DeFiBank for Enterprises with Jozef Vogel from EtherFi

[00:00:00] Jozef: Your credit card maybe charges you 20% interest. Like the borrow rate in DeFi is substantially lower. Maybe that's 4 or 5%. So it allows you to still stay long with your precious crypto, but borrow against it and actually use it in real life. And from that we have some pretty good promos going on as far as what you get with the credit card.

[00:00:19] Jozef: Our goal is ultimately, to make that card rival whatever is currently in your wallets. Now you have the ability to actually spend with those assets. So you could either spend directly, you can borrow against them. 

[00:00:30] Umar: Welcome to The Accountant Quits podcast, where we help accounting and finance professionals learn how to manage a business using crypto.

[00:00:39] Umar: Banking has always been built on two things, trust and control. For centuries traditional banks held both deciding who gets access when and on what terms. Then came the neobanks with their sleek mobile apps, better UX and friendlier interfaces, but under the hood, still the same centralized rails and still the same gatekeepers.

[00:01:02] Umar: Now we are entering the third wave with DeFiBanks. A non-custodial alternative built on blockchain rails, cheaper, faster, and permissionless. One that combines the polished experience of traditional finTech with the core benefits of DeFi - lower fees, higher yields, and full user control.

[00:01:23] Umar: And at the forefront of this movement is ether.fi.

[00:01:26] Umar: They've launched a suite of tools that lets users save, earn, and spend all in one place without ever touching a traditional custodial bank. We are talking fiat on and off ramps, asset deployment into ETH, BTC, stables and more. One click staking, swapping and DeFi strategy execution.

[00:01:48] Umar: And to share how professionals can use  ether.fi at their companies, today I've Jozef Vogel, the Chief Operating Officer joining us.

[00:01:57] Umar: Lastly, if you're new to this channel, I'd really appreciate your support to help us grow by liking this video and subscribing. Now, enjoy my conversation with Jozef.

[00:02:07] Umar: Jozef, welcome back and thanks making the time to be here. 

[00:02:10] Jozef: Yeah. Really great to be here and reconnect.

[00:02:13] Umar: The listeners might be familiar with you. So Jozef first appeared on the show on Episode 48, quite a while ago, where he shared his experience navigating web3 as a finance professional. But today will be a different episode and we'll speak about   ether.fi.

[00:02:29] Umar: But before we dive into  ether.fi's products, Jozef, I'd love to start with a refresher for our listeners on what restaking is.

[00:02:38] Umar: So  ether.fi is a decentralized, non-custodial delegated staking protocol with a liquid staking derivative token. That means on  ether.fi you can stake ETH to get eETH or weETH and then restake your staked assets to an additional staking rewards all within the   ether.fi's app. And   ether.fi's today the largest liquid restaking protocol by TVL, which is around 6.8 billion if I'm not mistaken.

[00:03:07] Umar: So within  ether.fi's app, you can restake ETH, through 3 different protocols, EigenLayer, Symbiotic or the Karak protocol. You can also restake Bitcoin, and this is powered by Babylon Labs.

[00:03:21] Umar: I hope, yeah, this was a general overview of what  ether.fi is. So Jozef, you are one of the earliest employees at  ether.fi when you joined in June, 2023, the TVL was only around 30 million at the time.

[00:03:34] Umar: In early 2024,  ether.fi also secured a 23 million Series A, and you've now expanded to 4 offices. Could you walk us through the remarkable growth of  ether.fi for the past 2 years and why perhaps this growth is not surprising? 

[00:03:51] Jozef: Yeah. I think, I guess there's a few reasons to our success. It's probably a collection of everything.

[00:03:56] Jozef: But yeah, I guess just to step back we originally launched, as you kinda mentioned, our flagship, eETH product, which is the liquid restaking token back in November, 2023. At the time, I think the restaking narrative was just in its infancy and eETH was the first liquid restaking token to actually launch.

[00:04:16] Jozef: And I would say this was always in our thesis. This real consumer facing DeFiBank experience was really something we iterated on. All the way, basically from our series Seed round. So we had really been preparing for this potential narrative breakout in advance.

[00:04:31] Jozef: So I think one thing we really focused on when we launched was just kinda relentlessly ensuring that eETH was available everywhere in DeFi. It's competitive space. There's obviously, a big player in the liquid restaking or the liquid staking category. So we wanted to make sure that users weren't sacrificing anything by holding eETH.

[00:04:50] Jozef: So this was working with Oracle providers, working with other borrow/lend markets, yield markets such as Pendle, I'm really trying to iterate and give users kind of a unique new experience and just being the best partner we could with effectively everyone in the ecosystem. We wanted to just make sure that in any new project, anyone really trying to create something, really unique and cool for users.

[00:05:12] Jozef: We were able to get wrapped eETH on there. You know, that was different campaign. That was whatever it took to just really expand. So that was one thing obviously, I need to give a huge shout out to the exceptional team we have, you know, everyone's very hands-on from the top down. Everyone really leads by example and willing to do absolutely whatever it takes to move the company forward.

[00:05:33] Jozef: I can't say I've seen more passion in like a group of people before So, that was like really unique and just that helps energize you when you're working 16 hours a day or whatever it might be. To really get so over the line. I think you also mentioned our offices as well.

[00:05:48] Jozef: I know this is, kind of like, I guess an arguable topic in the crypto space. For us, we have kind of everyone in office. And I found that at least early on when you're iterating on a product it's really good to have everyone together and the amount of conversations we have throughout the day on how do we tweak this or how do we wanna launch this? Or after hours we just talk about, what would be like a cool new thing we could do for users. I just think that is a very unique thing for us and it's really helped us like mold the product as we have. And then I guess lastly, just like continuing to iterate on your product.

[00:06:22] Jozef: We had success with eETH. We launched, as you mentioned, like a few other liquid restaking tokens. We moved to BTC through Babylon. We launched just the liquid product line, so ETH by liquid, which is a series of basically DeFi vaults and then also, I guess we're gonna touch on it later but ether.fi Cash as well and just how this kind of all really fundamentally builds up into what we're trying to create for DeFiBank. 

[00:06:47] Umar: Okay. You said DeFiBank, the title of this episode is DeFiBank for Enterprises. So a DeFiBank is not a bank in the sense that it's a deposit taking institution. It's non-custodial and it's decentralized.

[00:07:03] Umar: So it gives you many of the tools that you get from a traditional bank, but in a DeFi flavoured way let's say. Could you expand on this suite of DeFi tools integrated into ether.fi that will allow users to conduct their day-to-day finance without ever needing a traditional custodial bank. Yeah. 

[00:07:23] Jozef: Yeah. So I guess I'll just kick it off with clarifying that ether.fi is building a viable banking alternative it's not a direct bank, but really trying to build something that rivals that in a very self custodied way. So it really plays into everything we built to this point, allowing users to save, grow, and spend their crypto now.

[00:07:41] Jozef: So since launching we're about a month and a half removed. We have about 50 million deposits. The spend is up to about 300k a day. So we're seeing good initial traction. As we start to roll out some more key features. It might be helpful to just take users through a bit of what the journey looks like.

[00:07:58] Jozef: So, you know, when you come to ether.fi, you sign up for a membership account much as you would for any kind of other account that you create and then when you do so a wallet is effectively created, so it's a self custody wallet for the user and this is either for an individual or for a corporate account.

[00:08:16] Jozef: And the management of this wallet is really abstracted away. So we want it to feel like not everyone in your organization has to go store their private key and go through kind of all these hoops and make sure it's in a bunker and all these things we really want it to be as seamless as possible.

[00:08:31] Jozef: Just so you know there's always the alternative to secure in, in many different ways, but really have a 2FA experience, have it nice and seamless, have pass keys, whatever is needed just to really make sure that you're not having to pull out a wallet every time you just wanna make a credit card transaction, for example. So I think that's one of the key things that we really focused on initially and then from there just making sure it's like really easy to add funds to account. So again, very simple thing in banking. I wouldn't say like all the crypto solutions have really focused on it as much, but how do you add funds? Whether it's on chain, whether it's off chain, how do I send dollars into my crypto account? How do I do this without a bunch of fees? So those are the other things iterating on and there's a lot of big brains in the background that work on the smart contract pieces of it and really make it super seamless abstracted.

[00:09:17] Jozef: You can top up from Ethereum mainnet, Base, or Scroll, you can top up from your bank account do an integration with different providers that allow us to do whether that's on the SEPA network, Fedwire, ACH, multiple ways to do that and then that really allows I think it takes away a lot of the friction of just onboarding net new users.

[00:09:37] Jozef: Obviously, the crypto natives will keep everything on chain and that's great and we wanna see more companies do that, but how do we make it seamless for let's say companies who are operating in the space, but maybe not as on chain or native to DeFi as others might be.

[00:09:50] Jozef: Yeah, that's like the top up experience and then from there it's really okay, the user has, or company user has funds in their account now what do they do with them? In your normal account, maybe some banks give you some yield on that. Maybe you can get some very low interest.

[00:10:06] Jozef: What we're focused on is then it, what's unique to this is you can now earn DeFi yield which is natively and better in, in most cases, you can weigh the risk reward, but I would say there's a lot of blue chip protocols that offer very good native yields on chain.

[00:10:22] Jozef: So from here now a user has funds in their account. They can earn yield on those assets. So they can move them into ETH they can move them into BTC. They can deposit them into a liquid vault. They can earn 5 to 10%. They can deposit it into some kind of T-bill equivalent on chain. There's other RWAs.

[00:10:40] Jozef: I would say we're this is actually a sector I'm really excited about. We have a lot in the pipeline as far as how do we offer other alternative yield sources or exposure to other assets. So that's the investment side of it.

[00:10:54] Jozef: Then moving forward to complete the product suite is now you have your investments, you have your assets sitting in your account.

[00:11:00] Jozef: Now you want, you have the ability to actually spend with those assets. So you can either spend directly, you can borrow against them can building a direct unique Aave-instance in the background for allowing users to, to borrow against those assets and inherently like these rates are much lower than a user would typically have on a credit card.

[00:11:19] Jozef: If your credit card maybe charges you 20% interest, like the borrow rate in DeFi is substantially lower. Maybe that's 4 or 5%. So it allows you to still stay long with your precious crypto but borrow against it and actually use it in real life and from that we've offered, we have some pretty good promos going on as far as what you get with the credit card.

[00:11:39] Jozef: Our goal is ultimate, ultimately to make that card rival whatever is currently in your wallet. That's what we're going after. We don't want it to just be this crypto product.

[00:11:47] Jozef: It really needs to feel like a really good solution and that's what we're striving for. I think that's the summary. I'll just, I highlight I guess also the piece around how this kind of plays in to companies as well. I guess coming from a traditional finance background it was like products like this that I was always looking for and never really found something that allowed allowed me to keep all assets on chain and send out wires, receive wires, interact, send out payroll, whatever it might be, add employees into the company org., like this is really the solution that encompasses all of that versus like a consolidated approach of multiple different providers all over the place doing very narrow things. I just inherently think it's it's a really good offering across the board. 

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[00:14:13] Umar: Okay, so you mentioned these three products, ether.fi stake, liquid, and then cash. We'll speak about cash later.

[00:14:20] Jozef: Yeah

[00:14:20] Umar: I wanna understand the difference between stake and liquid. So for your liquid product, when I go to the website, I can see these three steps.

[00:14:29] Umar: So you deposit your assets in a vault. Like for ETH, BTC and stablecoins. These vaults will then deploy these assets to optimize for earnings across the best protocols in DeFi and then you earn rewards.

[00:14:42] Jozef: Yep.

[00:14:42] Umar: So could you provide examples of how these vaults, they auto rebalance these assets across DeFi to optimize yield performance and what do listeners have to know before going in terms of thinking about like their risk profile or something? 

[00:14:57] Jozef: Yeah. Yeah. So it's, I'll say it's, it's self custody vault architecture, users deposit, they can withdraw at any time. So that's just the in and out. I would say there's, if a user wants to find out more we try to be as transparent as possible in the vault kind of front end just to show what protocols are deployed to, what the yield is, what the duration of those are. It's a collection of strategist and vault architecture that oversees this. A lot of the deployments are I guess into like primarily blue chip protocols.

[00:15:28] Jozef: So it's not necessarily like a long tail of of, I guess protocols and just chasing yield. So, I would say it's one, it's transparently shown across the board all the different positions that the vault takes and there's, I guess in the background a pretty extensive process as far as ensuring deployments are sufficiently audited and that they go through like a very thorough review process.

[00:15:51] Jozef: So I think that's one of the different offerings as far as if you're a user. You don't necessarily know a lot of these protocols, it's very hard to keep up with everything that happens in DeFi. So this is a professional team trying or working towards how do we transparently go about this and how do we ensure security of funds and there's always smart contract risk in anything on chain.

[00:16:13] Jozef: So that's inherently there. It would be wrong not to include that piece of it. But, generally that's the a little bit of the background as to all the work that goes on as far as the positions are involved.

[00:16:26] Umar: Now as the target audience of this podcast, it's mostly aimed at finance professionals already working in web3. So ether.fi you guys offer both non-custodial and custodial options and that what I mean is you partner with regulated custodians like BitGo, Finoa, Anchorage.

[00:16:43] Umar: So my question is I understand it's permissionless, but the onboarding experience for institutions, would anything be different?

[00:16:52] Jozef: Yeah, I guess I'll, I'll start with saying we have a lot of institutions, funds, large asset holders already using ether.fi. We have to, if based on the 7 billion of deposits but I think there's there's a few different avenues that an institution could take based on kind of the risk appetite and what they're looking for.

[00:17:10] Jozef: For more I guess conservative institutions just looking to get yields on ETH they have the ability to just directly stake they can do so from many different custodian providers such as what you mentioned previously the Anchorages, the MPC providers. There's lots of different avenues that they can go as far as custodying those assets.

[00:17:30] Jozef: So we really want to ensure that is always available for them and then the ones a little bit further out on the risk curve can then go do whatever they want to DeFi with all. I mentioned some of the blue chips they can yeah, borrow against those positions and they can ultimately earn yields whatever kind of their appetite is and however they wanna approach that and then there's also a liquid vault which we're working on getting more channels for institutions to, to deposit into those. But yeah, we've seen a number of institutions come through that path as well.

[00:17:59] Jozef: So I, I guess really we just wanna stay flexible and provide different channels for them to deposit and based on whatever kind of their risk appetite is. So, I think that's the ultimate goal. 

[00:18:12] Umar: Based on our conversation prior to this podcast, you had mentioned that you've built an offramping product as well, and therefore if users have USDC or other stablecoins in their wallet, they can offramp to an external bank account just within the ether.fi interface. Could you elaborate on the use cases business would use this feature for? Would that be yeah, for paying like vendors, contractors. 

[00:18:38] Jozef: Yeah, exactly that. So hopefully by the time this podcast goes live that's ready for, corporates to onboard and go through. But yeah that's a 100% the idea is how do we still enable every company still has to pay.

[00:18:51] Jozef: I don't care how crypto native you are, you will have something to pay with fiat. Like you'll have to send out a wire, you'll have to pay with a card, whatever it might be. So it's really like it, it goes both ways. So if we're looking at actually settling this will allow users to settle to or businesses to settle to third party vendors, to pay invoices.

[00:19:11] Jozef: So, you know, whether I guess you're a business or even personally, Whether I guess you're a business or even personally, you could pay your rent and that's really, I think a major unlock. As far as being able to actually still keep assets on chain you could pay employees. You can effectively offramp, whatever you might need to do. So that, that is really designed, around that and we'll just continue to iterate and add more and more country support 'cause then you're dealing with, traditional TradFi rails many different different pavement rails that you have to fix for. Starting with SEPA, U.S and then just continue to expand that to many different regions.

[00:19:48] Jozef: And then also just, yeah, the flip side of that is allowing users to top up from their bank account. You might have assets within your bank, you wanna earn some kind of additional yield in DeFi, or you want to just use those to earn some cash back on a credit card within ether.fi.

[00:20:05] Jozef: Just having the ability to then send funds make it super easy, super seamless and not charge extravagant fees is really what we're going for. 

[00:20:15] Umar: I guess that will have a KYB component to it? 

[00:20:18] Jozef: That's correct. Yeah. Everything associated with the card or with the on/off-ramp solution or I guess whenever we bridge the traditional world there is yeah, KYB and KYC that users need to go through.

[00:20:30] Jozef: Yeah, it's just it needs to happen. But we wanna make that as seamless as possible. 

[00:20:34] Umar: Cool. Now my next topic that I have is to go through ether.fi's business model. So you've co-authored this paper titled ‘Building a $1B Revenue DeFi Protocol’ with ether.fi and I'll share the link for the listeners in the show notes.

[00:20:50] Umar: So the TL,DR of this paper is that crypto native businesses have substantial structural advantages versus traditional businesses. They can grow faster and they can have higher operating margins. So in last year, so 2024, ether.fi ended with 26 million in revenue and 1.9 million operating profit and this was your first in business and in this year for financial year 2025, you are forecasting revenue up to $96M with 30% profit margins.

[00:21:24] Umar: So I wanna ask you if you could go through the structural advantages of, I'm saying a DeFiBank, but also in other of DeFi protocols and yeah. The direction that web3 projects can take to diversify their revenue models and have greater transparency than TradFi.

[00:21:44] Jozef: Yeah, I think you've nailed it with the headline, I think DeFi protocols, or I guess ether.fi I'll speak for ourselves is just structurally more efficient than TradFi in many ways. I'd say based on either profit margins or just the ability to, really grow, total assets deposited into the protocol without substantially adding headcount or amount of additional cost within that document that you're talking about, we really broke down a lot of kind of the key earning verticals for ether.fi. I think, just to step back, one thing we're really focusing on is how do we provide more transparency in this space? As it starts to grow. I really believe it's very important for companies to be more transparent, really show where the operating models are, and really focus on how do we actually earn revenue versus just create a token or whatever whatever kind of path, certain companies might go down. So, yeah, I, I just think it's really important that we start to move in that direction and just really provide some more legitimate analysis for users who are just generally interested about how these models work.

[00:22:50] Jozef: I guess into a few specifics. We have our stake, liquid, cash, which we've talked about.

[00:22:56] Jozef: Stake you know, a few of the revenue streams or staking rewards. There's some RWA yield, the restaking rewards. When we look at liquid vaults that's like another very profitable channel for ether.fi.

[00:23:09] Jozef: I would say, it's almost 2.5x per the revenue per ETH that's deposited. So, that we just expanded into multiple different offerings and really diversifying revenue streams. So through that we've seen BTC revenue, you see the US dollar revenue, or I guess USDC revenue, and then various other kind of like partner channel revenue line items. So that's, been good for diversification and, to further that point going down kind of the cash route that's really focused around interchange revenue. There's kind of the FX side. ether.fi just launched like a effectively a hotel booking site.

[00:23:46] Jozef: So, We just continue to expand on multiple different revenue streams. I think that's really what we're trying to show. I'll stop there. I think that's summarizes a few of the key pieces for ether.fi and just fundamentally what we're looking to do.

[00:23:59] Umar: Do you have examples of project doing a good job when it comes to transparency? ether.fi can be one of them, but are you referring to having these, Dune dashboards for the community where everyone can see what's happening on chain? 

[00:24:14] Jozef: I think, yeah. There's many ways to do it. I think having very clear, like dashboards to show revenue or to show total holdings.

[00:24:21] Jozef: Just making sure those are like accurate we obsess over ensuring that is the correct information on chain and then there's other ways too, like we are now doing kind of quarterly calls for the community just to run through. I think one piece of it is good is it keeps us it, it keeps ownership as to what we say we project to do and so we transparently show what our goals are for the next year, what we're planning to roll out, a bit about kinda the user base and revenue assumptions that we're hoping to hit and then subsequent quarter, we give feedback on that.

[00:24:52] Jozef: We update our forecast if needed and just continue to really show the community exactly how we're trying to expand and what we're trying to do in DeFi. I think it takes many forms. I've seen a couple other projects start to do this as well.

[00:25:06] Jozef: And yeah, I think it just adds a more, mature level of sophistication to the industry, that kind of rivals a lot of the traditional, financial sense. 

[00:25:15] Umar: Beautiful. In our previous episode, we had spoken about subledgers, and for people listening when we are speaking about financial reporting, transparency, when you use a sub-ledger at a company, it would not be used for that use case, right?

[00:25:30] Umar: Like it's more like these Dune dashboards that you can then disclose publicly to your community. So yeah, companies. Operating the space that they want to improve their reporting, the it's not really the sub-ledger that would do the job there maybe in the future. 

[00:25:45] Jozef: It can play a part in it, I think.

[00:25:47] Jozef: I think as far as analyzing profit margins and showing average revenue per user and really expanding on that, I think, the sub-ledger information is, can play a key part in that. I think actual financial data, whatever a company is comfortable disclosing I think is good.

[00:26:03] Jozef: You don't have to show everything. You have to kinda give up the secret sauce of what your business is doing. But just to like fundamentally understand like the underlying inputs and portray that I think can help versus just strictly Dune data because for some, not everything is can be seen on chain.

[00:26:20] Umar: Yeah. Yeah, I agree. Okay, so you mentioned ether.fi Cash earlier. I'd like to go deeper into this use case. Let's say a user has a mix of assets, right? They've got their staked ETH, staked Bitcoin. They've got other deposits into their DeFi strategy vaults. So with Cash, they can actually spend those assets directly.

[00:26:42] Umar: For example, someone could pay a vendor using eETH, and then that gets off-ramped into fiat. Is that correct? And can you walk us through how that works under the hood? 

[00:26:53] Jozef: Yeah. So we don't have the direct swap mode available right now. What a user could do is if they wanted to hold onto their eETH effectively they have staked asset within their vault and they want to send out funds.

[00:27:05] Jozef: What they could do is just, it's an instant, atomic borrow transaction effectively. So if they don't have stables that they want to send, they wanna borrow against the position, they can do and that just happens all within, effectively the send. And so the user's funds it would be a USDC, let's use in this case would get sent to, we're using Bridge xyz.

[00:27:25] Jozef: As an example, it gets sent to an account. They recognize that they say, hey, great funds received. We recognize the wire details that are sent out to the third party. Great, converts sends those wire details out. It's, it go into a little bit more into the hood, but it's, I guess not much more complicated than that.

[00:27:44] Jozef: The same kind of holds true for topping up your account if you go the alternative way. Whenever a user completes the signup flow, they're given, a bank account number. They just send those funds to the bank account number. Once you know they're received the funds get converted to USDC and sent to their vault. So, Yeah that's effectively the flow. 

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[00:29:44] Umar: And for the corporate card right now, how elaborate is this product? Like in terms of maybe setting spending limits, this kind of stuff? And have you partnered with a web3 corporate card provider, or are you building this stack in house? 

[00:29:58] Jozef: Yeah, so we'd like to build the product mostly in house where possible, it really allows us to have the freedom to make sure that the user experience is as good as it possibly can be. But so as far as the controls go if you're a company, for example, you sign up, you can add different employees to your organization. If you're the admin, you can set different thresholds.

[00:30:19] Jozef: So you could say, within this vault only these people can withdraw or maybe we need two or three signers to do certain actions. You can set total limits on the vault so maybe I only want to send out maybe 10,000 a day.

[00:30:33] Jozef: Maybe I only want cards to do that. So, You have that kind of level of control and then you can issue cards to all your employees they can come on, they can get an account, they can see their card, you can see all their transactions and you could set limits at a per card level. So it really gives you kind of granular control over what happens in the organization and the same is true also for just your personal account.

[00:30:57] Jozef: As far as, I guess specifically on the credit card side. Yeah, so we're working with a BIN sponsor which effectively is a company that has a Visa principle issue license. So working with them, to provide the credit card and that's region specific, so we're gonna continue to grow that as we expand but yeah that's the back end of how the card kind of operates.

[00:31:19] Umar: You said BIN sponsor. If people are not familiar with this term, can you explain what that is? 

[00:31:24] Jozef: Yeah, effectively whether it's Visa, MasterCard, any kind of card program, they will issue, basically a bin sponsorship or there's a Visa, for example, principal issue license.

[00:31:36] Jozef: So you need that in order to issue cards and as companies are just launching they might not have significant volume to have a direct program with Visa. You need to get to a certain level before you can do that. 

[00:31:47] Jozef: So, in the middle kind of sits different card program providers that aggregate across a number of differents card programs that are just early stage, wanna get up and running, and then you can just share effectively.

[00:31:59] Jozef: It's a bin, but it's ultimately just, let's look at it as just like a way to issue cards that's where we're at right now. As we start to grow, we'll expand on how we can approach this from different business models.

[00:32:12] Umar: Perfect. Thanks for clarifying.

[00:32:14] Jozef: Does that make sense? 

[00:32:15] Umar: Yeah, that makes sense and for the listeners, Bin is 'B-I-N' if you wanna check that out. So one of the other big features of Cash is that users can borrow against their assets to finance their working capital without selling their crypto. You went through this earlier, but could you walk us through, how borrowing would work with, within the ether.fi app?

[00:32:34] Umar: What are the, current interest rates like and how the net return stacks up when you consider you're receiving like staking rewards, these other, earning rewards from your DeFi strategies. How does that look like?

[00:32:48] Jozef: Yeah, for sure. I guess we'll just go through the flow a little bit. When a user tops up, they can put it into, I guess let's say they put it into a liquid position. Liquid ETH so that, depends, but it's earning about 5 to 10% return. If they don't want to spend their crypto, and they just wanna hold it their Long ETH, they love ETH, it's going to the moon.

[00:33:08] Jozef: They can simply just, borrow against that position. So what kind of happens in the background is when we get the AAVE-integration live, this is currently available, but we'll be iterating, with a unique AAVE-instance. But it, the user would effectively deposit that position into AAVE and then that just sits there it earns yields, but only when they go to actually spend a transaction, would it trigger to do a borrow against that?

[00:33:33] Jozef: So, Maybe they have 20K of ETH value on the protocol. They wanna borrow against that maybe, they have a 100$ transaction at the time of transaction it'll just take out a borrow, against their position and that can continue to happen assuming they stay within the loan to value ratio that's set. So continue to earn yields and then they'll just pay the borrow rate on whatever the outstanding balance is. So, If it's 500 bucks, they're earning maybe 7% on the supply side.

[00:34:02] Jozef: Maybe they're just paying whatever market borrow rate is on Aave, maybe about 4%. Ultimately their supply side yield should cover any kind of borrowing costs that they incur. That's really the idea and then they're free to pay off the balance at any time but just continue to hold their assets.

[00:34:21] Jozef: So, Yeah, this can happen with ETH, BTC many other assets if a user doesn't wanna sell and just wants actually to be able to use those assets to, to settle real world transactions. 

[00:34:32] Umar: You outlined a phased go-to-market strategy targeting three distinct user groups, starting with, of course, the DeFi-native users, but eventually expanding into CeFi and other Neo-banking audiences. I wanna ask you, what's your approach for reaching CeFi and Neo-banking users and maybe what you see as key catalyst that could accelerate the adoption in those segments.

[00:34:55] Umar: I know it's challenging, but we're getting there. 

[00:34:58] Jozef: Yeah. I think the first thing is really, making sure the product is, has a lot of these kind of key features that I think CeFi users would really want to see.

[00:35:06] Jozef: We discussed on/offramp, having different access to other products, really making it like I don't know, making some very unique things that they might not get in their normal traditional sense and opening up this whole new banking experience. Yeah, I think, I won't expand on it too much. We have a few channels that I think we're gonna roll out, but really the initial focus is ether.fi has a ton of very good DeFi users that have been with us for a long time.

[00:35:34] Jozef: We're finding a lot of net new ones in the ecosystem with the recent launch. So we wanna make sure we really build a good product for the crypto natives and then, once we feel comfortable about that, I think then we really start to, to turn on, activation for different channels such as CeFi and Neobank.

[00:35:52] Umar: And I understand ether.fi like all these services, they're provided by a financial tech company. It's not a chartered bank. What kinda license would ether.fi have, where is ether.fi currently available for institutions and how have you been navigating global regulation? 

[00:36:10] Jozef: Yeah, I guess I'll leave that for kind of the lawyers and a bit on the compliance side, but yeah, I would say that's, very much a complex piece of this operating in DeFi, relatively more simple. Once you start to bridge this gap, that's where the challenge becomes and ultimately making sure the experience is still good. I. But ensuring you obviously follow all kind of regulations and laws in, in applicable jurisdictions.

[00:36:32] Jozef: As we start to expand, it's looking at different, different jurisdictions and figuring out exactly we maybe have a good fit in this region. How do we wanna approach that? What is like a long-term solution? Is it this, particular licensing? How do we really cater to that audience?

[00:36:47] Jozef: So, I think, we'll continue to see, what the right approach is. As we start to like really figure out what jurisdictions we have a lot of users in. But for now, yeah, it's available in a number of different regions. I guess I would just encourage users to, to go to the site, see if it's available in their area.

[00:37:03] Jozef: But yeah, it's, a lot more to come on that piece. 

[00:37:06] Umar: So we are speaking about DeFiBank.

[00:37:08] Umar: And essentially going bankless. I wanna ask you, in your experience also speaking to other folks in the industry, when does a web3 project actually need a bank? If you're a foundation, do you actually even need a bank?

[00:37:21] Jozef: My experiences, I always have. you know, You can try to say, we'll just be completely on chain. But there always seems to be like a bit of a bridge to real world, whether that's, just simply like an ongoing subscription, whatever you want to pay for your chatGPT, whatever it might be.

[00:37:39] Jozef: I find it's always valuable to have some kind of banking rails. Whether that is a foundation, whether that's a Labs Co, whether that's just a small business, whatever it might be. I think, yeah, that's always needed. So it's, what I find important though, I think, there's a number of companies in the space I really wanna continue to encourage them to keep assets on chain.

[00:37:59] Jozef: I think again, kind of coming from the finance side if you have, and you've settled payments on chain versus sending a wire across the world, entering, different intermediary banks, hoping it gets there, it gets rejected. It comes back 5 days later. You can't figure out what's going on.

[00:38:17] Jozef: Everyone blames everyone throughout the whole chain like those things fundamentally are just so much easier with digital assets. So I, really want to try to build a solution for maybe more of kind of the web2 style digital asset companies that really gives them like a very seamless ability to do this.

[00:38:36] Jozef: I think that's important and ultimately the more settlement we have on chain, there seems to be some good headwinds, or sorry tailwinds with kind of stablecoins these days. So, the more we can support very fluid ways to transact paying to employees, paying to other vendors. Really get people interacting more on chain and what feels like a more traditional sense. So, maybe they're a little bit more comfortable with it, I think is like a big net positive for the industry. I think it, brings in more users, brings in more capital, keeps it on chain and really starts to kind, introduce like different offerings. 

[00:39:10] Umar: Cool. Thanks for sharing. Yeah ether.fi sounds like a great company to work for right now, are you guys recruiting any finance ops role? And I know you said you have to come to the office, but Yeah, if people are listening right now, are there any roles available?

[00:39:26] Jozef: Yeah, I think we'll be looking at both finance and ops, someone to cover both. Yeah, so always hiring and if, if any, I guess really strong candidates wanna come through and meet. Always happy to do so. And yeah, just to guess to expand on the office locations. We're in Cayman, New York, Denver primarily and we have a office in Toronto as well, so. yeah. One of those occasions I think is sufficient coverage across the region. So yeah, always open to meeting new people looking to work in this space. 

[00:39:56] Umar: Perfect. Jozef we've, come to the end of the podcast as closing thoughts. Has there been anything that you wanted to share today in terms of the new suite of products that ether.fi has launched that we didn't cover? Or how would you summarize the episode for the listeners? 

[00:40:13] Jozef: I think I tried to get everything across that I could. As far as ether.fi goes, I would say just try it out if you have any questions, always happy to like, hear feedback from users. I think, that's one of the important things we've really focused on is what is needed for a lot of kind of companies within this space?

[00:40:30] Jozef: How do we really deliver that? Yeah, I'm very open to hearing feedback from anyone who's gone through the flow. But yeah, otherwise excited about, about space generally and different products coming to market around this, general thesis. 

[00:40:44] Umar: And other than users, if there are potential like partners like listening, what kind of partnerships maybe you'd be looking for. 

[00:40:52] Jozef: Yeah, different channels that can plug into cash. Different kind of unique offerings that we can give users, whether that's RWAs, whether that's other kind of yield opportunities, whether that's more seamless, onboarding in different regions if any of your audiences in a certain country and they're just passionate about, ensuring their country has really good, rails as far as, crypto can go.

[00:41:14] Jozef: I think, hearing that directly and figuring out what each jurisdiction needs, I think is actually a very interesting feedback for me. 

[00:41:23] Umar: Perfect. Jozef, usually at the end of the podcast, I like to ask the guest, what's your favorite quote or maxim because you're returning guest.

[00:41:30] Umar: I, I believe I won't ask you again, but the first time you had said, when I asked you this, you said it is just to enjoy the ride. So I guess you've been doing that over the years and if people want to reach out to you, Jozef, or they want to learn more about ether.fi which they go. 

[00:41:47] Jozef: Yeah, if they want to go, just ether.fi, you can hopefully see a lot there.

[00:41:51] Jozef: But yeah, it can provide, a channel that we can connect on, after and, maybe we can put it in, in the notes, but, yeah, I'd say that quote is still pretty bang on, really enjoying the experience. Love, love this space. Yeah, always, happy to meet anyone you know who shares that passion and I really appreciate your time, and your questions. 

[00:42:11] Umar: Perfect. Thanks a lot to you for coming today, Jozef we'll be in touch. 

[00:42:15] Jozef: Great. Thank you.