Consumer DeFi: The Savings Account of the Future by Ethan Lippman

uh what's up everybody um put your hand up if you think Finance is blockchain's killer use case there some hands okay I see some hands um then why is no one using the chain why do we only have a few hundred thousand users um compared to um trafi and and fintech like we all know adoption is growing but we're still being dwarfed by incumbents so for those of you who didn't see this video um our boy Jesse from base he tried to onboard some Norm with limited success and like he could have been more chill with it but I think his intention was spot on uh normi users remain underserved sophisticated institutions are coming on chain stable coin rails are being adopted rwas are being tokenized but consumers are still not enjoying the benefits of Internet Finance so today I'm going to share IU's thesis as to why this is the case and what we can do to capture this opportunity so if we abstract everything away what's the point of Finance it's wealth and why do we seek wealth humans have evolved to survive under the selective pressure of scarcity our hormones respond to the environment and make us do things that help us survive and reproduce um but in a postmodern uh in a in a modern world like it's we're post scarcity uh this is the age of abundance and sometimes our Primal response mechanisms can actually act against our best Ben uh best interests um those who Thrive nowadays are are actually those who can regulate their impulses but turns out most people can't so how does all this relate to blockchain speculation is like hunting a big animal or exploring an Uncharted land it's high- risk High reward the Primal Buzz that you get from aping something can cause Behavior Beyond what's what's rational and we all know trading is crypto's primary mainstream uh attraction right now but for the average participant they're actually much better off just playing roulette like this is not how we're going to be Building Wealth for normies uh in a world where everyone is not a sophisticated risk underwriter you build wealth by practicing austerity and compounding gains from lowrisk strategies in other words savings maxing is how the average person can sustainably grow their wealth so I believe internet finance will have a killer mobile super app with the following features first we have um savings so you can earn yield on your wealth then we have peer-to-peer payments you can send your money globally we have Investments so you can diversify your wealth into productive assets we have loans so you can get permissionless credit against your wealth onramp off-ramp to move your money how you please and self- custody so you actually own your own wealth um why do we need this internet Finance super app well firstly the people need it um the average American doesn't even have ,000 Dollar in savings to cover uh unexpected um expense and this is contrasted to genzies like my peers uh believing that 170k is like a healthy salary that they need to live their life um secondly existing Solutions like fintech is just trafi rapper there's High fees low transparency and it's constrained um by the regulatory jurisdiction the fintech belongs to we all know that blockchain powered Financial features can create marginal utility at scale and lastly smartphones are the perfect distribution medium 75% of the world is going to be having smartphones in 2025 fintech download rate is growing year-over-year and if we look at China the uh WeChat and alipe adoption has penetrated 90% of smartphone users over there so it shows that mobile is the way majority of people will interact with Finance so how do we how do we win saving is boring and we can't expect everyone to be financially sophisticated or financially responsible so how do we onboard the masses we need to make saving feel like winning What If instead of relying on financial literacy we can design incentives that naturally nudge people to do like Smart Financial behaviors plus if we're helping users meaningfully grow their wealth by offering a 10x better Financial experience this is also how we retain those users so yeah Consumer Finance is not new uh there's like fintech and neobank incumbents like you can see here and you'll see that like peer-to-peer payments like zel ven mode they have the most users whereas like saving and investing apps like Robin Hood new bank it has most AUM so as we go explore how do we build this internet Finance super app what can we learn from these incumbents like the features that they offer I'll give some case studies so first we have new bank is latam's mobile first Neo Bank focus on providing Financial Services to previously unbanked populations who would otherwise have been subject to very high fees from incumbents they have 85 million users 28 billion deposits and their features uh revolve around mobile only credit card zero fee high yield saving and checking High touch customer support peer-to-peer payments and other stuff like Insurance loans and investment but the key takeaway here is that Above All Else low fees savings and payments is essential products for previously underbanked populations okay I talked earlier about making things fun um next we have Yota and pool together these are zero loss lotteries so Yota is offchain it's like FD it's like FDIC insured and pool together is on chain is fully decentralized both were able to attract significant deposits by offering users the feeling of gambling without actually um creating any risk on one's deposits like the way it works is you deposit money it earns yield that yield is distributed via Lottery but user can withdraw their principle anytime so it's zero loss um but both have their shortcomings so y y they leaned too much into gambling features because it increases their top line but it actually that depresses the yield for users and secondly they partnered with the bank called synapse they went under and despite being FDIC insured many of their users are still not made whole and like this is the classic principal agent risk we're all familiar with pull together it works fine but the the payout is not interesting um you can see like some of the example payouts there I would rather just take my money and go directly Farm defi myself so the key takeaways is zero loss Lottery is viable it's a viable product but the winnings have to be meaningful and above all else the priority is maintaining solvency um yeah zero loss must be zero loss so lastly I'll touch on some Crypton native Solutions um firstly there is like self- custody mobile defi like legend or def. apppp this is for Crypton native user and it lets you do everything you would want to as a crypto native like permissionless swap stake lend Bridge all from your phone and if you want to play with perss there's like hyper liquid specific mobile apps like PVP trade and deari but as I said this is for for crypto native I don't think like um normal consumer would be able to use this effectively next there's also um payments like and crypto cards this lets crypto wealth flow into like the Fiat economy and they can be broken into three categories um cards that let you deposit crypto and borrow dollars against St to spend but you remain exposed to the crypto um price volatility there's debit card like models where you top up and it converts the money into Fiat for you to spend there's stable coin only um payment models uh or Payment Solutions and yeah this is kind of the world of crypto cards and payments and there's a lot of solutions I didn't list um the last thing I want to mention is nfy it's the number two finance app on the US app store and it lets users get payday loans for rent bills Etc and uh it integrates with Payroll Solutions and it uses ZK TLS to feed data into their loan underwriting engine so yeah this is just some examples to show like the tech is here many people are working on this idea and I think like we're at a Tipping Point the the infrastructure is ready the demand is obvious but the only question is who's going to build it like consumer is notoriously all about go to market and actually like getting that user so we can raise all we want we can hypothecate all we want or hypothesize all we want but it's actually about who's going to build it and actually get the get the normal users um so yeah if you want to chat about anything I mentioned um I'm all ears yeah thank you for listening