Blueprint: Coinbase ETH staking token launch; MENA focused neobank targets GenZ; MUFG bank and Animoca Brands fund $45MM for Japan NFT effort
Hi Fintech Futurists —
You are the best, today’s agenda below.
CRYPTO: Coinbase Announces cbETH Wrapped Ethereum Staking Token (link here)
NEOBANK: YC-backed Zywa, a neobank for Gen Z, raises $3M to expand across MENA (link here)
WEB3: Banking behemoth MUFG invests in Animoca Brands Japan’s $45 million raise (link here)
LONG TAKE: Evolution of NFT markets with automated market making (Sudoswap) and collateralized lending (BendDAO) (link here)
PODCAST: How virtual worlds, vast communities, and traditional entertainment are shaping the $200B Web3 gaming sector, with Mark Aubrey of Catheon Gaming (link here)
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Short Takes
CRYPTO: Coinbase Announces cbETH Wrapped Ethereum Staking Token (link here)
Crypto exchange Coinbase is following the example of the leading DeFi players (e.g., Lido) with the launch of its own wrapped ERC-20 Ethereum staking token. Users staking Ethereum on Coinbase, thereby participating in the process of securing the Etherum proof-of-stake network by validating transactions in return for yield, will now be able to receive an equivalent amount of cbETH relative to the amount of ETH they have staked.
Staked ETH is locked in the network until a bit after the upcoming merge. That means you stake your assets, but cannot get them back out until certain tecnical milestones are hit. Coinbase’s cbETH provides their users with liquidity, meaning that in the long run the token could be traded, cashed out, or potentially used to engage with DeFi protocols. We think of wrapped assets like this as equivalent to derivatives, because they are backed by an underlying exposure while having different market characteristsics and additional financial attributes.
Each cbETH token should track the price of ETH closely, subject to technical implementation risk and Coinbase protocol risk. Coinbase is also setting up a cbETH-USD trading pair to provide users with the ability to cash out in Coinbase, although this will not be launching in restricted jurisdictions.
For context, Lido’s staking feature has over $6B in ETH locked into the platform and has seen it grow to become the fourth biggest DAO with more than $300MM in their treasury. Coinbase currently accounts for 15% of deposits on ETH2, compared to 31% for Lido, indicating significant revenue potential if the feature can attract more retail investors.
Another important note is that Coinbase is currently being investigated by the SEC for listing unregistered securities, insider trading, and for allegedly making misleading statements regarding the business. Brian Armstrong, Coinbase’s CEO, also claimed that the exchange would shut down its staking service if required by regulators, following the sanctioning of the use of Tornado Cash. Sounds complicated — an additional risk for holding a derivative asset.
NEOBANK: YC-backed Zywa, a neobank for Gen Z, raises $3M to expand across MENA (link here)
Zywa is the latest Gen Z neobank, based in Dubai and with $3MM in seed funding at a valuation of more than $30MM. The fintech also received $1MM in pre-seed funding in February 2022. Despite all the headwinds we see in B2C plays, investment keeps coming.
The social banking app is targeted at 11-25 year olds, providing an interface for managing funds, and sending and receiving payments. Parents are able to track spending and saving habits of their children using the card. GenZ in the UAE is ready for digital banking tools, as this age group tends to rely on cash or the use of their parents’ cards, whilst still spending 5B+ AED annually. The seed funding will be used for Zywa to deploy in the UAE and Egyptian markets initially, with a launch in Saudi Arabia planned for 2023.
Zywa leans into a gamified user experience, where users can share photos or videos of their purchases, and can react to media, similar to Instagram. The fintech rewards users with Zem and Zyon tokens for those saving, budgetin, and investing. These tokens supposedly can then be used for purchases at partner stores and for reducing transaction fees in app. We’re seeing continued growth in teen-focused banking apps across the world. Check out our interview with the CEO of Step on the topic here.
WEB3: Banking behemoth MUFG invests in Animoca Brands Japan’s $45 million raise (link here)
Animoca Brands Japan, a subsidiary of Animoca brands, has raised $45MM from MUFG and others at a $500MM pre-money valuation. The Animoca Brands family is a Hong-Kong Web3 investing firm with stakes in Dapper Labs, OpenSea, The Sandbox, and Axie Infinity. Check out their positions in the space below.
The subsidiary will primarily be focused on Web3 adoption in Japan, and securing licenses for intellectual property and content holders in the country. Despite Japan’s tech-focused culture, it is not a particularly crypto-friendly environment, with a 30% corporate tax imposed on profits from holdings, including unrealised gains. This has motivated talent in the country to leave for other jurisdictions.
MUFG is a Japanese banking powerhouse, printing something like $20-30B of revenue per year, on assets in the $1-3 trillion range. It was formed through a series of mergers (Yokyo-Mitsubishi and UFG bank), and trades at a marketcap of $70 billion while providing every kind of financial product across the board. To that end, we are interested to see this type of institution investing in the NFT space.
Of note is the bank’s partnership with Animoca Brands for NFTs, among a series of digital securities and blockchain related initiatives sitting on R3 / Corda technology. The bank has launched its own crypto wallet and various utility tokens as part of that initiative. We excerpt the usual enterprise blockchain PowerPoint slide above — no translation necessary.
Long Take: Evolution of NFT markets with automated market making (Sudoswap) and collateralized lending (BendDAO) (link here)
We revisit the 2022 inventions in NFT financial infrastructure. Just like AMMs and collateralized lending developed for fungible tokens in 2019-2021, we see growth in comparable protocols for the NFT space.
There are unique challenges and opportunies when building such machines for NFTs given the inherent differences in underlying assets. Yet fully onchain mechanisms for creating and running markets and leverage are an important step forward, and pose some fundamental challenge to centralized NFT marketplace models.
Podcast conversation: How virtual worlds, vast communities, and traditional entertainment are shaping the $200B Web3 gaming sector, with Mark Aubrey of Catheon Gaming (link here)
In this conversation, we chat with Mark Aubrey – CEO of Catheon Gaming.
Prior to this, Mark was Managing Director and Head of Asia Pacific (“APAC”) at Activision Blizzard, the leading gaming developer and publisher of entertainment software renowned for creating some of the industry’s most critically acclaimed games, including Call of Duty and World of Warcraft. Mark has over 19 years of experience in the entertainment and gaming industry in the APAC region
Rest of the Best
Here are the rest of the updates hitting radar.
ROBOADVICE: Deraya launches first robo advisory service in Saudi Arabia
REGTECH: CSI, a decades-old fintech solutions vendor, agrees to be acquired for $1.6B
INSURTECH: Airbnb launches travel insurance
INSURTECH: Sagicor to acquire ivari
INSURTECH: FairPlay launches AI bias detection product for the insurance industry
INSURTECH: Latú Seguros raises $6.7 million
AI: How reinsurance underwriters should use data, analytics and AI
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