Fabric Ventures backs Unstoppable Finance on their mission to build a simple and intuitive access layer, in order to democratise access to DeFi irrespective of technical knowledge, wealth or abilities.
• • • • •
Back in 2017, when I (Anil) invested in Raisin on behalf of PayPal, both companies shared a vision of democratising access to financial services, in particular within savings and investment products. The vision, which at the time represented no more than 4bnE AUM, has proven itself and today Raisin DS is a powerhouse European fintech, with over 60bnE in AUM. Despite still surfacing incredible value for consumers, the fact remains that most Western Market traditional bank savings accounts generate effectively zero interest, or even charge you for the pleasure. This is particularly unacceptable to many retail consumers in a post-quantitative easing and covid world, where money supplies are expanding exponentially and purchasing power of fiat currency will inevitably fall.
But wait, over in the DeFi space we have a rapidly growing trillion-dollar industry, centered around the trading of digital assets where traditional lending and borrowing has been rebuilt entirely on-chain. Some of the crazier yields witnessed in DeFi clearly have been driven by: a) the provision of capital from private investors funding token incentives (supported by the ensuing retail demand for speculation) and b) an appetite for leverage through borrowing-to-trade volatile crypto assets; but even so, yields of 5–20% p.a are available relatively risk free, from things like stablecoin lending and staking. More critically, in the longer term DeFi completely circumvents intermediaries from the traditional system that extract rental value and allows for potentially more efficient capital markets, owing to the transparency of operation and ability for any project’s open source code to be quickly iterated upon or integrated with. It is our belief at Fabric Ventures that blockchain technology, with all its properties of being open, permissionless, decentralized and non-manipulative, is capable of building the most transparent and democratised access to financial services and banking ecosystem that has ever existed.
It is this vision of making DeFi accessible to the mass market that drew us towards the team at Unstoppable Finance. Max and the team are building the access layer to give DeFi its “Raisin” or “Trade Republic” moment. Their aim is to allow everyday investors to participate in this new decentralized economy by providing a one-stop-shop for trading, high-yield savings, NFTs and other Web3 services, all bundled into an intuitive mobile application that also helps (even automatically) to discover the right products to invest in for the right risk profile.
This is not a simple challenge to take on, as current native DeFi yield protocols or wallets are simply not designed for mass-market expansion and focus mainly on power users and crypto natives.
First, we have to overcome the Inherent complexity of the crypto user journey (from onramp to token conversion; to metamask funding; to staking; to managing gas fees; to monitoring; to unstaking and then off ramping). Quite simply, non-crypto natives users do not have the skillset to properly handle on-chain transactions and interactions with DeFi protocols and are used to the simplicity of mobile-first Fintech products.
Second, the UX/UI of DeFi protocols cater to crypto-natives, who are familiar with the internal ecosystem vocabulary and web 3.0 design standards. While these design choices can lead to significant traction with crypto-native users, they’re also alienating web 2.0 users.
Third, there are high risks to manage for uneducated users. Smart contract risk for on-chain yield options is inherent to DeFi as mentioned above. But on top of this base risk, uneducated users who come into DeFi — because of attractive yields — are also subject to other significant risks, e.g. poor due diligence can lead them to use scams or protocols with poor smart contract security, a lack of opsec knowledge increases the likelihood of their wallet getting hacked, a lack of experience with on-chain transactions can lead to irreversibly lost funds and in general there is a lack of customizability of the risk levels.
Finally, many yield opportunities constantly arise in DeFi because of new token emissions, liquidity provision fees and lending markets. Some native DeFi yield aggregators already deploy complex yield strategies and automate yield farming to optimize the yield and reduce the operational complexity for end-users. However, these yield-aggregators still list a wide variety of options that require different tokens, which is still too much to ask of mass-market users who would prefer an even simpler user experience.
Unstoppable Finance’s flexible and fast go to market, using a non-custodial approach, allows them to remain faithful to the value proposition of DeFi and avoid initial heavy regulation oversight. The beauty is in how they abstract away the complexity of non-custodiality by mimicking the onboarding flow of centralized services.
We are proud to join the syndicate that includes Speedinvest, Inflection, Backed, Cadenza, Discovery Ventures and Rockaway Blockchain Fund in backing three co-founders (Peter Grosskopf (CTO), Maximilian von Wallenberg-Pachaly (CEO) and Omid Aladini (Director of Engineering)) on this journey. They come to this challenge with both relevant and successful experience, having previously worked together in building Börse Stuttgart Digital Exchange into one of Germany’s leading crypto exchanges. Together with their initial hires, the core team have also previously been instrumental in building other consumer and FinTech successes, such as Soundcloud, Solaris Bank and Trade Republic. Exactly the pedigree we are looking for in taking on this substantial but critical challenge.