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.
