Short Takes: SocGen's $20MM DeFi loan from Maker; $1.3B Alloy powering Brex, Ramp; TikTok NFTs from Lil Nas X, Gary Vee, Grimes
Gm Fintech Futurists —
Final reminder — Mondays are now focused on analysis of the top 3 developments. Long Takes are moving to Wednesday and will be premium. This is the last week that everyone will get everything to see the new structure. For paid members, there is nothing you need to do. For free subscribers, check out your options here or apply to join the Ambassadors program that we are building here for free access (5 Spots left).
And with that, our agenda for today is:
DEFI & BANKS: Société Générale Applies for $20M MakerDAO Loan Using Bond Token Collateral (link here)
IDENTITY: Alloy raises $100M at a $1.35B valuation to help banks and fintechs fight fraud with its API-based platform (link here)
NFTS: TikTok to Release Ethereum NFTs With Lil Nas X, Gary Vee, Grimes (link here)
RESEARCH: Will Paypal's digital wallet beat Google Pay and Square Cash App on shopping & banking? (link here)
PODCAST: Robinhood's order flow disrupting equities and crypto market structure, with Paul Rowady of Alphacution (link here)
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Short Takes
DEFI & BANKS: Société Générale Applies for $20M MakerDAO Loan Using Bond Token Collateral (link here)
SocGen, one of France’s largest banks, is posting on the MakerDAO forums in an attempt to get a loan. This is a first example of a major bank submitting an application for a financial relationship with a DeFi DAO. Reminder that Maker is behind DeFi’s original stablecoin, DAI, which is issued against collateral. If you want to learn more about MakerDAO check out our podcast with founder Rune Christensen here.
The loan would be for up to $20 million in DAI, and would use on-chain bond tokens issued by the bank as collateral. These tokens were issued in 2020, with a fixed rate of 0%, a AAA rating from Moody’s and Fitch, and mature in 2025. This move is deemed an experiment by the bank to see how the solution would work under the French legal framework. Six entities are due to be involved: the DIIS Group acting as a security agent (a requirement under French law), a MakerDAO legal representative (currently unappointed), SocGen, Socgen Forge, the MakerDAO protocol, and an unnamed third party (likely a custodian or centralised exchange).
We like a bunch of things about this, in addition to the poetry of it all. The first is an attempt to clearly articulate — in traditional legal terms — the nature of the parties, and a schema by which they may interact. Another is the promotion of the CAST Framework, which is SocGen’s effort to get security tokens onchain through standards. And last, while most of crypto is spinning off into the metaverse and art collection, that there are still Fintech/DeFi people willing to grind out good compliance language. Promising if this flies in France for the EU.
IDENTITY: Alloy raises $100M at a $1.35B valuation to help banks and fintechs fight fraud with its API-based platform (link here)
An identity operating system for banks and fintechs, Alloy, has raised $100 million. The move brings its total valuation to $1.35 billion, just one year after raising a $40 million Series B. Alloy’s main offering currently lies in automating onboarding identity decisions (i.e., opening accounts) and helping firms to automate transaction monitoring. The fintech uses data from 120 identity providers to avoid fraud in initial customer onboarding and with ongoing transactions.
The company has doubled its number of customers in the last year (from 90 to 200) and plans to add credit underwriting to its repertoire, because good machine learning shouldn’t go to waste. Does it surprise you that account opening and fraud prevention is such big business? We can first anchor in a comparison like ComplyAdvantage, which has been the backbone of a number of fintech players and like Alloy leans into API integration. In large part, the ability to do things programmatically and by marketing to developers explains the rapid growth of regtech companies in this space.
Another thing to notice is that Alloy has core Silicon Valley customers on its website, like Ramp and Brex. Both are corporate cards, and Ramp is valued at $4B while Brex is worth $7.4B. The main vector those two companies represent is the digitization of the finance function, which flows into treasury, cash management, and credit. And if Alloy powers the account opening process for hyper-growth hyper-funded card issuers, then it ends up scaling as a byproduct as well. Think Marqeta and Square, which we cover here.
NFTS: TikTok to Release Ethereum NFTs With Lil Nas X, Gary Vee, Grimes (link here)
TikTok is getting in on the NFT game after recently announcing plans to create NFT collectibles based on popular videos. Initially, the NFTs will feature works from Gary Vaynerchuck, Lil Nas X, and more (check the picture above for the full lot). Each artist will issue 6 NFTs based on “culturally significant” videos on the platform. NFTs will be released in single-edition and larger limited edition runs. Layer-2 Ethereum scaling solution, Immutable X, will mint the NFTs, providing lower transaction fees and faster completion times than would otherwise be possible on the Ethereum mainnet.
This isn’t the first time some of the artists have done NFTs — Grimes sold $6 million of her artwork last spring, and Gary V created Vee Friends. Adding this to the already booming NFT market (OpenSea witnessed $3.4 billion in trading volume in August alone, to name just one marketplace) and TikTok’s cult-like following, the move makes NFTs even more viral and social.
For deeper reading on industry trends, check out: a podcast with Art Blocks CEO Erick Calderon on generative art, blockchains, and the NFT movement, and the top 5 NFT trends for 2021, and current state of the NFT market. You can find the whole lot on NFTs here. And here’s a great takeaway from Ryan @Bankless:
Rest of the Best
Here are the rest of the updates hitting our radar:
ROBOADVISOR: Betterment Raises $160 Million in Growth Capital (link here)
PAYTECH: Highnote emerges from stealth with $54M and a plan to take on Marqeta in the world of card issuing as a service (link here)
PAYTECH: Australian Fintech Till Payments Finalizes $110M Series C, Plans to Operate in UK, Europe, US (link here)
PAYTECH & STABLECOINS: Visa Unveils 'Layer 2' Network for Stablecoins, Central Bank Currencies (link here)
DEFI: R3 to launch private permissionless blockchain DeFi network, issue token (link here)
DEFI: Fireblocks Draws Closer to Getting Wall Street Cash on DeFi Giant Aave (link here)
FINANCE FUNCTION: Singapore Fintech Aspire, an All-in-One Finance Operating System for Businesses, Secures $158M via Series B (link here)
ASSET MGMT: Franklin Templeton to Acquire OSAM and Custom Index Platform Canvas (link here)
METAVERSE: AR Glasses Creator Nreal Secures $100M Series C Financing to Expand Internationally (link here)
Blueprint Updates
Analysis: Will Paypal's digital wallet beat Google Pay and Square Cash App on shopping & banking? (link here)
We answered the following question in the Long Take last week — does PayPal have what it takes to take on Google Pay and Square Cash App with their own ‘super app’?
The Long Take dives into PayPal’s various offerings: PayPal Savings (a cash account integrated from Synchrony Bank), its Crypto wallet capabilities (powered by Paxos), a personal finance management tagging system, PayPal Deals (shopping rewards/cash-back, courtesy of PayPal’s $4B acquisition of Honey) and more. We looked at how these features shape up against Square, Venmo, and Google Pay. We also trace the DNA of PayPal to understand whether such an offering will succeed where others failed.
Meanwhile, Google ended up shutting down its efforts to launch a neobank account, so that makes it a bit easier, we guess.
Podcast Conversation: Robinhood's order flow disrupting equities and crypto market structure, with Paul Rowady of Alphacution (link here)
What has payments for order flow done to equities market structure, and how will the same happen to crypto? This is the core question of last week’s podcast.
We talked with Paul Rowady is the Founder and Director of Research for Alphacution Research Conservatory and a 30-year veteran of proprietary, hedge fund and capital markets research, trading and risk advisory initiatives. Alphacution is a digitally-oriented research and strategic advisory platform focused on modeling and benchmarking the impacts of technology on global financial markets and the businesses of trading, asset management and banking. We touch on all things Robinhood, trading velocity, market making, crypto trading and its impact on hedge funds and asset managers, regulation and the SEC, and the future of capital markets and investment management.
“Now, flash forward a bit, and I know we're going to skip over a lot, but flash forward to Robinhood's latest earnings report, and we see this massive shift toward crypto trading and the revenue of that crypto trading. But oh, guess what? A lot of the same wholesalers or group of wholesalers are still behind the scenes. We have a few new names. One that you're likely to be hearing about, certainly by Alphacution, we've already written about it, is another very successful, legendary proprietary trading firm called Jump Trading, based in Chicago. And in Q2 they paid more for crypto orders to Robinhood. They paid more to Robinhood for that order flow in cryptocurrencies than Citadel Securities had ever paid for equities or options. It was $163 million in one quarter by one player. That's a significant development…”
More? More!
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