Uniswap overtakes Coinbase in ETH trading; Hong Kong virtual bank WeLab raising $250MM; LGBTQ+ bank Daylight raises $15MM

Hi Fintech Futurists —?

You are the best, today’s agenda below.

1. NEOBANK:?Sequoia-Backed WeLab Seeks Funds at $2 Billion Value, Sources Say (link?here )
2. CRYPTO:?Uniswap Overtakes Coinbase as Second-Largest Exchange Trading Ethereum Today (link?here )
3. NEOBANK:?Daylight, the LGBTQ+ neobank, raises cash to launch subscription plan for family planning (link?here )
4. LONG TAKE:?How Elon Musk can turn Twitter into a fintech powerhouse (link?here )
5. PODCAST:?Embedded custody services and crypto IRAs using fintech APIs, with Prime Trust CEO Tom Pageler (link?here )

Before we jump in today, we wanted to remind you of the 33% Black Friday Discount for the premium subscription.

***

In Partnership

Fintech Meetup delivers results!?Kick off 2023 with new deals, partnerships and business opportunities. Meet with anyone for any reason using our incredible tech-powered meetings program that connects 3,000+ attendees to 30,000+ double opt-in meetings. Plus amazing content, networking events, and an exhibit hall with 200+ sponsors! In person at the Aria, Las Vegas March 19-22.

??Get your ticket !

***

Short Takes

NEOBANK:?Sequoia-Backed WeLab Seeks Funds at $2 Billion Value, Sources Say?(link?here )

HK-based WeLab is raising between $200-250MM in their upcoming round at a valuation of $2B. The fintech was founded in 2013 and has expanded primarily within 3 core areas: (1) WeLend, a consumer credit platform in HK, (2) WeLab Digital, a consumer credit platform based in mainland China, and (3) WeLab Bank, a virtual lender based in HK. Since founding WeLab has raised $900MM in total, becoming a unicorn in 2017 following a $220MM raise.

While initially filing for an IPO in 2018, going public was postponed due to market volatility at the time,?although the firm was rumored to be revisiting this idea in 2022. ?Revenues at the time floated around $160MM, implying a 10-15x multiple — we’d expect today’s multiples to be much closer to 1-5x. Still, the company has grown its loan balance to $7B, amassed 50MM retail users, and 700 enterprise customers, making it a national champion. It also recently acquired PT Bank Jasa Jakarta, an Indonesian commercial bank,?partnering with PT Astra International for the purchase in a bid to transform Jasa Jakarta into a digital bank .

Indonesia presents meaningful digital opportunity, with?77% of the 270MM population eing unbanked or underbanked , sparking a flurry of competition in the country over the last two years. The Indonesian government is also pushing to achieve 90% financial inclusion by 2024, which could be an achievable goal, given 2/3 of the population is younger than 41 and likely to adopt digital services. Top competitors include GoTo-backed digital bank Jago and SoftBank-backed Aladin with its Sharia digital banking offering.

We’d guess the company is still in growth and market-share mode, but perhaps that’s right for businesses that are positioned for such a position in today’s market.

***

CRYPTO: Uniswap Overtakes Coinbase as Second-Largest Exchange Trading Ethereum Today?(link?here )

Traders are moving market activity to DeFi rails as trust in brokerages and custodians erodes after the FTX collapse. Decentralised exchange Uniswap has another day overtaking Coinbase, and momentarily Binance, for ETH/USD transactions. Last time this happened, we were in the grips of the DeFi summer. We like this from a software perspective — adoption of decentralized infrastructure suggests self-custody over assets. For comparison, 50 unsecured creditors alone from FTX are owed $3.1B.

Uniswap isn’t alone in its growth —?crypto trades on DEXs were up to $31B last week , up from the $5-10B range over the last couple of months. Most other players saw their trade volumes double last week, with Curve going from $700M to $1.3B. However, this may be not entirely a win for DeFi, but rather a liquidiation cascade out of the exchanges into dollar equivalents as capital flees exchanges, which in turn meaningfully compresses asset price levels. See the FTX “hacker”?selling $60MM of ETH .

Also, we should be careful to remember smart contract risk, which, while different from some dude taking your money from inside the bank, is just some dude taking your money from outside the bank.

There are more dominos to fall in the aftermath of the FTX crash. Crypto lending firm?BlockFi is reportedly preparing a Chapter 11 bankruptcy protection filing , following significant exposure to FTX.?Crypto Bank Silvergate is also seeing its share price plummet , dropping 10% on the 11th November, and contributing to its now 85% drop since the bull run last year. We won’t talk about GBTC — don’t google it.

?? See related coverage ??

• Long Take: Understanding the fall of FTX and attempted acquisition by Binance

***

NEOBANK:?Daylight, the LGBTQ+ neobank, raises cash to launch subscription plan for family planning?(link?here )

LGBTQ+ neobank Daylight raised a $15MM Series A,?a day after the US clears a key procedural hurdle of the bipartisan bill to protect same sex and interracial marriage . The bank will focus on the approximately 30MM LGBTQ+ people in the US with a spending power of over $1 trillion, by re-thinking how financial products fit into people’s lives.

One example is that Daylight provides debit cards where customers can choose a chosen name that may not be the same as the own on their legal ID. Other features include 10% cash back at a selection of partnered queer organisations, goal-setting for gender-affirming procedures, and the hosting of Daylight community sessions where customers can educate themselves on queer financial literacy within a safe space.

Notably,?LGBTQ+ people tend to earn less ?and have less familial support. The poverty rate for transgender communities in the US averages at 30% —?double that of cisgender adults .?Transgender people are 2x more likely to be unemployed? and?4x more likely to have a household income lower than $10K .

In terms of traditional features, Daylight offers a checking account, free ATM withdrawals, and the ability to get paid two days early. These are?provided by Pathward , a banking as a service provider.

Neobanks are distribution storefronts for financial products, and it is a natural strategy to focus as deeply as possible on target audiences. We’ve covered how this movement is going after everyone from teenagers, to supporting Black and Latinx communities. From an industry perspective, we will see maximal diversity of distribution and then horizontal consolidation in the commoditized infrastructure.

?? See related coverage ??

• Podcast Conversation: The Harvard Endowment and alternative assets, Square buys $50MM of Bitcoin, Killer Mike launching a Bank and Akon building a $6B smart city
• Podcast Conversation: Step CEO CJ MacDonald on building the leading Gen-Z bank, TikTok influencers, and money culture
• Podcast Conversation: Millions of users and millions in losses -- analyzing neobanks Monzo, Starling, and Revolut

***

Long Take:?How Elon Musk can turn Twitter into a fintech powerhouse (link?here )

Elon is talking about turning his $44B Twitter purchase, with its 400MM monthly active users, into a fintech with a payments and banking offering.

We take apart the underlying strategy, and discuss the value chain that starts in social media, moves into commerce and payments, and then ends in banking and investments. There certainly are ways this could work, if it’s not an expertly executed troll plan. We consider how Goldman could power the financial aspects of the platform, and highlight the importance of identity to the whole scheme, which explains the speed to build verified accounts.

?? Read Long Take

***

Podcast Conversation:?Embedded custody services and crypto IRAs using fintech APIs, with Prime Trust CEO Tom Pageler?(link?here )

In this conversation, we chat with?Tom Pageler , the CEO at Prime Trust.

Prime Trust is a one-stop-shop for API-based financial infrastructure for fintech and digital asset innovators. Previously Tom worked as CSO and COO at crypto-custodian BitGo, as well as CRO and CSO at Neustar. Additionally, Tom has held senior risk and security positions at DocuSign, JP Morgan Chase, and Visa over the course of 15 years.

?? Listen on Apple Podcasts

***

Black Friday offer

Reminder that the offer is expiring in a couple of days ? Right now, as a free subscriber you only have access to Monday’s Short Takes, Thursday’s Digital Wealth newsletter issue, and Friday’s podcast without transcripts.

Which is great, but frankly, you can do much, much better ??

By upgrading for only $149/year, you will unlock instant access to additional letters:?

???Tuesday’s Web3 Short Take?with expert curation and in-depth analysis on Web3

???Wednesday’s thorough and rigorous Long Take?research on key Fintech and DeFi developments without shilling or marketing narratives?

???Annotated & value-packed scripts to the Podcasts

???Full Access to our Premium Analysis starting in 2019, covering 50+ brands and 15+ themes in Fintech and DeFi?

???Monthly Greatest Hits Reports?on various topics such as stablecoins, DAOs and more

Get your premium subscription at a 33% Discount to the most value packed Fintech & DeFi Newsletter on the market, aiming to help you find and build the next unicorn!?

You have only 2 days left to take advantage of this special offer. ??

• Read our?Disclaimer here ?— 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
• Contributors:?Lex ,?Laurence ,?Matt ,?Farhad ,?Daniel ,?Daniella