Blueprint: MetaMask's Ethereum staking; Goldman's $3B fintech losses; Fidelity acquires Carta competitor
Tech and Alternative asset classes will not slow down
Hi Fintech Futurists βΒ
You are the best, todayβs agenda below. Chin up everyone!
DEFI: You Can Now Stake Ethereum on MetaMask (link here)
CONSUMER: Goldman Sachs says new fintech unit incurred $3bn in losses since 2020 (link here)
WEALTH MANAGEMENT: Fidelity makes first acquisition in 7 years, snapping up fintech Shoobx (link here)
LONG TAKE: Creating a B2C fintech marketing strategy (Build It Series, Part 2) (link here)
PODCAST CONVERSATION: The $100B fintech custodian powering digital investing, with CEO of Apex Bill Capuzzi (link here)
Hereβs that handy upgrade button to access the Long Takes β a rigorous view on the future of our industry. Level up your Fintech and DeFi knowledge. πππ
In Partnership
Fintech Meetup Fills the Q1 Event Gap! Donβt Miss Q1βs BIG fintech new event with Tyfone, Synapse, Treasury Prime, and 3,000+ attendees you need to meet. Best of all, youβll join 30,000+ double opt-in meetings, where you can actually meet the people you want to meet. In-person at the Aria, Las Vegas March 19-22.
Short Takes
DEFI: You Can Now Stake Ethereum on MetaMask (link here)
MetaMask, the largest self-custodial crypto wallet, has introduced staking functionality. It allows users to lock their Ethereum through Lido or Rocket Pool to earn financial rewards from the underlying Ethereum protocol. Users can generate annual yields of 5.22% with Lido and 4.59% with Rocket Pool on any amount of Ethereum from their wallet, without needing to interact directly with the user interface of either platform. Note that these rates are denominated in ETH, and are not equivalent to USD treasury rates since you would also experience ETH capital gains and losses.
Over $6.9B of ETH is currently staked through Lidoβs service, compared to $800MM or so in Rocket Pool. Both protocols provide liquid staking derivatives (LSD), where users that stake ETH through their platforms receive an equivalent amount of Staked Ethereum (stETH or rETH depending on the protocol) in return for their staked tokens. This enables stakers to remain liquid while locking up their ETH, providing the opportunity for users to leverage their stETH on other DeFi services, while also contributing to the security of Ethereum.
Staking comes with risks, ranging from compromised third-party software, buggy smart contracts, and substantial token price fluctuations, all of which may impact returns. Unstaking ETH is also not yet an option, with this feature planned for the coming Shanghai upgrade. In essence, you are buying a derivative that entitles you to receive ETH in the future, and that derivative has liquid markets in which you can trade it. It can be unpegged, it can experience confidence runs, and other financial concerns as seen in other derivative products.
Still this is largely considered by the industry to be one of the safer means of earning yield on core holdings. Integrating the capability through MetaMask simplifies the process for retail investors looking to access native protocol returns without significant technical effort or proficiency. It also provides insight into the crypto wallet strategy β providing an easy way to connect to DeFi; imagine a neobank checking account that gives you 5% interest on any cash you hold on it.
π See related coverage π
CONSUMER: Goldman Sachs says new fintech unit incurred $3bn in losses since 2020 (link here)
Goldman Sachs reported $3B in pre-tax losses since 2020 for its recently formed technology and consumer unit. This reportedly includes the Platform Solutions division β losing $780M in 2020, $1.1B in 2021, and $1.2B for the first three quarters of 2022. The division supports credit cards for the likes of Apple and General Motors, transaction banking services, and includes online lender Greensky, a 2022 acquisition for the bank.
Restructuring has been ongoing to ramp up income from fee-based businesses and reduce reliance on trading and investment banking. Goldmanβs digital bank Marcus will be brought into its private wealth management unit and scaled down. Other big changes in the reorganisation include moving the investment banking and trading businesses into a single division, as well as coupling the asset and wealth management units. These things generally happen in bear markets, as fees outperform transactions.
Goldmanβs investment banking and trading businesses make up the bulk of their profits, generating pre-tax profits of $11.9B (compared to $12B in total profits) in the first 9 months of 2022. Asset and wealth managements units also brought in $1.2B over the same period.
Most notable is the reduced emphasis on Marcus, the neobank, a surprise given CEO Solomonβs emphasis on retail banking since joining in 2018. Marcus is still yet ot launch a checking account, which was due for last year, and losses now total more than $4B. Goldman also recently cut 3,200 jobs (6.5% of employees) as part of its biggest cost cutting initiatives since the 2008 financial crisis. We are interested in seeing Goldman continue to invest in its fintech capabilities β it is one of the best firms on the street actually doing the work. However, we also understand the pressure from fintech valuation multiple collapse and the importance of profitability.
π See related coverage π
Interested in Sponsorship?
To support the Fintech Blueprint and reach our 150,000+ Substack and LinkedIn audience of builders and investors, learn more below or contact us here.
WEALTH MANAGEMENT: Fidelity makes first acquisition in 7 years, snapping up fintech Shoobx (link here)
Fidelity acquired Carta competitor Shoobx, which offers a software platform for startups to manage equity, compliance, and legal tasks. The platform also provides tools such as digital signature, document management, and cap table management to make the process of raising capital and managing investors more efficient. The last previous Fidelity acquisition was of eMoney advisor in 2015, which provides wealth planning software and was part of the digital wealth distribution trends.
With this acquisition, Fidelity aims to expand its existing private company and start-up specific services. The product will be brought into Fidelityβs Stock Plan Services business, which supports almost 700 companies across equity compensation plan record keeping and administration, for 2.5MM plan participants and $250B in plan value. Shoobx will let Fidelity support these clients in-house. Shoobxβs valuation has not been disclosed.
For contrast, Carta has raised $1.1B so far, driven largely by a $500MM round in August 2021 at a $7.4B valuation. Bare in mind that Shoobx has only raised $10MM so far. Given the drawback in valuations, Fidelity may see Shoobx as a tuck-in technology acquisition that complements their Stock Plan Services. The reason that these things are valuable is the network graph of investors and private companies that cap table management allows you to build, which can then lead to the creation of private markets, as well as lead generation for entrepreneur wind-falls.
Long Take: Creating a B2C fintech marketing strategy (Build It Series, Part 2) (link here)
We are continuing our Build It Series, focusing on the differences between B2C and B2B strategies, and on the implementations of some foundational marketing principles.
We discuss branding and the two ways of doing it right. Then we dive into the various programs that can be implemented to generate demand, from content, to social media, to paid acquisition. Finally, we touch on the importance of CAC and LTV, in particular during a year like 2023.
Podcast Conversation: The $100B fintech custodian powering digital investing, with CEO of Apex Bill Capuzzi (link here)
In this conversation, we chat with William (Bill) Capuzzi, CEO at Apex Fintech Solutions.
In his role as Chief Executive Officer at Apex Fintech Solutions, Bill sets the vision and strategy to help Apex identify and realize new areas of growth and opportunity. Prior to his role as CEO of Apex, Bill worked at Convergex Group where he was Chief of Staff and a member of the firmβs Executive Committee. Bill also served as Director at Pershing LLC, responsible for their institutional product suite and directed their global re-engineering efforts firm wide.Β
Rest of the Best
Here are the rest of the updates hitting radar.
PAYTECH: Stripeβs internal valuation gets cut to $63 billion
PAYTECH: Nuvei Acquires Paya for $1.3B to Expand Beyond Retail Payments
PAYTECH: Alibaba sells Paytm stake worth $125 mln via block deal - source
INSURTECH: Going Private: Vista Takes Duck Creek In An All-Cash Purchase
INVESTING: Scalable Capital hits 1 million ETF and stock savings plans
INVESTING: Backed by Tiger Global, Mayfair emerges from stealth to offer businesses a higher yield on their cash
WEALTHTECH: BlackRock acquires minority stake in SMB 401(k) provider Human Interest
CONSUMER: Ant Group revamp βbasically completedβ, says central bank official, in key step forward for Chinaβs biggest fintech firm
Shape your Future
Wondering whatβs shaping the future of Fintech and DeFi?Β At the Fintech Blueprint, we go down the rabbit hole in the DeFi and Fintech industries to help you make better investment decisions, innovate, and compete in the industry.Β
Read our Disclaimer here β this newsletter does not provide investment advice and represents solely the views and opinions of FINTECH BLUEPRINT LTD.
Want to discuss? Stop by our Discord and reach out here with questions