Unchained - Guy Young on Why Ethena Launched a Neobank on Top of Its Stablecoin

Episode Date: September 15, 2026

Ethena's Guy Young explains why the companybuilt a neobank that pays 6% in yield, 5% cash back, and never tells users they're holding self-custodial stablecoins instead of dollars. ======================================================== Thank you to our sponsor! ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Visit⁠⁠⁠⁠⁠⁠⁠⁠⁠ 1inch.com⁠⁠⁠⁠⁠⁠⁠⁠⁠ to swap tokenized securities, crypto and more. Simple. Secure. Self-custodial. Whatever asset you’re buying - swap it at⁠⁠⁠⁠⁠⁠⁠⁠⁠ 1inch.com⁠⁠⁠⁠⁠⁠⁠⁠⁠ ======================================================== DeFi's total value locked never reclaimed its 2021 peak, even four years and a full bull market later. That data point convinced Ethena Labs founder Guy Young the onchain dream needed a backup plan. Young joins Laura Shin days after launching Ethena Pay, a neobank paying 6% on dollar deposits and 5% cashback in AVAX while hiding from users that their balance sits in a self-custodial stablecoin wallet, not a bank account. He argues yield, not brand loyalty, is what pulls the next hundred million users onto crypto rails. They cover why Young shrugs off Tether-backed Plasma as a rival, how USDe's backing shifted from a basis trade toward AAA-rated real-world-asset lending, why a Revolut-style KYC breach is a risk Ethena can't fully control, and why card spend and FX fees, not USDe's own yield, are the revenue line he is actually chasing. Host: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Laura Shin⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, Host / Unchained Guest: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Guy Young - Founder and CEO of Ethena Labs Timestamps 🏦 01:25 Why Guy built a neobank after DeFi's TVL never beat its 2021 peak 🥊 07:16 Why Guy doesn't see Tether-backed Plasma as a competitor 🕵️ 17:57 How Ethena Pay hides self-custody from users who don't know it 🌍 19:10 The nearly 50-country rollout and Ethena's slow, controlled go-to-market 📣 22:30 1inch Aqua: See how the shared liquidity platform lets LPs back multiple positions with one wallet balance at http://unchainedcrypto.com/go/1inch-yt ⛰️ 23:18 Why Ethena Pay chose Avalanche, not Ethereum, for settlement 🏛️ 29:20 How USDe's backing shifted from basis trades to AAA-rated RWA lending 🔓 33:00 What the Revolut KYC breach means for Ethena Pay's own compliance risk 💳 39:55 Why card spend, not USDe's yield, is the metric Guy actually chases 🚀 47:50 The 7-figure deposits that surprised Guy in Ethena Pay's first two weeks Learn more about your ad choices. Visit megaphone.fm/adchoices

Yeah, I mean, there is definitely a risk that you can lose money on USDA. I would kind of just point towards the last two to three years is kind of one of the most testing periods you could have ever imagined for a product like USDA to have got through and never lost even the basis point of users' money. So just for some figures for your listeners, there's been around like $30 billion of mint and redemption flows within USDA, picked at around $15 billion, and then we went through the finance 10-10, you know,

de-leveraging event that we saw at the back end of the last. year and then the Arbe Kelp incident that was, you know, in Q2 of this year. In many ways, this is like some of the most testing periods you could have ever gone through with a product like this where people would have expected something to go wrong. And nothing did go wrong with like 30 bill of flows coming in and out. Hi, everyone, welcome to Unchained. You're a no hype resource for all things crypto. I'm your host, Laura Shin. First, we'll take a quick word from the sponsors to make this show possible. This episode is brought to you by 1-inch Aqua, the shared liquidity

layer from one inch. Back multiple liquidity positions with one wallet balance and keep your tokens in your wallet until a swap fills. See how it works at one inch.com slash aqua. Today's guest is Guy Young, founder and CEO of Athena Labs. Welcome, Guy. Nice to see you and congratulations on the recent launch of Athena Pay, your new NeoBank. It's a really interesting launch because Athena for a long time has been seen as very crypto product. And it even, you know, had both centralized and decentralized aspects. It kind of just was its own unique animal. And it very quickly became one of the most successful non-reserved back stable coins. So I'm curious to hear why you decided to also launch a NeoBank.

Yeah, for sure. I think it's part of a broader theme, I think, just from the lessons, I think we've gathered through the last cycle, which is, I don't have as much confidence that, like, all the money that we thought would turn up into Defi and operate on chain is eventually going to come here and, you know, operate in the same way that we have in the last five years. I think I've increasingly become, you know, forms of view that DeFi probably just plays a role in the back end for a lot of, you know, user-facing front-hands that actually control the user in the distribution. So I think you've seen that kind of trend in the last year or So with some of the bulk products, for example, like you've seen, you know, integrations into Morpho,

with Morpho into Coinbase and Robin Hood, and I think that those are just very good examples of kind of the role that Defi plays as providing better infrastructure or better products in the background to, you know, a centralized front end where tens of millions of users actually sit. And I think that this is a bit of a learning for us, which is just looking at the data from this last cycle versus 2021. on, DefyTVL actually didn't even break the peak of where we were in 2021, and it was actually, you know, 30 to 40% below the peaks that we saw even four or five years ago. And to us, that was just a very important data point, which kind of told us that we needed to go out and meet users where they are in a form factor that they used to, which we think is, you know, a mobile app that anyone can access to be able to interact with these products. So, yeah, I think it's kind of a combination of a few different things.

one is just recognizing that you can't just operate on train and expect that the whole world is going to turn up and get used to interacting with the Metamask wallet and finding your defied app and you need to go meet users where they are to try and control the destiny of your own distribution in a more meaningful way and I think that that kind of segues into the second piece which is I think Athena has done a decent job of integrating into important distribution platforms in the last two to three years. So integrations across some of the names that I mentioned, Dahlia with Robin Hood and Coinbase,

Binance, ByBid, etc., etc. And while that's extremely helpful to try bootstrap your growth in the beginning, I think in an end state, if you're going to control the end-user relationship, that's a much more valuable place to be in terms of being able to extract a margin and actually grow revenues for the business.

And so while that is, you know, still maintains one of the most important sort of growth factors that we have, in terms of integrating in the back end of other people's products and platforms, we thought that the opportunity here was so big for us to go and try, do that ourselves, direct with this type of product, and thought we couldn't ignore the opportunity to go and try it at least. So when you were considering a Neobank, there must have been some other options that you looked at. What were those other options and why did you end up settling on Neobank?

Yes, we've taken different product directions, which have been mistakes in the past, kind of spending time on things which were basically just distractions. And I think we're too distant from the core DNA of things that we think that we're good at, which is basically money, Satan's products, and pieces related to that. And for us, yeah, I think it was just the emergence of this category when it came out, it just felt like the first kind of non-speculative application that you could just genuinely imagine more than 100 million people actually using outside of crypto. And so, yeah, when I saw the product category come out,

I think a key question that you need to ask yourself with these type of things when you're trying to take a new direction or try to build out a new piece of the business alongside what you're doing is, A, does it produce like a 10 times better product for the user on the end? And then if you're successful in doing that, does it create like a 10 times better business rebuilding this stuff on crypto rails? And I think for us, like, the answer to both those questions were, like, a resounding yes. And then it basically just came down to, like, do you have a reason to win that market,

which is kind of the piece that we ran through, I think, in the beginning, around, you know, why does it have any reason at all to try and compete within this market? And for us, the answer there was around the savings yield and actually owning kind of like the yield infrastructure in that ground. So, yeah, I do continue to believe the addressable market for this is huge, and we're actually, you know, as cringes as it sounds like extremely, early in this product category here. In some sense is right.

People, it's very obvious that like stable coins and exchanges could be 50 to $100 billion outcomes as you've seen with like the finances, the coin bases and then tethers and circles between the exchange and stable coin categories. This to me just feels like a very similar one way you look at a revolution in a new bank at a very similar sort of valuation range of $100 billion. And then you look at the actual product itself and just say you can do this better where we're rebuilding it on stable coin and blockchain rails. and then the interesting piece of that is that you don't really have an incumbent within crypto

who's at the scale and size with tether and a finance to sort of crush you if you're trying to compete with them. And so I think it's a very first time since I've been in this space for the last four to five years where you feel like the size of the outcome can be that sort of like $100 billion sort of ceiling that I was describing. But you don't actually have an incumbent within crypto who's there to sort of stop you're getting there. So yeah. And how do you plan to? So like in in that space, there is still a neobank attached to Tether, and I know that they also just launched, but obviously Tether has so many enroads. So how do you think about competing with Plasma?

Yeah, I don't really view it as competition as all. We're quite friendly with the teams. I'm an investor in Plasma as well. I think the, as I said, the bigger picture here is how do you find the 100 million users who are not operating on China right now? I think Plasma have done an amazing job of making a product that just looks and feels like really great. I don't know if you played a around with the app, but the actual sort of design and just attention to detail to the whole thing is actually incredibly impressive, I think, from our perspective. But yeah, I think like trying to compete over the 50 to 100,000 people who are using the app right now kind of misses the bigger picture of like where this thing can go in an end state

with new users coming into the space. So, yeah, we're not too focused on, yeah, trying to fight for scraps. I think with the existing users who are here, it's really like a race to see who can get to the millions and hundreds of millions of users. So this is obviously a really different product. And, you know, you had already spent years building Athena. And that, you know, was kind of more, well, it wasn't user facing directly, right? And so you probably had to either make a lot of changes or learn a lot of new things to try to own this kind of. customer relationships. So what are some of the changes that you've been making?

Yeah, a very likely challenge, I think, maybe the premise that we've never kind of gone direct to users where I'd say in the beginning we were kind of direct to consumers and direct to users where we had no integrations whatsoever. And when we first launched, it was kind of just in DFI to the DFI native user base that got us to, I think, the first sort of two to three billion dollars before we ever sort of integrated into any meaningful distribution platform. And then, yeah, the second leg of growth definitely came through those integrations that I was describing and now we've kind of come full circle again

to where we started in the beginning, which is trying to go back directly to the user. So there definitely is like a different DNA in terms of doing that. And I think even just the product and the look and feel of these apps is actually just completely different to, you know, normal applications that you see

operating on chain just from even like a basic design and product perspective. So that did require kind of hiring in and bringing in a new team entirely focused on building out of this product with a lot more experience from building these kind of apps in FinTech and having had that experience doing it before. So yeah, I think it's really just like a team composition piece where this has really been the only piece of Athena alongside the security team that's actually

grown in the last year where we've added sort of like 25% of the total headcount in Athena to just focus on this product and they've all come in new to build this. So it definitely is a different type of DNA for building these products. And yeah, I think you need to recognize that to do that well. And since it is something that will sort of mimic fintech apps that already exist and already have many users, how do you think about competing in that space? Yeah, I think there is like a sequencing this entire thing where you kind of need to, A, recognize that the crypto user base is not large, just from like a numbers perspective of users who are actually operating on chain and trying these products.

So even the most successful examples of these applications that exist there now, are sort of in 100 to 150,000 users in total. But the interesting data point there is that they're kind of 10 times more valuable than a normal fintech user just because everyone is so much more, you know, so much more wealthy and has such a higher propensity to sort of spend and consume and save. So even if you just look at the average revenue per users for some of the existing crypto nebanks versus normal fintechs, it's quite literally one order of magnitude larger.

And so I think the view that we have is that, you know, the ultimate end goal of this is not to just have 100,000 users within crypto. But it's also a mistake, I think, to ignore that user base in the beginning just because, A, that's where we have existing users who trust us and trust the products that we bring to market, you know, having interacted with us over the last three years. B, because the users are that much more valuable from a revenue perspective, you should definitely focus on, you know, trying to capture them in the beginning if you can.

But then at some point when you feel like you've sort of saturated that market and grown into, you know, the majority of existing users who are trying these products, on chain, there's just an entirely different, I think, sequence to that, which is then trying to expand to normal users who are using these products in place of normal fintech apps outside of the normal crypto bubble. So I definitely don't think we're at that stage yet. I think we still have a six to nine month period to sort of fill out that first piece of the sequence that I was describing.

But the end goal for us is definitely not to just try better serve the existing 100 to 150,000 people who are trying these apps now. But sort of viewed as more of a stepping stone to going to much less. larger user numbers. And so because, you know, there are apps already out there that do this, you know, do what you're doing and have, you know, probably very loyal user bases, how do you plan to try to acquire those customers? Yeah, I think one thing we've learned is actually the crypto user is not that loyal at all.

And I think, you know, when you have a better rate or slightly different functionality, it's very easy for people to switch over, which is quite literally sending one, you know, sending a stable coin from one wall ever dress to another. So that's one thing that's kind of great, but then also very difficult when you're building within, you know, on chain, which is you can accumulate capital and accumulate users very quickly if your product stands out, but you can lose them equally quickly when, you know, something new and shiny is out there that can attract them out. I think the core sort of like structural reason for why, you know, we as Athena founder is interesting to do. And, you know, can.

try to answer that question of like, why do you even deserve to compete or try and win within this market? Is a huge piece of this product, I think, is like, why is this actually a better product than what you can do within a Revolut or something similar, you know, within Web2? And I think a core piece here is actually the savings, you know, rewards that you're actually generating on the balances that are sitting within the app versus the 50 basis points that you're getting within a normal bank. And, you know, really what we've done here is actually just build a consumer-facing front end to our existing product set that's that's already been in the market for three years,

which is a dollar with a structurally higher, you know, savings yield versus everything else that's in the market. And so it's called to the DNA of what we've done already, which is trying to produce the best savings yield on dollars at multi-billion dollar scale. And if you're able to do that, I think you have a structural advantage versus everyone in the market because everyone else is bleeding cash to try and pay up for these incentives on the savings yield that sits within the app. and if you can just, you know, produce the best yield outright because of the product that you sort of own and you own the yield engine that actually produces that, we think that that's like a structural advantage going forward, which allows you to actually just produce better pieces of the product outside of that. So it allows you to sort of afford to do free onramps, for example, which is something that Athena Pay offers on the side.

It allows you to sort of afford the cashback piece of the card spend. And all of these pieces are basically downstream of actually owning and vertically integrating the yield engine and the dollar. issuance with the app itself. So I think that that's just like one piece that we looked at, you know, from the outside in, which was the growth of, you know, the pretty insane growth that we've seen in the segment of the market in terms of how many neobanks and also just the growth in terms of user numbers and spend. In some senses, like the biggest beneficiaries of that weren't actually the neobanks

themselves. It was kind of circle and tether because they were all built on someone else's stablecoin basically and they were able to monetize the name and the float, you know, at circle and tether. and for us, like in an end state, we think that that's a pretty unsustainable sort of revenue structure if you're losing what should be one of the largest revenue drivers within the business to someone else. So yeah, there was just a few ideas there around, you know, why we thought having the experience that we did building USDA was actually a pretty important like prerequisite to, you know, potentially competing within this market.

Yeah, it definitely makes sense from a back end perspective that, you know, you would have more efficiencies that would allow you to compete better. But yeah, just in the existing market, it's sort of like a question about how you get over the hurdle. One other hurdle that I thought of was, you know, there is a portion of this that's self-custodial and you're going after a market that is not crypto people. So how do you plan to educate those users about like, you know, that aspect? That's a little bit different and what that means for, you know, the behaviors that they should apply when using the app. Yeah, I think the self-custodial piece is a very interesting one because people have taken

different approaches here to actually bringing this product to market. For us, I think it was actually a key competitive advantage, which is actually creating every balance on the app being self-custodial, but the user not being aware, or not aware in the sense it's sort of being hidden from them, but not aware in the way that they're interacting with the app, that they're actually just holding stable coins in a wallet rather than, you know, fear it's sitting within a bank account. The reason for that is that if you think about the rollout of normal fintex, historically, it's been like a pretty slow process, which is every single country that you open up to,

you need to get a new bank account, you know, new fear rails, regulators need to sign off, et cetera, et cetera, et cetera. And that's like a 12 to 24 month process for most of these large fintechs to just open up a new region to be able to offer their products. I think one of the interesting things about this is that when you have user balances sitting within a self-custodial stable coin wallet, you kind of unlock a new region. the whole world just by default on day one because, you know, that doesn't require regulation and licensing to be able to offer a self-custodial Stober coin wallet to users. And so it's a very, like,

strong, accelerant, I think, to be able to be global by default on day one, which is kind of what that unlocks. And then I think the other piece is actually just the nature and type of financial products that are available within a self-custodial stable coin wallet, essentially just plug you in to Defi, which, which you obviously just have less restrictions versus, you know, the regulation that sits around like a banking balance sheet. And you're kind of seeing this trend, I think, even across some of the largest exchanges and brokerages in the world, which is the move of like even a Robin Hood to be able to offer what is a very similar product within their own Robin Hood.

They're essentially doing the same thing, which is plugging into a morpho bolt with USDA that's sitting within the collateral. And so, yeah, I think this is like a broader trend that you're seeing with even some of the largest and most established players in the world, kind of recognizing the fact that being able to provide these products in the self-custodial on nature can actually just provide an outright better product for their users on the other end. But I think, like, is there an education piece around how if they send the money to the wrong place, then you can't get it back for them, you know, that kind of thing?

Yeah, I think that's always a challenge. I think we try to keep a lot of that away from the user in the app. I'm not sure if you've had a chance to actually give it a go, but it's all kind of name tag-based rather than wallet. So you're just sending to names and your contact address that you've saved down. I think the other piece that we build from the ground up, which is quite interesting, is it's basically no seed phrases or anything when you're getting into the app. It's actually past key-based with an email backup that sits behind it.

So it essentially just follows you around with your iCloud account. Even if you lose your phone, you just need to set up your iCloud, and you have the entire balance sort of sitting there. So it does feel quite like, you know, normally friendly in the sense that it's just using the same infrastructure that they're used to operating an iPhone or an Android with past keys and email backup that sits behind the whole thing. But yeah, I think there's still definitely like some areas around the edges that you can do better there. But yeah, we've tried to make it feel as little as possible around, you know, normally sending money to a pretty scary looking, you know, wallet address like

you do on show. Yeah. And I think you're launching with about 20 countries. Like how do you plan to go to market, you know, in so many. different regions. Yeah, so it's actually, it's closer to 50 now on day one, and this is kind of the top priority that we have right now. So it's kind of still in beta phase at the moment with very much like gated access in terms of the number of users that we're letting onto the app just because we want to do things in a slow and controlled way as we bring it out.

Yeah, I think this is literally number one top priority for us is opening up US, Europe, UK, and then some bits of Asia, including Taiwan and others. And yeah, a big piece of this is just the card infrastructure. layer that sits beneath, you know, the front end that users are actually interacting with. So think of like a rain or a reap or a stripe that's sitting underneath and actually helping with the card insurance. We're sometimes just controlled by, you know, all constraints, very by the timelines that they're able to bring our product to those markets.

And so, yeah, it'll be a matter of weeks of sort of like three to four weeks until a lot of these new geographies are coming online. But that's also part of the intention of doing a slightly slower rollout to controlled group of users. Yeah. But like, so any one market would be a challenge. So how would you, you know, think about, so obviously like the U.S. is a huge one, but, you know, I'm sure it's super different from like Asia or, you know, some country in Asia. So do you have strategies for each one?

Are you going to try to focus like on remittance? Do you, you know, how do you think about getting adoption in all these different markets, given that there's probably different demographics than each that you want to target? Yeah, for sure. Sorry, I'm slightly misunderstood your question. Yeah, I kind of think about it as, A, we really have quite a bit of data around which users are actually finding the savings products that Athena is actually brought to market. Historically, we kind of have a very good sense of South America and Asia is kind of where the largest user basis for us sit already.

And so we don't really want to reinvent the wheel. We kind of know that these products are in demand in those countries and that's where we want to lean into. I think this kind of goes back to the sequencing point that I was making slightly earlier on, which is in the very beginning, we don't have a country-specific strategy for everywhere that we're going, because we're actually trying to sequence this with our crypto-native user base that we already know, and then you get some data and understand where is the product popular, where do you want to lean into harder, and then you pick 10 to 15 countries that you really want to go and dominate after you learn that. And I think a lot of this stuff you don't know until you see how users respond and where this actually picks up.

So anecdotally, we've kind of seen with a couple of the other large neobanks now who are in the market, and speaking to one of the founders there, who's actually a close friend of mine. His two largest markets weren't even in the top 10 before he actually launched his in terms of what he was expecting. It's like Brazil and Taiwan were basically the two that came out. And he said when he was starting this, that definitely wasn't the top of the list of what he was expecting.

So for us, as I said, I think there's a six to nine month, learning period in sequencing where you actually just interacting with the same crypto native user base that we've served already. And then once you have the data, you'll be able to work out where you want to localize and really lean into. Okay. Yeah, I'm excited to try it. I'm on the wait list. All right. So in a moment, we'll dig into the back end a little bit, but first we'll take a quick word from the sponsors who make this show possible.

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guaranteed. Back to my conversation with Guy. So something that is interesting is obviously the name Athena is based on ETH or Ethereum. But Athena Pay uses Avalanche for the back end for USDA transfers. Why Avalanche? Yeah, I think we, for a couple of years, have been trying to find something more meaningful to work on with the Avalanche team together. So historically, we had sort of left some of the stable coin balances. We had like launches on Avey, which with USDA collateral, some of the RWA backing that we had within USDA was actually held on Avalanche through periods of time. And it's been like a pretty long kind of what else we're going to do that's a bit more meaningful with the team. I think we aligned a lot with them in terms

of the things that they spend time on and the things they focus on are pretty aligned with what we're trying to do here with the app. So, you know, I think different chains now have started to build characters or build pieces around their brand that actually align with what is the purpose of what they're trying to serve here rather than just being generalized to everything. So some chains are focused on trading, some are focused on derivative, some are focused on, you know, other pieces around like defy, et cetera, et cetera. And Avalanche, I think, has always come out with the, you know, pretty consistent line of this is back-end infrastructure for just real businesses

that are operating and serving users outside of the space. And so, yeah, when we came with the idea to them, I think there was just a very strong alignment with what they're trying to do with the chain and what we're trying to do with Athena Pay, which is we're not trying to build another trading app. We're not trying to build another app for speculation. It's just really a banking business that's settling on bulk chain rails in the background, almost invisibly. So, yeah, got along with the team very well.

And I think a lot with the vision of what they're trying to do with the chain in terms of what we're trying to do with the app as well. And the cashback is currently paid in AVVACs. I was curious for that reason. And like, I'm sure it's part of the deal is that, you know, exclusive for some period? Will that be the reward forever? Is Appalanche funding the reward? Like, tell me a little bit about why that is. Yeah.

So it is exclusive on avalanche in terms of Athena pay. And yeah, I'd say basic expectations is the next couple of years at least. We're expecting that the rewards will be paid in Apex, but I can't sort of guarantee that for I think you've seen a lot of these programs that have changed around a bit as these sort of pieces of bolt through time. So different car programs you've seen sort of swap between native token of the chain to ETH to USDC, etc, etc, back and forward. I don't want to lock us in to say we're definitely going to be doing one thing, you know, and definitely around the cashback piece forever. But yeah, at the moment, it's basically AVAX rewards that are coming through to users.

And that is funded by AVAX themselves. Okay. And so I also saw that, so Athena Pay is offering a 6% dollar savings rate, 5% cashback on card purchases. But I was kind of curious like where that yield comes from. I think SUSDE pays less than that. So, you know, what are all the components of that yield? Yeah, for sure. So in the beginning, as we're trying to bootstrap this, there is an additional kind of boost to the yield, which Athena is funding.

on top of the natural SUSD rate. So historically, like lifetime to date since the product's been out, USDA has averaged around a 7-ish percent yield. So that's actually kind of below the long-term averages of where the product is actually produced in terms of the savings yield. But yeah, at the moment, you're right,

it's around 4, 75 basis points for the natural S-U-S-D yield. And in the app itself, it's around six. And this is just a natural, we're trying to scale the product in the beginning, entice people to come on. And that won't last, indefinitely, but I think the interesting piece about this is that when the extra incentive

that's sitting on top of it falls away, you still have a product that's under, you know, at the underlying level, still producing one of the highest segments yields in the market, where a lot of these other programs where you're just putting additional incentives on top of a T-bill, it's always going to end up at T-bill yields afterwards in the end. And so you're kind of like, you know, what are we actually doing here? And then, yeah, the cashback incentive. Again, I think as we discovered, that's the piece that's sort of funded within Ab-AX in partnership with the avalanche team. So, yeah, the delta that you see on the savings yield right now is basically Athena just being a product in the beginning. Okay. And then something else that I

want to understand is, so as far as I understand, this is not structured as a typical debit card. It's more like a secured credit line against USCE. So there is some aspect that like some of this could be liquidated. Is that correct? That's not correct now. I'm not sure where you read that. I can check it out. I can explain what's happening in the background, which is a little bit more simple. So essentially like USDC, USDT, and I think PYUSD are kind of the only settlement currencies that are actually taken by Visa in the background. And so the interesting piece is that USDE itself kind of has backing portions sitting in all those stable coins that have

described there. So during different periods of Athena's life cycle, I think we've been the largest holders of tether circle and PY USDA at different proportions in different points of time. And essentially what's happening in the back end is when a user is spending, you're essentially redeeming USDC from the backing within USDA to then be able to send to the card network to be able to settle on the other side. So Visa isn't actually touching USDA. There's an intermediary step that actually draws USDC out of the backing from USDA to then settle. with visa on the other side. So mechanically, it's basically just a one-step kind of redemption process before it hits visa, but there's no kind of lending or leverage against USDA in the process.

Okay. So now let's also talk about how the backing of USDA has changed. So obviously, the original, you know, structure of it was a basis trade. But now perps are about a tenth of the backing and then the rest is institutional lending, collateralized loan obligations, etc. So this feels like the, you know, the backing just has sort of different risks hidden in it. So how would you, you know, think about that for users of this product? Yeah, I think you're right. The risk profile has changed quite a bit through time and the composition what we do within USD, I would actually argue has become like safer through time rather than

more risky, which is kind of more slanted to world towards real world assets, lending in a secured way, you know, within qualified custodians, et cetera, et cetera. And so, yeah, I think if you compare some of the stuff that's sitting within USD now to where it started, many would make the argument that like holding, you know, a bunch of AAA rated pieces of collateral is actually much safer but then a basis trade on offshore exchanges. The way I would, like, in very simple terms, sort of explaining it to use it on the other side is that the end user who's using a bank account

doesn't really see the complexity of like a bank balance rate that sits behind the whole thing. They kind of just see, I'm depositing my money and I'm getting a safe, reliable, dependable, saving sealed for having money within a deposit account. And for us, I think it's obviously not the same in terms of like the risk profile of a bank, but the complication of everything that goes on within the bank is almost abstracted away from

the user who just sees this very simple interface of a simple deposit with a reliable savings yield. And so from our perspective, it's kind of like almost a new form of that, which is a tokenized form of different exposures that are sitting within USDA, but simplified for the user as like a one-click experience for depositing dollars and getting a yield. Okay. And is there any risk in terms of like a situation similar to a genesis, or BlockFi where, you know, some of the assets might be, it just might not end up being there when, you know, for that you, for what users need. Yeah, I mean, there is definitely a risk that like you can lose money on USDA.

I would kind of just point towards the last sort of two to three years is kind of one of the most testing periods you could have ever imagined for a product like USDA to have got through and never lost even the basis point of users money. So just for some figures here, just I guess for your listeners, there's been around like $30 billion of mint and redemption flows within U.S.D. Picked at around $15 billion, and then we went through the Binance 10-10, you know, de-leveraging event that we saw at the back end of last year. And then the Arbe Kelp incident that was, you know, in Q2 of this year.

In many ways, this is like some of the most testing periods you could have ever gone through, with a product like this where people would have expected something to go wrong. And nothing did go wrong with like 30 bill of flows coming in and out. So that's, you can never say never sort of going forward. But I think that the risk profile and general perception of what we're doing in Athena now versus where we even while, you know, two years ago is just fundamentally so different. And so, yeah, I'll just point towards, I guess, the last, uh, market of the last sort of 18 months is a pretty testing period where you would have seen something go wrong if there was sort

of fragility within the system. So we're talking shortly after Revolut announced that they had someone reach out to them via government agency email requesting customer data. And they did give that to what is essentially a hacker. So it was like passports, selfies, transaction histories. And obviously, you know, your company does not have as much need for compliance as a Revolut. But I was. thinking, like, couldn't a similar attack at Athena Pay reveal additional information such as an on-chain address, you know, on top of all the other things that were, you know, part of this Revolut hack? And if so, you know, given that you probably have a smaller compliance structure,

like, how do you think about that type of security issue? Yeah, so I think a lot of thoughts on the whole kind of like KYC regime and kind of what happened with Revolut. I think I was actually affected by that as well as a as a user and customer of Revolut. I think as like before we actually just jump into the Thena Pay specific pieces, I do think we just kind of need a broad rethink around like KYC more broadly, which is like does the benefits of, you know, forcing this into every financial interaction everyone has in their lives actually makes sense relative to like the mounting cost that we're seeing

with like almost a weekly incident like this happening. You know, I think even basic elements around this, which is like, do you actually need to know, the address of where someone lives or do you just need to verify that they're in the country, for example, where they're operating, it just seems to be opening up like an insane risk vector where if one of the 20 different people that you shared your KYC with has some sort of breach, then your physical safety is basically at risk going forward. So I think that this entire kind of like KYC regime does need a rethink and it's pretty insane the way it's operating right now.

Having said that, the way that it's designed within Athena Pay is that we kind of recognize we're not a KYC and compliance company. We need to outsource that to people who do that for a living and do that as best as they can. We work with Sumsab on the side and then also Raine who do some of the KYC and compliance for actually signing up

on the cards itself. And so a big piece of this is actually working with reputable providers who kind of do this and do this securely for businesses that are much larger than Athena as well. And relying on, you know, obviously doing your DD,

but relying that they're doing a better job than you would be able to do trying to stand up your own small compliance team to do the same thing. So yes, it could happen, but I think the decision we've taken here is to outsource it to professionals who kind of this is their core business rather than what we're doing. Yeah. And then I'm sure you're aware of what happened with Trezor recently with their third-party provider. So, you know, do you have conversations with those third-party providers about like a different kind of threat level against crypto users or how do you think about that risk?

Yeah, this is the painful piece, which is I think you've had my opinion just there on like what like level of KYC I think you should be doing. That's like appropriate given the risk of KYC information being leaked. The issue is that, you know, our requirements are downstream of a lot of the service providers and platforms that were being built on. So a lot of this is actually down to like the card issuance and visa requirements around KYC, which we have to adhere to be able to issue a card on our products. the other side. And so this isn't necessarily like a decision that's sitting with us to say,

this is what we need to see from the KYC on the onboarding sort of flow that comes in. It's really just us providing a level that's required of our users before they're actually able to use the products that rely on visa payments, basically. But yeah, I think my point is more, I just disagree from a fundamental level as to the way it's designed at the moment. but Visa doesn't care what I think about KYC in compliance. They have their own sort of levels that they're going to stipulate we need to stand up to. And so one other question that I had about the go-to-market issue is, you know, as you mentioned, you have U.S., UK, Europe. And like we've seen that tether has done very well in sort of more developing countries that,

you know, have a natural demand for exposure to the U.S. dollar. And I was wondering why you are, you know, targeting the U.S. market. Yeah, I wouldn't say, I wouldn't say the U.S. is our biggest target market at all. I think the countries that I was mentioning in terms of where the largest user basis for Athena's product actually map out very similarly to the way, you know, the growth and success that you've seen with Tether, basically offshore, where, you know, in the beginning, we didn't even have access to U.S. users directly from Athena and it was really South America and Asia which drove a lot of the growth

for us you know the last couple of years so for us that's actually the highest priority markets which are outside of the developed markets where I think the lesson that tether taught everyone is kind of the best businesses within the space of kind of dollar issuance or providing dollar rails to people are built outside of the developed markets because they all have access to very good financial infrastructure in the US and in Europe to some extent but I also think it would be a stake to just entirely shut off those markets because you don't think that they're going to be the most in demand. It's relatively easy for us to open up to a new country and it's obviously the largest consumer market in the world with, you know, like one of the richest consumers per capita

anywhere in the space as well. So yeah, I think the view from our point is like, of course you need to have some presence there to be able to serve users who want to use your product and there can be very high value users as well. But I wouldn't say it's like even a top five sort of priority market for us, just in terms of where we think the end state of this product can go. Oh, interesting. Okay. For some reason, I would have thought that it would be more challenging to open up here, but it sort of sounds like any country, it doesn't matter which country,

but just adding on an extra one is not a big enough, a big hurdle. Yeah, again, this is downstream again of where Visa and Rain and Cardish basically have comfort being able to offer this type of service. So that's an evolving landscape the whole time, where even us coming to market now, it looks quite different to the way the market looked, even 18 months ago, where pretty much the whole world was accessible with these products until, you know, different markets start to put a lot more pressure on these products not being available. And I think that this is a bit of a broader theme where, you know,

local banks, local payment companies are actually quite threatened by the growth that they're seeing within these products around the world. And it wouldn't be, you know, surprising to me to see continued sort of pressure on blocking the growth of these products going forward. So here you are. You've kind of just set a new goal for yourself. You know, you've just started this launch. And so now you're going to have this race for adoption.

And you're going to also aim for non-crypto users. What are the metrics that you'll be tracking to measure your success? Yeah, it's relatively simple in terms of the business model. So it's kind of spend on the card. than the NIM that you can generate on the balances within the app itself, which is basically the USDE business model just sitting within an app. Yeah, for us, it's pretty simple, all the numbers you'd expect around users, average revenue per user, and just the volume of spend per user.

I think the sort of like TVLLL balances piece is slightly less important to us here, where I think part of what was attractive about Athena pay to us was actually a diversified revenue stream that wasn't just based on USDE NIM or, you know, interest generation on USDA itself. And so for us, like the USDA that sits in Athena Pay is more of like a user acquisition and tool for us to be able to fund other pieces within the business as a cost, as cost effectively as possible. And for us, it's really just like the card spend that comes through and volume on that side through, you know, FX fees and interchange, which I think is the most interesting, like,

revenue stream that falls out of this, which is actually quite uncorrelated and different to like USDA NIM generation. And talk about that more. Like why is that the most interesting piece? Yeah, I think it's just because, you know, one of the big lessons that I think we've had in the last cycle is you just don't want to be entirely reliant on just the crypto cycle as a business. And I think the very best businesses now in this space have tried to,

you know, untether themselves from just the cyclicality of just, is Bitcoin price going up or down? So I think, you know, Hyper Liquid here was a great example of, you know, kind of repositioning the businesses in some sense in the last year where RWA perps and the perps on equities and commodities actually grew to like more than 50% of their volumes, I think, like a month or two ago. And that didn't even exist like nine months ago as like a category within the space. So I think the learning and lesson, I think Teth is another example here, which is they don't care so much about which direction Bitcoin's going for like the earnings of

USD itself. It's just printing money from like T-bills and real world assets that are sitting outside to the space. And so for us, it was like the product did extremely well, obviously, in the bull market and it was quite reflexive on the way up. But we didn't really have like another tool in our arsenal when the crypto cycle was down to have, you know, differentiated and uncorrelated sources of revenue that weren't just connected to speculation within crypto. And so it was just a big piece in focus area for us, which was making sure that we weren't in that position again whenever we do, go through, you know, the next of the four-year cycle. Yeah. And so, um, you're going to have now multiple kind of arms of the business.

Where do you feel like the balance will eventually land? Do you think that the neobank will be bigger or I guess they'll sort of naturally grow together? Like it sort of feels like the user for Athena Pay will have smaller balances. The users for USDA might have bigger. Just talk a little bit about how you see that mix. Yeah, so we have like three cool business lands now. you have USDA, so like the second largest like on-chain savings product, you have the white label business, which is basically anyone being able to launch their own branded stable coins on our

infrastructure, and that's actually the largest in the space at the moment. And then Athena Pay, which is obviously what we'll just run through now. They're quite like synergistic in the sense that like Athena Pay is just a great distribution avenue if we're successful there for the first core product with USDE. And so as you said, the growth of one is kind of inherently linked to the growth of the other. I do, it's an interesting question because in some senses, the tan for both of these products, I think, is actually pretty large, which is like a dollar with, you know, savings yield is one of the few products that I think actually appeals to almost every single individual on earth who has some sort of dollar savings balance. And then equally, everyone pretty

much has a mobile banking application as well when you think about the number of people that are using those type of apps in the real world. So I think the time for both is actually like most people on earth if you can do it well. So yeah, I really don't have a view of which one's going to end up sort of like bigger in an end state, but I think they're both bets that we want to take, just given how wide the reaches, I think, for both of those products. So one other aspect that I've heard you talk about is how your goal is that a user will use this app without being aware that it necessarily has a crypto component. So how did you think about while building the app? And, you know, what other kind of changes in the business did you need to make to, you know, trying to achieve that?

Yes, I think it was even like very small pieces around some of these applications, right, I think lean very hard into the kind of like old crypto approach to building these products, which is almost ignoring the idea that like banks and fear rails exist at all. I think we kind of try to start from the position of saying, how would a normal user want to? bring money into this app and then be able to interact with these products afterwards without feeling at all like they're actually on ramping or bringing money into crypto like they would normally. So like even the deposit flow into the app itself is you just wiring money from your bank accounts to another bank account essentially. And then it turns up as USD within your wallet with no other interaction on your side necessary. And so I think it's like very small pieces like that, which is what does the user flow actually look like on a normal FinTech application when you're

doing the things that you want to do every day on these apps and make it almost identical to that while all you're doing is instead of sending like fiat between different bank accounts, it's just table coins moving between addresses on a on the blockchain. So even the look and feel once you do get off the way list and then the app, I'll be interested in your your feedback there. But to us, it was just kind of basically modeled off of the revoluted design of like user flows coming in and out rather than starting from the position of saying, this is a crypto app. how do we bring it to normal people? Since we are in a crypto winter

or perhaps a crypto spring right now, I was wondering how you think about trying to launch a product at this time. Yeah, I've never kind of tried to drive like product-related decision-making around like the cycle and that kind of stuff. I think the only lesson I had in terms of timing last cycle

as you just get the product out like as soon as you can to start like getting user feedback and iterating on the product as quickly as you possibly can. For us, yeah, we've never tried to time product launches all those type of things around, like, our view of where the cycle is, because I'm like wrong 99% of the time when it comes to trying to second guess those things anyway. So for us, I think this is actually kind of the absolute best time to build things,

which is the market is less distracting, you know, even employees are less distracted by what's going on in the market, and you can actually just focus on the only thing that actually matters, which is building a good product. And I think it kind of mirrors what we have, last cycle when we're just building a thinner in the beginning, which was we started in 2023 when it felt actually even more boring than I think the last of like 69 months has felt in this bear market. And it's actually just an amazing time to just have like quiet, like

focus on what you're actually doing before like the distraction of like the market going up comes around later. So yeah, I think in many senses this is the perfect time to lay the foundations to build a product with this. And regardless, we've never really tried to drive decisions around timing and like product releases around anything to do with the market. It's just trying to get it out there in the hands of people to get feedback and grow it as soon as possible. So I know you've only had this out for two weeks, but are there certain, you know, behaviors or metrics that you've seen so far that have surprised you?

Yeah, the spending, like, volume has been pretty intense relative to the number of users who are sitting on that. So we've, as I said, controlled how many users are actually using the app, which has felt quite painful actually being like, you know, turning people away and saying you're not actually able to use the app now as we're trying to do it in a controlled way. So I think the wait list now is like 10 to 15,000 people, and we've only got like 400 who are sitting on there now within, you know,

the last sort of like 14 days, I think, since we launched it. I think that one piece which surprised me slightly was a few guys throwing in like one or two million dollars on like the first day of the launch into this new mobile app that they've never used before, and it was like within five minutes, it felt like a bit of a compliment, I guess, to their trust in like our security sort of set up and processes and stuff. But I hadn't even had the confidence to do the same on my side yet, and I'd been playing around a third for a month. So that was probably the bit that surprised me the most was just the speed of the rich people were throwing in seven-figure sums into this

mobile app. Yeah. Okay. And when you say there's only 400, which geogical, Are they mostly in? Mostly South America and Asia at the moment. Yeah. Okay. Okay. And so they're just using it as a regular credit card? Exactly, yeah. And then savings account and then, yeah, it's basically like a savings and spending account right now in its current form.

And could you tell whether or not they, you know, were previous USDU's a year? US DE users? Yeah, a few of them just because we, you know, try to bring on, bring on like our power users from Athena as like the early beta sort of test group that was coming on. A lot of the guys who I mentioned we're putting in the size of balances that I'm describing where existing users that we did know already. Okay.

Well, so as I mentioned, you know, this has been an interesting year in crypto. obviously, you know, there was 10-10, and then we've seen a drawdown in the market. But I'm curious for your thoughts on where you think the market is headed and, you know, when you think will come out of this fair market. Yeah, I just preface it that every time I try to do one of these, I'm completely wrong. But I feel like the sentiment is at least better than was two or three months ago. And we might have kind of put the worst piece behind us. I was trying to put my finger on why it felt like a lot of people within the space.

We're almost more depressed during this last sort of down cycle versus 2022 when we had scams like, you know, lunar FDX, etc., etc. And I think the real pain was probably just caused by the fact that we didn't actually have an example of something to point towards and say like this was the reason for why the market collapsed in the way that it did, right? You didn't have some scandalous fraud or, you know, a huge leverage blowup with a lunar type of incident. And I think the disconnect between crypto and other, you know, risk on financial assets was probably the most painful piece where you're just watching like AI go out of 10x, gold

go up 10x, and then, you know, crypto down 80% of the same time period. So I think we just got to that point now where people were just looking at this and saying, on a relative value basis, this is all like quite cheap, just, you know, just based on where it's trading historically versus other assets, not even in polar terms. And so, yeah, I think my, low confidence views that we've probably seen the worst behind us now, and we've started to see green shoots, I think, up up in the last few months in terms of, yeah, optimism within the market. All right, well, thank you so much for coming on Unchained,

and congratulations on your launch. No, I appreciate it. Thanks for having me. That's it for this episode of Unchained. Nothing you hear on Unchained is Investment Advice. This show is for informational and entertainment purposes only, and my guest and I may hold assets discussed on the show. award disclosures, visit UnchainedCripo.com.