Let’s build something

Exploring fintech business ideas

So today was a pretty good day. I got woke up very early and managed to get a workout in while I listened to Willy Woo make the case for $100k BTC. It was very convincing, despite the fact that they recorded it friday before the dump from $42K. There was a bit of recovery in the markets which made back about half of what I lost on the Monday dump, but beyond that, I did little work altogether and got to spend some extra time with the girls today. They’ve been really starving for my attention lately and I was glad to be able to fill that cup. I taught them how to play checkers, and I let them tag team wrestle me on the the trampoline. Beating me up seems to be their favorite activity.

I’m keeping an close eye on my new investment in BadgerDAO. It’s netting about fifty dollars a day, and I’ve probably got a few weeks while the insane APY continues, so I’ll continue to monitor and scale in further as I assess the risk/reward. I pulled all my USDC out of the Yearn vault last night and bought ETH, as I figure we’re at the bottom and likely to hit all time highs and price discovery very soon. I had a minor mistake calculating gas costs which almost cost me; by the time all was said and done I paid a hundred dollars for the withdrawal. I only made a hundred dollars interest in the vault over the last two or three months, and by the time you calculate the entry fees, I ended up net negative.

At the risk of repeating myself, with DeFi it seems like it’s better to ape in first and figure it out later. A few months ago, I told my friends that Yield Farming wasn’t worth the trouble unless you were operating with more than a thousand dollars. That’s when ETH was trading at three hundred dollars. Now that we’re at a grand, that number has increased as well. I think my original estimation was off by a lot, and I’m wondering if the current figure isn’t closer to ten thou. It seems apparent that if ETH continues to climb to all time highs, that small players (minnows) are going to be priced out of participating. Transferring Eth or ERC tokens will be expensive in real dollar terms.

This may be mitigated somewhat by scaling advancements as ETH2 gets rolled out, but it seems we’re going to be dealing with some very high network congestion on ETH during the next few months, and it remains to be seen whether Cosmos, Polkadot, or Avalanche will be able to fill the need in time.

Some of you may know that the majority of my active investments and assets are in my IRA. I have a significant portion in Grayscale products and crypto-adjacent equities as opposed to BTC directly. It would be nice to have access to actual cryptoassets in my IRA, but I’ve yet to find a decent offering that didn’t have what seems to be outrageous fees.

One percent on trades on top of a one percent annual management fee seems outrageous on it’s face. To his credit, the CEO, Eric Satz, did respond to address the concerns, and I have a meeting scheduled with one of the associates later this week to discuss some of the options. Apparently the end goal is to have unrestricted access to DeFi through IRA dollars, but they currently have insurance and custody expenses that they have to deal with. More to come.

Something else I ran across to day was this post from a Bombay entrepreneur about a new crypto-bank that they’re spinning up. I had a chat and signed up to take a look. I really like the way they present it when you go to the app.

Letting people choose their risk level in this way is really striking. And as if the universe wasn’t trying to send me a signal already…

So to synthesize the problem a bit more explicitly: the DeFi industry is just at the early stages of really taking off. This success is going to price most smaller participants out of the markets, leaving most of the gains to those who are already starting with large capital investments. I’m thinking there needs to be a way to pool assets and distribute the costs in such a way that it’s more efficient for small lenders. Personally, I’ve been having problems keeping track of my own DeFi holdings, an issue which is complicated by the fact that I’m using funds earmarked for several family members. There has to be a better way, in fact, Andre Cronje, the lead developer of Yearn Finance, created the vault system for this very reason.

So can we build a ‘self-driving bank’ or DAO that makes easy to pool resources from lots of small players, and takes steps to minimize gas costs even further? Or one that can bring in large IRA funds from the less crypto-savvy investors and use those to bring in these 20%+ yields. I think it is possible, but recognize there are going to be numerous regulatory hurdles. That’s not my forte, but when one considers the opportunity in non-profit and municipal treasuries, it’s clear that there is a very large opportunity in this space.

It’s clear to me that I’ve found an issue that is near and dear to me, and I’m going to be spending some time brainstorming with others and figuring out how I can make this transition into a role in fintech this year. Whether that means becoming involved with an existing project or bringing one together from the ground up remains to be seen.

Ternia Blockcard: pre-paid crypto credit card

The Devil’s in the details: fees, murky exchange rates and other issues mar what should be a promising crypto to fiat instrument

This sponsored tweet has been coming up in my feed a lot:

I’ve been very interested in crypto-backed credit cards for some time now, (remember TenX, anyone?) and thought I would take a deeper look at this. And since my wife and I are no longer that interested in hacking frequent flyer miles, I’m very interested in something that advertises six percent back in rewards. So I signed up for a BlockCard account and did some testing with it. Let’s just say there’s a couple hiccups with it.

The Blockcard is basically a pre-paid Visa card. You can deposit funds from 13 different tokens including BTC, ETH, LTC, and others, and while they say you can “stay in crypto” until you need to spend your funds, all deposits are converted to the Ternio utility token, TERN, upon deposit. What is TERN, you ask? That’s what I wondered as well, so I took a look at the whitepaper.

Ternio background

The paper, published sometime prior to the TERN token sale in April of 2018, describes it as “built to transform and ultimately disrupt the $224 billion per year digital advertising approach.” Basically, they’re building a platform to connect advertisers, publishers and users, providing scalability, auditing, and payments. Of course, TERN tokens are used for the payments, and must be front-loaded to participants accounts. According to the whitepaper, Ternio relies on an internal blockchain called Lexicon, a modified version of IBM’s Hyperledger protocol, and the public token, TERN, on the Stellar network. Lexicon purportedly runs over a million transactions a second, and was accepted by Amazon as an AWS Advanced Technology Partner a little over a year ago.

The rest of the whitepaper describes the projected use case for the Ternio netowork, token sale and airdrop and social bounty program. The BlockCard is also described. That said, the Ternio team seems to have dropped their focus on advertising, and now seem to be focused primarily on building a payment network and driving adoption of the BlockCard.

Using the BlockCard

The Fees

I signed up for an account a few days ago and was immediately struck by the fee disclosure. First off there’s a $5 monthly “subscription” fee if you don’t spend at least $750/ month. Deposits, withdrawals, and point of sale (swipe) transactions are free, but using the card as a debit, with a PIN transaction, will cost you, as will any ATM cash transactions, even declined withdrawals. They also charge ten dollars for a physical card, or you can get a metal one for fifty.

Source: BlockCard FAQ page.

To BlockCard’s credit, they claim that theses fees are required by their banking partners.

Conversion confusion

I needed to load at least ten dollars on the card to make it usable, so I sent eleven dollars of BTC over from Ethos wallet when I ran into what seems to be BlockCard’s biggest problem. BlockCard undervalued my deposit. I was surprised when the transaction completed and my card only had a total balance of $9.37. The transaction history actually showed the value at a more reasonable $10.71, but it still showed an inexplicable deposit amount of 1.52 BTC (I wish!) instead of the actual 0.00156. This still left me with sixty cents under the ten dollar threshold, so I went ahead and sent a transaction in ETH. There seemed to be less lost on the conversion, $9.98 sent versus $9.85 deposited.

In total, I deposited $20.99 cents to my account (not including on-chain transaction fees), after which my account showed a $17.99. This was quite concerning, but after a few more minutes the balance updated to show $20.56. Less dramatic, perhaps, but still a problem if one is expected to spend $750 a month on the card. That’s a lot of slippage, likely more than a $5 monthly membership charge. On top of all this, the UI for the website seems to be extremely slow to update the conversion. I noticed several times when I logged in and the balance didn’t update for almost fifteen minutes.

A few days after my initial deposit and my balance flipped back to eighteen. I’m not sure if this is the buggy UI or just fluctuation in the price of TERN. The FAQ indicates that the value of TERN is pegged against the USDD stablecoin and is “tied to TERN on the BlockCard ecosystem”, independent of trading on any other exchanges. “As users deposit on BlockCard, the value of TERN increases.  As people spend, the value decreases. TERN is never issued at less than $0.008”

This is all very problematic from a transparency standpoint and seems very ripe for abuse, especially since their use agreement allow up to 36 hours for deposits to clear. Without any clear exchange rates as part of the deposit process, users are basically at the mercy of BlockCard to treat them fairly. With no clear indication of the TERN/USDD price, users are left to do the math to make sure they’re not getting ripped off. Even by my own calculations, my current balance is being valued at 0.0069.

17.699 / 2570.33 = 0.006999, an immediate loss of 14% value on deposit.

So does this mean that incoming transactions are converted to TERN at the 0.008 exchange rate, but then immediately lose value upon being credited to a user’s account? If this is accurate, it seems like a very bad deal for users.


The marketing for BlockCard touts the six percent rewards on spending. While on the surface, this seems like a deal, until you find out that these reward levels depend on staking TERN.

Source: BlockCard Rewards Page

At the base rate of $0.008 TERN/USDD, that’s a minimum of $240 worth of TERN for the bottom tier, and almost twelve hundred dollars required for the top. Granted, one might be able to cut that quite a bit if one is able to acquire TERN at a discount on a exchange, but given the hype that BlockCard is putting on the rewards aspect of their card, it’s disingenuous not to mention the staking requirements on their marketing.

The main exchange market for TERN is BitMart, ranked 24th on CoinMarketCap and based out of the Caymans. Source: BitMart, Apr 22, 15:34EST


There’s other issues with BlockCard as well that are worth mentioning. For one, I’ve been unable to use the card since I don’t have the option to complete KYC on my account. I’m guessing I have to request a physical card to do that, but I’m hesitant to do so since it’ll cost me ten dollars. I’ll likely reach out to BlockCard for confirmation on this, and just to be fair I’ll give BlockCard’s CEO Ian Kane a chance to respond to this article and address any inaccuracies.

The last issue is related to taxes. Sending depositing crypto to your BlockCard account and automatically converting it to TERN qualifies as a taxable event. Spending the funds on the card does as well. Kane said in a tweet that they plan on adding CSV export for transactions, but for now users will have to copy and paste the details manually.

Finally, I want to be clear that this post is not just meant to be a complete dump on the work that Kane and the BlockCard team have done. They’ve done well so far to put together this link between cryptocurrency and traditional payments system. While I’ve yet to use BlockCard for a payment, it does seem to be one of the fastest ways to spend crypto to fiat. My concerns are mainly with the execution of the crypto components of the system. Using TERN as an intermediary currency, without clear indications of how either deposit or balance calculations are converted, is especially troublesome. And the prospects of their so-called rewards system is completely offset by the staking risk, which is again compounded with the lack of transparency in the exchange value.

For now, I’m going to hold off further judgement on BlockCard until they’ve had a chance to respond.