EtherFi’s Next Act: Stocks, Loans, and Global Banking | Mike Silagadze

TRANSCRIPT
David:
[0:02] Bankless Nation, we got Mike Silagazzi from EtherFi back on the podcast. Mike, welcome back to the show.

Mike:
[0:06] Hey, thanks for having me on again.

David:
[0:10] So there is something brewing, as I hear, over in EtherFi, EtherFi land. Maybe for just listeners who haven't been paying attention to what's going on in EtherFi, EtherFi really pioneered the neobank whole revolution that started in 2024 and moved on into 2025. Really kickstarted the whole Neobank platform, I think. First, just with the whole restaking thing and then allowing people to do a lot of cool stuff in DeFi, hold assets in EtherFi, deploy them into DeFi, and also spend them. Starting to really chip away the TradFi banking system and allow some of the bankless ideas to manifest into a consumer app. As I hear it, Mike, you guys have a second act coming. Let me know. tell me about this second act coming down the pike for EtherFi.

Mike:
[0:57] Yeah, I mean, I guess it's sort of like the third act, right? Our first product was the yield layer. So it's almost like, okay, we had to like create a version of, this is not a perfect analogy. We had to create a version of T-bills that allowed us to build on top of that all the other stuff that, you know, users come to expect from, you know, from a financial, from TradFi. And so staking was the first yield layer. DeFi strategy vaults. We were actually, I think, the first or one of the first protocols to have protocol-owned vaults. Now, that's pretty common. But we introduced our liquid vaults. So that was kind of like, you've got the yield layer, but then you want to deploy it into DeFi. Earn higher rewards, higher risk. So we introduced that. And then we launched the sort of the wrapper around that with the, you know, the crypto credit card that created the first, I guess, proto version of a non-custodial crypto neobank. And today, I mean, we're still the largest, I think, yeah, if you look at all the crypto card programs, we're by far the largest non-custodial one. And I think that the one that sort of creates the most integrated package to experience for users that achieves, what I think is sort of the holy grail of DeFi, which is truly allowing people to get off of their traditional banking rails, to have self-custody over their assets, but not make any sacrifices, but continue to be able to use.

Mike:
[2:22] Interact with the normal financial system while getting the benefits of DeFi and self-custody. So that was like the first version of it. But that first version was still very crypto forward, I guess. What I mean by that is you still needed to know a lot about crypto to use this product, even just the way the app, the product was presented. It was very crypto jargony. And so it was great for DeFi natives, for people that, you know, day to day, you know, use DeFi, they're comfortable depositing into Aave or whatever. Very difficult to use for normies. Very few normies kind of broke through the pain and onboard.

Mike:
[3:06] And so what we're releasing now is not only is it the next generation of that, but more excitingly, the reason I'm excited about it is that it is much more normie friendly. So someone genuinely could not know anything about crypto and should be able to navigate it and get all the benefits without really having to, have any familiarity with the sort of the underlying tech. And secondly, it actually allows people to do stuff that they would not be able to do with their traditional financial institution. So in other words, it's not just like recreating what existed before. It's actually using the power of DeFi to let you do stuff that you previously wouldn't have been able to do. Which is, I mean, that's how you get, I think, crypto adoption is A, it has to be normie friendly and B, there has to be like a why there, right? Like, okay, I'm pretty happy with my Chase account. Why do I need to use this thing? And so hopefully now we have that for people.

David:
[4:05] What is all of that stuff? What's the meat on the bone? What is the cool things that you guys are adding into the EtherFi product suite?

Mike:
[4:13] Yeah, so there's a bunch of things. The first thing is, I guess, the current limitations or previous limitations of EtherFi is you could only hold a pretty small number of select crypto assets. Like you could hold stable coins, you could hold USDC, USDT, you could hold ETH, you could hold like, you know, a wrapped version of a pipe and Bitcoin, very crypto-y assets. We are now changing that to where you will now be able to hold tokenized stocks. So a huge range of tokenized stocks. You'll be able to hold metals. So gold, silver, all that great stuff, along with pretty much any token that you want, any of the majors that you'd want to hold. So it really is now becoming not just a general crypto wallet, but wrapped in a smart contract, say. But you can actually just hold any of the more tradfi, the tokenized tradfi assets. So that's pretty exciting.

Mike:
[5:14] First time I think CryptoNeoBank has allowed people to do that same benefits, same non-custodialness goodness.

Mike:
[5:22] The second thing that we're adding is an Aave V4, an integrated Aave V4 market. So what that means is twofold. One, any stables that you deposit now earn a yield if you choose to opt in. So now you deposit your USD, you're just going to be getting 2% or 3% interest on it because it'll just automatically be loaned out for you. So that's a higher rate than you get from your bank typically. And you can actually take out loans against your entire portfolio value. So basically imagine a bank that looks at like what's in your checking account, what's in your crypto wallet, what's in your brokerage account, package it all together and effectively give you a line of credit that you can now, from this Aave market, that you can now borrow, at what I think is going to be a very competitive interest rate. Obviously it's dynamic because it's a DeFi market, but I think it'll be better, that's certainly better than any loan you can get in TradFi. And then when you take out that loan, you could, of course, do anything you want with it. You could spend it, you could loop. In other words, you could put some SPY, like S&P 500 tokens in there.

Mike:
[6:34] Take out a loan, buy some more tokens, do all this stuff that you do in DeFi, but now with TradFi assets, which is super exciting. And then the other big thing is like super comprehensive fiat rails, very broad network support. So in other words, now you'll be able to deposit from Tron, from Solana, from Tempo, from whatever. So you'll be able to just deposit from anywhere. And we're going to support, I think, like 70 different currencies. So basically, you know, your Indian rupees, your Colombian pesos, anything you want, you'll be able to do in and out with, really like either no fees or lowest fees on the market. So now you can literally, you can deposit your salary. You'll have a named account, deposit your salary into EtherFi, goes into your non-custodian account, buy your tokenized stocks, your metals, take out loans, basically do everything, get a credit card, great cash back, everything that you normally need to do for the bank. But now you're a global citizen. You're not tied down to a particular financial institution or government regime.

David:
[7:41] I want to take a step back and talk about what this means for Ethereum and why I'm seeing EtherFi as a bit of a canary of where Ethereum as a whole is in its arc. The Gen 0.1.2 that you explain for EtherFi where you started with one, a primitive. And at Bankless, we really like our money verbs. The first primitive that you started with is saving. We allowed you to get yield on your ether, the yield layer, you can call it like the bond layer, the savings layer, the savings primitive. That was the first money verb that EtherFi really pioneered with the whole like LRT movement. It expanded, it evolved, a new layer came on top of that, that is spending. So with the integration of stable coins, an asset that came to Ethereum, and the EtherFi card, you could add a new money verb into the EtherFi app. Now you can also spend. So you can save, now you can spend.

David:
[8:40] And I think with this Gen 3, this new evolution of the EtherFi financial experience, you get to add a few more, two more money verbs come to mind. Invest. You get to invest now inside of the Etherfy app. You can buy tokenized stocks, you can buy gold. And then you can also margin or get a loan. Margin, I think, maybe margin's a verb, whatever.

David:
[9:02] And so now you can also get a loan. And so we are adding on the money verbs into the Ether5 financial experience, like the Neobank Plus experience. And why I think this is important, like, I think maybe crypto natives might have listened, heard you just now and be like, Mike, why is this exciting? I've already been able to get an AVA loan. I've already been able to buy tokenized stocks. It's not for you. It's for the rest of the world. It's for everyone else who is still stuck inside their

David:
[9:31] Non-United States financial system that don't have these opportunities and need a bundled product, seamless bundled experience to come together in order to get them and break them free from their bank. And so with all of these things all being put together, it's illustrative to me of all the primitives of Ethereum. That have grown up and become pretty mature one by one by one, this seems that, according to EtherFi, that the tokenized stock primitive on Ethereum is ready for mainnet, is ready for deployment into a consumer app, and we can scale that out to the rest of the world. And not only that, but also so is margins and loans as well. And because all of this is in one place on Ethereum, like Ethereum is the super app, it's easy for EtherFi, the Neobank Plus to wrap up the Ethereum experience and sell it to the rest of the world. So I think with that framing I want to throw that back to you because I think, again if a listener was just listening to you it's like, we've had Aave for years, Mike it's like, no, no, no, no this is now a seamless unified financial experience being like bundled up and being offered to the rest of the world by EtherFi I'll throw it back to you.

Mike:
[10:45] Yeah, the way I would describe it and I'm probably overstepping a little bit here, but like, think of it as like the first non-gambling crypto consumer app. If you think about like all the crypto consumer apps, because there are lots of them, right? You know, there's PumpFun, there's whatever, even centralized exchanges. Like you just have like casino version one, casino version two. It's just like casino with different like window dressing, you know, like Polymarket. Oh, gamble on the weather now. Okay. Like, and that's, it's super profitable. Right? Like casinos make tons of money, gambling, especially in a gambling type market.

Mike:
[11:24] It's a huge industry and it's very profitable. And, The ease of creating these, you know, casino variations and launching tokens, which again, in itself is like a microcosm of, okay, we're launching a little gamble unit that we then get to, you know, take a rake off of. That's what meme coins, you know, basically were. So that basically sucked all the oxygen out of like the real shit. Because like any builder going into crypto was like, okay, do I spend, you know, five years building like a real consumer product and it's fucking hard? And you could tell on our token, like our business is 100 times better than it was when our token first launched. But like the tokens in the gutter, you know, we talk about things we're doing to improve that as well. But like it's really hard, like it's way harder to build a real product versus like build some other gambling bullshit thing. And so it sucked all the oxygen out of the real, you know, the real economy.

Mike:
[12:21] On the blockchain and just didn't leave any room for this kind of stuff. And, but, you know, being just, I don't know, pigheaded or whatever, we just said, no, we're actually just going to build a real consumer app that's usable day to day that actually helps people in their day to day lives. Not about gambling, not about speculation, but more personal finance and just like grinding away for years. Like it's been three years, you know, it's and we're I mean, we're still not even close to, you know, where it needs to be. So like that's that's why I think this is important, because this is. You know, the first version of the product that I can see at least tens of millions of users using. You know, the V1 of it was like, okay, it's good for crypto people, maybe a few hundred thousand users. But this version with the fiat, easy fiat, you know, on and off ramps and like all these integrations, I can see tens of millions of people using it. And then there's a version, you know, version further on that a billion people might actually be able to do. And once you have like these large businesses that, you know, create value, generate lots of revenue, that's going to create an ecosystem that brings other players in. And then I think at some point, there's going to be a tipping point where the gambly nature of the crypto universe becomes like a, you know,

Mike:
[13:40] a little 10% sliver rather than this sort of 90%, you know, sleeve that we have today.

David:
[13:46] I want to learn a little bit more about the specifics behind each of these two primitives, the invest and the margin primitives. Let's talk about the tokenized stocks element. How are you deciding, how is the Etherify deciding what tokenized stock provider or what tokenized stocks show up in the app? How are you like displaying that? What choices have you made? Who's the service provider in the background? Just fill in some of the details there.

Mike:
[14:10] Yeah, that's a great question. So, I mean, first of all, it will be permissionless. So you'll be able to, I'll talk about the way it'll be, you know, soon after versus what it is today. Eventually, I mean, you'll be able to use On, though you'll be able to use Xstocks, whatever is on Ethereum, anything on Ethereum, you'll be able to use it. Day one, we're launching with Xstocks. A lot of reasons for that, honestly. It's just we have a good relationship and had a good partnership with those folks. So we're launching with XDOX being the primary option there. And then there'll be a number of commodities, so tokenized gold assets that are available as well.

David:
[14:51] Do you guys kind of opinionatedly show XDOX or the tokenized gold assets more than others? Yeah, you just are selecting, here are the quality ones that we feel comfortable. Selling, not selling, but displaying, giving the option to buy to our users.

Mike:
[15:07] Yeah, because we need to make a choice about which ones are enabled as collateral, on the Aave market. And so that's the choice that we're making is there's a risk curator that's making those decisions. And then there's a bunch of like a wiring that needs to be done for liquidations and, you know, setting the risk parameters on each of these assets.

Mike:
[15:29] So that's kind of a choice that's being made.

David:
[15:31] I see. Okay, let's go into the Aave side of things. Talk to me about the Aave spoke model. We've never done an episode on Aave spokes. So I think we would need to help understand like what that construction means. So walk me through what that is. And we can get into some of the needier details after that.

Mike:
[15:47] Yeah, so Aave is Aave before, just the new iteration of Aave that, you know, they've recently released that's, you know, growing really nicely, is a very flexible system. Like you could create these isolated markets where you only, you know, borrow and lend one asset versus another. We're using it in a, at least for now, in like a pretty simple way where it's one market. You know, all your portfolio stuff goes into this one market and we just we set risk parameters and thresholds around each asset in terms of what you can do with it. And this market is very much not meant to be used the same way that other Aave markets or other DeFi lending protocols have been used. What I mean specifically is other DeFi markets are very DGEN heavy. So it's like, okay, you can like lever up 10x on this market. You can like loop, you know, your assets, you know, super aggressively. You, you know, take it all the way or right up to, you know, the limit. And then if the price changes by a few percent, you get liquidated. And it's very like aggressive.

David:
[16:55] And you don't want that because you don't want to be like too far on the, in the operations of risk management. You are going to do risk management, but that's not your specialty. You're going to keep it a little bit more moderate.

Mike:
[17:07] That's actually not the reason. I mean, we certainly could do the risk management. I mean, it's clearly worked, right? Like Aave's worked across pretty insane market conditions. No, we just don't want our users to get wrecked. Like an exchange, like a centralized exchange or pump fund or whatever, I mean, I'll stand by this. Like it's a wood chipper like you just feed users into it and they just all of them come in everyone loses money and they just like, you know they they get wiped out and they go and they earn a little bit more and they put some more in it's just it's a casino like that's the business model it just fucking feed the users into into this machine and, like we we go out of business if we do that we cannot do that we need our users to stay solvent and like make reasonable decisions so with either I mean, we've had, much more limited, you know, ability to borrow for your card against like this, against like ETH and like other basic assets. In the entire time that, you know, we've been around like, the amount of assets liquidated is like a few thousand dollars. So like this is out of like, I think $200 million in these vaults, we've only ever had to liquidate a few thousand dollars worth of assets.

Mike:
[18:24] And that's a win. We could have dialed up the risk profile and we would have

Mike:
[18:29] made tons of money on liquidations, but then we wipe out our own users. So this market is meant to be much more conservative, no 10x leverage. And in fact, the difference with this market versus others is there's actually two thresholds, one threshold above which it will not let you borrow anymore or spend anymore, and then a much higher threshold where you get liquidated. Whereas in other markets, there's just one threshold, just keep borrowing all the way to the end. And then if you click over, you get wiped out. In our case, we have one conservative threshold where like even a 40% price move won't like won't kill you. And then another much more aggressive threshold where you get to actually liquid. So it's just a different use case. We're like, we're not looking for people to come here and like, you know, lever up and, you know, go max, max D gen. This is really meant to be like a personal finance tool.

David:
[19:24] So as assets flow into to this Aave, what is it called? Not a spoke, spoke. It's a hub. Aave spoke?

Mike:
[19:32] Hub, it's a hub. It's a hub, and then there's going to be multiple spokes coming out of it to start with just one.

David:
[19:39] What are the spokes then in that case?

Mike:
[19:41] Well, for now, just one. There would just be the one main spoke. Because it's being launched on Optimism, We talked about them about launching another spoke specifically dedicated to more DeFi activity on Optimism. I think I can say that.

David:
[19:55] Okay. Okay. So like say my Etherify user, I'm buying some stocks, got some Tesla, got some gold. Now I have like a line of credit because of this Aave market. And so I borrow some money. Who is lending me that money? Who's on the other side of that borrow lend equation?

Mike:
[20:13] So either other users who are depositors in this Etherfy market, or, well, I guess other users is the short answer. They can be, anybody in the world can deposit into the market. So it's totally permissionless. For basic stablecoin. Or anything. I mean, you deposit, it's just an open market. So you can be a cash user, an Etherfy user, or anybody. You can be a financial institution looking to earn yields in like a pretty low risk market. So anybody can deposit. So borrowing is limited just to cash users. So that's sort of the idea. So you're borrowing from a wide variety of depositors. We have a few partners that are actually going to be depositing some of their treasury as sort of a way to help facilitate the growth of the market. So there's going to be a variety of players that participate.

David:
[21:02] So Etherfy is using Aavev4 to be like a matchmaking platform for its own users for borrowing and lending. So it's like what a bank does, but doing it bankless.

Mike:
[21:15] Yeah, exactly. That's exactly right. That's, I mean, a bank gets together, takes your deposits, you know, gambles in on mortgage bonds or whatever in some opaque black box. And then every few years they get bailed out. In this case, you know, it's fully transparent. You can choose to participate or choose not to participate. But if you choose to participate, you deposit, you're in a bit of interest. and then other users

Mike:
[21:36] can use that to take out a loan and do whatever they want to do.

David:
[21:41] Is this a new revenue line item in the Etherify P&L? Like this makes money for Etherify?

Mike:
[21:47] Yeah, for sure. So both the swaps on assets makes money and this lending market also makes money.

David:
[21:55] Okay, okay. So you take a little bit of the fee of the lending yield and then when somebody like takes...

Mike:
[22:01] Yeah, which is the same as Aave or any Aave market. There's always a...

David:
[22:04] Right, Aave is sharing some of their economics with you. I'm sure Aave gets a little bit too.

Mike:
[22:09] Yeah, that's right. I think this is public. There was an Aave governance proposal. So it's 80-20. So EtherFight keeps 80%. Aave gets a 20% rev share for the infra. Cool.

David:
[22:18] And then the swapping feature, how does that actually work? Whose software is that?

Mike:
[22:25] Yeah, it's pretty sophisticated. It involves a number of remote vaults that are integrated with your primary vault on Optimism and anything that's deposited. Whatever, I'm nerding out here. In terms of the specific partners, we primarily are using a partner named Enso, and they're doing a lot of the routing and optimal routing to give you the best price on your swaps. And the prices you get are actually really great. I mean, in many cases, you'll get a, maybe even I can make a strong statement that in most cases, you'll get a better price on this than you would get in like a centralized exchange, or just randomly doing a swap on chain. It's, yeah, it's pretty great. And it feels, we're working really hard to make it feel instant. Like this is why people, you know, use centralized exchanges is you go away and you tap once and you're done and it's instant. Whereas in DeFi, you know, it's like a one minute ordeal, all right, to do something.

Mike:
[23:27] This is really meant to feel, you know, as good as in a centralized exchange.

David:
[23:31] Talk about the rollout plan for this Gen 2 of EtherFi. How we are at A, how do we get to B, where it's like fully released, everyone can get their hands on it. Talk about the details there.

Mike:
[23:44] Yeah, so everyone can get their hands on it. It's live. Already, that's it. Yeah, as soon as we announce it, it's live. Yeah, we're not doing like a, pre-announcement and then no it's just it's live you can use it new users immediately get in existing users will be sort of rolled into it over a period of i mean like a week or or two so if if you're an existing account holder you'll still gonna,

Mike:
[24:07] have it enabled but new users get it.

David:
[24:09] Immediately where does the product go from here so you've got these two new primitives into the etherify app are there next steps or is that just like too soon to talk about

Mike:
[24:18] I mean there's there's so much stuff that we're doing. So we're calling this release Etherify Summer. Yeah, whatever. It's just a goofy name. We're going to be doing these packaged releases probably at least three times a year. So instead of just releasing little features here and there, we're going to try to sort of have more themes. And I think this is actually inspired a lot by what the founder of Airbnb had this now very famous speech called Founder Mode. And he talked about how they organized and structured their releases. And so I was really inspired by that. So we're kind of following that model. Anyway, so next release is going to be called Etherfy Autumn.

Mike:
[24:56] There's going to be a lot of polish and improvements that we're doing there, including both summer and autumn. We'll have a much more normie-friendly brand, which is just like the way we talk about the product, the way the website looks, just much more normie-friendly. Previously, Etherfy just is still very DeFi feeling. And then the other big thing for autumn coming up is going to be a lot of what we call sort of a social layer. I won't maybe spill the beans too much on exactly what the features are going to be, but it's just going to make it much easier for you to collaborate and, you know, interact socially, I guess, in a financial sense with others. And we're doing some cool stuff there. Again, stuff that you couldn't, like, I'm sort of spilling the beans, I guess, a little bit here. But like, imagine you could just like, yeah.

Mike:
[25:48] Like if you want to send someone money with like, you have a Chase bank account, you want to send somebody money, right? Like they need to have a bank account. They need to have something to receive it. Imagine you could almost like just, send somebody a fully functional account. Like you send somebody 10 bucks and they just like, they open the, you know, the message or the money that you send them. And like, okay, they now have a fully functional account. They can literally, they can go spend it. They could send it to somebody else. It's like you've literally like taken this like concept of like a unit of money and just like it now is like self-sovereign, so to speak. You can like send it to somebody else. And now, you know, your grandmine India or whatever can now go and like use that to buy stuff. Which again is sort of taking this idea that look with DeFi, you can just do things that are impossible in TradFi. And we're going to like really double down on that because I just think that's

Mike:
[26:41] when the magic happens. And that's how you actually get people to, you know, replatform.

David:
[26:45] When EtherFi started, we were in a much different place in Ethereum and with stablecoins than where we are today. This is before TradFi got all horny over stablecoins. You use a terrible word. And now stablecoins and on-ramps have also just gotten more sophisticated. Talk to me about the on-ramp ecosystem and how it's improved and what solutions it maybe has provided for you, but also what problems you guys still have at EtherFi with on-ramps and off-ramps.

Mike:
[27:16] Yeah, like they went, I guess eventually maybe they'll converge on something that's good. Yeah. Yeah, rewind the clock like two years. Yeah, there were some crypto on ramps, but they were just horrible, right? Like 3%, 4% fees, super slow. You have to KYC multiple times over to do anything. Your account would get banned randomly all over the place. The world we are today is there's now enough aggregators that are out there that can create a somewhat smoother experience. like the KYC is less painful. Instead of 4%, maybe you're paying like 25 basis points. You know, like it's less bad, like it reaches a lot better, you know, currency support. My honest take is that, like, it's just a question of when, you know, we get there. If you're really serious about this, you got to fully vertically integrate the stack. Like, you can't just package up a bunch of integrators because it just, it is both expensive because, like, every layer takes a fee. And it just doesn't create a good experience because, like, you know, the sort of KYC data sharing boundaries always create, you know, tons of user friction. So I think anybody, and there will be many, not just Ether5, but anybody who's serious about this is going to fully vertically integrate all the way down to, at some point, having a bank charter in one or more regions.

David:
[28:45] Does that mean that you guys are just kind of navigating around the on-ramps and you guys are just getting banking relationships directly? Is that what's going on?

Mike:
[28:53] Yeah, that's the end game. I mean, that's for sure the end game.

Mike:
[28:56] You know, that's, and look, actually, that's not the end game. The end game is great. You have this beautiful, seamless experience. And then you sort of open up a parallel, you know, payments, a rail where it just, it's crypto to crypto. You're not even going through the TradFi system. The merchant has a POS, a point of service, you know, terminal, you, you know, you tap your crypto payment thing and it just exchanges stable coins or crypto assets directly. And now it's very hard to do that in a compliant way and all that. But then you're really like, that's going to be super seamless. I don't think it is, and maybe I'm wrong, because there are people that are trying to do this already. I think Wallet Connect is trying to do that. Even Circle was kind of going down that path a little bit. But I think the level of adoption needs to be much higher.

Mike:
[29:49] Even with 10 million customers, unless they're all in the same city almost, it's just not enough. You don't have enough scale. Even if you're Amex scale, that's barely there, right? Amex, I think, has 100 million accounts, something like that. That's maybe just enough where you can have the lounges and the terminal integrations where like, a merchant, whether online or, you know, or retail is going to be willing to make the investment and deal with the hassle of integrating yet another, you know, thing. So I think that's the end game. The end game is pure crypto to crypto. It's just, but I think that's like a couple of years out at least. Right, right.

David:
[30:32] Yeah, we need complete crypto ubiquity for that, for the on-ramps to become just obsolete and invalidated and irrelevant because we're all staying inside of the crypto ecosystem. I think that's what you're saying.

Mike:
[30:44] Yeah, that's right. And, you know, at that point, you're, you know, the power dynamic between individuals and governments really changes dramatically. Because when you have... Let's go. I mean, when you have like an asset that's unseasoned, because right now, look, we're still transacting in like dollars, right? And stable coins are a lot more free than, you know, bank deposits. But, you know, you're still transacting in dollars. Those dollars are inflated, they can be seized. It's much more difficult to do it, but they can be. But when people are truly transacting peer-to-peer, it becomes really hard to fund forever wars by printing money, right? Right, right.

David:
[31:27] This is the original crypto Bitcoin vision, yeah.

Mike:
[31:30] Yeah, and so you have to build quite a tower to get there. But at least for the first time, we can see what the top of that tower looks like. Whereas, you know, a couple of years ago, it was like, how do we get from here to like something that, you know, normal humans actually, actually use?

David:
[31:47] You talked about updates to the EtherFi token as well. Let's talk a little bit about that, what's going on over in the token world.

Mike:
[31:54] Yeah, so there's been a lot of debate back and forth around token value accrual. And we've participated to some degree in that. We had buybacks previously. What we're doing now with EtherFi is doing what we're calling programmatic buybacks. So basically every action within the product now has a portion that generates their revenue, has a portion of that that programmatically goes to buying back ETHFY. And so now it's not so much this sort of discretionary thing, you know, how much is it going to be, you know, this month or next month. It's just baked into the protocol in a programmatic way, which we think should create a lot more confidence in terms of like, what is this token for? What's the value? Like, how does it connect to the health of the, you know, the protocol and the company? I think, well, others have done this kind of thing before. And that's almost like the only instance where buybacks have actually worked is in cases like Hyperliquid, like I guess PumpFun, I think is doing something similar where it's just baked into the product. And so that creates a level of trust and confidence for people that want to hold the asset.

David:
[33:02] Does that also give people a bit of a view into the actual financials of EtherFi? Because you can like back your way into the data, right?

Mike:
[33:11] Yeah, well, that's always been the case. I mean, all our transactions, everything's on chain. So there was no... Right. I suppose, I suppose like the interchange rate specifically and a few other brands, but we generally are pretty transparent about that. We do these analyst calls, at least quarterly, where we just give a full, you know, transparent view of where things are at.

David:
[33:32] It was never a secret. It was always open.

Mike:
[33:34] Yeah, that's right. I mean, it's kind of hard to keep it a secret.

David:
[33:38] To hide an on-chain business. Yeah. Yeah. What about privacy with EtherFi? I suppose as EtherFi gets more and more users and more and more transaction volume comes into the EtherFi app, privacy becomes a bigger and bigger issue.

Mike:
[33:50] Yeah, absolutely. I mean, look, what would be so nice, and this is where, you know, it'd be nice if the Ethereum protocol was focused on exclusively on this kind of stuff. It'd be nice if privacy was just built into Ethereum. We are working with optimism to roll out a privacy layer on EtherFi that should, hide like some of the basic information, like balances and transactions. connections. I mean, at this point, it's not like they're public, right? It's like anything in DeFi, like, yeah, if you know the wallet address, but that requires, you know, doxing. And obviously, you just see the number, the quantities, you don't know what, you know, what the person is buying or where or anything like that. So, so there's, you know, there's a level of privacy, but we want to take it, you know, to a next level where everything is, is private by default. Again, I mean, this is, I think one of the most valuable things that Ethereum could do at the network level is integrate a true privacy layer that works. But in the meantime, as I said, we're working with Optimism to just roll that out as an additional feature that we'll have.

David:
[34:54] Mike, this is all my questions. This is pretty exciting. As I kind of said,

David:
[34:58] I do see Etherify as a canary for Ethereum at large. Etherify is kind of just like wrapping up the Ethereum super app into a consumer product and selling it to the world, which, I mean, it's bullish that we've gotten this far. We've got spend, we've got save, we've got invest and margin. What's the next verb you think that will come into the Etherify app?

Mike:
[35:18] That's a verb. Yeah, that's an interesting way to think about it. I wonder if there's some social element that could be turned into a financial verb. Maybe that's kind of a direction where it's going. Gossip. Yeah, there we go. Yeah, no, I think it's exciting. I mean, I hope other, and I'm sure other people will try to replicate this and that'll be good because like this is, you know, just neobank, you forget banking, just neobanking is a $300 billion revenue industry. today. That's, I don't know, about 300 times larger than DeFi today. Like that's the opportunity. All this gambling shit that we're doing is a distraction, really. So the sooner we can get past that, the sooner I think the actual benefits of crypto start to accrue.

David:
[36:06] Mike, congrats on the release. I hope the best for you guys. Thanks for coming on the show and telling me all about it.

Mike:
[36:10] Great. Thank you.

David:
[36:11] Bank of the Station, you guys know the deal. Crypto is risky. You can lose what you put in, But the institutions are here. So we are going even further west. This is the frontier. It's not for everyone, but we are glad you're with us on the bank journey. Thanks a lot.