Fintech: Onfido to sell for $650MM to Entrust, an identity tech rollup

https://lex.substack.com/p/fintech-onfido-to-sell-for-650mm

Hi Fintech Futurists — 

Today’s agenda below.

  1. IDENTITY: Onfido’s AI-powered Digital ID solution nears a $650MM sale to Entrust 

  2. LONG TAKE: JPMorgan’s bank branch expansion mirrors Apple’s retail magic (link here)

  3. PODCAST CONVERSATION: The evolution of derivatives from structured products to decentralized perpetuals, with SynFutures CEO Rachel Lin (link here)

  4. CURATED UPDATES: Paytech, Neobanks, Lending, Digital Investing

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

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Digital Investment & Banking Short Takes

IDENTITY: Onfido’s AI-powered Digital ID solution nears a $650MM sale to Entrust 

British AI identity company Onfido is nearing a sale to Entrust in a deal worth up to $650MM. Onfido offers an AI-powered digital identity solution to help companies automate the onboarding of new customers, while adhering to KYC and AML compliance. This reduces costs by minimizing manual customer checks, increases the speed of approval for customers and, as a result, improves conversion rates.

The product works by using machine vision and a smartphone camera — just take a selfie and the software is able to cross-reference a person’s facial biometrics with their identity document to confirm their identity. As for results, Forrester increased conversion rates by 26% and Revolut increased customers onboarded by 12% since using Onfido. 

On the other side of the transaction is Entrust, a company providing certification and verification services for payment cards, website access, passwords and more. Having been around since 1969, when it was formerly known as Datacard, Entrust has approximately 10,000 customers, including large banks and governments, and generates annual revenues of almost $1B. It is backed by a private equity firm, which has financed an acquisition roll-up strategy around the core business since 2011.

The synergies are clear. Onfido provides Entrust with a pre-built AI identity solution to bolster its existing identity verification offerings without having to rearchitect legacy infrastructure or build one from scratch. It comes at a time when data breaches are at an all-time high with 3,205 data compromises in 2023, up 78% from 2022, and more than 353 million people falling victim to ID theft. With this in mind, companies are looking to provide a secure experience for their users, while not having to instantiate significant manual processes that create inefficiency and add costs. 

For Onfido, a potential valuation of up to $650MM indicates a welcome exit. In its last round in 2020, Onfido was valued at $100MM. While not much data is publicly available, Onfido reported that revenue grew 90% year-over-year in 2021, to achieve more than $100MM in revenue. In 2022, its net income of $44MM significantly beat competitors like Yoti ($22MM) and IDNow ($13MM). Assuming continued growth in top line and net, the $650MM valuation reflects reasonable exit multiples given the downbeat funding and M&A environment that fintech has been experiencing in the past 12-18 months. As for the company’s future prospects, there is clearly room to grow — as of 2022 the digital identity market size is estimated at $28B

Entrust’s motivations makes sense, providing the company with AI identity technology to strengthen its offering in the digital identity space. Consolidation here is largely in the best interest of the consumer. A ubiquitous, common mechanism that users are familiar with helps both businesses and consumers alike to quickly move past the necessary hurdles of onboarding. Demand for these solutions is higher than ever, particularly as the growth of Fintech has opened up whole new attack vectors as an increasing amount of our lives move online. 

👑 Related Coverage 👑


Blueprint Deep Dive

Long Take: JPMorgan’s bank branch expansion mirrors Apple’s retail magic (link here)

In this article, we delve into the contrasting trends of digitalization in banking and the strategic expansion of physical bank branches by JPMorgan Chase, despite the industry’s push towards online and mobile banking.

While Bank of America and Wells Fargo have reduced their branch footprint, JPMorgan plans to add 500 more branches and renovate 1,700 locations, betting on the value of physical presence in an increasingly digital world. Comparing JPMorgan’s approach to Apple’s investment in retail stores, we suggest that both companies see physical locations as a key part of their brand experience and customer engagement strategy.

Read Long Take


🎙️ Podcast Conversation: The evolution of derivatives from structured products to decentralized perpetuals, with SynFutures CEO Rachel Lin (link here)

In this conversation, we chat with Shelby Austin – CEO and co-founder of Arteria AI. Prior to this, Shelby was a Global AI Council member with the World Economic Forum, and before that, a partner at Davies Ward Phillips & Vineberg LLP. Shelby has also been Managing Partner of Growth & Investments and Omnia AI at Deloitte Canada.

A well-respected business leader, Shelby has been recognized for her work in driving significant growth through innovation and technology. Arteria AI was named one of Canada’s Hot 50 companies by Profit Magazine and Shelby, one of Canada’s Most Powerful Women: Top 100 from WXN.

Listen to Podcast


Curated Updates

Here are the rest of the updates hitting our radar.

Paytech


Neobanks


Lending


Digital Investing


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Fintech: Moody’s downgrades New York Community Bancorp to junk status

https://lex.substack.com/p/fintech-moodys-downgrades-new-york

Hi Fintech Futurists — 

Today’s agenda below.

  1. WEALTH MANAGEMENT: Moody’s slams New York Community Bancorp and its stock declines 57%

  2. LONG TAKE: How can Farcaster avoid the death trap of decentralized social media? (link here)

  3. PODCAST CONVERSATION: The evolution of derivates from structured products to decentralized perpetuals, with SynFutures CEO Rachel Lin (link here)

  4. CURATED UPDATES: Payments, Lending, Digital Investing

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

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Digital Investment & Banking Short Takes

WEALTH MANAGEMENT: Moody’s slams New York Community Bancorp and its stock declines 57%

New York Community Bancorp (NYCB) is in a challenging position, attempting to reassure investors following a significant stock slide and a Moody’s credit downgrade to junk status. The bank has faced a 57% stock decline since announcing a dividend cut and reporting a $252 million net quarterly loss in Q4 2023. 

The struggles stem from the 2023 regional bank crisis that saw a bank run on deposits and the subsequent collapse of Silicon Valley Bank, Signature Bank, and First Republic. A bank run is where a large number of customers want to withdraw their money en masse because of worries around the safety of their deposits. This spurs other customers to do the same, putting all of the deposits at risk, thanks to fractional reserve banking whereby only a portion of bank deposits must be available for withdrawal.

NYCB absorbed billions in loans from Signature bank upon its failure. This decision pushed NYCB above its asset threshold of $100B, increasing the regulatory standards to which it is subject, and requiring more capital to be set aside to cover potential future losses. To meet these capital requirements NYCB opted to cut its dividend in Q4 and set aside more capital, totaling $552MM, for potential loan losses. These provisions were well above analyst estimates and were designed to protect the bank against any vulnerabilities in its commercial real estate portfolio. The decision also stemmed from pressure from the Office of the Comptroller of the Currency for the bank to set aside more money and cut dividends in case commercial real estate loans went bad, particularly due to its exposure to the rent-controlled apartments in New York City, which account for 22% of its loans.  

Moody’s main reasoning behind the credit downgrade is this exposure to rent-controlled apartments. Under current conditions, inflationary pressures have increased the interest rate expense for refinancing and maintenance costs, which are often passed on to tenants via rent increases (rent-controlled buildings aside). The credit rating agency also cited the bank’s high dependence on wholesale funding, short-term financing from other financial firms, and a comparatively smaller pool of liquid assets when compared to peers.

Amidst these struggles, NYCB has focused its investor relations and regulator communications efforts on affirming its liquidity and deposit stability, highlighting an increase in total deposits since the end of 2023 with deposits up from $81.4B to $83B. Uninsured deposits account for $22.9B (27% of total deposits), which appear to be well covered by liquidity levels of $37.3B. 

The future success of NYCB hinges on its ability to effectively manage its commercial real estate exposure and reassure both investors and regulators of its financial stability. This is difficult to accomplish amid a “junk” rating downgrade.  NYCB must also keep depositors happy, which the bank is trying to do with a 5.5% annual interest rate on some short-term certificates of deposit. NYCB reports that the downgrade from Moody’s does not have a material impact on its contractual arrangements, though this is unlikely to boost confidence in its customers. And while NYCB is reassuring us that they are hedged, Lehman brothers claimed the same. Overall, we are concerned not just about NYCB, but about the scores — perhaps hundreds — of banks behind them. History’s rhyme is difficult to ignore.

👑 Related Coverage 👑


Blueprint Deep Dive

Long Take: How can Farcaster avoid the death trap of decentralized social media? (link here)

In this article, we explore the rise of social media as a recent phenomenon reshaping business and financial landscapes.

Source

The discussion transitions to the challenges and missteps in creating decentralized social media (DeSo) platforms that prioritize financial features over improving the core social media experience. We examine several attempts at integrating blockchain and financialization into social media, such as Steemit, EOS’s Voice, BitClout, and Friend.tech, noting their initial promise but ultimate decline in user engagement and value. Farcaster is introduced as a new contender aiming to blend the social media experience with Web3 capabilities without compromising on the social aspect.

Read Long Take


🎙️ Podcast Conversation: The evolution of derivates from structured products to decentralized perpetuals, with SynFutures CEO Rachel Lin (link here)

In this conversation, we chat with Rachel Lin -  co-founder and CEO of SynFutures.

Introducing the SynFutures V3 Public Testnet | SynFutures

Lin started her career in TradFi at Deutsche Bank in the global markets department,  specializing in structured derivatives. Later on, she joined Ant Financial , where she helped build the first version of its blockchain platform under Alipay. Prior to SynFutures, Lin was one of the founding partners and head of DeFi and lending for Matrixport, a spin-off of Bitmain and one of Asia’s largest crypto neobanks.

Listen to Podcast


Curated Updates

Here are the rest of the updates hitting our radar.

Paytech


Neobanks


Lending


Digital Investing


Financial Operations


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  • Enhanced Podcasts with industry leaders, accompanied with annotated transcripts for deeper learning.

  • Special Reports

  • Archive Access to an array of in-depth write-ups covering the hottest fintech and DeFi companies.

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DeFi: Jupiter airdrops $700MM to Solana users, top 10 largest of all time

https://lex.substack.com/p/defi-jupiter-airdrops-700mm-to-solana

Hi Fintech Futurists — 

Today we highlight the following:

  1. PROTOCOLS: Exploring Jupiter’s $700MM JUP Airdrop

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

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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In Partnership

Fintech Meetup (March 3-6) is the best place to find new business, partnerships and opportunities. Attendees & sponsors say Fintech Meetup is “the highest ROI event” with reasonably priced sponsorships, tickets, and rooms. Meet everyone for any reason across every use case over 45,000+ double opt-in meetings, and network with 4,000+ attendees.

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PROTOCOLS: Exploring Jupiter’s $700MM JUP Airdrop

Last week Solana witnessed the biggest airdrop in its history. Jupiter, the leading Solana decentralized exchange aggregator (i.e an application that enables users to find the best prices across all Solana DEXs), accounting for 27% of Solana DEX users, airdropped $700MM in its native JUP token to its community.

Assuming all-time high token prices, this ranks Jupiter as the tenth biggest airdrop of all time, with the only DEXs ranking ahead being Uniswap ($6.4B UNI airdropped) and dYdX ($2B DYDX airdropped). If we look specifically at DEX aggregators, Jupiter just about trumps 1inch’s $671MM airdrop to become the largest airdrop in its niche — no easy feat, given that 1inch accounted for 64% of the Ethereum DEX aggregator market in Q4 2023.

Jupiter currently accounts for 63% of all DEX volume on Solana, a particularly large amount given that Solana overtook Ethereum for the first time in 7-day DEX volume in December 202 — totaling $10.1B compared to $8.8B. This is due to the growth of Solana in the past few months, spurred by memecoins, like BONK and Dogwifhat, and more users exploring the Solana ecosystem due to its lower fees and transaction times compared to Ethereum. Despite the rise of Solana, it is worth noting that SOL’s market cap sits at $41B vs. ETH at a $285B market cap, which we largely attribute to the developer popularity of ETH and its considerably larger ecosystem of dapps. See our analysis here.

Diving into the tokenomics, Jupiter has split the token supply 50:50 between team and community. The team allocation is divided between current team members (20%), strategic reserves for new hires and investors (20%), and liquidity provisioning for the token (10%). The community allocation is split between airdrops (40%), which will be distributed across four rounds to motivate continuous growth, and grants (10%). 

At first glance, the team allocation, when accounting for the strategic reserves, is high. The community allocations may also seem relatively high. However, we appreciate how they are broken into four rounds designed to incentivize future growth. This is similar to Optimism’s airdrop approach, which has undoubtedly been successful when one considers that its native token’s market cap is a third higher than Arbitrum’s despite having half the market share.

What we also like about the community allocations is that the first airdrop distributed 10% of the tokens as follows — 2% evenly distributed to all wallets, 7% distributed based on a tiered score based on adjusted volume, and 1% to community members on Discord and X. Distributing tokens evenly, while not necessarily a meritocracy, is an inclusive mechanism for all users, rather than benefiting airdrop farmers that are likely to move onto the next project after receiving and selling their tokens.

These smaller, real users now have a vested interest in Jupiter doing well and are incentivized to continue using it in the hope of future airdrops and appreciation of their JUP token holdings. 

The airdrop has overall been successful, despite the token itself being limited to governance capabilities only. Tokenomics aside, key to its success has been the burgeoning interest in the Solana ecosystem, which has grown from $260MM in TVL to $1.7B in the past year, coupled with Jupiter’s dominance in the Solana DEX space.

Despite these wins for Solana, we received a reminder about its greatest pitfall this week — the blockchain went down for 5 hours, the largest outage since its two-day stoppage in February 2023, due to currently unknown causes. There is profound work to be done on decentralization if Solana is to remove such points of failure and compete with Ethereum. 

👑 Related Coverage👑


Curated Updates

Here are the rest of the updates hitting our radar.

Financial Institutions and Adoption 

SEC pushes back timeline for decision on the Invesco Galaxy Ethereum ETF – The Block

Ramp rolls out ID free crypto onboarding in attempt to boost adoption – The Block


DeFi and Digital Assets

Crypto Payments App Oobit Raises $25M in Series A Funding Round Led by Tether – CoinDesk

Hybrid crypto exchange Cube reaches $100 million valuation in new funding round – The Block

Crypto yield marketplace Superform, built by former BlockTower investors, raises $6.5 million – The Block


Blockchain Protocols

Solana network restarts after outage that lasted five hours – The Block

Nibiru Chain Secures $12 Million to Fuel Developer-Focused L1 Blockchain – Decrypt


NFTs, DAOs and the Metaverse

What Is Farcaster and Why Is Crypto So Excited About the Twitter Alternative? – Decrypt

Art Blocks Acquires NFT Marketplace Sansa – Decrypt

‘Heroes of Mavia’ token airdrop follows entry into crypto gaming sphere – Medium


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  • Digital roundtable discussions.

  • Archive Access to an array of in-depth write-ups covering the hottest fintech and DeFi companies.

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Fintech: Brex, MSFT, and Fintechs cutting headcount, but unemployment stays low

https://lex.substack.com/p/fintech-brex-msft-and-fintechs-cutting

Hi Fintech Futurists — 

Quick reminder before we dive into today’s newsletter. As a member of The Fintech Blueprint community, you receive a $500 discount off tickets to Fintech Meetup, taking place March 3-6 in Las Vegas. This is the largest meetings program in fintech PLUS Lex will be moderating a session on the state and future of crypto and DeFi.

👉 Get your tickets here before next Monday to qualify for the meetings program.


Now, on to today’s agenda.

  1. FINTECH VALUATIONS: Brex cuts 20% of its employees as fintechs trim the fat

  2. LONG TAKE: Will $5B Trade Republic, Germany’s Robinhood, win the race for European wealth? (link here)

  3. PODCAST CONVERSATION: Building modern digital lending across Capital One, Barclaycard, Funding Circle, and TRIVER, with TRIVER CEO Jerome Le Luel (link here)

  4. CURATED UPDATES: Payments, Lending, Digital Investing

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

FINTECH VALUATIONS: Brex cuts 20% of its employees as fintechs trim the fat

Brex provides financial services tailored to startups and small to medium-sized businesses, offering corporate credit cards with higher credit limits, expense management tools, and business banking solutions. They also offer rewards programs, cash management, and integration with various business software to streamline financial processes for businesses. This month, Brex has announced a 20% reduction in its workforce, amounting to 282 employees — seemingly a trend in high tech employment.

The move comes after significant business gains for Brex in 2023. Following the collapse of Silicon Valley Bank (SVB), Brex acquired 4,000 new customer accounts and added $3 billion in customer funds under management by August 2023. This is in large part due to the credibility damage to SVB, which witnessed the largest bank failure since the financial crisis, the companies’ overlapping product offerings, and Brex’s ability to rapidly onboard thousands of new clients. The latest valuation we have of Brex is $12.3B, following its $300MM Series D-2 fundraise at the start of 2022.  Still, the company is burning hundreds of millions of dollars.

The recent layoffs at Brex, while significant, align with a broader trend of operational streamlining observed in the fintech industry. The year 2023 was a significant year for fintech layoffs — BaaS fintech Synapse laid off 40% of its staff in October, paytech GoCardless laid off 15% in June, neobank N26 laid off 4% in May, and PayPal laid off 7% of staff in February. In the broader industry, Microsoft just laid off 1,900 in their games division.

We see two main factors that have led to smaller, more agile organizations. 

  1. Fintech Funding Cuts: Funding into global fintech companies has dropped 49% year over year to $23B in the first half of 2023. Less funding means that company success is based on greater profitability through streamlined operations and an increased focus on the core, proven business model. Experimental or R&D projects that do not yet have product-market fit suffer.

  2. High Profile Workforce Reductions: Case studies like Elon Musk’s highly publicized acquisition of Twitter and subsequent reduction in the workforce by 80% have highlighted the benefits of operating a lean tech company and brought it into vogue. There may be a cultural force at play. 

We expect that the industry will stay leaner going forward, especially for companies planning to IPO (looking at you Circle) and have to please public investors. Fintech competitors are becoming a commodity, and commodities have to stay lean, optimize in their vertical, and achieve profitability. While it may be bad news for employees and job searchers, this is the necessary recalibration for the industry.  

What’s strange, however, is that the general unemployment rate seems to be holding steady at below 4% — historically on par with levels prior to Covid. However, the high tech industry is seeing continued cuts of a large magnitude. That suggests to us that the capital markets hypothesis is correct — this is a luxury funding problem.

👑Related Coverage👑


Blueprint Deep Dive

Long Take: Will $5B Trade Republic, Germany’s Robinhood, win the race for European wealth? (link here)

The battle for European wealth is heating up. Just last month, Trade Republic, Europe’s largest pure-play neobroker valued at $5B, announced profitability and a freshly obtained EU banking license.

At the same time, Robinhood announced plans to launch in the UK and Munich-based Scalable Capital announced a new fundraise at a stable $1.4B. This week we dive into the rise of the neobroker model with a focus on Trade Republic, analyzing its performance among competitors, and whether it can win the race against $10B behemoth Robinhood.

Read Long Take


🎙️ Podcast Conversation: Building modern digital lending across Capital One, Barclaycard, Funding Circle, and TRIVER, with TRIVER CEO Jerome Le Luel (link here)

In this conversation, we chat with Jerome Le Luel – Founder and CEO of TRIVER – a London-based startup that uses open banking data and AI to provide short-term working capital to SMEs. Jerome has 25+ years experience of deploying advanced credit analytics at world-class lenders.

Jerome’s previous role was as Chief Risk Officer of Funding Circle, where he built the automated platform that enabled $12Bn of loans to small businesses. Additionally, his previous role at Barclays, Jerome was in charge of stress testing, risk reporting and quantitative analytics for the entire bank.

Listen to Podcast


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Contact us to learn more about our custom opportunities.


Curated Updates

Here are the rest of the updates hitting our radar.

Paytech


Neobanks


Financial Operations


Digital Investing


🚀 Level Up

Sign up to the Premium Fintech Blueprint and in addition to receiving our free newsletters, get access to:

  • Wednesday’s Long Takes with a deep, comprehensive analysis.

  • Office Hours, digital roundtable discussions.

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

  • Enhanced Podcasts with industry leaders, accompanied with annotated transcripts for deeper learning.

  • Archive Access to an array of in-depth write-ups covering the hottest fintech and DeFi companies.

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Artificial Intelligence: European Union AI Act and its implications for finance

https://lex.substack.com/p/artificial-intelligence-european

Hi Fintech Futurists — 

Today we highlight the following:

  1. AI: Understanding the Impact of EU’s AI Act on Financial Services

  2. CURATED UPDATES: LLMs and other Machine Models; AI Applications in Finance; Infrastructure & Middleware

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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AI: The Impact of EU’s AI Act on Financial Services

Artificial intelligence will reshape industries in ways we cannot yet fully understand. With this in mind, the European Union AI Act is a regulatory milestone addressing the potential and rapid integration in sectors like financial services. The European Commission first proposed the AI Act in April 2021, with the European Parliament and Council creating a risk-based approach, which attempts to categorize AI systems as “unacceptable,” “high,” “limited,” or “minimal risk.” The full text has been leaked online.

AI systems posing “unacceptable risks” are strictly prohibited under the Act, which includes applications that deploy subliminal techniques to manipulate users, exploit vulnerabilities of specific groups, or enable social scoring by authorities.

The four risk classes of the EU Act. Source

“High-risk” systems require the most stringent oversight as flaws could endanger health, safety, and fundamental rights. This encompasses AI applied to law enforcement, biometric identification, and the administration of justice. “Limited risk” systems face custom transparency obligations, such as disclosing the use of AI to users to respect their autonomy in interacting with automated systems rather than humans, whereas minimal risk systems currently avoid heightened regulation but can be reassessed if harms emerge.

For financial services, the Act’s focus on transparency, safety, and non-discrimination in AI systems is particularly relevant. The financial sector’s escalating reliance on AI for various essential functions underscores the necessity of regulation in this sphere. Financial institutions that fail to comply with the act could see fines of up to €40M, or 7% of global annual turnover for the previous fiscal year. This is comparable to breaches under GDPR. 

Many institutions use AI to analyze customer data and determine creditworthiness or investment risks. Under the Act, these systems will require rigorous compliance with transparency and fairness standards. Financial institutions will need to ensure accurate and unbiased decisions that are explainable to both customers and regulators. For example, denying a loan application will mandate clear explanations, diverging from some opaque current AI practices.

Fraud detection systems in banks and financial institutions, which currently leverage AI to identify unusual transactions, will also be impacted. While these systems enhance security, under the AI Act, they would require thorough documentation and human oversight to ensure they do not falsely flag or overlook legitimate transactions. This could mean additional layers of verification and an increase in manual checks to balance AI efficiency with regulatory compliance.

UK financial services sector spending £22k per hour fighting fraud

Source Cost of Compliance

In financial advisory, AI algorithms offering personalized investment or savings guidance will need transparent data processing and recommendation methodologies. Advisors must prove sound, unbiased AI foundations, contrasting some current approaches lacking explainability.

However, more complex AI like Large Language Models (LLMs) pose transparency and trust issues. LLMs are inherently “black boxes,” making their decision-making opaque, leading to a lack of clarity about how they interpret patterns, which makes it tough for firms to explain AI choices to customers and regulators. Moreover, training data biases can skew LLM outputs, concerning for the finance sector where fairness is critical. Another issue is false outputs or “hallucinations” — factually incorrect or nonsensical responses. Such errors could lead to misguided, risky decisions in finance that do not comply with the EU’s AI Act. 

Complying with EU regulations will require new methods to interpret LLM decision-making, robust data governance, a continuous monitoring of outputs. The EU AI Act compels financial services to evolve from efficiency-centric AI utilization to investing into transparency, fairness and accountability. Increased human oversight, documentation, and explainability will mark a major shift as regulatory compliance becomes a central focus.

However, we are also concerned about over-regulating a nascent industry where the implications and industrial logic are not yet well established. Generating high cost and operational barriers to make start-ups chase things that technology cannot do — like explain an LLM hallucination — isn’t particularly useful. To that end, we hope to see regulators respond to the reality on the ground.

👑Related Coverage👑


Curated Updates

Here are the rest of the updates hitting our radar.

Machine Models


AI Applications in Finance


Infrastructure & Middleware


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

Artificial Intelligence: The importance of temporal validity for financial AI

https://lex.substack.com/p/artificial-intelligence-the-importance

Gm Fintech Architects —

Welcome to AI in Finance, focused on the application of artificial intelligence — LLMs, generative AI, machine learning, deep learning, and neural networks — to financial services.

Today we highlight the following:

  1. Fintech’s Future is AI: Building Better AI Models with Temporal Validity

  2. CURATED UPDATES: LLMs and other Machine Models;…


Read more

Fintech: HSBC Zings into payments competition with Revolut and Wise

https://lex.substack.com/p/fintech-hsbc-zings-into-payments

Hi Fintech Architects — 

Happy 2024, and welcome back! It will be a sprint of a year.

Today’s agenda below.

  1. PAYMENTS: HSBC takes on Revolut and Wise with its international payments app Zing

  2. LONG TAKE: Deciphering Solana’s remarkable 700% rise, and why Ethereum lags behind (link here)

  3. PODCAST CONVERSATION: Advancing Bitcoin with Lightning, Inscriptions, and L…


Read more

Artificial Intelligence: Neobank Dave launches GPT chatbot for scalable customer service

https://lex.substack.com/p/artificial-intelligence-neobank-dave

The Fintech Blueprint team will be taking a break for the holidays from December 23 — January 7th. We will return in the new year with fresh insights. Happy Holidays!


Gm Fintech Futurists —

Welcome to AI in Finance, focused on the application of artificial intelligence — LLMs, generative AI, machine learning, deep learning, and neural networks — to financial services.

Today we highlight the following:

  1. Fintech’s Future is AI: Neobank Dave’s Chatbot – An Example of AI Efficiency (link here)

  2. CURATED UPDATES: LLMs and other Machine Models; AI Applications in Finance; Infrastructure & Middleware

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Fintech’s Future is AI: Neobank Dave’s Chatbot – An Example of AI Efficiency (link here)

Neobank Dave recently launched DaveGPT, an AI-powered chatbot that responds to customer inquiries in real-time. The tool generates an 89% resolution rate, a major improvement over Dave’s previous bot, DaveBot. 

Dave CEO Jason Wilk says DaveGPT’s large language model approach provides a superior and more human service while saving staffing, training and infrastructure costs. The GenAI chatbot enables Dave to serve its 9 million customers with only 300 employees, a whopping 30,000 customers per employee. Compare this level of scalability, essential to the success of startups like Dave, to the customer density of traditional banks, which in the European Union has reached up to 225 customers per employee.

Dave collaborates with Aisera to interact with OpenAI’s LLM capabilities, fine-tuned by Dave, to create DaveGPT’s ultra-relevant responses that resolve nearly 9 out of 10 customer inquiries. Over time, Wilk envisions personalizing advice by factoring in users’ financial data – a level of personalization other financial institutions such as Commerz Bank are striving for using GenAI avatars.

This level of success with AI in financial services is not limited to fintech startups. Ken Moore, CIO at Mastercard, notes that institutions are just scratching the surface of what generative AI can do for banks. He expects that within the next 12 months, GenAI will be integral to all processes, ranging from customer service to financial advising, security, and marketing. 

In fact, established financial leaders such as JP Morgan have already started to adopt AI chatbots as financial advisors. 

If institutions throughout the industry do indeed adopt AI, we can expect cost reductions of up to 22% across front office, middle office, and back office by 2030, saving institutions nearly $1T across the board. Per McKinsey, GenAI could further add $200-$340B in annual profit for banks, equivalent to 9-15% of current operating profits. McKinsey projects the greatest profit gains in corporate and retail banking, at $56 billion and $54 billion respectively. 

Specific opportunities include using AI to automate manual processes like testing, assess regulatory impacts, and extract insights from unstructured customer data to improve service quality. Additional areas of value include fraud detection, personalized financial planning and advice, operational efficiency, risk management model development,

These projections, combined with DaveGPT’s demonstrated performance, are an optimistic view on how AI could deliver efficiency gains, cost savings, and customer satisfaction for modern fintech platforms that deploy the technology. That said, it is also fair to have reservations about how far conversational interfaces can go in transforming the customer experience. Early fintech chatbot platforms like Kasisto, large contact center software providers, like Twilio, as well as neobanks like Dave, have struggled to maintain value in the current market environment.

We are optimistic that GPT front-ends will indeed support millions of customers and be both useful and empathetic in discussing financial products. However, we are skeptical that embedding the technology into an existing footprint will bring about a platform shift. More likely, a destination of AI conversation traffic will have multiple financial products embedded therein.

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Curated Updates

Here are the rest of the updates hitting our radar.

Machine Models

Google Gemini Pro helping devs and organisations build AI – Technology.

Regulatory compliance with AI in Fintech – Medium

Artificial intelligence now capable of creating new AI without human intervention, scientists say – NY Post


AI Applications in Finance

E-commerce fintech SellersFi secures $3M credit facility from Citi  – Fintech Nexus

Square’s departing CEO on Gen AI: You don’t need an MBA to run a startup  – eFinancial Careers


Infrastructure & Middleware

Equinix enables private AI infrastructure for businesses – Venture Beat


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DeFi: $225MM airdrop from Solana’s liquid staking derivative protocol Jito

https://lex.substack.com/p/defi-225mm-airdrop-from-solanas-liquid

Gm Fintech Futurists —

Today we highlight the following:

  1. DEFI: Jito Airdrop Hands Out $225 Million to Solana Users (link here)

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

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DEFI: Jito Airdrop Hands Out $225 Million to Solana Users (link here)

Solana-based Jito has airdropped $225MM worth of JTO (10% of the total supply) to its users two weeks after announcing its governance token. As far as speculative activity rewarding early adopters, this is pretty massive, rivaled perhaps by decentralized exchange Uniswap and NFT platform Blur. The fully diluted marketcap of the project now floats at nearly $3B.

Jito is a liquid staking platform, akin to Lido on Ethereum, where users can stake Solana’s native token, SOL, and receive a liquid staking derivative (LSD), JitoSOL, in return. Similar to the Ethereum process, SOL is staked by or delegated to validators who maintain and secure the network in return for SOL emissions. Malicious and dishonest behavior is penalized by slashing the staked SOL.  

Unlike other liquid staking derivatives projects, the Jito Stake Pool delegates SOL solely to MEV-enabled validators. MEV is the maximum profit validators can make by including, excluding, and changing the order of transactions in a block. These validators auction off blockspace in return for MEV rewards, which are then redistributed to the staking pool as APY. Using this mechanism, JitoSOL holders accrue MEV rewards in addition to staking rewards. 

In short, this adds more yield to the equation.

As of today, total value locked (TVL) in the protocol sits at $435MM, across 97,000 individual stakers and 82 participating validators. To compare, Lido has a 46x multiple in TVL ($20B), yet its governance token, LDO, only trades at a 6x multiple to JTO. This likely reflects positive market sentiment towards the current hype about Solana, the MEV capture boost. SOL has witnessed a 280% price increase in the past 90 days to a $30B marketcap, far outpacing ETH’s 40% growth over the same period.  

Taking a closer look at Solana, the protocol recently processed over 51MM daily transactions — the highest since December 2021 — and daily active addresses have doubled in the past month to 565,000. Daily DEX volume is over $1B, second only to Ethereum, and more than BNB and Polygon combined. Its modular blockchain design, rather than the composable one in the EVM ecosystem, has attracted developers looking for a high performance environment. Jito’s airdrop alone has added almost $225MM in liquidity to Solana DeFi, showcasing the net positive value creation that airdrops bring to protocols.

Airdrop hunting season has arrived again.

Pyth Network recently airdropped $77MM PYTH, Blur launched a season 2 airdrop, Starknet released airdrop plans, and LayerZero confirmed that a token is on the way. For Web3 enthusiasts, take this as a friendly reminder to sample as many new protocols as you can. For dapps and protocols, this is a reminder that Jito had only raised $12.1MM until now, yet its governance token commands a $330MM market cap, 24.5% of which is with the core contributors.

A word of warning, however. During Solana’s 2021 rise to a $70B marketcap, the DeFi story was also very strong, with nearly $10B in locked assets. It turned out that 70% of those assets came from 3 protocols that re-hypothecated their own, self-issued tokens, creating the impression of high usage, while actually performing accounting shenanigans that collapsed later. Pressure and financing from FTX and other market makers to grow also led to a growth-hacked NFT market. The current cycle is less manipulated, and the developers that have remained are less mercenary, but buyer beware.

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Curated Updates

Here are the rest of the updates hitting our radar.

Financial Institutions and Adoption 

Swan deployed more than $200 million in 2023 building out institutional offerings such as Bitcoin-backed lending – Fortune

Institutional Crypto Brokerage Nonco Secures $10m of aggregate new capital in Seed Round, Led by Valor Capital Group and Hack VC – Businesswire


DeFi and Digital Assets

M&G Investments leads $30 million raise for GFO-X – The Block

Yearn.finance pleads arb traders to return funds after $1.4M multisig mishap – Coin Telegraph

Bitcoin staking protocol Babylon raises $18 million in Series A funding – The Block


Blockchain Protocols

Cronos, Partner of Crypto.com, to Start Layer 2 Network With Matter Labs – CoinDesk

Total Value of Cardano DeFi Ecosystem Nears $450M Amid Layer 1 Push; ADA Rockets 17% – CoinDesk


NFTs, DAOs and the Metaverse

Pudgy Penguins Reveal ‘Pudgy World’ NFT Game Rollout Plans – Decrypt

Decrypt Media Inc. and Rug Radio Merge to Create Global Web3 Publishing Company – Decrypt

Axie Infinity NFTs Can Soon Evolve Like Pokémon—Here’s How – Decrypt

Blockchain media authentication app eyes news journalism as primary use case – Coin Telegraph

Donald Trump, FIFA and Megadeth NFTs, trading volume nears $1B: Nifty Newsletter – Coin Telegraph

Animoca Brands’ $11.88M Boost to Transform Mocaverse – NFT Plazas


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Artificial Intelligence: Mistral $2B valuation and Open Source strategy

https://lex.substack.com/p/artificial-intelligence-mistral-2b

Gm Fintech Futurists —

Welcome to AI in Finance, focused on the application of artificial intelligence — LLMs, generative AI, machine learning, deep learning, and neural networks — to financial services.

Today we highlight the following:

  1. Fintech’s Future is AI: Mistral AI and the Hype Around Generative Models (link here)

  2. CURATED UPDATES: LLMs and other Machine Models; AI Applications in Finance; Infrastructure & Middleware

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Fintech’s Future is AI: Mistral AI and the Hype Around Generative Models (link here)

With a recent $2B valuation, generative AI startup Mistral AI highlights the insatiable investor appetite for AI in Fintech. Despite being less than a year old, the French startup, founded by former DeepMind and Meta employees, has just secured $487M in a funding round from investment firms like Andreessen Horowitz, Nvidia, and Salesforce. This shows both Mistral AI potential, and the broader market belief in the potential economic opportunities from this new sector. 

Arthur Mensch, Co-founder and CEO of Mistral AI, says they plan to use this funding to develop AI models that surpass GPT-4 capabilities, and that within 4 years from now, Mistral’s vision is to offer the best technology in the industry. 

The startup has a unique approach to developing large language models (LLMs). Instead of the industry standard of secretive “black-box” models, Mistral takes inspiration from the open-source movement that developed web browsers and operating systems, and applies the same community-driven approach to their LLMs. 

For instance, the company’s Mistral 7B model, which has 7 billion parameters, is freely available to developers. It can process and generate text faster than larger models and does this far cheaper (Mistral AI). Furthermore, as shown below, Mistral claims their 7B model outperforms other language models on various metrics.  

Screenshot from Mistral AI, September 2023. Source

But there is disagreement. Contrary to these claims from Mistral AI, Andrej Karpathy, former Sr. Director of AI at Tesla and current OpenAI employee demonstrates how closed models, such as GPT and Claude, score higher in the MT-bench, a set of multi-turn questions used to assess model responses, than Mistral’s 7B model, and other open-source models, including Meta’s WizardLM.

How different LLMs compare against one another, depending on MT-bench score and MMLU. Source

The expensive battle over training LLMs, whether open- or close-source, is creating the infrastructure for a variety of powerful applications, including those in financial services. Fintech companies can leverage these lower-level services to create applications that provide bespoke investing guidance, personal finance management, customer service, and trading automation based on individual risk. 

One recent example is the fintech Airwallex, which successfully reduced Know Your Customer (KYC) false positives by 50% and “boosted the number of customers that pass through the onboarding process without human intervention by 20%” by using generative AI. This potential for AI to augment financial services is estimated at $13B in value in 2023, and is projected to grow at a CAGR of nearly 20% from 2024 to 2032.

While there are also many other generative AI companies securing significant investment – think Perplexity AI, AssemblyAI, and Inworld AI – there are not many other startups saying they are capable of challenging OpenAI. Reminder that it costs $40-100MM now to train a large enough LLM. To that end, it is likely that the industry structure will support a few very large LLM providers, then a long tail of open source alternative, and a broad marketplace of applications, including those tuned on financial services.

Whether the financial companies, fintechs, or Web3 are up to the challenge is a question yet unresolved.

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Curated Updates

Here are the rest of the updates hitting our radar.

Machine Models

Apple joins AI fray with release of model framework – The Verge


AI Applications in Finance

Airwallex Cuts KYC False Positives in Half With Generative AI and Boosts Customer Onboarding – Fintech Times

New Ways Technology is Revolutionizing the Stock Market – Clayton County Register


Infrastructure & Middleware

Nvidia’s stellar 2023 performance: A decade’s best in stock market – Readwrite

The World Depends on 60-Year-Old Code No One Knows Anymore – PC Mag


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Fintech: Canopy expands into commercial lending, fintech lending projected to hit $5T by 2030.

https://lex.substack.com/p/fintech-canopy-expands-into-commercial

Hi Fintech Futurists — 

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

  1. LENDING: Loan Servicing fintech Canopy ventures into commercial lending following its recent fundraise (link here) 

  2. LONG TAKE: The $2B of tokenized Real World Assets (RWAs) trading onchain in 2023 (link here)

  3. PODCAST CONVERSATION: Can open banking power AI-based finance?, with Bud CEO Ed Maslaveckas (link here)

  4. CURATED UPDATES: Payments, Lending, Digital Investing

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Digital Investment & Banking Short Takes

LENDING: Loan Servicing fintech Canopy ventures into commercial lending following its recent fundraise (link here

Lending is the lifeblood of new growth, providing companies with capital to fund business investments, from working capital to lines of credit. It remains an attractive market for fintechs and other software as a service platforms, despite compressed valuation multiples in the sector. The fintech lending space is expected to grow from $450B in revenue in 2020 to $5T by 2030, highlighting the sizable potential of the market overall. While recent venture capital flow into the space has also slowed down, we think this frames an opportunity for growth for the right players that are able to expand into a competitive position in the current environment.

The complexity of the financial product workflow, which benefits from the application of modern technology, is a lever that fintech startups can focus on to be more effective. Canopy, a loan servicing software for unsecured loans, raised $15MM in October to expand such a value proposition, with a loan servicing API built for fintechs to offer and service lending products throughout their lifecycle.

Once a loan has been granted to a borrower, it needs to be serviced – this is the process of collecting interest, principal, and escrow payments, as well as managing the associated data. Canopy’s platform helps companies build lending products and takes care of the loan management and servicing components. As a new lending product enters the marketplace, the go-to workflow often entails several systems operating independently. The company’s latest product, Canopy Connect, is a lending workflow builder integrated into apps like Quickbooks, Salesforce, and AWS. 

Canopy charges a platform fee and a variable fee on the total value of the loans on its platform. The platform will service over $1B in loans this year, with gross margins over 80%, and impressive net revenue retention is at over 175%. In contrast, many digital lending businesses have struggled to find profitability in the current part of the credit cycle, which suggests an over-reliance on the financial product part of the equation, relative to the “tech” part of the value proposition.

Given the current market conditions, the raise is promising — fintech funding dropped 49% year over year to $23B in the first half of 2023, and even reached new lows this past Q3. Similarly, public comps like SoFi or LendingClub face similar pressure. Now that rate hikes have slowed, we expect for some of these haircuts to start getting reversed by demonstrating positive operating performance.

Canopy exemplifies the broader industry move away from holistic financial technology stacks to modular composability, separating the distribution through user experience to embedded financial manufacturing. Fintech has enabled companies to leverage specialized APIs and applications that focus on providing the most value in a given niche rather than trying to offer everything at once.

To learn more about Canopy, check out our Podcast with the CEO below:

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Blueprint Deep Dive

Long Take: The $2B of tokenized Real World Assets (RWAs) trading onchain in 2023 (link here)

Today we consider the trend of tokenized Real World Assets, and put them into broader context for the industry.

Source: Fintech Blueprint

We look at the evolution of institutional tokenized finance, from DLT to STOs to RWAs, and show the quantitative metrics and growth over the last year by the relevant asset classes, from stablecoins, to treasuries, to private credit. Finally, we parse the key participants in the space and compare them to the fintech digital lending generation of old.

Read Long Take


🎙️ Podcast Conversation: Can open banking power AI-based finance?, with Bud CEO Ed Maslaveckas (link here)

In this conversation, we chat with Edward (Ed) Maslaveckas – CEO and co-founder at Bud Financial (Bud).

FT Partners

Bud is an API platform with thoughtful data and service capabilities, is backed by world-renowned financial institutions and gearing up to have the largest team in the UK working on Open Banking. Ed founded Bud alongside his school friend, George Dunning, in 2015. Under his leadership, Bud has grown to some 120 people, and secured more than 100m in investment. The company, which is headquartered in London, is leading the charge in making every financial decision simple by turning transactional data into rich customer insight. It counts global banks, credit bureaus and fintechs among its clients.

Listen to Podcast


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Curated Updates

Here are the rest of the updates hitting our radar.

Paytech


Neobanks


Lending


Digital Investing


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Artificial Intelligence: Commerz Bank uses Generative AI to creative financial avatars

https://lex.substack.com/p/artificial-intelligence-commerz-bank

Gm Fintech Futurists —

Welcome to AI in Finance, focused on the application of artificial intelligence — LLMs, generative AI, machine learning, deep learning, and neural networks — to financial services.

Today we highlight the following:

  1. AI Applications in Finance: Commerz Bank combines GenAI and Avatar technology in first-ever customer-facing application (link here)

  2. CURATED UPDATES: LLMs and other Machine Models; AI Applications in Finance; Infrastructure & Middleware

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AI Applications in Finance: Commerz Bank combines GenAI and Avatar technology in first-ever customer-facing application (link here)

Customer experience is a key competitive dimension for financial services companies, with 60% of banking clients in a recent survey saying that good customer experience is the most compelling reason to stay with a provider.

To that end, Commerzbank is developing Artificially Intelligent (AI) avatars to be used in client-facing customer service roles. This is an expansion of the hybrid digital service model, further pushing the emotional labor of advisors to digital interfaces instead. 

Commerzbank’s AI banking avatar, developed in partnership with Microsoft Azure, leverages advanced GPT models to facilitate natural conversations with customers, an innovation that aims to make banking more accessible and personalized. In practice, we expect this to replace some portion of the industry’s customer support agents with interactive rendered video chatbots. Projects like these are possible for Microsoft, given its large investment into OpenAI and adept navigation of recent board drama.

Commerzbank is not the first to go down this path. Back in 2018, UBS adopted an AI-powered virtual rendering of its Chief Investment Officer, and KB Bank, one of the major banks in Korea, is using DeepBrain AI products AI Human & AI Kiosk to interact with customers. These efforts were made in the context of broader chatbot integration into the middle office, with companies like Kasisto supporting enterprise bank deployments.

The economic potential of AI avatars in the financial sector is large. The global digital avatar market, estimated at $14B in 2022, is forecasted to grow at a CAGR of 47% from 2023 to 2030​​. Another estimate suggests that the digital human (AI Avatars) market will grow from $6B in 2023 to $70B by 2032. While these numbers are still largely imaginary, we do know that the call center industry runs at $20B of revenue per year.

This growing trend of AI avatars in customer service roles is gaining traction beyond financial services. AI avatar-focused startups, such as HeyGen, are growing rapidly, from $1M annual recurring revenue in March 2023, to $18M as of this November. These avatars are being used across social media platforms, narrating videos, even in the broader context of attention economy. 

The pertinent question for AI avatars in financial services is whether they will fundamentally change customer interaction, or just be a more sophisticated version of the earlier chatbots? The goal is clear — to create a competitive advantage for financial institutions to provide superior customer experience. Can AI avatars achieve that goal? 

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In Partnership

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Curated Updates

Here are the rest of the updates hitting our radar.

Machine Models

Amazon is building a LLM to rival OpenAI and Google – AINEWS

Fueling AI Excellence: Lablab.ai’s TruEra Challenge with Google Cloud Vertex AI and TruLens – AITHORITY

Forrester Report Shows That You Need More Than an LLM to Build a GenAI Application – Enterpise AI


AI Applications in Finance

Finastra survey shows global investment in AI, embedded finance, and BaaS – Finextra

Finance & insurance jobs on front line as AI/LLM advance: UK gov’t – Intelligent Insurer

Finance leaders embrace AI and machine learning to revolutionise industry – FF News


Infrastructure & Middleware

Meta and IBM form open-source alliance to counter big AI players – Yahoo Finance

Huawei Cloud Fintech Summit unveils Pangu finance model – FinTech Magazine

Nvidia Seeks to Build Out AI Ecosystem in Tech-Hungry Japan – Yahoo Finance


DeFi: $600MM+ deposited into Blast, an L2 that stakes bridged ETH, despite rug risk

https://lex.substack.com/p/defi-600mm-deposited-into-blast-an

Gm Fintech Futurists —

Today we highlight the following:

  1. L2s: Layer-2 Blast traps over $600mm in TVL in a week (link here)

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

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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L2s: Layer-2 Blast traps over $600mm in TVL in a week (link here)

In a little over a week since launch, Blast captured over $600MM in total value locked (TVL) and counting. Blast is the latest Layer-2 (L2) rollup in the market. L2s are off-chain networks built on top of a Layer-1 (L1) blockchains, like Ethereum, with the aim of scaling it by providing cheaper and faster transactions while relying on the underlying L1 for security. Blast will be an EVM-compatible optimistic rollup, similar to Arbitrum and Optimism, the two biggest L2s by transaction count.

Blast differs from its competitors by claiming to incorporate yield for ETH and stablecoins within the protocol. Tokens locked in the bridging contract — the smart contract “bridging” tokens between Ethereum and the L2 — are utilized to earn yield on the underlying blockchain, Ethereum. The yield is then automatically applied to the corresponding tokens on the L2.

ETH holdings will, supposedly, be staked in liquid staking protocols, like Lido, to generate a 4% yield for holders. Stablecoins will be invested in the Maker DAO ecosystem, with exposure to treasuries, to earn a 5% yield. We should note that Blast claims these yield-generating mechanisms are risk-free returns. There is a risk associated with any ETH staking, however small, as well as in using Maker. Further, such staking opportunities are already freely available to any crypto user and are not unique to Blast, although Blast does provide the yield “automatically”.

Blast is not yet a working product, but it has already launched a bridging contract that allows users to deposit funds. The control of this contract is currently in the power of a five-member security council, three out of five of whom are required to pass any changes. If there is a majority agreement from the council, the smart contract is able to send the deposited funds to another contract, like Maker or Lido, to earn yield. In theory, funds held in this contract cannot be withdrawn to an externally owned account (EOA), but there is nothing stopping three of the members from agreeing to send the tokens to another smart contract which enables them to withdraw to an EOA. This is a critical risk for anyone depositing funds into the Blast smart contract.

Stop putting your stuff in a custodial box and being surprised when the box gets stolen or lost.

So, why are people rushing to deposit their ETH and stablecoins into this contract? The founder of Blast is also the co-founder of NFT marketplace Blur. Blur has highly gamified their token airdrop to steal market share from competitors, and this worked very well — it was the fifth biggest airdrop in crypto, worth over $100MM, and the protocol has since retained its position as the leading NFT marketplace with a 57% market share. This is, in part, due to washtrading by insiders to create transaction volume.

Blast features an equally gamified airdrop, which is the primary motive for users to deposit funds. Users need a referral code to gain early access. Blast then requires users to follow its page on X and provide limited access to their own X accounts. The access allows Blast to follow/unfollow accounts and to view posts from any accounts the user follows, including private accounts.

Once set up, users earn points that will determine the airdrop they receive. Points are earned by depositing ETH, referring friends to grow your “squad”, and through a “super spin” lottery draw. The super spin is affected by your “luck”, which can be increased by growing your squad size, and the frequency of spins is determined by the amount of ETH you have deposited (1 ETH = 1 spin a week). 

At best, this is way too much financial engineering. At worst, Blast seems to exhibit many features of a pyramid ponzi scheme, from the gamification of deposits to the fact that there is no working product. Depositors are effectively entrusting 3 to 5 strangers to hold and stake their funds on their behalf, until at least February, in the hope that they are able to capitalize on an airdrop at the end of it.

While the risks are significant, the project also gained traction due to its backing from prominent VC firm Paradigm, who have since said they do not endorse these tactics and are unhappy with the decision to launch the bridging contract prior to the deployment of its L2. The tactics adopted by the Blast team are clearly effective, but they may lead to a giant “rugging” of unsuspecting — or perhaps simply naive — depositors.

Given that the industry has just moved past Terra, FTX, and Binance sins, it would be a shame to see another black hole materialize. We are deeply anxious about the potential for irresponsible actors to destroy this progress at the expense of FOMO-ridden investors over-excited about the prospects of a crypto bull market. On the positive side, there is a case to be made that blockchain bridges, in general, should avail themselves to interest income. If the custodial conflict can be resolved, perhaps a new business model has been opened up for future projects. We expect many bridging projects, like Wormhole, to be paying attention.

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Curated Updates

Here are the rest of the updates hitting our radar.

Financial Institutions and Adoption 

Binance operating without license in Philippines, regulator says – Cointelegraph

U.S. Treasury’s Wally Adeyemo calls for more authority to go after bad actors in crypto – The Block


DeFi and Digital Assets

Binance to End BUSD Support on December 15, Convert User Balances to FDUSD – Decrypt

“Benevolent Dictator” Succeeds in Bringing Aave’s Stablecoin GHO Near Parity With USD – The Defiant


Blockchain Protocols

NEAR Protocol Overtakes Ethereum and Bitcoin in Key Activity Metrics – The Defiant

Wormhole Sells $225M of Token Warrants in 2023’s Largest Crypto Raise – The Defiant

dYdX Chain Launches Trading Rewards Program – The Defiant


NFTs, DAOs and the Metaverse

BLUR Up 30% Following Season 2 Airdrop, Binance Listing – Decrypt

Esports Giant Team Liquid Reveals Collab With NFT Game Illuvium – Decrypt

Uniswap DAO Approves Delegation Of 10M UNI To Active Voters – The Defiant

Web3 Gaming Company OhBaby! Partners With Paramount – The Defiant


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Fintech: Private investment fintech Arch raises $20MM from capital markets insiders

https://lex.substack.com/p/fintech-private-investment-fintech-439

Hi Fintech Futurists — 

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

  1. FINTECH: Arch, a Digital Admin for Private Investments, Closes $20 Million Series A Funding Round (link here)

  2. LONG TAKE: We made ChatGPTs for asset allocation and stock analysis, it hallucinated financial answers & got some right (link here)

  3. PODCAST CONVERSATION: How Legalist, a $770MM litigatio…


Read more

DeFi: Yuga Labs and Magic Eden’s royalty focussed marketplace

https://lex.substack.com/p/defi-yuga-labs-and-magic-edens-royalty

Gm Fintech Futurists —

Today we highlight the following:

  1. NFTs: Yuga Labs and Magic Eden team up to create an NFT marketplace with obligatory royalties (link here)

  2. CURATED UPDATES

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NFTs: Yuga Labs and Magic Eden team up to create an NFT marketplace with obligatory royalties (link here)

NFTs are mere JPEGs to the mainstream. But they are actually far more important — digital objects with emerging venues for commerce, like OpenSea and Magic Eden. Think eBay for Web3, with all the network effects and payment processing that entails. The standards that emerge around that commerce are being fought over now.

Yuga Labs, creators of the Bored Ape Yacht Club and owner of CryptoPunks, and Magic Eden, a multi-chain NFT marketplace, have partnered to create a new Ethereum NFT marketplace with a target launch at the end of 2023. The platform will enforce royalties on every NFT sale, which typically range from between 2.5% to 10% of the sale price. Magic Eden is an OpenSea clone that was initially Solana-focused. It launched an Ethereum marketplace in autumn 2022, but has since sunset the product, which will now be replaced by the new platform.

While royalty fees were initially honored by marketplaces in the space, the trend has moved away from this model. The reason? Fierce competition for traders in a suddenly shrinking market. As NFT sales dwindled in the second half of 2022, some platforms opted to allow traders to bypass these fees in a bid to attract buyers.

OpenSea, the world’s largest NFT marketplace, hopped on the trend of making royalties optional in August, despite previously stating they would honor the fees. Magic Eden also changed to optional royalties last year, but have since changed their tune following their role in the Open Metaverse Alliance of Web3 (OMA3), a working group anchored by Yuga Labs that aims to improve royalty standards and enforcement. 

Magic Eden will implement a new smart contract that will enforce royalties on all trades. Other marketplaces will be able to use the same smart contracts, and new NFT projects will be able to mint their collections with them as well. Potentially, traders and NFT enthusiasts opting to use marketplaces who do not use the contracts may be penalized — e.g., Yuga may withhold future benefits for NFTs bought without paying royalties. That doesn’t sound all that persuasive to us, but perhaps it is technically possible to implement. 

The news comes as NFT trading volume reaches a 3-month high, in large part due to a seven-figure cryptopunk sale to none other than the creator of Yuga Labs. But that does not signal long-term sustainability, but more likely continued fighting over scraps.

Traditional visual art does not have royalties for the artist, and Yuga Labs, the firm proposing this change, is not a single artist but a corporation subject to the whims of investors looking for the company to make higher returns on its collections. Does enforcing royalties really benefit artists, as the proposal claims, or does it generate more revenue for corporations in the space?

From a trading perspective, enforcing royalties makes each trade less profitable. Traders have to resell for (1) the initial buy price, plus (2) royalties and (3) exchange fees, just to break even. This means professional traders will look for venues where they can avoid royalties, or even make money from just wash trading (e.g., see Blur). Artists, on the other hand, see royalties as an incentivize to maintain and promote prior collections rather than churn out new art. But with asset prices depressed, the value from royalties to artists is also insufficient to make a real living.

Source: Magic Eden

Source: OpenSea

Trading and issuance are the lifeblood of market venues. Just this month we witnessed OpenSea cut 50% of its staff. Magic Eden and Yuga are under pressure. Playing with value distribution is unlikely to create enough value. Alternately, we would just standardize royalties at 50 bps — call it an art portfolio management fee — and call it a day.

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Curated Updates

Here are the rest of the updates hitting our radar.

Financial Institutions and Adoption 

Investors Bet $5.5 Million on Stackr to Onboard JavaScript Devs to Crypto – Decrypt

Decentralized AI compute platform Ritual closes $25 million fundraise – The Block

Founder of Estonia’s LHV Bank Lost Access to $472M of Ether – CoinDesk

Swiss Crypto Bank SEBA Wins Hong Kong License – CoinDesk

Standard Chartered unit, SBI Holdings team up to invest $100 million in crypto startups – The Block

The SEC has opened talks with Grayscale over its bid for a spot bitcoin ETF conversion: report – The Block

A startup that wants to make DeFi less stressful for institutions raises $4.1 million – The Block


DeFi and Digital Assets

Aave To Vote On Restoration Plan Following Market Freezes – The Defiant

BIS Researchers Say Stablecoins Are Failing to Live Up to Promise – CoinDesk


Blockchain Protocols

Linea Kicks Off ‘DeFi Voyage’ Campaign – The Defiant 

Near Foundation Joins Celestia in Race to Provide ‘Data Availability’ for Ethereum Rollups – CoinDesk

Wintermute Threatens Near Over $11.2M Soured Stablecoin Deal – The Defiant 


NFTs, DAOs and the Metaverse

Arbitrum DAO voting on $24 million ‘backfund’ for projects that missed out on grants – The Block

Galxe Joins Growing List of Crypto Startups Pivoting to AI– Decrypt

Free NFT Inspired By The Simpsons Crosses $2M In Trading Volume – The Defiant


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Fintech: Brazilian embedded finance champion QI Tech raises $200MM in growing market

https://lex.substack.com/p/fintech-brazilian-embedded-finance

Hi Fintech Futurists — 

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

  1. NEOBANK: QI Tech becomes the first-ever BaaS to receive an SCD license from the Brazilian Central Bank (link here)

  2. LONG TAKE: Can we be optimistic about 2Q2023 Equities, Crypto and Venture markets? (link here)

  3. PODCAST CONVERSATION: Using AI to digitize financial documents at scale, with Ocrolus CEO Sam Bobley (link here)

  4. CURATED UPDATES

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Digital Investment & Banking Short Takes

NEOBANK: QI Tech becomes the first-ever BaaS to receive an SCD license from the Brazilian Central Bank (link here)

QI Tech enables virtually any company to offer financial products through its infrastructure platform, which provides a modular API for developing payment, credit, and banking solutions. This offering, known as Banking-as-a-Service (BaaS), has become a worldwide trend in recent years as more and more distribution channels and applications find monetization in offering financial products.

The company now also has a Direct Credit Society (SCD) license, which effectively acts as a national bank charter in Brazil, albeit with limitations. An SCD enables a business to carry out credit operations on an electronic platform, but must be funded from its own operating balance sheet — the lending institution cannot raise funds from the public — and customers must be selected based on verifiable, transparent and consistent criteria. This marks the first SCD that the Brazilian Central Bank has approved. 

Source – Brazilian Fintech Landscape

The company’s BaaS offering is applicable to companies across any vertical, whether it be a retailer or a telecom, looking to bolster their own financial products offerings including digital registration tools, credit scoring, wire transfers, Pix (Brazil’s digital payment network), digital account opening, credit underwriting, bank slips, data validation and wire transfer services.

QI Tech can offer its technology in modular components via API — something that technolofy-first firms require. QI also differentiates by providing a suite of offerings, rather than focusing on a specific niche. A customer can therefore begin with a point solution and continue to build out a full suite of services over time. We are impressed and surprised by the breadth of the offering — from eCommerce, to payments and anti-fraud, to banking and BNPL, as well as capital markets.

QI Tech’s raised the largest VC round in Brazil this year — a $200MM Series B. This brings total funds raised to $262MM since founding in 2018. The company has reportedly been profitable since year one, and in the first half of 2023 reported $21.2MM in net revenues, an increase of 89% compared to the same period the year before. It operates on a pay-as-you-go model, with customers paying a fixed fee for every transaction that utilizes QI Tech APIs. Its 300+ Customers include Shopee, which has annual revenue of $2.1B, and Vivo Telefonica, a subsidiary of Telefonica Group.

Source – Comparison of Nubank and QI Tech offerings

Brazil’s fintech scene has been burgeoning this year. It is home to Nubank, which is valued at $35B, and Pismo, which Visa acquired for $1B in one of the biggest fintech M&A deals this year.

Nubank is a particularly interesting comparison as it offers many of the same services but directly to consumers and SMEs. The neobank has c. 84MM customers globally with $1.9B in revenue, making up 14% of the $128B Brazilian retail banking market. We show its economics below — while not a direct comparison, the pace of growth and its dominance in the Brazillian market is instructive for other similarly positioned companies. In contrast, QI Tech allows users to bypass the bank experience, instead allowing consumers to get financial products directly from the businesses where they shop.

Source — Nubank, SoFi, Wise YTD performance

Brazil’s BaaS market size is currently only 15% of the total retail banking market ($19B vs $128B), but this figure is expected to double by 2029. Nubank commands a 20x revenue multiple and $40B valuation, with room for expansion. QI’s $200MM round might imply a $500MM-$1B valuation, which would suggest somewhere around a 10-25x multiple — on the edge of reasonable given the market where it operates and the pace of growth.

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Blueprint Deep Dives

Long Take: Can we be optimistic about 2Q2023 Equities, Crypto and Venture markets? (link here)

We look for key indicators suggesting a risk-seeking environment, potentially favorable for growth and innovation.

Despite recent volatility, equities show resilience over a five-year span. Crypto and AI, represented by Bitcoin and NVIDIA, are enjoying substantial gains, hinting at deep tech’s growing appeal. Venture capital, although subdued compared to its 2021 zenith, maintains a steady pulse in fintech, with banking and lending drawing the lion’s share of investment. Our analysis points towards a cautious optimism as we navigate through the economic fluctuations, keeping an eye on the horizon for emerging opportunities in fintech and beyond.

Read Long Take


🎙️ Podcast Conversation: Using AI to digitize financial documents at scale, with Ocrolus CEO Sam Bobley (link here)

In this conversation, we chat with Sam Bobley, founder and CEO of Ocrolus, a fintech infrastructure company that powers underwriting processes for lenders like SoFi, Lending Club, and Enova.

He started building Ocrolus in his parent’s kitchen when he was 22-years-old. Six years later, the company has more than 900 employees globally, across four offices. Along the way, Sam authored a patent application, helped raise over $50 million in venture capital, and surrounded himself with a world-class team of coworkers, investors, and advisors. Inc. Magazine recognized Ocrolus as the #1 fastest-growing fintech company nationwide, and the #1 fastest-growing software company in NY.

Listen to Podcast


Curated Updates

Here are the rest of the updates hitting our radar.

Banking


Insurtech


Lending


Wealthtech


Financial Operations


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Fintech: Removing cross-border FX fees for SMEs gets YouBiz $50MM round

https://lex.substack.com/p/fintech-removing-cross-border-fx

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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Hi Fintech Futurists — 

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

  1. PAYTECH: Singapore-based fintech YouTrip adds broad-based SME financial services to its offering (link here)

  2. LONG TAKE: Dissecting the 2023 Macroeconomy, from personal savings to global politics (link here)

  3. PODCAST CONVERSATION: Embedding lending and credit into the fintech value proposition, with Canopy CEO Matt Bivons (link here)

  4. CURATED UPDATES

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Digital Investment & Banking Short Takes

PAYTECH: Singapore-based fintech YouTrip adds broad-based SME financial services to its offering (link here)

Let’s examine Singaporean fintech YouTrip’s multi-currency wallet for SMEs and retail consumers, providing users with an offering that has no FX fees and fee-less ATM withdrawals across 150+ countries. The company is licensed by the Monetary Authority of Singapore, and its services include FX, remittances, cards, and payments. YouTrip is differentiated from many other SME fintechs that do not own their own licenses directly, and have to rely on third parties.

Since 2018, YouTrip has processed circa $10B in annualized transaction volume, with its e-commerce payment volume growing 240% in annualized transaction volume since 2021, along with 3x user base growth. The growth is largely a result of post-pandemic travel picking up and Southeast Asian e-commerce rebounding. Between 2020 and 2021 e-commerce in the region rose from $69B to $102B.

Source – Southeast Asia eCommerce growth

YouTrip launched YouBiz in May 2022, a B2B product that has since onboarded 3,000 enterprises. The benefit YouBiz brings its customers goes beyond business travel, solving the FX challenges faced by non-US companies with their digital marketing spend and supporting remittances to suppliers and remote workers.

The major players in digital marketing, Google and Facebook, generally bill in USD. YouBiz helps its customers avoid having to pay regular FX fees when using these services, which tend to be essential for small digital businesses. The YouBiz service also features a perks program to provide cash-back deals for more frequent or larger transactions. 

As evidence of this model working, the company recently closed a $50MM cash injection in Series B funding led by Lightspeed, which brings the total funds raised since inception in 2018 to $100MM.

Singapore recently proposed raising e-wallet transaction caps by 3-4x, giving YouTrip good scope for offering larger-scale FX and remittance services. Digital adoption also still has room to grow, with 99% of SMEs currently using traditional banks rather than their fintech counterparts. In an increasingly globalized world, YouTrip differentiates itself from other providers minimizing FX fees, like Revolut or Wise, by focusing on solving the spending challenges faced by digital businesses looking to use cross-border products. Given that neobanks still only have 3.3% user penetration, there is plenty more market share to be taken.

Operating across multiple geographies is complicated enough. It shouldn’t also be expensive — we think most cross-border payment costs should trend to zero over time, especially as stablecoins become connected into embedded finance rails and used as a global settlement layer.

👑Related Coverage👑


In Partnership

Do you Know Your Customer? How to prevent fraud with biometric identity verification

👉 November 8, 2023 at 2pm ET

In this free webinar, experts from Incode, Customers Bank, and Affirm will discuss how they are leveraging the latest KYC solutions, and effective practices to enhance consumer trust and loyalty while avoiding damaging legal repercussions and reputational risks.

Register for Free


Blueprint Deep Dives

Long Take: Dissecting the 2023 Macroeconomy, from personal savings to global politics (link here)

Economic analysis indicates we might be at the peak of the interest rate environment with rates surpassing inflation, but banks show vulnerabilities with massive unrealized losses.

Personal financial health is concerning, with savings at an all-time low and escalating debt. Corporate debt maturing in the coming years poses significant threats in the high borrowing cost scenario, coupled with the growth of unprofitable public companies. Amidst these challenges, global political instability is rising, evidenced by U.S. governance issues and increased geopolitical risks. The 2023 growth forecast presents a modest outlook, marked by potential geopolitical and debt-related downturns.

Read Long Take


🎙️ Podcast Conversation: Embedding lending and credit into the fintech value proposition, with Canopy CEO Matt Bivons (link here)

In this conversation, we chat with Matt BivonsFounder & CEO at Canopy.  Canopy’s loan management and servicing platform helps Fintechs and brands service customer accounts through automations and APIs to help improve borrower repayment rates, increase net promoter scores, and decrease the cost of servicing for lending and credit card products.

Prior to Canopy, Matt served as a VP of Growth & GM of Consumer at GreenSky (a Goldman Sachs Company), Head of Growth at fintech startup Earnest, and Director of Growth at vacation rental marketplace VaycayHero.

Listen to Podcast


Curated Updates

Here are the rest of the updates hitting our radar.

AI


Insurtech


Payments


Wealthtech


Financial Operations


Shape your Future

Curious about what is shaping the future of Fintech and DeFi? 

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

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DeFi: Scam detection platform Blockaid raises $33MM; SynFutures DEX raises $22MM

https://lex.substack.com/p/defi-scam-detection-platform-blockaid

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. ADOPTION: Web3 Security Firm Blockaid Receives $33MM In Funding (link here)

  2. DEFI: SynFutures Raises $22MM Series B, Bucking ‘Crypto Winter’ (link here)

  3. CURATED UPDATES

If you got value from this post, let us know your thoughts! And to recommend new topics and companies for coverage, leave a note below.

Leave a comment


ADOPTION: Web3 Security Firm Blockaid Receives $33MM In Funding (link here)

Blockaid has raised $33MM in funding from Ribbit Capital, Variant, Sequoia Capital, Cyberstarts, and Greylock Partners for its blockchain security platform. The startup works with leading non-custodial wallets and marketplaces including MetaMask, Opensea, 1inch, Zerion, and Rainbow to provide an additional layer of security for their users. MetaMask first announced the partnership with Blockaid and Opensea in April as they looked to launch a feature that warns users when interacting with smart contracts known to be scams.

Blockaid offers four core security enhancement features: (1) transaction simulation and validation, (2) dApp scanning, (3) address validation and (4) token validation. Transaction simulation and validation leverages an API to enable users to simulate the transaction without actually executing it, allowing users to then view the outcome of that transaction and whether there are any flags raised. dApp scanning API returns a real-time report of a particular dApp, identifying whether it is malicious or safe, what chain it is operating on, and any other Web3 or network interactions from the site. The data recorded from these two features is leveraged to provide the address and token validation features. All identified malicious addresses or tokens are added to a roster to quickly identify the risks for future users.

Blockaid’s platform has scanned 450MM transactions over the past 3 months, preventing 1.2MM malicious transactions and protecting $500MM in user funds that would otherwise have been stolen. The raise comes at a time when an additional layer of security is needed more than ever for those venturing to take custody of their digital assets. In Q3 2023 $700MM was stolen across 184 incidents, surpassing the $633MM that was lost over the first half of the year. 

Now, as the crypto market rallies off the back of BTC ETF anticipation and with the DeFi and GameFi ecosystems (Forge and Shrapnel games both raised this week) having developed significantly since the last bull market, we may begin to see an influx of users opting for self-custody of their digital assets. If so, wallets and marketplaces need to be prepared to protect users and make Web3 as safe and easy to use as the traditional payments infrastructure. 

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Do you Know Your Customer? How to prevent fraud with biometric identity verification

👉 November 8, 2023 at 2pm ET

The stakes are high when it comes to preventing fraud and protecting customers’ data and identities. However, even for those not legally obligated, implementing KYC measures can be an effective safeguard against fraud and other illicit activities.

In this free webinar, experts from Incode, Customers Bank, and Affirm will discuss how they are leveraging the latest KYC solutions, and effective practices to enhance consumer trust and loyalty while avoiding damaging legal repercussions and reputational risks.

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DEFI: SynFutures Raises $22MM Series B, Bucking ‘Crypto Winter’ (link here)

SynFutures, a decentralized crypto exchange that integrates on-chain order book functionalities alongside its automated market maker, has raised $22MM in a Series B funding round. The round was led by Pantera Capital, with participation from HashKey Capital, SIG DT Investments, and Susquehanna. Notably, Pantera Capital has also recently invested in Brine Fi, which operates its own orderbook-based decentralized exchange (DEX)

SynFutures has introduced an “Oyster automated market maker” (Oyster AMM). An AMM is a DEX mechanism that uses algorithms, such as the constant product formula, to automatically facilitate the trading of digital assets by adjusting asset quantities and prices within a liquidity pool. 

In crypto markets, order books have largely been available on centralized exchanges (CEXes) and in a nascent form on alternative L1s like Solana and Sei. Bringing an order book on-chain is computationally intensive and cost-prohibitive (i.e., higher gas fees). Remember, order books require real-time order matching, which involves continuously processing incoming buy and sell orders to find exact matches and execute trades. As a result, AMMs, which assume more static market pricing, are the go-to trading method in DeFi. The opportunity cost is that order books offer lower slippage and tighter spreads, whereas, with AMMs, slippage may be low for small orders, but it rises exponentially with large orders

In the Oyster AMM model, the combination of buy and sell limit orders on single price points with concentrated liquidity ensures that traders receive accurate pricing. Unlike most spot AMM models, Oyster AMM permits native limit orders akin to those that make up central limit order book systems (CLOBs). These limit orders are established at single price points and become irreversible once filled, granting makers confidence in their order status. The main benefits of this approach include price certainty, predictable execution, and reduced impairment loss, as irreversible limit orders are executed at the specified price without being subject to market volatility. Impairment loss refers to the value lost by liquidity providers (LPs) because of diverging asset prices within the pool. In other words, the fees collected often fail to cover the missed opportunity caused by arbitrage trades. For a more detailed technical explanation of Oyster, see here

DeFi has seen significant developments in the pursuit of capital efficiency. Uniswap V3 introduced the concept of liquidity provision across the entire price curve, enabling users to specify pricing ranges for their participation. Building on this, Uniswap V4 brought in “hooks,” allowing developers to enhance existing liquidity pools with their own features. Sei emerged as the first order book-specific L1 blockchain, whereby its native order-matching engine processes independent orders in parallel, leading to efficient trade execution and lower gas fees. There was also Serum, a CLOB on the Solana blockchain, which catalyzed the growth of hybrid DEXes like Raydium.

We like Synfutures’ hybrid approach—integrating on-chain order book functionalities alongside its AMM—as it provides a solution for trading many assets, especially “fat-tail” assets like Bitcoin and Ethereum. In such cases, where buy and sell orders overlap, the order book excels by executing trades without slippage. But when liquidity is low, especially with less popular “long-tail” assets, spreads tend to widen, and the price discovery mechanism of AMMs is useful. This is particularly useful for institutions and sophisticated traders. 

c


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For forward-thinking leaders eyeing sustainable growth, investment in an integrated platform for managing fraud, credit, and compliance risks is no longer optional — it’s imperative.

Are you ready to empower your organization with cutting-edge technology, such as Generative AI, to not just solve today’s problems but anticipate tomorrow’s challenges?

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Curated Updates

Here are the rest of the updates hitting our radar.

Financial Institutions and Adoption 

FTX Is Negotiating With Three Bidders To Restart Crypto Exchange – Bloomberg

World Bank Rolls Out First Digital Bond Issuance On Euroclear – Blockworks

U.S. Senators Set In Motion Bipartisan Proof-of-Reserves Bill – Decrypt

Crypto Lender BlockFi Ends Bankruptcy With A Plan To Repay Customers – Decrypt

SEC Drops Securities Lawsuit Against Ripple Executives – The Defiant


DeFi and Digital Assets

Triple-A Gets Funding From Peak XV To Help More Businesses Use Crypto – TechCrunch

Polygon’s New Zk-powered Token Is Live On Ethereum Mainnet – Blockworks

Nocturne Raises $6MM Seed Round To Bring Private Accounts To Ethereum – Yahoo Finance

Worldcoin To Pay Orb Operators In WLD Rather Than USDC – The Block

Crypto Platform Beluga Secures $4MM In Seed Round – Financial IT

dYdX, Decentralized Crypto Exchange, Open Sources ‘V4’ Code For Upcoming Cosmos Chain – CoinDesk

Yearn Overhauls YFI Tokenomics – The Defiant

Uniswap’s New Fee Heightens Token/Equity Tension & Uniswap Visa Card Proposal Is Facing Opposition Among UNI Token Holders – The Defiant


Blockchain Protocols

Arbitrum Orbit Integrates Celestia For Data Availability – Blockworks

Do Rollups Actually Scale Ethereum Or Are We Fooling Ourselves? – Blockworks


NFTs, DAOs and the Metaverse

Call Of Duty-style Crypto Video Game ‘Shrapnel’ Raises $20MM – The Block

Friend.tech Hit By Selloff As SocialFi Whales Move To New Bitcoin City – The Defiant

Maison Margiela Debuts First Web3 Gamified Mint – nft now

Getty Images And Candy Digital Launch Paranormal Photography NFTs – nft now


Shape your Future

Curious about what is shaping the future of Fintech and DeFi? 

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

Go Premium


Leave a comment

Fintech: Nirvana, AI insurance for trucks, gets $57MM; BitGo acquires HeightZero to bring TradFi to crypto

https://lex.substack.com/p/fintech-nirvana-ai-insurance-for

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.


Hi Fintech Futurists — 

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

  1. AI: AI insurance startup Nirvana rocks a $57MM Series B  (link here)

  2. WEALTHTECH: BitGo acquires HeightZero bringing TradFi wealth management capabilities to digital assets for RIAs (link here)

  3. LONG TAKE: How Wise disrupted $150T of Cross-Border Payments and earns $1B in revenue (link here)

  4. PODCAST CONVERSATION: Embedding Web3 infrastructure into Web2 platforms, with Bastion Co-Founders Nassim Eddequiouaq and Riyaz Faizullabhoy (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

AI: AI insurance startup Nirvana rocks a $57MM Series B  (link here)

Nirvana Insurance has raised $57MM, bringing its valuation to over $350MM post-money. The insurtech uses a combination of AI, IoT, and telematics to develop advanced risk models for commercial truck fleets. Typically, fleets of trucks operate as small businesses, with 90% of fleets having fewer than 50 trucks. These operators are cost sensitive, due to rising fuel prices, as well as mandatory insurance that can cost between $15-20k annually per vehicle. The insurance challenge is amplified by the process of obtaining quotes, securing policies, and making claims, all of which can prevent trucks from activity for weeks. 

Nirvana solves this challenge by leveraging data from truck sensors to evaluate risks and derive custom pricing models for its clients. A 2017 US federal mandate required all trucks to install electronic logging devices, which are now present in 30-40% of all vehicles globally. By collecting data from these sensors, as well as from dashboard cameras, Nirvana is able to determine operator and truck safety with accuracy. Drivers deemed safe are eligible for a 20% discount on premiums, and users generally are able to receive faster quotes, customized for the client’s fleet size. The company also uses dashboard cameras to both file and make claims, speeding up the claims process as well. 

Such implementation of AI is one of the near-term areas for generating real business and customer impact. Sensors are becoming more prevalent, and companies can use their data to make quicker informed decisions and customized pricing can adapt their business models that better suit their customer base. The insurance market benefits greatly from deeper quantitative modeling, and the same logic applies to risk models across a broad range of financial offerings. For instance, Nova also raised $45MM last week for leveraging customer bank data to provide a novel mechanism for accessing credit. This is machine manufacturing of financial products.

👑 Related Coverage 👑


In Partnership

5 Key Insights for Your Build vs Buy Decision

For forward-thinking leaders eyeing sustainable growth, investment in an integrated platform for managing fraud, credit, and compliance risks is no longer optional — it’s imperative.

Are you ready to empower your organization with cutting-edge technology, such as Generative AI, to not just solve today’s problems but anticipate tomorrow’s challenges?

In this FREE guide, we discuss:

  • Building vs Buying a Risk Decision Platform

  • AI Risk Decisioning: The Foundation of Risk 3.0

  • Future Proofing your Fraud & Risk Strategy

Download for Free


WEALTHTECH: BitGo acquires HeightZero bringing TradFi wealth management capabilities to digital assets for RIAs (link here)

BitGo, a custodian for digital assets, has acquired HeightZero, a digital TAMP helping wealth managers access the cryptocurrency market, for an undisclosed amount. This comes shortly after its $100MM raise earlier this summer, valued at $1.75B. BitGo has stated that these funds are primarily for growth via M&A, though it has experienced little success in acquisition follow-through. Reminder that last year, Galaxy Digital abandoned a $1.2B deal to buy BitGo, which in retrospect appears favorable for BitGo given its recent valuation. This year, it dodged a bullet by terminating a deal with Prime Trust, which we now know lost its customers’ keys and recently filed for Chapter 11 bankruptcy. 

HeightZero targets RIAs by offering tools that allow advisors to add client capital to digital assets like Bitcoin and Ethereum, which can be accessed through a web-based portal. Access is tiered and clients are charged a monthly service fee based on a percentage of AUM. There are API endpoints that also feed into other technology stacks, like TradingView. There are also services that include portfolio rebalancing, statement generation, tax loss harvesting, and automated billing — traditional wealth management features that most institutional clients have not fully adopted when it comes to investing in digital assets. The risk of fraud, market volatility, and custody continue to serve as customer pain points after instances of exchanges not being able to meet client withdrawals. These are concerns that firms like BitGo are hoping to alleviate. 

The convergence of capital, innovation, and technology within TradFi and digital assets is important for broader adoption, and while the gap is narrowing, it’s still early and the environment is contradictory. On the one hand, banking debacles such as the collapse of Silicon Valley Bank have altered the perception of what constitutes supposedly “safe” institutions. That has opened the door for digital asset-centric firms like BitGo to grow. On the other hand, despite fairly broad ownership of crypto assets by consumers, crypto industry reputation has been deeply damaged.  

Investor interest in digital assets continues to surge, driven mainly by more accessible technology platforms and traditional finance players offering services in digital assets. According to Nomura, 90% of investors consider it important to have the backing of a large financial institution before investing in crypto assets. 96% of them see digital assets as a diversification opportunity alongside traditional investments. Of course, Nomura would say that!

This deal comes at a moment for traditional RIAs and other institutional investors who may have been wary of regulatory oversight in adopting digital assets like cryptocurrencies, especially in the US. BitGo’s acquisition addresses a market need, but success will depend on how well platforms integrate and reassure wealth managers that clients can safely invest in cryptocurrencies as part of their asset allocation.

The SEC’s recent court setbacks offer some favorable tailwinds, as a host of major financial institutions currently await a decision on whether it will allow the issuance of a spot bitcoin ETF. Approvals are anticipated to add approximately $155B to Bitcoin’s market cap ($1T to crypto overall) which will have massive implications. The moment there’s a green light, expect firms with the infrastructure to accommodate institutional demand to benefit. That means they should get prepared today.

👑 Related Coverage 👑


In Partnership

Do you Know Your Customer? How to prevent fraud with biometric identity verification

👉 November 8, 2023 at 2pm ET

The stakes are high when it comes to preventing fraud and protecting customers’ data and identities. However, even for those not legally obligated, implementing KYC measures can be an effective safeguard against fraud and other illicit activities.

In this free webinar, experts from Incode, Customers Bank, and Affirm will discuss how they are leveraging the latest KYC solutions, and effective practices to enhance consumer trust and loyalty while avoiding damaging legal repercussions and reputational risks.

Register for Free


Blueprint Deep Dives

Long Take: How Wise disrupted $150T of Cross-Border Payments and earns $1B in revenue (link here)

Wise launched in 2011 with a bold mission to make moving money across borders instant, free, and convenient.

A decade later, the platform facilitates over $130B annually in cross-border payments from 10MM customers, with prices averaging 1/8th those of traditional banks. This week we uncover the strategy fuelling Wise’s growth and the mechanics behind FX transfers. We particularly touch on the paradox of a zero-fee target while growing profitability, and assess the increasing threat of stablecoins in the FX industry.

Read Long Take


How to Reach 195,000 Fintech Professionals

With a 35% open rate and 1 million post views per month, we have an engaged audience of Fintech, DeFi, and AI enthusiasts receptive to your messaging.

👉 Contact us to learn more about our custom opportunities.


🎙️ Podcast Conversation: Embedding Web3 infrastructure into Web2 platforms, with Bastion Co-Founders Nassim Eddequiouaq and Riyaz Faizullabhoy (link here)

In this conversation, we chat with Nassim Eddequiouaq and Riyaz Faizullabhoy – Co-Founders of Bastion.

Bastion Platform là gì? Đưa doanh nghiệp đến với Web3

Bastion helps companies seamlessly integrate web3 infrastructure into enterprise technologies through a compliant, white-label platform. The Bastion platform focuses on three core pillars: ownership & monetization of digital goods, smart transaction routing, and customer analytics.

Listen to Podcast


Curated Updates

Here are the rest of the updates hitting our radar.

AI


Banking


Payments


Wealthtech


Financial Operations


Shape your Future

Curious about what is shaping the future of Fintech and DeFi? 

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 by 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

Leave a comment

DeFi: Account abstraction wallet UniPass gets $7MM; Liquid staking from Ether.Fi using EigenLayer

https://lex.substack.com/p/defi-account-abstraction-wallet-unipass

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. ADOPTION: Account Labs Raises $7.7 Million for New Google-Enabled Crypto Wallet (link here)

  2. DIGITAL ASSETS: Ether.Fi Rolls Out Liquid Staking Token eETH, That Can be Restaked On EigenLayer (link here)

  3. CURATED UPDATES

If you got value from this post, let us know your thoughts! And to recommend new topics and companies for coverage, leave a note below.

Leave a comment


ADOPTION: Account Labs Raises $7.7 Million for New Google-Enabled Crypto Wallet (link here)

Account Labs has raised $7.7MM for its non-custodial stablecoin crypto wallet, UniPass, in a round led by Amber Group, MixMarvelDAO Ventures and Qiming Ventures. The wallet offering stands out from competitors with two features. Firstly, it leverages account abstraction to reduce the complexity for end-users and to enable more advanced features, akin to those in online banking. Secondly, it offers one of the easiest onboarding experiences for new users with Google login and balance top-ups with Apple Pay, Mastercard or Visa cards.

Account abstraction is at the cutting edge of advancements in the non-custodial wallet space. Traditionally, users interact with Ethereum using externally owned accounts (EOAs). EOAs are controlled by private keys and typically involve the generation of a seed phrase. They are limited in how they can interact with Ethereum, requiring each transaction to be performed individually. This poses difficulty when performing batch transactions and requires users to have a balance of ETH to cover gas costs. Account abstraction allows users to flexibly program the security and user experience associated with the account, effectively upgrading EOAs to enable them to initiate a set of EOA transactions before they are processed on Ethereum. The logic is coded into the wallet itself, which is then executed on Ethereum. 

By implementing account abstraction, UniPass offers a wallet where users do not need to hold ETH to cover gas costs, nor do they have to safeguard a complex 12-word seed phrase. The wallet abstracts the complexity of making multiple manual transactions when swapping tokens, combining token swap transactions into a single click and allowing stablecoin holdings to be utilized to cover gas. Users can use their stablecoin balances to pay for goods in any token without having to take the risk of holding the associated token. It also enables other social accounts, like Google logins, to be used to set up the wallet. Users leverage Web3 without having to understand or care about the underlying technology. 

We are fans of Account Labs’ approach as it knocks attracts non-crypto native users, who benefit from a streamlined experience and a familiar login process with Google. Apple ID and other social media logins are soon to be supported as well. Crypto payment acceptance is also on the rise, with Ferrari being the latest blue-chip company to accept tokens and 75% of retailers planning to accept crypto payments within the next year

Despite the benefits, challenges remain. While there are no KYC measures, accessing a wallet with a social account will be off-putting for some users who are more protective of connecting their identity with their digital wallet. Additionally, if you think there is a risk that your Google account might be compromised, there is the added threat that the perpetrator will now have access to your digital assets as well as your emails, photos, and the many other services connected to your Google account. Despite these risks, we think Google logins are relatively secure and this user-friendly approach is helpful to bring crypto payments to the masses.

👑 Related Coverage 👑


The AFC Policy Summit serves as a pivotal gathering for industry leaders, regulators, academics, and policymakers. 

Confirmed speakers include Congressman French Hill, Chairman of the Subcommittee on Digital Assets, Financial Technology & Inclusion, Mark Gould, Chief Payments Executive, Federal Reserve Financial Systems, among many more

👉Register before 11:59pm October 20 and SAVE 20%!


DIGITAL ASSETS: Ether.Fi Rolls Out Liquid Staking Token eETH, That Can be Restaked On EigenLayer (link here)

Ether.Fi, a non-custodial liquid staking protocol, has launched its liquid staking token, eETH, on Ethereum’s Goerli testnet in preparation for its mainnet launch on November 6. The launch coincides with ongoing scrutiny surrounding Lido Finance, the largest liquid staking protocol in terms of TVL, over its refusal to self-limit its staking.

Ether.Fi offers liquid staking, which allows users to earn rewards by validating a network while maintaining the flexibility to invest their locked funds elsewhere. Custodial and centralized exchanges, like Coinbase, offer staking services that consolidate large pools of ETH for multiple validators. Such centralization poses a risk to the network’s security, as it creates a concentrated target. Ether.Fi enables users to retain control over Ethereum validator operations, whereby users maintain custody over their assets and interact with other protocols, effectively mitigating counterparty risk.

eETH, the liquid staking derivative offered by Ether.Fi, is an ERC-20 token representing a claim on staked ETH or ETH held in the platform’s liquidity pool. Through a rebase mechanism, eETH holders receive an automatic distribution of staking rewards based on their share of the total staked ETH. What sets eETH apart from competitors is its integration with EigenLayer, as staking with eETH on EtherFi automatically restakes on EigenLayer. Think of it as native restaked ETH. 

However, in our previous analysis of EigenLayer, we highlighted the potential risks of a rush to farm new tokens using staked ETH, which could expose black swan risks due to inherent rehypothecation. Another concern is Lido’s validators controlling 31.54% of the staked Ether’s supply. This can lead to cartelization and poses risks to Ethereum and pooled capital, especially when critical consensus thresholds are exceeded.

To address these concerns, Ether.Fi is implementing safeguards in its smart contracts to limit its staking to a maximum of 25% of both the staked Ether’s supply and Ethereum’s validator headcount. Lido will hold a dominant position for the foreseeable future. However, we anticipate that capital allocators will become increasingly aware of the risks and seek out alternative protocols, leading to a wider distribution of TVL across liquid staking protocols.

That said, there is also risk in the nesting dolls of staking assets, no matter how much we use the word “decentralized”. Sometimes, it is alright to just put money in a bank.  

👑 Related Coverage 👑


How to Reach 195,000 Fintech Professionals

With a 35% open rate and 1 million post views per month, we have an engaged audience of Fintech, DeFi, and AI enthusiasts receptive to your messaging.
👉 Contact us to learn more about our custom opportunities.


In Partnership

Mule in the middle: Where all new account fraud, ATO & scam money lands

👉 TODAY at 2pm ET

Financial Institutions of all stripes are grappling with the uptick of money laundering accounts in their portfolio today. All of this bad money often lands into a web of interconnected accounts that are used to launder it.

Join experts from BioCatch and Varo as they discuss:

  • The common fraud schemes that are in use today

  • The new-age technology that is effective in protection

  • The biggest pain points for all banks and fintechs

Register for Free


Curated Updates

Here are the rest of the updates hitting our radar.

Financial Institutions and Adoption 

BitGo Buys Crypto Wealth Management Platform HeightZero – CoinDesk

EU Formally Agrees On New Crypto Tax Data Sharing Rules – CoinDesk

Trezor Launches Two New Devices To Help Onboard Crypto Newbies – TechCrunch

Ferrari Will Now Accept Crypto Payments For Its Cars in the U.S. – nft now


DeFi and Digital Assets

Account Labs Raises $7.7MM As FTX’s Demise Leads To Crypto Self-custody Growth – TechCrunch

Elixir Protocol Secures $7.5MM Series A Funding At $100MM Valuation – The Block

AI Creator Bot Platform MyShell Raises $5.6MM At $57MM Valuation – InvestingCube

Uniswap To Charge 0.15% Swap Fee On Website And Wallet – The Defiant

Lido Exits Solana Following Community Vote & Lido Faces 20 ETH Slashing Penalty – The Defiant

Coinbase Advanced Offers Perpetual Futures To Non-US Customers – Blockworks


Blockchain Protocols

Scroll Suffers From Weak Adoption One Week After Mainnet Launch – The Defiant

Stellar, Early Blockchain Built For Payments, Adds Smart Contracts To Take On Ethereum – CoinDesk

Ethereum Restaking: Blockchain Innovation Or Dangerous House Of Cards? – Cointelegraph

Manta’s Layer-2 Blockchain Already Plans To Ditch OP Stack For Polygon – CoinDesk


NFTs, DAOs and the Metaverse

Yuga Labs CEO Addresses Community Criticism – The Defiant

Open Metaverse Alliance Seeks Universal Standard For Creator Royalties – nft now

Bitcoin Metaverse Token Pre-Sale From ‘Life Beyond’ Team Raises $3.5MM – Decrypt


Shape your Future

Curious about what is shaping the future of Fintech and DeFi? 

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

    Go 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, Michiel, Bo

Leave a comment

Fintech: $30B in fraud targeting seniors, Carefull raises $16MM to protect elderly

https://lex.substack.com/p/fintech-carefull-raises-16mm-to-battle

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.


Hi Fintech Futurists — 

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

  1. AI: Carefull lands $16.5M to shield seniors from financial fraud (link here)

  2. LONG TAKE: The difference between Generative AI and Machine Learning for Finance (link here)

  3. PODCAST CONVERSATION: Mastering fintech from public to private investments, with Portage CEO Adam Felesky (link here)

  4. 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

AI: Carefull lands $16.5M to shield seniors from financial fraud (link here)

Carefull has raised $16.5MM in Series A funding, bringing total funds raised to $19.7MM, as it builds tools to prevent financial fraud targeted at seniors. Currently, seniors lose $28.3B to criminals annually. Further, 72% of scams are perpetrated by people known to the victims, such as advisors, friends and family. Seniors are often targeted for their socioeconomic circumstances, lack of technical proficiency, and even the declining state of their health.

Carefull focuses on the association between cognitive decline and financial vulnerability. Research indicates that there is a link between potential early warning signs of certain neurological disorders and financial issues. For instance, Johns Hopkins research shows that missing payments could indicate the beginnings of dementia, with those affected by Alzheimer’s developing subprime credit up to six years before their diagnosis. 

Carefull’s solution is using AI to scan customer financial accounts to identify activity indicative of financial exploitation. Its models claim to be able to identify behavioral and anomalous financial patterns, which are then flagged for the user or financial institution. Beyond algorithmic monitoring, Carefull also assists with negotiating and canceling bills, performs identity and credit monitoring, and reviews home titles quarterly to identify fraud and tampering. Carefull also works with banks and asset managers as customers, compiling the issues faced by their users to give a holistic view of threats and trends. For instance, Carefull may notice that users within a particular town are falling victim to mortgage scams and can flag this to the relevant institution to identify culprits or to provide warnings to users within that geography.  

Carefull sells directly to customers for $299 a year or $29 a month, with enterprise plans available for advisors and wealth managers that enables them to offer the service to clients for free. We like Carefull for its psychological research approach to financial fraud. There are other competitors in the AI fraud detection space, including Fraugster and Hawk AI, but this is the first player we have seen specifically focusing on the challenges faced by seniors. Not only does it help those more vulnerable who may not have the necessary support, but it also takes the workload off of caregivers who may be talented at elderly care, but not at personal financial management and/or fraud detection.  

👑Related Coverage👑


In Partnership

Mule in the middle: Where all new account fraud, ATO & scam money lands

👉October 19 at 2pm ET

Financial Institutions of all stripes are grappling with the uptick of money laundering accounts in their portfolio today. All of this bad money often lands into a web of interconnected accounts that are used to launder it.

Join experts from BioCatch and Varo as they discuss:

  • The common fraud schemes that are in use today

  • The new-age technology that is effective in protection

  • The biggest pain points for all banks and fintechs

Register for Free


How to Reach 195,000 Fintech Professionals

With a 35% open rate and 1 million post views per month, we have an engaged audience of Fintech, DeFi, and AI enthusiasts receptive to your messaging. Contact us to learn more about our custom opportunities.


Blueprint Deep Dives

Long Take: The difference between Generative AI and Machine Learning for Finance (link here)

We delve into the progression and potential of generative AI in the current technological landscape.

Examining generative AI’s position in the hype cycle, we highlight how this technology transcends mere decision-making to actively create human-like content, primarily appealing to human senses. Drawing parallels to transformative tech shifts like personal computers and mobile phones, the potential for generative AI to become a core part of human interaction and productivity is underscored. Yet, amidst the optimism, there’s caution to discern between genuine utility and mere novelty as the technology evolves. Finally, we explain the difference between machine learning and generative AI applications in financial services.

Read Long Take


The AFC Policy Summit serves as a pivotal gathering for industry leaders, regulators, academics, and policymakers. 

Confirmed speakers include Congressman French Hill, Chairman of the Subcommittee on Digital Assets, Financial Technology & Inclusion, Mark Gould, Chief Payments Executive, Federal Reserve Financial Systems, among many more
👉Register before 11:59pm October 20 and SAVE 20%!


Podcast Conversation: Mastering fintech from public to private investments, with Portage CEO Adam Felesky (link here)

In this conversation, we chat with Adam Felesky – Co-Founder and CEO of Portage.

Percent change in median pre-money valuation vs Q1 2022

Adam is responsible for overseeing Portage’s strategy to invest in leading fintech opportunities on a global basis. Within the investment portfolio, Adam is a board director of Alpaca, Boosted.AI, Borrowell, Clark, Hellas Direct, KOHO, LoanStreet, Socotra, and TheGuarantors and executive chairman for Grayhawk Investment Strategies. Adam is also a Managing Partner and a member of the Management Committee at Sagard, a multi-strategy private asset manager.

Listen to Podcast


Curated Updates

Here are the rest of the updates hitting our radar.

AI


Payments


Wealthtech


Financial Operations


Office Hours: Surviving the Trough with Federico Travella

👉October 19 at 11am ET

Office Hours is a live, digital roundtable discussion exclusively for Premium Members of The Fintech Blueprint community. This Thursday we welcome Federico Travella, Founding CEO & Executive Chairman, Novicap for a conversation about navigating the current environment and the levers founders have in the absence of venture capital.

All Premium Members receive a zoom link prior to the event. If you are not yet a Premium Member, subscribe here to join this week’s Office Hours.


Shape your Future

Curious about what is shaping the future of Fintech and DeFi? 

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

Leave a comment

Fintech: SoftBank unblocks Revolut from getting UK banking license; Apex launches Fractional Fixed Income

https://lex.substack.com/p/fintech-softbank-unblocks-revolut

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.


Hi Fintech Futurists — 

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

  1. NEOBANKS: Revolut strikes share deal with SoftBank to remove barrier to UK license (link here)

  2. WEALTHTECH: Apex to Launch Fractional Fixed Income, Opening Up Low-Cost Access for Retail Investors to Bonds in Industry First (link here)

  3. LONG TAKE: Is Apple Wallet’s Open Banking integration a fintech extinction event? (link here)

  4. PODCAST CONVERSATION: Applying artificial intelligence to investing and finance, with Auquan CEO Chandini Jain (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

NEOBANKS: Revolut strikes share deal with SoftBank to remove barrier to UK license (link here)

Revolut, the most valuable UK neobank with nearly 35MM customers, wants a banking license in order to generate net interest and lend out capital. But it does not have one in the UK, its largest market, even after applying over two years ago. One of the blockers is that the Bank of England (BoE) has asked Revolut to collapse its six classes of shares, which are the result of its multiple funding rounds over the past 8 years. Not surprisingly, if you are an investor holding a liquidation preference, this is an unappealing request.

Investors TCV, Tiger Global Management, Ribbit Capital and Balderton Capital agreed to transfer shares into a single class. However, the final hurdle has been SoftBank, which led an $800MM round in 2021, valuing Revolut at $33B.

Despite the limitations from not having a license — preventing the neobank from offering lending services or accessing the UK deposit insurance scheme — SoftBank has been unwilling to give up its priority shares without compensation. The fund was asking for twice the amount of common stock in exchange for its preference. But it looks like SoftBank relented, and a deal has been finalized that does not require new issuance to SoftBank. This implicitly means they are taking a write-down.

Source – Revolut Bank Lithuania growth

Hurdles still remain as Revolut is still under pressure by the BoE to produce clean and punctual financial accounts after reporting issues in 2021 and 2022. The neobank also came under fire for failing to block accounts, worth £1.7MM, flagged as suspicious by the UK’s National Crime Agency. 

Still, consumer sentiment remains high in neobanks, with over 80% of users likely to recommend their neobank services compared to 60% for traditional banks, and profitability, or at least reduced losses, are starting to be realized. 

While Revolut has had an EU banking license in Lithuania as of 2021, but a UK banking license also provides the legitimacy needed for applying to other major national regulators, such as in the US, Singapore, and Australia. If Revolut can obtain those, its offering will grow closer to financial product manufacturing, which in turn will drive profits.

👑 Related Coverage 👑


In Partnership

Trends in Digital Lending for Europe 2024: AI, Automation, Embedded Finance and more

👉October 10 at 2pm BST

As we begin to look to 2024, we can expect new technology to continue to have a profound impact on digital lending. This webinar features a panel of leading experts who will discuss some of the major trends for the next year.

Topics include: 

  • Why AI/ML models will become more important and how to deploy them quickly

  • How open banking can help drive underwriting efficiencies

  • How innovative lenders are using automation in their credit decisions 

  • What new opportunities are provided by embedded lending

  • How to navigate the new normal of high cost of capital

Register Now


WEALTHTECH: Apex to Launch Fractional Fixed Income, Opening Up Low-Cost Access for Retail Investors to Bonds in Industry First (link here)

Apex Fintech Solutions launched a fractional fixed income investing platform with Moment Technology. Since 2012, Apex has been powering many of the functionalities of modern fintech platforms — custody & clearing, fractional trading, and digital account management. As of June, they serve over $120B in client assets across 24MM+ accounts, with customers including brokerages and RIAs like Ally Invest, Betterment, eToro, M1 Finance, and SoFi Wealth.

The timing of the new product aligns well with the macro regime shift towards fixed income. Investors are paying close attention to rates, particularly in US treasuries, which are now at 16-year highs, and the selloff of long-duration treasuries, like TLT (iShares 20 Plus Year Treasury Bond ET), approaching 3 years of consecutive negative returns. 

While asset allocation models using a traditional 60/40 portfolio have been hurting, the risk-free rate on a US 2-YR note stands at 5.08%. 

The uncertainty of a looming recession has seen investor funds flow to short-term bonds for safety and, in other cases, pile into cash via Money Market funds. These dynamics have given fixed income a re-birth after a dormant decade of low rates. In the words of Churchill, “Don’t waste a good crisis!”

This is a positive dynamic for tech-forward custodians like Apex, and other embedded investment tech platforms. The convergence in asset management over the last few years has eliminated many of the traditional barriers to entry (illiquidity, high investment minimums, fees, pricing opacity, dealer-to-dealer relationships, among others) and grown retail participation across asset classes like crypto and alternatives — firms like Moonfare, Yieldstreet, Fundrise, Equi come to mind. 

Bonds, and other fixed income products, historically have high barriers to entry, but the current economics and customer demand will chip away at that over time. Wealthtechs like Wealthfront and Singapore-based exchange, BondbloX, are emerging players; crypto-native players like Ondo as well as traditional asset managers are also tokenizing these assets for easier access. Given the asset class is valued at $133T, we are excited about the news ways it becomes automated and widely available. 

👑 Related Coverage 👑


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Blueprint Deep Dives

Long Take: Is Apple Wallet’s Open Banking integration a fintech extinction event? (link here)

Sharks, once apex predators, now face decline, contrasting with the rapid evolution and growth of humans, attributed to our general intelligence.

Drawing parallels in fintech, specialized ATMs grow in underbanked areas, while adaptable smartphones, embodying human-like versatility, reshape global finance. Apple’s embrace of UK’s open banking, merging bank data with the ApplePay wallet, hints at a future where standalone bank apps might become obsolete. As tech giants potentially adopt Web3 wallets, they could overshadow national regulations, heralding a future where generative AI shapes global finance.

Read Long Take


The AFC Policy Summit serves as a pivotal gathering for industry leaders, regulators, academics, and policymakers to exchange ideas, explore emerging trends, and shape the future of responsible financial technology

Confirmed speakers include Congressman French Hill, Chairman of the Subcommittee on Digital Assets, Financial Technology & Inclusion, Congressman Mike Flood, Renaud Leplanche, CEO, Upgrade, Ram Palaniappan, CEO, Earnin, among many more. 
👉Register to Attend


Podcast Conversation: Applying artificial intelligence to investing and finance, with Auquan CEO Chandini Jain (link here)

In this conversation, we chat with Chandini Jain – CEO and founder of Auquan. She has 6+ years of global experience in finance.

How can generative AI improve the customer experience? | ZDNET

She started her career with Deutsche Bank Mumbai/New York and worked as a derivatives trader with Optiver, the world’s largest market-maker, in Chicago and Amsterdam from 2013-2016. Since 2017, she has been working on Auquan, an early-stage fintech startup bridging the gap between data science and finance. At Auquan, she is employing new and cutting-edge ML and Deep Learning techniques to solve financial prediction problems.

Listen to Podcast


Curated Updates

Here are the rest of the updates hitting our radar.

AI


Payments


Wealthtech


Financial Operations


Shape your Future

Curious about what is shaping the future of Fintech and DeFi? 

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Fintech: WhatsApp in-chat payments launching in India; $131MM valuation for Wealthtech Farther

https://lex.substack.com/p/fintech-whatsapp-in-chat-payments

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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Hi Fintech Futurists — 

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

  1. PAYTECH: WhatsApp launches in-chat payments service for businesses in India (link here)

  2. WEALTHTECH: Farther closes Series B funding round to gain $131MM valuation (link here)

  3. LONG TAKE: How Decentralized Physical Infrastructure (DePIN) impacts finance and the machine economy (link here)

  4. PODCAST CONVERSATION: How to build a $60B volume global payments platform, with Rapyd CEO Arik Shtilman (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


Fintech Meetup Delivers Results! Fintech Meetup (March 3-6) is the best place to find new business, partnerships and opportunities. Attendees & sponsors say Fintech Meetup is “the highest ROI event” with reasonably priced sponsorships, tickets, and rooms. Meet everyone for any reason across every use case over 45,000+ double opt-in meetings, and Network with 5,000+ attendees.

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Digital Investment & Banking Short Takes

PAYTECH: WhatsApp launches in-chat payments service for businesses in India (link here)

The world’s most popular messaging application, WhatsApp, owned by one of the world’s most powerful tech companies, Meta, is bringing in-chat payments to the world’s most populous country, India.

The feature enables users to pay for products and services directly from within the application using WhatsApp Pay, their debit or credit card, or India’s Unified Payments Interface. While consumers and businesses transact in-app without fees, the revenue model leans into a traditional Meta motion — businesses pay to message their customers. It is a model that has been tried and tested by WhatsApp in Singapore and Brazil and is now coming to its biggest market. 

With over 400MM WhatsApp users in India, this feature could turn the app into the country’s leading e-commerce application. Already, businesses using Meta’s click-to-message ads have led to a $10B revenue run-rate. This move not only lays the groundwork for diversifying revenue, but also adds significant financial data to better customize and target advertising. For businesses using the application, in-message transactions make it easier to close sales, while consumers benefit from fewer steps in the checkout process. 

One example of customer success so far is JioMart, the e-commerce offering of Jio, in which Meta invested $5.8B in in 2020. Since enabling in-app payments, customers using the company’s WhatsApp have grown by 900%.  

This move allows WhatsApp to take one step closer to super-app status, which WeChat famously achieved nearly a decade ago as it integrated its instant messaging service with digital wallet functionality. WeChat itself has 1.6B monthly active users and annual revenue of $17.5B — over 20x more than WhatsApp’s $790MM in 2021.

While efforts to build this chat payments functionality started in 2018, regulatory uncertainty in India halted progression. With this launch, we see India as a significant revenue opportunity and an ideal — if massive — testbed. Once these features spread west, there may be a future in which WhatsApp has everything you need on your phone.

Note, of course, the importance of the Unified Payments Interface here, and compare notes to the CBDCs in China and Nigeria, as well as Brazil’s Pix payments.

👑 Related Coverage 👑


In Partnership

Trends in Digital Lending for 2024: AI, Automation, Embedded Finance and more

👉October 10 at 2pm BST (9am ET)

As we begin to look to 2024, we can expect new technology to continue to have a profound impact on digital lending. This webinar features a panel of leading experts who will discuss some of the major trends for the next year.

Topics include: 

  • Why AI/ML models will become more important and how to deploy them quickly

  • How open banking can help drive underwriting efficiencies

  • How innovative lenders are using automation in their credit decisions 

  • What new opportunities are provided by embedded lending

  • How to navigate the new normal of high cost of capital

    Register Now


WEALTHTECH: Farther closes Series B funding round to gain $131MM valuation (link here)

Digital RIA Farther closed a $31MM series B round this week at a $131MM valuation, with participation from Lightspeed Venture Partners. Since its founding in 2019, the firm has grown its clientele to 3,600 accounts and AUM to $675MM, according to its latest ADV filing in June. While the pathway to $1B+ in AUM is likely in the not-so-distant future, it is a drop in the bucket for the scale investors hope the firm can achieve.

Success in the RIA sector is still fundamentally benchmarked against the scale of AUM. Traditional asset managers are worth about 2% of assets (e.g., $700MM AUM = $14MM valuation), while roboadvisors can be comped to Wealthfront’s aborted $1.4B acquisition at $30B in AUM, or about 5% of AUM. Farther is growing fast, but is expensive relative to the market, likely at 10% of AUM.

For now, Farther appears to be deploying its funds, $53MM to date, to improve inefficiencies across the RIA tech stack — a common approach undertaken by independent RIAs with a hybrid tech/advisor business model. (See our related coverage of Savvy Wealth). Sixty-five percent of advisors lost business due to outdated wealth management technology. To solve for this, Farther has hired aggressively for tech, product and engineering positions.

A lot of advisor work is not done in front of the client, and is wrapped up in admin and ops. Farther can improve the onboarding process and unlock digital client engagement. According to a poll done by F2, less than 50% of RIAs are satisfied with the native tools provided by their existing custodian, and 44% said their custodian does not offer necessary integrations. 

Farther also hopes to challenge the advisor compensation structure. Currently, it hires in-house advisors using a model that pays them 50% for the first $500,000 in production and up to 75% over that. All advisors work remotely and receive equity as part of their compensation package. Farther charges up to 1.5% of all assets including cash and $1,000 per hour for planning. We note that 89% of RIAs still generate revenue via wrap fee programs (charging for the % of all AUM), though this figure has been declining. 

As the fundraising environment remains subdued, it is encouraging to see investor activity in wealthtech. We believe AI-powered financial guidance will bring a new era of financial advisory, making it clear that firms like Farther have a lot of white space to grow into.

On the flip-side, there is no shortage of technology to serve RIAs, so the company would do well to remember that technological innovation is but one lever of success. There are plenty of TAMPs and portfolio management systems building software. Striking the right balance between automation and maintaining an engaging and human-centred service that can drive AUM growth will likely be the litmus test for enduring success in this sector. Put another way, focus on the go-to-market.

👑 Related Coverage 👑


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Blueprint Deep Dives

Long Take: How Decentralized Physical Infrastructure (DePIN) impacts finance and the machine economy (link here)

We dive further into the concept of a machine economy, and how it intertwines the Internet of Things (IoT), the Metaverse’s economic structure, and visionary sci-fi narratives.

Top 20 Stocks Drive Most of S&P 500 Returns

Current data from Goldman reveals a shift in the S&P 500, where top tech companies dominate, indicating their increasing influence in the digital realm. The DePIN (Decentralized Physical Infrastructure Networks) sector is emerging in Web3, aiming to anchor digital twins and commerce avatars into decentralized platforms. As finance evolves, we’re not just observing hardware devices interacting financially; we’re witnessing the birth of self-driving money, where software representations of real-world entities play pivotal roles in our digital economic future.

Read Long Take


Podcast Conversation: How to build a $60B volume global payments platform, with Rapyd CEO Arik Shtilman (link here)

In this conversation, we chat with Arik Shtilman – CEO and co-founder of Rapyd, a leading fintech-as-a-service platform. Arik founded Rapyd in 2016 with a singular goal in mind: to provide all the tools businesses need to create payment, payout and fintech experiences anywhere in the world.

Rapyd CEO Arik Shtilman: How to Thrive and Build Bold in 2023 - Rapyd

Prior to starting Rapyd, Arik realized there was a massive need to create a way for fintech applications to scale globally so businesses could invest in expansion – not spend critical time attempting to build complex payments infrastructure. To solve this glaring challenge hindering growth in the payments space, Arik launched Rapyd as the first “Fintech-as-a-Service” product in the industry, the category-leading full stack of integrated payments, commerce and financial services capabilities that can be seamlessly embedded into any application

Listen to Podcast


Curated Updates

Here are the rest of the updates hitting our radar.

Neobanks


Payments


Wealthtech


Financial Operations


Shape your Future

Curious about what is shaping the future of Fintech and DeFi? 

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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DeFi: Proof of Play raises $33MM; Ordinal’s creator launches Runes

https://lex.substack.com/p/defi-proof-of-play-raises-33mm-ordinals

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. GAMING: Proof of Play Raises $33MM, Wants To Build ‘Forever Games’ On-Chain (link here)

  2. DIGITAL ASSETS: Bitcoin Ordinals Creator Announces New Fungible Token Protocol ‘Runes’ (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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GAMING: Proof of Play Raises $33MM, Wants To Build ‘Forever Games’ On-Chain (link here)

Proof of Play, a Web3 gaming startup helmed by Amitt Mahajan, one of the creators of Farmville, raised $33MM in a Seed funding round led by a16z and Greenoaks Capital. Proof of Play aims to develop games that diverge from the typical “play-to-earn” models. Their inaugural on-chain game, Pirate Nation, is a social RPG whose game contracts serve as a foundation for developers to craft their own games or expand within the Pirate Nation universe – e.g., allowing developers to create games featuring Pirate Nation NFTs or individual pirate characters. It debuted in a closed beta in December on Polygon and has now migrated to Arbitrium Nova.

Web3 gaming terms like play-to-earn, gas fees, smart contracts, wallets, and NFTs have caused confusion among gamers. Damian Bartlett, team lead at W3E Gaming, provides a realistic perspective on the matter:

“When I first came over from Web2 to Web3, it wasn’t a quick decision. I had looked at it for several months and just got so confused that I didn’t take that step sooner. There are a lot of games where you sign up because something catches your eye. And then you’re suddenly hit with wallets; you’re hit with seed phrases and all these terms that are just very confusing to somebody new to Web3 gaming.”

Proof of Play aims to abstract away the UX hell presented in Web3 player onboarding and gameplay via Mirroring and its Game Wallet. Players authorize the Game Wallet just once using their primary Web3 wallet (e.g., MetaMask). Subsequently, this Game Wallet executes in-game actions without any fees, popups, or transactions to sign. The Game Wallet does not store any funds or player assets, meaning if someone were to gain access to it, they would only be able to perform gameplay actions on the player’s behalf—while the player’s assets remain in their main wallet.

Pirate Nation also uses meta transactions to streamline transaction authorization. When players sign a transaction, a relay server comes into play and acts as an intermediary, covering the associated fees on behalf of the players. Next, the relay server broadcasts the transaction through a Trusted Forwarder contract, which (1) verifies the transaction’s signature, ensuring its authenticity, and (2) forwards the transaction to the Game Contracts for processing. This approach eliminates the need for players to be aware of the tokens associated with the network they interact with. 

Pirate Nations introduced Mirroring as a better alternative to traditional bridging, which allows users to transfer assets between two separate networks. Unlike bridging, Mirroring ensures ownership security through a single-chain purchase process, eliminating additional transfer steps between networks. Specifically, when a user buys a token (e.g., an NFT) on a Layer 1 network, Pirate Nations monitors those transfers. They employ their mirroring system to temporarily store the purchase in their L2 address. After confirming the block, the token is transferred to the new owner. 

Overall, the play-to-earn approach, coupled with less-than-ideal UX, has impeded the widespread adoption of Web3 games. Take, for instance, the leading Web3 game in Q2 2023, Alien Worlds, boasting 4x the daily unique active wallets compared to the second most popular game. In Alien Worlds, players mainly engage by mining Trilium, the game’s native token, using a virtual ‘Shovel’ on designated land plots. They can then transfer these tokens to Binance Smart Chain and increase their Trilium holdings via staking. The process involves simply clicking a button and accepting a transaction request popup to initiate mining. Now, let’s juxtapose this with GTA V, a Web2 game released a decade ago.

We like Proof of Play’s emphasis on making games fun without relying on play-to-earn mechanics. Another notable initiative is Dappicom, a non-profit, open-source project aiming to emulate classic Nintendo games on-chain. With gaming tech projects like ImmutableX equipping developers with SDKs, APIs, and a robust infrastructure, coupled with hundreds of millions poured into Web3 gaming each month, we envision more sustainable game economies; ones that extend beyond mining and staking tokens as their core focus. 

👑 Related Coverage 👑


In Partnership

[Webinar] Trends in Digital Lending for 2024: AI, Automation, Embedded Finance and more

👉October 10 at 2pm BST (9am ET)

It is more important than ever to understand the trends in consumer lending that will drive the industry forward into 2024. This webinar features a panel of leading experts who will discuss some of the major trends for the next year. 

Topics include: 

  • Why AI/ML models will become more important and how to deploy them quickly

  • How open banking can help drive underwriting efficiencies

  • How innovative lenders are using automation in their credit decisions 

  • What new opportunities are provided by embedded lending

  • How to navigate the new normal of high cost of capital

Register for Free


DIGITAL ASSETS: Bitcoin Ordinals Creator Announces New Fungible Token Protocol ‘Runes’ (link here)

Casey Rodarmor, the creator of Bitcoin Ordinals protocol, has launched his latest project – Runes. For context, Ordinals act as a system for numbering and tracking satoshis – the smallest monetary unit in the bitcoin cryptocurrency system, equivalent to one hundred millionth of a bitcoin. Each Ordinal is a non-fungible token assigned to a satoshi, which can then be tracked, traded and inscribed with data like images and videos. In effect, enabling users to create tokens, known as BRC-20 tokens, on Bitcoin which inherit the network’s security. 

The new protocol Runes looks to scale fungible tokens built on top of the Bitcoin network, while solving some of the issues inherent with Ordinals. Ordinals current design impacts network latency and transaction fees as each Ordinals transaction requires a corresponding Bitcoin transaction. The challenge comes with Unspent Transaction Output (UTXO). UTXO is the balance of an address after a transaction has been made, equating to the total balance remaining after the output of a transaction – the diagram below highlights the UTXO in yellow. While each Ordinal requires a new transaction, with the UTXO unused, Runes’ token balances are instead held by UTXOs and each transaction can hold any amount of Runes. This enables much greater efficiency, flexibility and scalability compared to Ordinals.  

While several efforts have been made to create fungible tokens protocols on Bitcoin each exhibit their own challenges. With BRC-20s the challenge comes with not being UTXO-based, others like Omni Layer and Counterparty require a native token to operate fully and also don’t take advantage of UTXO. Runes have the flexibility and scalability to make Bitcoin tokens a feasible option for projects. One challenge we see around building apps around Runes is that it would require managing the UTXOs of different tokens within a wallet, which may add operational complexity for builders. 

Our takeaway is that Ordinals will continue to be the go-to for inscriptions and NFTs on the Bitcoin network, whilst the Runes protocols will allow dapps to create their own fungible tokens on the network. The interest and demand is already being made clear – since launching two days ago Runes already has more developers than BRC-20. That’s a very sizeable footprint already given the popularity of Ordinals, which witnessed more than 350k daily inscriptions in July.

👑 Related Coverage 👑


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Curated Updates

Here are the rest of the updates hitting our radar.

Financial Institutions and Adoption 

Chase U.K. to Block Crypto Payments Citing Fraud, Scams – CoinDesk

Grab Launches Web3 Wallet For Singaporean Users – The Defiant

Cygnetise Secures £2.5MM To Deploy Blockchain For Authorised Signatory Sharing – Tech Funding News


DeFi and Digital Assets

On-chain Leverage Trading Platform Avantis Labs Raises $4MM Seed Round Led By Pantera Capital – TechCrunch

Prisma Finance Pulls In $30MM With LST-backed mkUSD Stablecoin – The Defiant

Celestia Unveils Airdrop and Launch Plans – The Defiant

MicroStrategy Bought 5,445 Bitcoin for $150M Since August – CoinDesk

Unclaimed ARB Tokens Worth $56MM Returned To DAO – The Defiant

DraftKings’ Billionaire-Backed Crypto Analytics Firm CoinScan Raises $6.3MM – CoinDesk


Blockchain Protocols

Announcing Our $5.15MM Seed Round – Essential

Arbitrum Reboots Odyssey Campaign As Rival Layer 2s Gain Ground – The Defiant

Ethereum Developers Debate New Standard For On-chain Audit Reports – The Defiant

FhenixIO Raises $7.5MM To Bring Fully Homomorphic Encryption (FHE) To Smart Contracts – X


NFTs, DAOs and the Metaverse

ApeCoin Community To Acquire Top NFTs Through New DAO – The Defiant

BAYC x BAPE Unveil Streetwear Collaboration – nft now

Walmart Introduces Pudgy Toys In 2,000 Stores – The Defiant

Milan Fashion Week Showcased NFT-Linked Designer Shoe – nft now


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


Leave a comment

Fintech: Earned-Wage-Access ZayZoon raises $35MM; Mesh’s $22MM for embedded finance and digital asset APIs

https://lex.substack.com/p/fintech-earned-wage-access-zayzoon

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.


Hi Fintech Futurists — 

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

  1. LENDING: ZayZoon, which lends employees money for a fee, raises $34.5MM (link here)

  2. EMBEDDED FINANCE: Mesh Raises $22MM in Series A Funding To Redefine the Embedded Financial Ecosystem (link here)

  3. LONG TAKE: Comparing MetaMask’s Snappy Transition to a Developer Platform with Apple, Ant Financial, and ChatGPT (link here)

  4. PODCAST CONVERSATION: MoneyLion’s evolution from neobank to financial education marketplace, with CMO Cynthia Kleinbaum Milner (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

LENDING: ZayZoon, which lends employees money for a fee, raises $34.5MM (link here)

Fintech lender ZayZoon has raised $34.5MM in Series B funding from Framework, EDC, and ATB Financial. ZayZoon is an earned waged access (EWA) fintech, providing employees with a loan for wages earned but not yet been paid. Users pay a $5 monthly fee and can withdraw between $20-200 every pay period. There is also a no-fee option, which pays employees with gift cards for brands like Target and CVS, as well as requiring personal information (date of birth, gender, name, etc.) for advertising purposes.  

Since its founding 10 years ago, the company has acquired 10,000+ business customers in the US and over 160 payroll provider partners. The product is primarily geared towards low-income workers, who may need early access to funds for bills and other monetary needs, with the intention of keeping them away from payday loans and overdraft bank fees. ZayZoon also claims to help employers recruit and retain employees by providing them with more flexible pay arrangements. 

Despite the positive claim of helping customers avoid taking on loans with interest, many are beginning to decry EWA. Those against it argue that ZayZoon and other EWA companies should be considered loans under the U.S. Truth in Lending Act. This act provides protections for users, including requiring lenders, to provide an advance notice before increasing some charges. It is worth noting that ZayZoon users are not legally obligated to repay the advance paychecks and no legal action will be pursued in that instance.  

Other criticisms argue that ZayZoon simply prolongs the challenges faced by their users. The $5 fees add up for low-income workers and may eventually culminate in users taking on the predatory loans that EWA companies claim to help them avoid. For context, 20% of  US families do not have two weeks of liquid savings, highlighting how easy it can be to dig a deeper financial hole, even with small loans at a set price. Regarding the benefits to companies, a study by Walmart suggests that providing employees with access to earned wages early typically results in employees quitting faster. Yet despite these challenges, EWA usage has grown significantly in recent years with workers accessing $9.5B in 2020 via EWA apps vs $3.2B in 2018

Regulators are beginning to take note; for instance, Nevada now requires EWA providers to be audited, and reviewed by the state. Missouri also passed a law requiring EWA companies to register with the state, as well as to keep all payments records for at least two years. The challenges posed by EWA may continue to scale as adoption increases, and more studies on the adverse effects need to be  conducted before EWA companies are reviewed at a federal level.

Notably, if money was earned and disbursed in real time (which it can be), then employees would be better off, and employers would no longer be implicitly subsidized by their workers.


EMBEDDED FINANCE: Mesh Raises $22MM in Series A Funding To Redefine the Embedded Financial Ecosystem (link here)

Mesh, previously known as Front Finance, has raised $22MM in a Series A led by Money Forward, Inc. and participation from investors like Galaxy, Samsung Next, Streamlined Ventures, and others, bringing total funds raised to $32MM.

Founded in 2020, Mesh has its sights set on the convergence of traditional finance (TradFi) and decentralized finance (DeFi) through the use of 300+ API integrations that can connect to brokerages, exchanges, a variety of self-custody and crypto/Web3 wallets and have it all in one unified view. These integrations allow both retail and institutional customers to bring together a variety of financial activities — digital asset transfers, crypto payments, and real-time account aggregation that includes crypto and equities. 

While we believe this convergence is inevitable, the necessary infrastructure to achieve this level of interoperability, at scale, is still in its early innings. 

For the better part of a decade, Wealthtechs, Fintechs, and TradFi domains have endeavored to build and actualize an “all-in-one” concept for traditional finance.

Whether it’s one platform to view a customer’s investments from various accounts — as demonstrated by platforms like Arta Finance, Masttro, AdvisorEngine, and Empower — or one app to service a customer’s banking, lending and cash management needs — like SoFi, Intuit Mint, Betterment, and Revolut — the result is an industry still fragmented, but experiencing rapid maturity. 

Institutions are recognizing the importance of integrating digital assets with traditional products, but technology integration is still complex. A study of advisors by wealthtech Orion revealed that 1 in 10 say their firm has all the technology solutions it needs. Meanwhile, Fidelity Digital Assets highlights that 81% of wealth managers believe digital assets play a crucial role in a portfolio and 74% plan to buy or invest in the future. 

At a time when customers are increasingly demanding a unified, connected view of their financial profiles and exposure to digital assets, the marketplace has not had enough time, yet, to offer solutions that integrate these elements in a secure way. Enter Mesh. According to its site, aggregations can be performed on a customer’s brokerage and crypto accounts without ever having to leave the app in one integration. 

Mesh has just scratched the surface of the market potential. Incumbents are still relatively untroubled; with core markets across asset classes still unchallenged. As money becomes increasingly more automated, embedded, and digital, services like these will grow faster than their analog counterparts. For a comp, see Onramp Invest and Securitize below.

👑Related Coverage👑


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Blueprint Deep Dives

Long Take: Comparing MetaMask’s Snappy Transition to a Developer Platform with Apple, Ant Financial, and ChatGPT (link here)

MetaMask, the Web3 wallet developed by Consensys, has introduced a feature called “Snaps” which enables third-party developers to create extensions enhancing the wallet’s functionalities.

The extensions can be categorized into three groups: connecting to blockchains that were previously unsupported by MetaMask, enhancing security by advising users on the safety of transactions, and improving the wallet’s usability by incorporating messaging and communication features. Contrary to traditional applications where multiple financial accounts are tied to a single identity, the Web3 space utilizes financial identity to link various media and information channels, transitioning the wallet into a platform that is more secure, interconnected, and social. We highlight the issues around platform and network models, resembling the open architecture that has powered the success of platforms like Apple.

Read Long Take


Podcast Conversation: MoneyLion’s evolution from neobank to financial education marketplace, with CMO Cynthia Kleinbaum Milner (link here)

In this conversation, we chat with Cynthia Kleinbaum Milner – Chief Marketing Officer at MoneyLion, a FinTech company providing financial access to Middle America. She is accountable for brand building, customer acquisition, and customer retention efforts on both the business’s B2C and B2B sides of the business. 

MoneyLion Profile (NYSE: ML): are investors missing out on this rapidly growing neobank?

Prior to joining MoneyLion, Mrs. Milner was instrumental in the digital transformation of Walmart, where she served as the marketing leader for the CEO’s top-priority projects. She led the launch of Walmart’s highly- anticipated membership program, Walmart+; the expansion of its Online Grocery business during the Covid-19 years; the relaunch of its award-winning omnichannel mobile app; and the growth of its then-nascent consumables e-commerce business.

Listen to Podcast


Curated Updates

Here are the rest of the updates hitting our radar.

Neobanks


Payments


Digital Investing


Financial Operations


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.

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Fintech: Morgan Stanley & OpenAI advisor bot; Neobank Monzo’s launches digital investing

https://lex.substack.com/p/fintech-morgan-stanley-and-openai

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.

Hi Fintech Futurists — 

Here is today’s agenda:

  1. AI: Morgan Stanley to launch AI chatbot to woo wealthy (link here)

  2. INVESTING: Britain’s $4.5B Digital Bank Monzo Debuts Investments Feature (link here)

  3. LONG TAKE: Why $ billions are flowing out of Banks into Money Market Funds, and how startups can benefit (link here)

  4. PODCAST CONVERSATION: The Techstars Web3 thesis and advice on building companies, with Pete Townsend Managing Director at Techstars (link here)

  5. CURATED UPDATES

Subscribe now


Digital Investment & Banking Short Takes

AI: Morgan Stanley to launch AI chatbot to woo wealthy (link here)

Morgan Stanley and OpenAI, the creators of ChatGPT, teamed up to develop a generative artificial intelligence bot for the wealth management business. The two firms met in 2022, and Morgan Stanley signed a deal last summer for preferred access for its wealth management product development. The fruit of their labor — an AI bot for wealth managers to use as a virtual assistant — is set to launch this month. The move comes after months of testing with approximately one thousand financial advisors. 

The bot is able to find research or forms to provide insights and administrative support, and remove the need for bankers to scan in manual documents. In the future, it will be able to create meeting summaries, put together follow-up emails with next steps, manage the sales database, schedule follow-ups and provide advice on a range of topics related to client finances. You know, robot work.

There is a plethora of robo-advisors leveraging automation for investment advice. This solution, however, is different because it is geared at assisting advisors with administrative and insight support, instead of trying to pull them out of the workflow entirely. We think this makes sense, given the high-end nature of Morgan Stanley’s services, providing a human touch to nurture the relationship.

AI is important right both in Silicon Valley, as well as on Wall Street. JPM recently promoted Teresa Heitsenrether to become its Chief Data and Analytics Officer, with the aim of boosting AI adoption. Bank of America’s virtual assistant, dubbed Erica, has had over a 1B interactions since 2018, and Moody’s is working with OpenAI and Microsoft for an AI research assistant for its clients. 

Morgan Stanley has indicated these AI initiatives are meant to expand the wealth division segment, which grew 16% in Q2 and added $90B in client assets. We believe AI will take a more prominent role in financial services, but the human touch will remain a differentiating factor for customer acquisition and emotional management. Incumbents that are able to leverage AI optimally for best performance and efficiency gains, while still maintaining an engaging, tailored and human-centred service will capture more share in the wealth management market of the future.

👑 Related Coverage 👑


INVESTING: Britain’s $4.5B Digital Bank Monzo Debuts Investments Feature (link here)

Digital banking continues to be a topic of focus. Monzo, one of the London-based neobanks that operates with a UK banking license, launched a digital investment product called “Investments” — its customers will be able to invest in a number of funds managed by BlackRock. 

In the UK, digital investing platforms such as eToro, IG, and Freetrade are attempting to solve this as well, given the low adoption in the country. Fintech Revolut, which positions itself as a financial super-app but has struggled to obtain a license from the Bank of England, currently offers equity and crypto trading capabilities to its 30 million users. Freetrade offers commission-free and fractional share investing to 1.4 million customers as part of its entry-level subscription plan.

Founded in 2015, Monzo last raised $500MM in 2021 at a $4.5B valuation. Revolut was valued at $33B in 2021 but has recently seen multiple investors like Molten Ventures and Schroders reach for the scissors with write-downs of ~40% on their investments. This is indicative of the broader recalibration of valuations that the fintech industry has been experiencing. Klarna, once Europe’s most valuable startup, saw a down round in 2022 cut its valuation cut to $6.7B — an 85% drop from a year earlier. Throughout 2023, investor attention has been more keen on profitability rather than growth, though the former continues to be a challenge for many neobanks. 

Elevated interest rates in the UK, currently at 5.25%, and abroad have served as a boon for banks, particularly net interest income (NII). Monzo and other neobanks have been able to reap the rewards of their banking licenses with the ability to invest deposits — Monzo posted $200MM in net income on deposits of $7B. Notable UK fintechs with a UK banking license include: Starling Bank, Kroo, Stripe-competitor Adyen, which secured a license this week, and Zopa.

Still, Monzo reported a $124MM loss for FY23. While we like that the user base has grown to 8 million customers, the digital investing pivot could prove to be costly. FY22 already painted a less than stellar picture of profitability with a 56% YoY increase in operating expenses and a 7x YoY increase in credit loss expenses. 

Convincing users to pay a monthly 0.59% fee — a 0.14% fund fee and a 0.45% platform fee — when there are commission-free trading options may also prove challenging. Global daily trading volume has also taken a hit across European and U.S. equities, so trading revenue may not have a meaningful contribution in the short term.

👑 Related Coverage 👑


The Fintech Blueprint Office Hours

Office Hours is a live, non-recorded roundtable that provides our community the opportunity to interact with the Fintech Blueprint team, our esteemed guests, and each other.

Topic: Let’s Talk About Finding True Innovation

  • When: Thursday, 21 September at 11:00 AM ET (8:00 AM PST / 4:00 PM BST).

  • Guest: Scott Abrahams, the current EVP Channel Partnerships at Mastercard. With over two decades of experience in people leadership, Scott has managed substantial teams, with up to 300 individuals under his guidance. He brings an entrepreneurial spirit to his career, embracing a growth mindset that fuels his approach to work. 

  • Host: Bo Brustkern, CEO, Fintech Nexus.

Learn from Scott’s experience, ask your burning questions, and get a peek into the future of channel partnerships at Mastercard.👇

Add to Calendar


Blueprint Deep Dives

LONG TAKE: Why $ billions are flowing out of Banks into Money Market Funds, and how startups can benefit (link here)

In this article, we delve into the complex perceptions and impacts of interest rates in the financial ecosystem, emphasizing their influence on the fintech and crypto sectors.

Detailing the shift of assets from bank deposits to money market funds (MMFs), we suggest this transition has been propelled by better returns and flexibility offered by MMFs, alongside evolving fintech integrations which facilitate easier asset movement. The piece also discusses the implications of these shifts on fintech companies who are integrating cash returns into their products, pointing out regulatory considerations and the role of innovations like tokenization in blending traditional finance with emerging financial technologies. Lastly, the article urges fintechs to focus on aligning their products with the real-life goals of their customers, instead of merely offering investment returns.

Read Long Take


PODCAST CONVERSATION: The Techstars Web3 thesis and advice on building companies, with Pete Townsend Managing Director at Techstars (link here)

In this conversation, we chat with Pete Townsend – Managing Director at the Techstars Web3 accelerator.

The Metaverse Hype Cycle. Past, Present, Future | by Avi Bar-Zeev | Predict | Medium

Pete is an early-stage startup investor, advisor, non-executive director, and podcaster.  He has 28 years’ global experience at the startup and enterprise level with companies such as BNP Paribas, Fidelity Investments, Coinbase, and has invested in 25+ web3 and fintech ventures around the world.  He is based in Dublin, Ireland and helps early-stage ventures get their products to market, get traction with customers and raise funding.

Listen to Podcast


Webinar for fintechs, software platforms and marketplaces

How Managing Global Fund Flows Makes International Expansion Much Simpler

Join us for an insightful, 30-minute webinar where we explore how marketplaces, fintechs, and software platforms can drive market expansion and transform the way customers manage global fund flows

👉 September 21 at 11am ET. 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

Register Now


Curated Updates

Here are the rest of the updates hitting our radar.

Payments


AI


Financial Operations


Shape your Future

Curious about what is shaping the future of Fintech and DeFi? 

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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Fintech: Ramp’s down round

https://lex.substack.com/p/fintech-ramps-down-round

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.

Hi Fintech Futurists — 

Here is today’s agenda:

  1. PAYTECH: Fintech startup Ramp raises $300M at a 28% lower valuation of $5.8B (link here)

  2. LONG TAKE: Down from $6B to $18MM, better for Better Mortgage to stay private (link here)

  3. PODCAST CONVERSATION: How AI-enriched data aggregation is empowering the next generation of financial institutions, with Envestnet’s Farouk Ferchichi (link here)

  4. CURATED UPDATES


Digital Investment & Banking Short Takes

PAYTECH: Fintech startup Ramp raises $300M at a 28% lower valuation of $5.8B (link here)

Fintech unicorn Ramp’s latest round sees its valuation drop to $5.8B – a 28% mark down. The round totalled $300MM, led by Thrive Capital and joined by Sands Capital, bringing total funds raised since founding in 2019 to $970MM in equity financing and $700MM in committed debt funding. For context, Ramp’s previous round was $200MM at a $8.1B valuation during the peak of fintech fundraising. The valuation drop is favorable compared to what we’ve seen lately with other prominent fintechs like Stripe, whose valuation dropped by 40% to $63B, and Klarna, whose valuation dropped 85% to $6.7B

Ramp offers financial operations tools and infrastructure, including expense management, accounts payable, accounting automation, and global corporate card offerings. While still searching for profitability, revenue has quadrupled in the past year, surpassing $300MM on an annualized basis. The catalyst behind the growth has been Ramp Bill Pay, an accounts payable system that helps finance and accounting teams automate their bill entries, payments, and approval. Its notable features include the ability to extract key details from invoices using AI, financial controls, error prevention, and fraud minimization.  

Fintech funding remains relatively quiet with global funding volume down almost 50% to $7.8B in Q2, the lowest since 2017, which underscores the significance of being able to raise $300MM, even at a down valuation. Ramp’s recent business activity remains strong; it acquired AI customer success tool Cohere.io (its first acquisition), it brought on Shopify as a client, and it launched Ramp Plus, a procurement solution for large enterprises. All in, fundraising may be down but those rare platforms like Ramp, wihch have proven product-market fit and the ability to scale, are continuing to find capital to fuel their ambitions.


In Partnership: Webinar for Product, Fraud and Risk Officers

Fintech’s wake-up call: The hidden dangers of dormant accounts

👉 September 7 at 2PM ET

Join this expert panel as they discuss the potential risks of dormant financial accounts and the importance of safeguarding unclaimed assets for financial institutions and account holders.

Topics include:

  • Identifying dormant account vulnerability

  • How to educate consumers on dormant account risks and encourage anti-phishing security

  • Steps for future-proofing: implementing MFA, adaptive security, and the ethical use of AI to predict, prevent, and alert against potential threats.

    Register Now


Blueprint Deep Dives

LONG TAKE: Down from $6B to $18MM, better for Better Mortgage to stay private (link here)

Better Mortgage, initially a promising digital finance target known as BETR or Aurora Acquisition Corp., saw a 90% drop in stock value despite previously raising $500MM at a $6B valuation from major investors like SoftBank.

What is a de-SPAC? - MoneyMade

Founded around 2014, the company aimed to digitize the mortgage market, which had significant potential. However, issues arose with financial projections, dubious management decisions, and changes in the macro environment. This culminated in massive layoffs, revenue shortfalls, and a declining stock, highlighting the pitfalls of rapid scaling and market unpredictability.

Read Long Take


Podcast Conversation: How AI-enriched data aggregation is empowering the next generation of financial institutions, with Envestnet’s Farouk Ferchichi (link here)

In this conversation, we chat with Farouk Ferchichi – President of Data and Analytics at Envestnet.

Farouk is a Senior Executive, a business leader, and a CDO 4.0 (a product-centric approach to the role of a Chief Data Officer according to Gartner) pioneer with over 20 years of proven success transforming businesses to create new data analytics products, markets, and business models that enhance customer experience, loyalty, and profitability.

Listen to Podcast


Interested in Sponsorship?

To support the Fintech Blueprint and reach our 185,000+ Substack and LinkedIn audience of builders and investors, contact us here.


Curated Updates

Here are the rest of the updates hitting our radar.

Payments


Neobanks


Financial Infrastructure


Investing


💡 Insights Report

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


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


Leave a comment

Fintech: TruStage launches Payment Guard Insurance

https://lex.substack.com/p/fintech-trustage-launches-payment

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.

Hi Fintech Futurists — 

Here is today’s agenda:

  1. INSURTECH: TruStage launch Payment Guard Insurance (link here)

  2. LONG TAKE: Can Bunq, the $1.9B profitable European neobank, crack US consumer banking? (link here)

  3. PODCAST CONVERSATION: Deconstructing fintech innovations, valuations, and exit strategies,with Royal Park Partners Managing Partner Aman Behzad (link here)

  4. CURATED UPDATES


Digital Investment & Banking Short Takes

INSURTECH: TruStage launches Payment Guard Insurance (link here)

TruStage™, formerly known as CUNA Mutual Group, has launched an insurance product for digital lenders. The company has been operating for over 85 years and serving over 30 million US customers. The new insurance product is called Payment Guard Insurance and covers the digital lender against unexpected events that may cause loss of income by a borrower.

The latest partner to use Payment Guard is Zirtue, a relationship-based, peer-to-peer lending application that simplifies loans between friends, family, and trusted relationships.

Payment Guard is designed to increase lending capacity for institutions like fintechs, banks, and credit unions by adding a layer of protection to lending portfolios against the leading causes for default. The insurance product is paid for by the digital lender, and approved claim payments go directly to that lender, thereby reducing defaults.

Insuring against the leading causes of consumer default should result in more resilient loan portfolios. Effectively, lenders taking the insurance will accept a lower overall yield in exchange for lower default risk. Theoretically, this makes lending through the Zirtue platform less risky, and therefore expands the lending capacity of the individual lenders on its platform. 

When asked for comment, Dennis Cail, CEO of Zirtue, said, “TruStage allows us to provide an innovative solution that acts as a safety net for lenders, underscoring our commitment to driving financial security and inclusion.” 

Financial distress due to unemployment rises during recessions. In addition, post-pandemic mental health burdens have led to the Great Resignation, with employees choosing to leave employers when given the choice. Still, despite recent interest rate pressure on the capital markets, overall unemployment remains low. Whether the labor shock is yet to come is up for debate, but it is generally believed that unemployment risks are material.

The consumer balance sheet is also under pressure, with savings at historic lows. This suggests that people may have less of a buffer to repay their obligations. As a result, digital lenders may not wish to face the full brunt of this credit cycle, and hedge out the down risk with a product like Payment Guard.

Relevant disclosures can be found here


In Partnership: Webinar for Product Leaders

Fraud prevention and CX: The power of phone numbers in Latin America

👉 Aug 30 at 4PM ET

How do you balance managing risk with ensuring an exceptional customer experience?

This interactive roundtable will explore some of the most fundamental topics in fraud prevention today. Join Javier Covarrubias, CMO, Kubo.financiero, Luis Carrillo, COO, Klar, Sahari Cabello, VP Credit Risk, Kueski, and Tarek Osman, Telesign as they discuss:

  • Preparing for emerging and prominent fraud schemes

  • Prevention strategies for synthetic identity fraud, account takeovers, and bots

  • The right balance between security and a scalable, seamless, user experience

Register Now


Blueprint Deep Dives

LONG TAKE: Can Bunq, the $1.9B profitable European neobank, crack US consumer banking? (link here)

Following its fresh $111M fundraise, Dutch neobank bunq recently announced plans to expand into the US and UK markets.

We benchmark the bank’s strategy against key EU competitors and challenge bunq’s stable valuation of $1.9B during the driest quarter of fintech funding since 2017. In addition, we discuss how bunq plans to extract value from a market where Goldman Sachs has recently begun to retreat consumer banking.

Read Long Take


Podcast Conversation: Deconstructing fintech innovations, valuations, and exit strategies,with Royal Park Partners Managing Partner Aman Behzad (link here)

In this conversation, we chat with Aman Behzad – founder and managing partner of fintech-focused corporate finance advisory firm, Royal Park Partners. Providing the expertise needed to enable entrepreneurs, founders and funds to build the future of finance.

Aman is a corporate finance professional with over 15 years experience, having started his banking career and interest in fintech at Citigroup. Aman left to help establish the fintech team at Arma Partners, spending six years there before being hired by FT Partners to help build their European operations.

Listen to Podcast


Interested in Sponsorship?

To support the Fintech Blueprint and reach our 185,000+ Substack and LinkedIn audience of builders and investors, contact us here.


Curated Updates

Here are the rest of the updates hitting our radar.

Payments


Neobanks


Financial Infrastructure


Lending


AI


💡 Insights Report

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


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


Leave a comment

Fintech: Splitit raising to go private; Securitize acquires Onramp Invest

https://lex.substack.com/p/fintech-splitit-raising-to-go-private

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.

Hi Fintech Futurists — 

Before we jump into today’s insights, we want to remind you about our upcoming Deep Dive into Bunq, the European neobank unicorn. It will be delivered to premium subscribers this Wednesday, 23rd of August.

Bunq is standing strong with a $1.9 billion valuation amidst the driest quarter of fintech funding since 2017. But with its recent $111M fundraise and plans for US and UK expansion, there are vital questions to explore:

  • How does Bunq’s M&A-focused growth strategy compare to key EU competitors?

  • Is Bunq’s reliance on high interest rates sustainable for maintaining profitability?

  • With 90% of its fee income earned in the Netherlands, how will Bunq persuade US customers to embrace its paid plans?

We’ll dissect these questions and more in our deep dive report this Wednesday.

Full access to the Bunq Deep Dive is exclusive to premium subscribers.
Now is the perfect time to upgrade your subscription.

Go Premium Now


Now, on to today’s fintech topics. Here is the agenda:

  1. BNPL: Splitit moves to go private in exchange for fresh funds (link here)

  2. INVESTING: Securitize Acquires Onramp Invest, Extending Tokenized Alts to RIAs Managing $40B in AUM for First Time (link here)

  3. LONG TAKE: Launching Generative Ventures, an engaged venture capital fund focused on the machine economy of Fintech, Web3, and AI (link here)

  4. PODCAST CONVERSATION: A glimpse into stablecoin Tether and crypto exchange Bitfinex, with CTO Paolo Ardoino (link here)

  5. CURATED UPDATES


Digital Investment & Banking Short Takes

BNPL: Splitit moves to go private in exchange for fresh funds (link here)

Cracks have started to show in the BNPL space in the past two years. Klarna, one of the most valuable fintechs in Europe, witnessed an 85% drop in its valuation, US-based Affirm’s share price dropped by 77% and Australian-based Zip’s also dropped 89%. Splitit was founded in 2012 as a standard consumer BNPL provider but pivoted in 2022 to focus solely on a white-label installment payments platform for merchants. 

Now, Splitit is looking to raise $60MM under two conditions: (1) that the firm delists from the Australian Securities Exchange (ASX) and (2) that it reincorporates as a private entity based in the Cayman Islands. If successful, the deal will bring total funds raised to $350MM. Motive plans to provide $50MM, at a price of $0.20 per preferred share, split into two equal tranches. The first tranche is conditional on Splitit delisting from the ASX, whilst the second is dependent on the fintech achieving undisclosed 2023 full-year financial performance milestones, which they are already on target for. The remaining $10MM will be supplied by Parea Capital and Thorney Investment Group as a convertible note – debt that can be exchanged for equity in the future. 

Source: WorldPay

Whilst Splitit has been listed on the ASX since 2019, the firm is actually headquartered in Atlanta and has offices in Israel and London, whilst being registered in Australia as a foreign corporation to enable it to be listed on the ASX. Delisting will require the approval of shareholders and the new, private entity would be based in the Cayman Islands, primarily for its tax benefits. The Caymans do not have corporate income tax, payroll taxes, capital gains or other direct taxes for startups located there. If the shareholders agree to the delisting they will either be provided with private ownership in Splitit or they will have the opportunity to trade their shares on ASX before it occurs. 

Source: F-Prime Capital, Company data

The BNPL model fundamentally changed the e-commerce shopping experience globally, pioneered by Klarna. It did so by using both “soft” credit checks and data on consumer purchasing behaviors, enabling providers to accept c. 70% of applications. BNPL managed to capture 8% of online payments in Europe and 4% in the US in 2021, and by 2025 these numbers are forecast to triple. But, taking Klarna as a case study, these firms have traditionally struggled with profitability, in part because of operational expenditure on aggressive expansion strategies, but also due to an estimated 8% of customers not repaying loans issued. For context, traditional banks have loss rates of <1%. We see BNPL as a fundamental fintech tool in the future but more innovative underwriting and more sustainable spending will need to develop as the space matures for these platforms to stay alive and thrive. 

👑 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


INVESTING: Securitize Acquires Onramp Invest, Extending Tokenized Alts to RIAs Managing $40B in AUM for First Time (link here)

Securitize, a digital asset platform that uses blockchain tech for companies to tokenize assets and raise capital, announced its acquisition of wealthtech Onramp Invest for an undisclosed amount. To date, Onramp’s platform includes RIA firms with a combined $40B in AUM, an impressive feat for a firm launched in 2020. Securitize reportedly has 1.2M investor accounts across 3,000 clients, with ~100MM raised since 2017, backed by investors like Blockchain Capital and Morgan Stanley Tactical Value. Earlier this year, both firms flirted with a partnership that unveiled four tokenized private equity feeder funds from the likes of KKR and Hamilton Lane. Last month, Securitize also launched the first issuance of tokenized securities in Europe. The acquisition is indicative of competitive pressures emerging in the space and the broader desire for institutional adoption of digital assets. 

Securitize’s platform provides tokenization management services to issuers, simplifying the process of capital raising, asset management, and trading. Onramp supplies the architecture that enables RIAs to access crypto assets and also integrates with known CRM and reporting tools like Orion and Wealthbox. RIAs on Onramp will now be able to extend clients tokenized access to alternative asset classes such as private equity, private credit, secondaries, and real estate – a natural product extension given that its client-base already had crypto exposure. 

It is prudent to highlight why wealth managers should expect client interest in digital asset products. Boston Consulting Group and ADDX suggest that the market for asset tokenization could be worth as much as $16T by the end of the decade. A CAIS study showed that nearly 90% of advisors plan to increase allocations to alternatives over the next two years. And, although some institutional investors are taking a more cautionary stance with their digital asset investments, investors are optimistic about the outlook on blockchain and digital assets and view them both as a means of diversification and as a growth potential.

But despite all bullishness, most surveys still show that investors don’t feel educated enough about alts as an asset class. The decision to venture into digital assets hinges not just on current trends but also on long-term beliefs about the future of finance. We’re excited about this next evolutionary phase, as it’s not a matter of “if” but “when” Continued innovation, cooperation among industry players, and regulatory alignment will be pivotal in steering this promising technology to its full realization.

👑 Related Coverage 👑


Blueprint Deep Dives

LONG TAKE: Launching Generative Ventures, an engaged venture capital fund focused on the machine economy of Fintech, Web3, and AI (link here)

After 4 years at Consensys, where I worked on tokenized digital assets, crypto wallets and DeFi, macro investing, and token economics, and over a decade in fintech, I remain deeply committed to innovation and the promise of technology in financial services and in our economy.

With that, I am excited to announce that I am building a venture capital fund called Generative Ventures as a founder with several fantastic partners. The thesis is focused on the rise of the machine economy, which is the synthesis of new economic activity accelerated by AI, powered by fintech, and settled on Web3 blockchain networks. Our investment thesis is articulated in more detail in this long take, and I’d love your engagement on the topic.

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Podcast Conversation: A glimpse into stablecoin Tether and crypto exchange Bitfinex, with CTO Paolo Ardoino (link here)

In this conversation, we chat with Paolo Ardoino – Chief Technology Officer at Bitfinex and Tether.

Bitfinex Supplied 'Most' Liquidity During $3.7K Bitcoin Crash — Report

With his experience spanning close to 10 years in Web3 alone, Paolo Ardoino is a veteran in creating technology solutions for the decentralized world. Ardoino joined Bitfinex as a senior software developer in 2014, but was soon made the chief technology officer in 2015, and has continued in the role ever since. He has also served as the chief technology officer of Tether, which issues the USDT stablecoin, since 2017.

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Curated Updates

Here are the rest of the updates hitting our radar.

Payments


Digital Investing


Lending


Financial Infrastructure


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DeFi: Binance launces L2 opBNB to rival Coinbase’s Base; BitGo is a unicorn 🦄

https://lex.substack.com/p/defi-binance-launces-l2-opbnb-to

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: Binance To Launch opBNB Layer 2 Network Later This Month (link here)

  2. FINANCIAL INSTITUTIONS: BitGo secures $100 million in Series C round at $1.75 billion valuation (link here)

  3. CURATED UPDATES

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BLOCKCHAIN PROTOCOLS: Binance To Launch opBNB Layer 2 Network Later This Month (link here)

Binance is launching opBNB, a Layer 2 scaling solution for its BNB Smart Chain. The announcement comes shortly after Polygon unveiled Polygon 2.0 — an architecture aimed at achieving scalability and unified liquidity across chains built on top of Polygon. Coinbase and ConsenSys have launched their own L2s, Base and Linea respectively, on mainnet.

The news mark a period of rampant activity from Binance — it shut down its buy-and-sell service, Binance Connect (formerly Bifinity), Binance.US requested a protective order limiting the information the SEC can access in their legal case, and invested $10MM into Helio Protocol.

opBNB, an optimistic rollup, improves BNB Smart Chain’s scalability by processing transactions off-chain and validating them with fraud proofs, resulting in significantly higher throughput than the underlying chain. Last May, Binance integrated Optimism’s technology, deploying Optimism’s OP Stack, to reduce costs and improve scalability for transactions on the chain.

Driven by the OP Stack, opBNB has average transaction gas fees of $0.005 and achieves a throughput of 4,500+ TPS – making the chain feasible for managing transaction-intensive use cases like machine learning (ML) data, Web3 gaming, and NFT trading. opBNB also functions within the EVM (Ethereum Virtual Machine), the framework employed by Ethereum, enabling it to facilitate the movement of dApps across all EVM-compatible networks with minimal code changes.

From a more technical standpoint, individuals engage with opBNB by initiating fund deposits from BSC and engaging with dApps and smart contracts on opBNB. Subsequently, sequencers compile transactions, calculate state transitions, and forward them to the rollup contract on BSC. Then, Provers produce cryptographic evidence (i.e., proofs) validating the legitimacy of these state transitions, while Verifiers (or Challengers) examine these proofs to confirm the accuracy of the opBNB state. A state transition involves updating the data stored in the blockchain’s state (e.g., account balances, contract storage) to reflect the effects of a transaction. This state change becomes a part of the blockchain’s immutable history. 

Blockchains deal with a well-known trade-off trilemma: scalability, security, and decentralization. L1 networks typically tick the security and decentralization boxes, while sacrificing scalability. So, we end up with slow performance and high fees. Remember the exorbitant gas fees during the Otherdeed NFT mint? It’s not obvious to us that the BNB chain was expensive to use prior to this upgrade, but the investment meta has moved on from alternate L1s to L2s, so Binance must chase the dragon.

We are seeing various scaling solutions in development — Optimism, Arbitrum, Matter Labs’ zkSync, Starknet, ImmutableX, Polygon zkEVM, Polygon 2.0, ConsenSys’s Linea, Taiko, Coinbase’s Base, and many more. Focusing on the most recent ones, Polygon 2.0 and Base, both opBNB and Polygon 2.0 share technical similarities. In Polygon 2.0, the Execution Layer arranges batches of transactions and aids validators in reaching consensus on the committed chain data. Meanwhile, the Proving Layer generates cryptographic ZK-proofs to establish the inclusion of these transactions within the Ethereum base layer. 

But the primary competition lies between Binance and Coinbase. As the SEC targets both exchanges, it is becoming evident that Coinbase will likely retain its dominant position in the US, reinforced by Coinbase gaining approval to introduce federally regulated crypto futures trading. Meanwhile, Binance is on the defensive, filing for protection from the SEC.

Base, also built on the OP Stack, already houses 100+ dApps, including DEXes like Uniswap and Sushiswap, wallet providers Exodus and Brave, and infrastructure players Nansen and Etherscan. Only a month after launching it is already the fifth biggest L2 network, with $234MM in TVL and up 50% in the past week alone. Binance has its competition cut out on the L2 front, although we expect Optimism to be gleefully watching on the sidelines as it rakes in sequencer fees from both networks.

👑 Related Coverage 👑


Insights Report

Before we move onto our second 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


FINANCIAL INSTITUTIONS: BitGo secures $100 million in Series C round at $1.75 billion valuation (link here)

Crypto custodian BitGo has raised $100MM in Series C funding at a $1.75B valuation, a notable round given the difficult crypto fundraising environment of late. The round builds on the $42.5MM Series B back in 2017, which included Goldman Sachs, Pantera Capital, and Craft Ventures as investors.

BitGo had previously tried to fundraise at a $1.2B valuation in November last year, after a potential acquisition by Galaxy fell through for the same amount in August that year. The failed acquisition, reportedly due to BitGo not providing audited financial statements for 2021, ended in the firm suing Galaxy for $100MM for breaching the merger agreement, which has since been dismissed.

BitGo’s primary offering is crypto custody solutions for financial institutions, helping them to manage their digital assets in a compliant and secure manner with up to $250MM in insurance. It also helps them make the most of these assets through a range DeFi offerings from lending to staking, depending on the client’s risk tolerance. Lastly, it provides an infrastructure offering for exchanges, retail aggregators, and software companies, providing wallet-as-a-service for user onboarding and a range of APIs to power back-end systems. And this round comes off the back of an impressive year to date, with a 60% increase in new client onboarding, a 200% increase in fiat custody, a 20% increase in assets under custody and a 40-fold increase in staked assets on the platform.

The new funds are expected to be used to fund strategic acquisitions. The custodian had previously reached a preliminary agreement to acquire Prime Trust, another crypto custody firm in June, but the deal fell through with Prime Trust since filing for Chapter 11 bankruptcy. Because they literally lost the keys.  

We find this news interesting for two main reasons. First, it bucks the trend of a down period in crypto funding, at its lowest level since 2020. The latest quarter of fundraising totalled $2.5B, a major drop-off since 2022Q1 peaks of $13.5B. Recently, it seems to be picking back up with Flashbots raising $60MM at a $1B valuation last month, EigenLayer raising $50MM in March, and Worldcoin raising $115MM in May.

Second, it further demonstrates the attention that institutional-grade crypto custody solutions continue to receive. Competitors like FireBlocks raised $550MM last year at an $8B valuation and Anchorage raised $350MM at a $3B valuation, both during the peak of crypto fundraising in late 2021 / early 2022. These raises by custody solutions are indicative of institutional demand, highlighting the increase in openness towards the asset class, and the demand for DeFi solutions onchain. 

👑 Related Coverage 👑


Curated Updates

Here are the rest of the updates hitting our radar.


Financial Institutions and Adoption 

The Machine Economy And The Convergence Of Web3, AI And Fintech – CoinDesk

Singapore Finalizes Regulatory Framework For Stablecoins – The Defiant

Ripple Labs Opposes ‘Gambit’ Appeal Request By The SEC – Blockworks


DeFi and Digital Assets

MakerDAO Attracts $700M In Deposits After Hiking DAI Savings Rate – The Defiant

PayPal Teams Up With Ledger On Fiat Onramp For US Users – The Defiant

Binance Labs Invests $10MM To Accelerate Helio Protocol’s Liquid Staking Pivot – Decrypt

MEV On The dYdX V4 Chain – Chorus One

Bittrex Global Not ‘Paying A Penny’ As Its US Affiliate Set To Pay SEC – Blockworks

New Social Trading App Attracts 12,000 Users In Less Than Two Days – The Defiant

Binance Connect Is Shutting Down On Aug. 16 – Blockworks


Blockchain Protocols

Linea Completes Public Mainnet Rollout – The Defiant

ZetaChain Announces $27MM Raise In Latest Funding Round – Blockworks

Shibarium Botches Launch With Bridged ETH Unrecoverable – The Defiant

Sei Network Launches Token And Mainnet Beta – The Defiant


NFTs, DAOs and the Metaverse

Coca-Cola Turns Its Attention To Base With New NFT Collection – Bitcoinist

Grimace Forever: McDonald’s Is Giving Away Free NFTs That You Can’t Trade – Decrypt

Neal Stephenson’s Metaverse Vision Is One Step Closer As Lamina1 Blockchain Launches Betanet – CoinDesk

‘Krapopolis’ To Premiere In September with NFTs And Fan Voting – The Defiant


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