this still marks a significant milestone for NFTs adoption. It is the first time Apple has supported externally purchased NFTs to be used in applications from the app store. However, while a 30%+ markup may be acceptable for other mobile games, it is likely untenable for most NFTs with significant value. Additionally, the removal of native tokens from in-app purchases also hampers token utility, and is destructive to value capture — a price to pay for Apple’s 1.36B iPhone users worldwide. 

Big tech companies continue to be a potentially large barrier to digital asset adoption, exercising their monopoly power to protect financial interest that preclude disintermediation by Web3 commerce.

👑 Related Coverage👑

Curated Updates

Here are the rest of the updates hitting our radar.

Financial Institutions and Adoption 

⭐ Congressman Emmer Introduces ‘Securities Clarity Act’ – The Defiant 

Bankrupt Crypto Broker Voyager Cleared To Repay $1.3B To Creditors – Decrypt 

Borderless Capital Leads Wormhole-Powered $50MM Cross-Chain Fund – CoinDesk 

BNY Mellon Commits to Long-Term Digital Asset Initiatives – Blockworks

DeFi and Digital Assets

⭐ ZK Startup Lagrange Labs Raises $4MM to Build Secure DeFi Interoperability – CoinDesk

Coinbase Finally Launches Subscription Service Overseas, Focuses on Staking – Decrypt 

DeFi Exchange Uniswap To Launch On Polkadot Via Moonbeam Parachain – Decrypt

Climate Finance Firm Solid World Opens Forward Carbon Liquidity Pools With Polygon – CoinDesk 

Curve’s New USD Stablecoin Is Almost Ready for Users – Blockworks

​​Lido Enables Staked ETH Withdrawals With V2 Rollout – The Defiant

Crypto Custodian Anchorage Enables Institutional Clients To Participate In DeFi Governance – The Defiant 

Blockchain Protocols

⭐ Multicoin Leads $2.3MM FastLane VC Deal, Continuing Its Bet on MEV Infrastructure –  CoinDesk

Ledger Expands Cosmos Integration, Aims At Adding 20 New Projects – Decrypt

Crypto Wallet Provider Ledger Delays Key-Recovery Service After Uproar – CoinDesk 

Visa Taps Ethereum’s Goerli Testnet To Experiment With Account Abstraction – The Block

NFTs, DAOs and the Metaverse

⭐ MakerDAO Founder Proposes Dedicated Blockchain And New DAI and MKR Tokens – The Defiant

Crypto Perpetuals Exchange dYdX Considering The Launch Of More SubDAOs – CoinDesk 

Transforming Dust Into Prizes: LooksRare’s NFT Raffle Hits The Market – Blockworks

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• Read our Disclaimer here — this newsletter does not provide investment advice and represents solely the views and opinions of Fintech Blueprint.

• Contributors: Lex, Laurence, Matt, Farhad, Daniel, Daniella

• Want to discuss? Stop by our Discord and reach out here anytime.

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https://lex.substack.com/p/digital-wealth-retirement-platform

Hi Fintech Futurists —

Happy Thursday!

Today we highlight the following —

1. NORTH AMERICA: Goldman Custody Business Gains Steam With $1B Add From Prime Capital

2. EMEA: Smart Raises $95MM In Series E Funding

3. GEOGRAPHIC NEWS CURATION

An update on format — we are working to consolidate our coverage of the digital investing industry with other innovations in global financial services. To that end, we are likely to integrate the digital wealth takes with coverage of digital banking, lending, and payments to create a holistic view of how automation is transforming the sector. You will see an updated Short Takes that incorporates this approach.

Everything crypto and Web3 will be separated into a dedicated email, so for those of you focused fully on digital transformation but not digital assets, you should still be able to focus on your topic of interest.

As always, leave a comment below with a company of your interest and we’ll do a deeper take on it later!

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⭐🇺🇸 Goldman Custody Business Gains Steam With $1B Add From Prime Capital – InvestmentNews, May 17, New York

Goldman’s restructuring last year pointed to the rising importance of the Wealth and Asset management business over things like neobanks and lending. Custody for independents RIAs and money management shops, offered by Goldman Sachs Advisor Solutions, is in line with that direction.

This is a larger offensive chess move for recurring revenue in a volatile market, competing with companies like Schwab, Fidelity, TD Ameritrade, and Pershing. According to a 2020 report, these 4 custodians own ~80% of the RIA market.

A key step was an acquisition of Folio Investing in 2020, an online custodian with $11B in AUM. Now, we see Prime Capital choosing to bring in another $1B. The deal gives Goldman access to Prime Capital’s $20B in AUM, but also signals that the firm is making a concerted effort to reach the RIA market. Of course Goldman also has $220B in AUM across its own advisors, as well as manufacturing a variety of proprietary funds.

It may appear that Goldman had somewhat of an identity crisis, first leaning into being a tech firm, and now emphasizing the wealth business. Rather, we think that the firm has done a good job of picking strategic direction, and then clarifying its path once more information became available with a nimbleness rarely available to large Wall Street banks. Only time will tell whether this effort becomes another Marcus, or builds to the company’s existing strengths. In all cases, we like seeing increased competition for RIA assets as independents have gotten bought out.

⭐🇬🇧 Smart Raises $95MM In Series E Funding – Businesswire, May 15, London

UK-based retirement tech platform Smart announced a round of $95MM to power its global expansion, bringing the company’s total funds raised to ~$400MM. The investment was led by Aquiline Capital Partners LLC with participation from Chrysalis Investments, Fidelity International Strategic Ventures, DWS, Barclays and Natixis Investment Managers.

Despite the contraction in fintech multiples, it is encouraging to see checks of this size in digital investing, as evidenced by our recent coverage of Altruist’s latest $112MM raise. Even during a difficult fundraising environment, investor activity remains active and resilient.

Smart is currently used by 70,000+ employers and has served over 1 million people in retirement planning through their enterprise cloud pension platform, Keystone, which claims to have $5B in AUM — a 2,000%+ increase since 2018. Much of this success can be attributed to UK pension reform, requiring employers to auto-enroll employees into workplace pensions. UK rules dictate that there must be an annual minimum contribution of 8% of qualified earnings between employers and employees.

If you’ve had multiple jobs, it could be hard to keep track of all the different pension providers, which is where Smart’s platform comes into play. In addition to being a provider for employers to meet auto-enrollment mandates, Keystone serves as a digital pension aggregator. Pensions can be a conservative industry, yet the total addressable market is $57T. Big data, analytics, and artificial intelligence will continue to push this space forward as it transitions to cloud-native, live data sets and away from legacy systems. We like that Smart combines digital interfaces with payroll integration, and expect that to be a strong competitive position.

Curated News

North America News

⭐🇺🇸 YCharts And Orion Release Integration Enhancement – Businesswire, May 16, Illinois

🇺🇸 Wealthtech Yield App Partners With Volt To Boost Crypto – Private Banker International, May 17, California

🇺🇸 TIFIN Wealth To Support The Growth Of Smaller Financial Advisors By Offering Its Personalized Investment Platform To NAPFA-Aligned Advisors At No Cost – PR Newswire, May 11, New York

🇺🇸 Wealthtech Groundfloor Is Recognized Again As One Of Atlanta’s Fastest Growing Private Companies – PR Newswire, May 11, Georgia

EMEA News

🇬🇧 GBST Extends Strategic Partnership With Novia Global – Fintech Global, May 16, London

🇬🇧 London Real Ventures Invests In Swissborg, A Pioneering Wealth Management Platform Utilizing Blockchain Technology – Cryptoslate, May 5, London

🇬🇧 Investment Platform Joins Forces With Wealth Tech Firm – International Adviser, May 16, London

🇳🇬 4 Wealthtech Platforms Shaping The Financial Ecosystem In Nigeria – IBS Intelligence, May 17, Lagos

Asia Pacific News

⭐🇭🇰 Moomoo Expands Into Malaysia Following Success In Singapore – Hubbis, May 18, Hong Kong

🇵🇭 BPI Wealth Cuts Minimum Investment For Its UITFs – Business World, May 17, Makati

Blogs, Webinars, Podcasts

🇺🇸 Amid Shifting Market Dynamics, How Can Wealth Managers Create Value? – Tearsheet, May 17, New York

🇬🇧 European Wealth Management: Tech Race Is Driving Competition – Private Banker International, May 15, London

🇺🇸 Crypto ETFs Are Year’s Best Performers But Only Lure $12MM – Wealthmanagement.Com, May 15, New York

🇺🇸 The Arrival Of AI And ChatGPT In Wealth Management – Medium, May 17, California

🇺🇸 Crystal Capital Partners’ Spring Survey Indicates Investment Caliber ‘Key’ for Financial Advisors – PR Newswire, May 11, Florida

Events & Reports

🇺🇸 Broadridge – U.S. Investor Study – Broadridge Financial Solutions, May 15, New York

🇺🇸 Broadridge Finds Increased ‘Democratization’ In Discretionary Investing – PlanAdviser

🇺🇸 Wealth Management Edge – Informa Connect, May 21 – 24, Florida

🇺🇸 Finovate Spring – Informa Connect, May 23 – 25, California

🇬🇧 Innovation In Wealth Management – Professional Wealth Management, June 8, London

🇬🇧Private Banking & Wealth Management London Conference & Awards 2023 – Arena International, June 14, London

Shape your Future

Wondering what’s shaping the future of wealthtech, Fintech, and DeFi? 

At the Fintech Blueprint, we go down the rabbit hole in the DeFi and Fintech industries to help you make better investment decisions, innovate, and compete in the industry. Subscribe now to level up your knowledge and get access to our weekly Long Takes!

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• Read our Disclaimer here — this newsletter does not provide investment advice and represents solely the views and opinions of FINTECH BLUEPRINT LTD.

• Contributors: Lex, Laurence, Matt, Farhad, Daniel, Daniella

• Want to discuss? Stop by our Discord and or reach out here anytime. Leave a comment below on what you think and what we should cover next.

  Leave a comment

https://lex.substack.com/p/web3-worldcoins-100mm-raise-as-it

Gm Fintech Futurists —

Welcome to our Web3 newsletter, covering DeFi, digital assets, NFTs, and the emergence of the financial metaverse. Today we highlight the following:

1. FINTECH & INSTITUTIONAL: Worldcoin, Co-founded By Sam Altman, Is Betting The Next Big Thing Jn AI Is Proving You Are Human

2. CURATED NEWS

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Web3 Short Takes

Worldcoin, Co-founded By Sam Altman, Is Betting The Next Big Thing In AI Is Proving You Are Human – TechCrunch

Sam Altman, the CEO of OpenAI, is poised to raise $100MM for Worldcoin, a platform that offers crypto assets in exchange for a scan of a user’s eyeballs. The company had previously raised $125.5MM from a16z, Tiger Global, Variant, Khosla Ventures and Coinbase. The company claims a three-part mission — (1) World ID, a decentralised proof of personhood protocol; (2) a global currency; and (3) a currency exchange. And we see some real adoption — 1.7MM people have already taken the plunge.

Worldcoin has created its own hardware — an orb with an optical system for iris scanning. See here for the technical details.

Once you download the World App and have your iris scanned, that scan is added to a database of “verified humans”, and Worldcoin generates a cryptographic hash linked to your identity. Notably, the actual scan is not stored, but the hash can be used in the future to verify one’s identity. Worldcoin also offers an SDK waitlist, which will help developers integrate its API into their platforms.

To facilitate transfers, Worldcoin generates a zero-knowledge proof, a method that verifies the validity of a statement without revealing the statement itself. While alternative identity verification applications like Yoti, which raised £10MM recently, require submitting an ID and a real-life photo, Worldcoin asserts that the iris scan is the optimal way to solve sybil resistance.

Worldcoin brings together a collection of popular high-tech ideas, involving the use of zero-knowledge proofs for transaction verification, providing complimentary cryptocurrency to users upon sign-up, like Binance’s $10 sign-up bonus or DeFi yield-farming, and using alternative methods for identity verification with soulbound NFT characteristics.

All these standalone concepts are quite reasonable, but their combination invokes a sense of unease akin to the dystopian visions portrayed in literature. Like an uncanny valley device. Consider Philip K. Dick’s “Do Androids Dream of Electric Sheep?”, the book on which Blade Runner is based, which describes a future society that grapples with the blurred lines between humanity and AI. Worldcoin is the real-life implementation of the Voight-Kampff test — a tool for distinguishing real humans from synthetic replicas.

Look, we agree that authenticity, provenance, and identity are absolutely needed to combat the digital hallucination wave brought on by generative AI — Altman’s other project. And Web3 protocols are uniquely suited to such self-custody. Biomarkers are a stronger identity answer than registration with a government, though many ethical and cultural barrier stand in the way of widespread use.

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Curated News

Financial Institutions and Adoption 

⭐ IRS Claiming $44B From FTX Bankruptcy – Cointelegraph

Binance Wants To Connect Crypto Funds With Institutional Capital – Blockworks

Blockworks Raises $12M At $135MM Valuation – Blockworks

China Launches National Blockchain Center To Train Half A Million Specialists – Cointelegraph

DeFi and Digital Assets

⭐ Maker To Spark ‘New Explosion of DAI’ With Custom Lending Market – Blockworks

Uniswap Weighs Proposal to Enrich Token Holders, Switch On Liquidity Pool Fees – CoinDesk

Memecoins Continue To Dominate DEX Volumes As Crypto Market Slides – The Defiant

Chronos DEX Attracts $230MM With Modified Ve(3,3) Tokenomics – The Defiant

Circle Backs USDC With Shorter US Treasurys, Worries US Government Will Default – Blockworks

Blockchain Protocols

⭐ Bitcoin’s ‘BRC-20’ Explosion Sends Users Scrambling For Options, Including Lightning – CoinDesk 

Neutron Becomes First Cosmos Chain to Launch On Replicated Security – Blockworks 

Ethereum Developers In ‘Final Stages Of Planning’ Next Major Upgrade – The Defiant

Bitcoin Developer Calls to Block Ordinals, BRC-20 Tokens From Network – Decrypt

NFTs, DAOs and the Metaverse

⭐ Artizen Fund Raises $2.2MM to Create NFT Cultural Artifacts – Decrypt

Alibaba Says ‘Open Sesame’ To Web3 – CoinDesk 

NFT Brand Pudgy Penguins Raises $9MM For IP Play – Blockworks

Aragon ‘Repurposes’ $177MM Treasury Into Grants Program – The Defiant

Elon Musk Sends Milady NFT Price Soaring With Twitter Meme – The Block

Postscript

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• Read our Disclaimer here — this newsletter does not provide investment advice and represents solely the views and opinions of FINTECH BLUEPRINT LTD.

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https://lex.substack.com/p/digital-wealth-orion-a-3t-wealthtech

Curated News

North America News

⭐🇺🇸 Orion Advisor Technology Goes Live with Industry’s First ChatGPT Integration – Businesswire, May 10, Nebraska

The Redtail Speak application started out as a way for advisors to compliantly message clients, and is now being extended through an integration with ChatGPT. We expect that all chat interfaces in customer service are about to level up their capability for empathy and creativity using machine intelligence. This is why our Long Take this week is this —

🇺🇸 Tema, Backed by Index, Accel and Zinal, Expands Access to Innovative Investment Themes Through Launch of Active ETF Platform – Businesswire, May 8, New York

🇺🇸 Talos Snaps Up D3X Systems To Widen Pre-trade Capabilities – Fintech Global, May 10, New York

🇺🇸 Wealthfront Raises Account Yield To 4.55% After Fed’s Rate Hike – Forbes, May 5, California

🇺🇸 BrickMark Group Announces Strategic Partnership With PreIPO.com To Expand Access To Tokenized Real Estate – Yahoo Finance, May 9, Florida

EMEA News

⭐🇨🇭 Temenos Adds New Advisory Features To Its Digital Wealth Solution – Fintech News, May 10, Geneva

Temenos is one of the world’s largest banking technology providers. While in the US, banking and investent management infrastructure is separate, in other parts of the world such software is part of the same package. We are interested in this joint model, and to see if Temenos can get to the same level of scale in digital wealth.

🇬🇧 Evooq and Titanbay Announce Private Markets Partnership for Private Banks and Wealth Managers – Yahoo Finance, May 10, London

🇧🇪 Accuro Goes Live With Objectway’s Investment Management Service Solution For Private Clients – Businesswire, May 11, Brussels

🇬🇧 Twenty7tec Releases New Digital Marketing Platform For Mortgage, Wealth And Protection Advisers – Finextra, May 10, Bournemouth

Asia Pacific News

⭐🇮🇳 Fintech Startup Fisdom Plans To Launch Portfolio Management Services – The Economic Times, May 9, Bengaluru

Blogs, Webinars, Podcasts

🇺🇸 Key Data Trends Driving Success For Wealthtech Startups – Venture Beat, May 8, California

🇬🇧 European Wealthtech Seed Deal Activity Drops 23% YoY In Q1 2023 – Fintech Global, May 10, London

🇺🇸 32% Of Home Offices Invest In Digital Assets: Goldman Sachs – Investing, May 9, New York

Events & Reports

⭐ 🇸🇬 Endowus Wealth Insights Report 2023 – Endowus, May 10, Singapore

Check out the report to understand the curent economic views across generations in Singapore and Hong Kong.

🇺🇸 Wealth Management Edge – Informa Connect, May 21 – 24, Florida

🇺🇸 Finovate Spring – Informa Connect, May 23 – 25, California

🇬🇧 Innovation In Wealth Management – Professional Wealth Management, June 8, London

🇬🇧Private Banking & Wealth Management London Conference & Awards 2023 – Arena International, June 14, London

Shape your Future

Wondering what’s shaping the future of wealthtech, Fintech, and DeFi? 

At the Fintech Blueprint, we go down the rabbit hole in the DeFi and Fintech industries to help you make better investment decisions, innovate, and compete in the industry. Subscribe now to level up your knowledge and get access to our weekly Long Takes!

Subscribe now

• Read our Disclaimer here — this newsletter does not provide investment advice and represents solely the views and opinions of FINTECH BLUEPRINT LTD.

• Contributors: Lex, Laurence, Matt, Farhad, Daniel, Daniella

• Want to discuss? Stop by our Discord and or reach out here anytime. Leave a comment below on what you think and what we should cover next.

Leave a comment

https://lex.substack.com/p/digital-wealth-ai-wealthtech-range

Hi Fintech Futurists —

Happy Thursday! Today we highlight the following —

1. NORTH AMERICA: Range Raises $12MM Series A Led By Gradient, Google’s AI Fund, To Revolutionize Wealth Management

2. APAC: GBST Acquires WealthConnect

3. GEOGRAPHIC NEWS CURATION

Based on your feedback, we know that many of you are interested in reviews of companies or projects highlighted by our community. Leave a comment below with a company of your interest and we’ll do a deeper take on it later!

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Let’s Meet!

As a member of the Fintech Blueprint community, you are invited to our first-ever, in-person gathering with free drinks and live entertainment!

Join me (Lex) and other Fintech Blueprint team members at the Edison Ballroom in NYC on May 11 at 5:30pm to celebrate our partnership with Fintech Nexus.

RSVP Here

⭐🇺🇸 Range Raises $12MM Series A Led By Gradient, Google’s AI Fund, To Revolutionize Wealth Management – PR Newswire, May 3, Virginia

Range has raised $12MM in a Series A funding round led by Google’s AI-focused venture fund Gradient, with participation from Expa, Red Sea Ventures, and 8-bit Capital. The fintech is an evolution of the roboadvisor genre, planning to use AI to make human financial planners obsolete. While earlier startups focused on deterministic rules in investment management or financial planning software, new wealthtechs can play the same game while targeting the human touch of the financial advisor using LLMs.

The company’s investment planning service comes with a team of expert financial planners who provide portfolio analysis and investment recommendations. While each customer is currently assigned a human advisor, the company is leveraging its advisor knowledge and customer data to train AI/ML models that will eventually augment and replace those human advisors.

The standard investment management service generates portfolios for the usual 0.25% annual fee. The company’s other offerings extend to tax, retirement, estate, insurance optimization, and education planning — an expensive set of feature for a single start-up to deliver. For context, the roboadvisor Wealthfront had secured $200MM+ in funding solely dedicated to investment management. Although complete AI model integration holds promise, achieving this will require far more scale and cost. We wonder what the MVP looks like.

Range is also competing against a wave of legacy and startup wealth management companies incorporating AI. One noteworthy example is Morgan Stanley, which made headlines in March when it announced that it would leverage GPT4 and feed its research data to provide AI-powered financial advice via its 16,000 advisors. Further, while favoring digital channels, younger customers still value human interactions for complex decisions. This preference has led to hybrid engagement models that blend AI-powered guidance with a human touch.

The question remains: will this preference persist if AI-powered advice becomes 2x or 3x, or even 5x cheaper? We think LLMs have the potential to match human empathy and experience, if not surpass it.

⭐🇦🇺 GBST Acquires WealthConnect – Finextra, May 2, Sydney

Sydney-based wealthtech GBST is acquiring wealth CRM platform WealthConnect, based on Salesforce, for an undisclosed amount. Previously, WealthConnect served as the flagship product of the now-defunct fintech CreativeMass, so we wonder if this is a distressed tech acquisition. It’s been a tough year for tech companies, and the troubled state of the financial markets has been unforgiving. Compressed valuations have reduced risk appetite, and this is further amplified among young fintechs.

The acquisition comes shortly after GBST’s March announcement of a complete rebrand that included updates to its existing cloud-native SaaS wealth administration platform, Composer. For context, as of Feb 2022, the Composer platform had £180B in AUM with 3MM+ active accounts.

GBST’s current tech stack provides clients with a suite of services designed to streamline the administration of wealth products from the distribution channel through to the back office with its tools Composer and Catalyst. Other digital tools like Equate allow advisors to leverage GBST’s built-in models/calculators that can be white-labeled on their own sites to create “what-if” scenarios for a more personalized customer experience and enable better lead generation. WealthConnect’s CRM platform is built on Salesforce, which is particularly suited to large enterprise clients.

Though we’ve begun to see a consolidation of providers, the battle to differentiate between platform tech providers and advice tech (like CRMs) has not changed much. It’s a competitive and fragmented market, leading to a frustrating experience for both the advisors and the customer. Additionally, the pool of quality advice tech platforms ready to be acquired is still relatively shallow, which we think is a function of wealth management market structure.

Curated News

North America News

🇺🇸 Deal Box Announces Integration With Fireblocks To Increase Security And Reliability For Digital Asset Management – PR Newswire, May 3, California

🇺🇸 Bunker Taps InvestCloud To Launch Digital Investment Platform In LatAm – Fintech Futures, April 28, California

🇺🇸 Envestnet Introduces Product Updates, New Partnerships At Annual Conference – Investment News, April 28, Pennsylvania

🇺🇸 Technology Problems at Envestnet Frustrate Advisors – WealthManagement, May 1, New York

EMEA News

🇬🇧 Wealth Intelligence Platform 1fs Wealth Secures Backing – Fintech Global, May 2, London

🇳🇴 Huddlestock Signs First Family Office To Use The Portfolio Management Platform – Huddlestock Fintech AS, May 3, Stavanger

🇦🇪 Property Tech Platform Stake Offers Golden Visas To Investors – Zawya, May 2, Dubai

🇦🇪 MEA-Focused Pyypl Rolls Out Micro-Investment Platform – Zawya, May 3, Abu Dhabi

🇦🇪 xCube Launches Retail Trading Platform In The UAE – Finextra, May 2, Dubai

Asia Pacific News

🇯🇵 Webull Expands To Japan – PR Newswire, April 27, Tokyo

🇮🇳 CoinSwitch To Diversify Into Wealthtech Platform In FY24 – Financial Express, April 28, Bengaluru

Blogs, Webinars, Podcasts

🇬🇧 Oxford Risk Predicts M&A Rise In UK Wealth Industry – 

Wealth Briefing, May 3, London

🇭🇰 Syfe’s Founder & CEO On Elevating & Scaling The Digital Investment Platform And Offering – Hubbis, May 4, Hong Kong

🇨🇭 The Rise Of The Retail Investor Continues – Here’s How The Financial System Can Accommodate Them – World Economic Forum, May 2, Cologny

Events & Reports

🇺🇸 Fintech Nexus USA – Fintech Nexus, May 10 – 11, New York

🇺🇸 Wealth Management Edge – Informa Connect, May 21 – 24, Florida

🇺🇸 Finovate Spring – Informa Connect, May 23 – 25, California

🇬🇧 Innovation In Wealth Management – Professional Wealth Management, June 8, London

🇬🇧Private Banking & Wealth Management London Conference & Awards 2023 – Arena International, June 14, London

Shape your Future

Wondering what’s shaping the future of wealthtech, Fintech, and DeFi? 

At the Fintech Blueprint, we go down the rabbit hole in the DeFi and Fintech industries to help you make better investment decisions, innovate, and compete in the industry. Subscribe now to level up your knowledge and get access to our weekly Long Takes!

Subscribe now

• Read our Disclaimer here — this newsletter does not provide investment advice and represents solely the views and opinions of FINTECH BLUEPRINT LTD.

• Contributors: Lex, Laurence, Matt, Farhad, Daniel, Daniella

• Want to discuss? Stop by our Discord and or reach out here anytime. Leave a comment below on what you think and what we should cover next.

  Leave a comment

https://lex.substack.com/p/digital-wealth-900b-aum-dws-and-galaxy

Hi Fintech Futurists —

Happy Thursday! Today we highlight the following —

1. NORTH AMERICA: Galaxy Digital to Develop European-Listed ETPs With Asset Manager DWS

2. EMEA: A First-Of-Its-Kind Partnership Between Syfe And PIMCO To Offer Fixed Income Portfolios

3. GEOGRAPHIC NEWS CURATION

Based on your feedback, we know that many of you are interested in reviews of companies or projects highlighted by our community. Leave a comment below with a company of your interest and we’ll do a deeper take on it later!

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Digital Wealth Short Takes

⭐🇺🇸 Galaxy Digital to Develop European-Listed ETPs With Asset Manager DWS – CoinDesk, April 26, New York

Blockchain investment bank Galaxy Digital and German asset manager DWS, which has $900B+ in AUM, are working together to release several exchange-traded products (ETPs) on digital assets, which will be accessible via traditional brokerage accounts. 

For context, Galaxy’s asset management unit is split into Fund Management, which has $2.4B in AUM and offers crypto and blockchain exposure spanning passive and active strategies, and Galaxy Interactive, which focuses on gaming and metaverse venture investments. The Passive Funds include Bitcoin, Ethereum, and a Crypto Index strategy. The Galaxy Ethereum Funds, for example, invest directly in Ether and are priced based on the Bloomberg Galaxy Ethereum Index.  

The Galaxy Active funds, like the Liquid Alpha Fund, also focuses on blockchain and crypto. It requires a minimum investment of $1MM and has an investment process incorporating Macro, Fundamental, and Quantitative factors. For fundamental analysis, Galaxy looks at protocols, tokenomics, and their “relative value.” Quantitative models use statistical analysis, and potentially machine learning (deep learning, neural networks), to execute asset selection. However, many traditional statistical methods apply poorly to the crypto markets given short data histories and unrealistic assumptions.

Active investment strategies in crypto can capture market inefficiencies in spot, derivative, and DeFi markets. The Efficient Market Hypothesis has not yet sunk its economic truths into the space, given that memetic and sentiment-driven models tend to be more profitable. Galaxy points to more fundamental progress —

“As crypto markets mature, sub-sectors and tangible use-cases will continue emerging. When paired with lower intra-asset correlations, we now have a ripe environment for more thesis-driven, fundamental, or complex trading and investment strategies to drive alpha.”

Unfortunately, intra-asset correlations have only increased since 2022 given the macro-environment.

That said, this story is about distribution. Putting crypto products in traditional ETP wrappers will grow investment flows. With the relative collapse of DCG and the political obstructionism of the SEC, there is a gap for traditionally accessible product. Even though it is inefficient, it is perhaps necessary.

⭐🇸🇬 A First-Of-Its-Kind Partnership Between Syfe And PIMCO To Offer Fixed Income Portfolios – PR Newswire, April 26, Singapore

Singapore-based digital wealth manager Syfe has a suite of regulated investment products, which includes trading and wealth management, and over 100,000 customers. The company has raised $50MM+ to date (the latest round in 2021) and has been aggressive with its geographic expansion. It is also now offering fixed-income products through a partnership with PIMCO. The new offering, Syfe Income+, will allow investors to select between two income allocation strategies, Income+ Preserve and Income+ Enhance, with expected yields of of 4% to 6%.

The backdrop of a high-rate environment and global macro uncertainties has created favorable conditions for fixed-income products, so Syfe’s timing makes sense — all roboadvisors, neobanks, and payments apps are rushing to offer nominal interest rate returns. The appetite for yield among investors remains high, with a risk-free rate of ~5% achieved through US short-term treasuries.

Singapore is an attractive place for foreign investment, with a wealth management sector full of tech-savvy consumers embracing digital investing solutions. The common thread that underpins the digital wealth space is a customer-centric interface, digital distribution channels, the flexibility to personalize the customer investing journey, and a basket of products at a fraction of the cost of traditional institutions with easy access to liquidity. Competitors include Endowus, StashAway, Bambu, and Kristal.AI, all doing something similar.

A recent EY survey revealed that among wealth management clients in Singapore, ~70% want to move money to another provider. While Singaporean interest in investing remains strong, 56% require more support and education to direct their investment decisions, citing that current platforms do not provide enough insights and quality content. Robots will help.

Curated News

North America News

⭐ 🇺🇸 Franklin Templeton Money Market Fund Launches On Polygon Blockchain – Businesswire, April 26, California

🇺🇸 Farther Surpasses $675MM AUM As Digitally Native RIAs Gain Traction – Investment News, April 20, New York

🇺🇸 iCapital® Launches Structured Investments Through The Envestnet Platform – Businesswire, April 25, New York

🇨🇦 CapIntel Announces Strategic Partnership with SEI – Businesswire, April 25, Toronto

🇺🇸 Morningstar Wealth Introduces Portfolio Analytics Enrichment From ByAllAccounts – PR Newswire, April 26, Illinois

🇺🇸 First Rate Acquires Wealth Management Platform And Partners For Compliance – PR Newswire, April 26, Texas

🇺🇸 Wealthtech  Crossover Plotify Raises $12.5MM In Equity Financing – PR Newswire, April 20, New York

EMEA News

🇩🇪 Wealthtech LIQID Launches LIQID Income Strategy And LIQID Smart Start – The Paypers, April 21, Berlin

🇬🇧 Platform One Acquires FCA-Restricted SIPP Provider – Financial Times, April 26, London

🇬🇧 Regtech SteelEye Partners With Wealthtech Company Enfusion – Fintech Global, April 26, London

🇳🇴 Infront Doubles Down On WealthTech – Finextra, April 20, Oslo

Asia Pacific News

🇸🇬 StashAway Launches The First Cash Management Portfolio With Guaranteed Returns – Hubbis, April 25, Singapore

🇭🇰 Endowus Launches Hong Kong Digital Wealth Services – Finews Asia, April 26, Hong Kong

Blogs, Webinars, Podcasts

🇭🇰 Asia-Pacific Investors More Likely To Switch Wealth Managers, EY Survey Finds – Financial Times, April 24, Hong Kong

🇬🇧 Europe’s Digital Investment Platforms Raise ETF Demand – Financial Times, April 24, London

🇭🇰 The Rise of Digital Wealth Management in the Growth Markets of ASEAN – Hubbis, April 24, Hong Kong

Events & Reports

⭐ 🇬🇧 2023 Global Wealth Research Report – Ernst & Young, April 24, London

⭐ 🇺🇸 Fintech Nexus USA – Fintech Nexus, May 10 – 11, New York

🇺🇸 Wealth Management Edge – Informa Connect, May 21 – 24, Florida

🇺🇸 Finovate Spring – Informa Connect, May 23 – 25, California

🇬🇧 Innovation In Wealth Management – Professional Wealth Management, June 8, London

🇬🇧Private Banking & Wealth Management London Conference & Awards 2023 – Arena International, June 14, London

Shape your Future

Wondering what’s shaping the future of wealthtech, Fintech, and DeFi? 

At the Fintech Blueprint, we go down the rabbit hole in the DeFi and Fintech industries to help you make better investment decisions, innovate, and compete in the industry. Subscribe now to level up your knowledge and get access to our weekly Long Takes!

Subscribe now

• Read our Disclaimer here — this newsletter does not provide investment advice and represents solely the views and opinions of FINTECH BLUEPRINT LTD.

• Contributors: Lex, Laurence, Matt, Farhad, Daniel, Daniella

• Want to discuss? Stop by our Discord and or reach out here anytime. Leave a comment below on what you think and what we should cover next.

  Leave a comment

https://lex.substack.com/p/digital-wealth-ria-custodian-altruist

Hi Fintech Futurists —

Happy Thursday! Today we highlight the following —

1. NORTH AMERICA: Altruist Raises $112MM Series D To Take On Schwab And Fidelity In $128T RIA Market

2. NORTH AMERICA: Tradier Raises $24.6MM Series B Funding To Drive Choice, Value & Better Service For Active Retail Traders

3. EMEA: Wealth Management Fintech FNZ, Virgin Money To Launch Investment Solution For UK Clients

4. GEOGRAPHIC NEWS CURATION

Based on your feedback, we know that many of you are interested in reviews of companies or projects highlighted by our community. Leave a comment below with a company of your interest and we’ll do a deeper take on it later!

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Digital Wealth Short Takes

⭐🇺🇸 Altruist Raises $112MM Series D To Take On Schwab And Fidelity In $128T RIA Market – Businesswire, April 12, California

Altruist, the RIA-focused custodian founded by Jason Wenk, has raised $112MMM in a Series D funding round led by Insight Partners, bringing the company’s total funding to $290MM+. Given where fintech is in the overall equities landscape, we find this raise particularly impressive, reflecting underlying performance. Together with recent news from Masttro, it appears that wealthtech is back in the favored cycle.

Altruist has taken a modern approach to integrating clearing, custody, and a full suite of advisory software into a single platform, intending to deliver a more affordable and streamlined digital experience for RIAs. The company places emphasis on its technology with a team of over 200 engineers, which has allowed it to reduce software application and TAMP expenses for RIAs by 90%.

By anchoring the offering in custody, the company may be able to avoid the pitfalls of previous wealthtechs that focused on being multi-custodial trading, performance, or digital investing interfaces, but capturing thin economics. For the latest example, see Vise.

While larger firms tend to gravitate towards established RIA custodians like Schwab and Fidelity, smaller players are left with fewer options. Of the 18,000 independent RIAs, most custody assets at Schwab, which holds $3.37 trillion in assets. Fidelity comes in second with $1.5 trillion, and Pershing trails with $350 billion. Schwab’s TD Ameritrade acquisition further fuels this concentration. Larger platforms focus on larger players, leaving smaller RIAs searching for alternatives.

Enter Altruist — a recent entrant digitizing the RIA custody space. By acquiring advisory services firm Shareholder Services Group, Altruist has created a 3,300+ RIA firm, now ranked third in the number of RIAs served, surpassing Pershing. Altruist is banking on its modern technology stack to retain these clients.

Older custodians often require RIAs and their clients to use their portals for account opening, trading, and changing portfolio allocation. Altruist, on the other hand, offers an open API structure and a developer portal. This is the modern way. With new features and functionality added every two weeks, Altruist clearly wants to become that go-to platform for smaller and midsize players. For more, check out our interview with Jason below:

Fintech Blueprint 🤖🏦🧭

Podcast Conversation: Altruist CEO Jason Wenk on WealthTech, financial planning, advice, and generally improving financial health

Listen now (46 min) | Hi Fintech Architects, Welcome back to our podcast series! For those that want to subscribe in your app of choice, you can now find us at Apple, Spotify, or on RSS. In this conversation, we chat with Jason Wenk, who is the Founder & CEO at Altruist. Apart from this Jason is a writer, self-proclaimed math geek, and investment systems developer. He began his career at Morgan Stanley in NYC at age 20, working on investment research and asset management systems development. After this Jason founded FormulaFolios: quantitative, computer-driven investment models based on academic research to help remove emotion from investing. FormulaFolios would later develop into a standalone asset manager and go on to rank as a fastest-growing private company by Inc. magazine 4 years in a row, reaching as high as #10 in 2017…

Listen now

2 years ago · 4 likes · Matt Low

⭐🇺🇸 Tradier Raises $24.6MM Series B Funding To Drive Choice, Value & Better Service For Active Retail Traders – PR Newswire, April 18, North Carolina

Tradier, the API-driven brokerage platform that processes over 1B API calls per month, has raised $25MM in a Series B funding round led by PEAK6 Strategic Capital, with participation from F-Prime Capital and KF Business Ventures. The past year has been a record year for Tradier, with traders who signed up for the platform’s subscription plans averaging an account size of $30,000 and executing an average of 150 trades per month.

Tradier’s primary offerings include APIs for trading, market data, and brokerage services, as well as its trading platform, TradeHawk. The package links a trader’s front-end system with Tradier’s integrated tools — of which there are over 100, like eSignal, Quantcha, and Exeria. For instance, integrating Quantcha provides an options book manager, an options search engine that leverages 40 different strategies, and a stock and options screener. TradeHawk, which costs $10/month, offers trading for options and stocks, as well as charting that overlays implied volatility (IVol) periods on daily underlying price action.

Embedded finance has been growing everywhere in fintech as we digitize processes and update the settlement of various assets, including those in the trading / brokerage industry. Numerous brokers now offer APIs, such as Alpaca, Pepperstone, and Interactive Brokers. Institutional customers benefit from the ability to pull in and manipulate data and functionality, rather being stuck in a user interface.

Our AI overlords will enjoy those APIs even more in the years to come.

⭐🇬🇧 Wealth Management Fintech FNZ, Virgin Money To Launch Investment Solution For UK Clients – Crowdfund Insider, April 17, London

Virgin Money, the UK-based bank with 6.6MM+ clients, is expanding its offerings beyond traditional retail banking with its new roboadvisor platform, Virgin Money Investments. In collaboration with asset manager Abrdn, the platform will allow customers to save through stocks and shares ISAs.

Fees for the platform total 0.75% per year, with an account charge of 0.30% and a 0.45% charge for investment management. The roboadvisor offers three growth options – cautious, balanced, and adventurous. The cautious option mainly consists of a 60-40 bond-equity split, while the adventurous option primarily consists of UK and overseas developed stocks, emerging market shares, and high-yield bonds. Interestingly, all three funds have been below the performance comparator for almost every year since 2018.

Virgin Money Investments also partnered with wealth management platform FNZ for back-end operations and investor administration capabilities. When it comes to partnerships, FNZ keeps popping up — Abrdn moved onto FNZ’s tech last year. The company has been inking deals like the one with Envestnet, and data integration is a super power in the world of finance. Of course, there are other players in the wealthtech game, like GBST (which FNZ sold to Anchorage in 2021), Bravura, Avaloq, and Orion, and newcomers like Seccl. That said, to meaningfully change market share requires either enormous capital outlay, or a technology platform shift.

Curated News

North America News

🇺🇸 Custom Indexing And Thematic Portfolio Construction Company ALLINDEX Selects BridgeFT’s WealthTech API As Its Primary Source For Data Aggregation – PR Newswire, April 18, Illinois

🇺🇸 Skience Unveils Blueprint Process To Help Wealth Management Firms Better Manage Digital Transformations – Businesswire, April 18, Virginia

🇺🇸 Onramp Invest Teams Up With CoinDesk Indices To Deliver Leading Crypto Indices – Businesswire, April 19, California

🇺🇸 Betterment Agrees To Pay $9MM To Settle U.S. SEC Charges – Businesswire, April 19, California

🇺🇸 L1 Advisors Launches World’s First Fully-On-Chain Crypto Wealth Management Platform To All Advisors – Accesswire, April 19, Texas

EMEA News

🇬🇧 Sharegain Announces Strategic Alliance With J.P. Morgan – PR Newswire, April 18, London

🇬🇧 Nickel DeFi Liquid Venture Fund Outperforms As Digital Assets Recover – Hedgeweek, April 19, London

Asia Pacific News

🇲🇾 Kapital DX Launches Malaysia’s First IEO Platform Regulated By The SC – Fintech News Malaysia, April 18, Kuala Lumpur

🇭🇰 Asia-Based Digital Asset Firm HashKey Group Introduces Wealth Management Service – CoinDesk, April 13, Hong Kong

🇸🇬 SC Ventures Invests In BetterTradeOff To Boost Digital Wealth Advisory Capabilities – Technode Global, April 13, Singapore

Blogs, Webinars, Podcasts

🇺🇸 Digital Advice Falling Short Of Potential Due To Lack Of Client Understanding, J.D. Power Finds – Businesswire, April 13, Michigan

🇬🇧 Overcoming Wealthtech Challenges Through Technology Transformation – Finextra, April 14, London

🇭🇰 The Wealth Management Industry And The Evolution Of Digital Assets & Tokenisation – Hubbis, April 19, Hong Kong

🇺🇸 ETFs Killed Off By Merciless Market At Double The Rate Of Last Year – Wealth Management, April 18, New York

🇨🇾 Wealthtech And The Rise Of Robo-Advisors: Opportunities And Risks For Investors – Finance Magnates, April 17, Limassol

Events & Reports

⭐🇺🇸 Envestnet Summit 2023 Elevate – Envestnet, April 26 – 27, Colorado

⭐🇺🇸 Fintech Nexus USA – Fintech Nexus, May 10 – 11, New York

🇺🇸 Wealth Management Edge – Informa Connect, May 21 – 24, Florida

🇺🇸 Finovate Spring – Informa Connect, May 23 – 25, California

🇬🇧 Innovation In Wealth Management – Professional Wealth Management, June 8, London

🇬🇧Private Banking & Wealth Management London Conference & Awards 2023 – Arena International, June 14, London

Shape your Future

Wondering what’s shaping the future of wealthtech, Fintech, and DeFi? 

At the Fintech Blueprint, we go down the rabbit hole in the DeFi and Fintech industries to help you make better investment decisions, innovate, and compete in the industry. Subscribe now to level up your knowledge and get access to our weekly Long Takes!

Subscribe now

• Read our Disclaimer here — this newsletter does not provide investment advice and represents solely the views and opinions of FINTECH BLUEPRINT LTD.

• Contributors: Lex, Laurence, Matt, Farhad, Daniel, Daniella

• Want to discuss? Stop by our Discord and or reach out here anytime. Leave a comment below on what you think and what we should cover next.

  Leave a comment