Is crypto money sticking around longer than we thought? A new report from Sentora says yes — it found that two out of three people using Kraken’s DeFi earn product kept their money in for more than 90 days. Here to explain what that means is Anthony DeMartino, Co-Founder and CEO of Sentora. Anthony, thank you so much for joining us this morning on Capital Markets Wall Street to Mena.
Two out of three people kept their money in the DeFi earn product for more than 90 days. Does that prove that crypto just is not quick in and out money?
I think the other statistic that is important is that if you look at the chart of the growth of the assets in the platform, they are just steadily up and to the right. There have been very few net down days from previous days as well.
Are people turning to stablecoins as a new way to save versus a savings account?
On the national average being 40 basis points for checking and savings accounts, a lot of people in the younger generations are looking for these types of alternatives. You have seen yield being offered in various different products — from yield back on debit cards through X Money to crypto earn accounts across the board. The search for yield is really important at a time when wealth is being transferred generationally from the baby boomer generation to younger generations. How they look to interact with money is changing. And that is evident in some of these programmes and the success they are seeing.
The GENIUS Act stops stablecoins from paying interest directly. So where is that money going to earn a return instead?
The GENIUS Act does not allow stablecoin holders to pay users for holding a stablecoin, but they can pay them for interacting in certain ways. The vast majority of yield in crypto is generated from borrowing interest against other collaterals. Think about people borrowing against Bitcoin — they are the ones paying the yield to users who are depositing their stablecoins into money market protocols to earn that yield. Oversimplified, it is a very collateralised borrowing market that is funding that yield.
Who wins the fight for customers’ money — banks, fintechs, or crypto exchanges?
I think winning is going to be seen at all three platforms. Banks are slowly starting to realise that the products they offer are just not competitive. The other thing that is really interesting — when we wrote a piece called Liberation of Money a few months back — is the generational difference in trust when it comes to banks and fintechs. At the older generations, there is almost a 90% trust factor with banks. In the younger generations it has dipped below 40%. The global financial crisis was a pivotal moment in many people’s lives, and the unquestioned safety and trust of banks has been shaken. Crypto exchanges are a great place to start — they are where people have idle funds in between financial decisions they make, which is now growing beyond crypto to tokenised stocks, tokenised private credit funds, tokenised bond funds. Whenever funds are idle, they should be earning yield. That is what these yield products provide.
Anthony, thank you so much for joining us this morning.
Thank you for having me.
