Ethena CEO: The Market Just Got 60x Bigger (Everything Changes)

Andy (0:00)

All right, Guy, welcome to the show, man. Good to have you. I know you're busy, man. Good to see you.

Good to have you, man. Congrats on the launch of Ethena Pay.

Big launch. And I mean, what a, what a, we're in an institutional era of the market, clearly. I think you guys have been strongly positioned for this. Obviously, you guys came out with that Unlock News, which I think the market responded well to. I think also, you know, setting a standard, perhaps, for some other teams, want to just get those overhangs done and just get to the point, we're building a real business here. Here's what we got. Talk us through just kind of where we are at on the state of Athena, just kind of catch us up.

Guy Young (0:40)

Last year was definitely the most challenging. I think I've had my career and also just like Athena's existence in the last three. I think post-1010, I think we were just caught offside with like multiple, almost like a comical series of just like bad market events that could have specifically happened to us. So 1010, obviously a huge impact to us with kind of derivative open interest, just collapsing even worse than it was in 2022

Then we had the Aave and Kelp incident straight afterwards where USDE was like the largest collateral asset on Aave, and then we used Layer for our cross-strain infrastructure. So it just felt like every three months we were just kind of having these four sigma events basically happened to us every three months.

But yeah, I think repositioned, I think both the core product on USDE to just be a bit more resilient and have a stronger foundation through the cycle. So I think it's no kind of secret that it's a pretty reflexive product through the cycle in the sense that when times are good, it's like an amazing product that's paying 10% yield and goes to 15 billion in 18 months. But then when the market unwinds, you just have a much more difficult sort of time sort of adjusting to that period. So USDE is a core product, I think it's just become a lot more resilient through time as we've expanded to do not only basis but actually institutional lending, RWA's and then obviously T-Bills, that's it within there. And then I think the big growth factor that's sort of opening up on that side is the growth that we've seen or purification of everything, like perhaps on RWA's and that kind of stuff. I think outside of the exchanges who are facilitating the trading of the RWA perhaps, I think it's probably the second biggest beneficiary of that trend just because you're essentially expanding the time of what could go into USDE from two and a half trillion dollars of crypto to 150 trillion dollars of other assets. And we've seen RWA perhaps have gone from like zero to 15 bill in OI paying 15 to 18% this year over the last nine months. And we had an announcement out I think a couple of weeks ago that we're starting after perhaps next week based on the backing of USDE. So I'm just very excited about that just because in simple terms we got to 15 bill, just doing this on crypto.

I really just think that like RWA perhaps are going to be multiple of the size that we saw with crypto in general. And so the time for what we're doing is just going to be multiple of that 15 bill going forward.

So yeah, that's on the Athena USDE side and also have a white label stable coin business where anyone can sort of like launch on top of our product. So you have Jupiter, Mega, 8th, Sui, a couple of others that are coming out soon on that side. I think it's actually the largest in the market right now in terms of AUM for white level. And then Athena Pay, which we obviously, you know, announced a couple of weeks ago where I think the broad thesis for us here is just I think we've done a decent job of kind of integrating in the correct like distribution platforms to grow USDE through Robinhoods, Coinbase, et cetera, et cetera. But like in an end state, I don't want to just be the back end for other people's kind of front ends. And I think owning the customer relationship and driving the destiny of your own distribution is an important thing for you to try and do. And for us, like the form factor of a mobile Neobank is really the ultimate way for you to try to do that when you're in the business of like money, which is what we are. And for us, like we really think that there is an edge here, which is you own the structural vertical integration of dollar issuance and yield generation with the Neobank at the same time. So to me, it's pretty crazy that a lot of these Neobanks right now have basically built their products on someone else's stable coin, which is great for circle and tether, but if you look at the revenue of a new bank or Revolut, 40% of the revenues are just interest generation on balances that are sitting there. And so if you control the dollar with the highest yield in the whole market, which is kind of the bread and butter of what Ethena has done since day one, we think you have a structural advantage as everyone else in the market to acquire customers and keep them and sort of build that through time. So, extremely early days for us on Ethena Pay, but for me, I haven't felt this excited about a market opportunity since USDE. And I think actually the potential for this product is potentially even bigger than USDE was when they first came out, if you do it correctly.