Within the cryptocurrency industry, the summer of 2020 was nicknamed “DeFi Summer”. Such was the explosive growth of this new sector which promised to revolutionise the way financial transactions occur.
Three years on, the enthusiasm has dulled somewhat, to say the least. Capital has flowed out of the space at a scarcely believable pace. At its peak, there was $165 billion of total value locked in DeFi. Today, three-quarters of that is gone. It has been a rough ride as scandals have besieged the crypto sector, companies have filed for bankruptcy and interest and volume has waned.
However, there is still activity in the space. We interviewed Eric Parker, the CEO and co-founder of Giddy, a self-custody smart wallet, to find out what it’s like to operate in the space after the hysteria and despair that the last few years have brought, and how the wallet experience continues to be worked on.
Invezz (IZ): How exactly does Giddy make money?
Eric Parker (EP): Same way MetaMask, Coinbase, Beefy, Uniswap, and Infura do. Fiat ramps, DeFi transactions, gas payments, and crypto trading. Except we’ve built solutions to these tech stacks ourselves, which means we can charge the customer less per service, saving our users time and money all while making crypto and DeFi much easier.
IZ: Total value locked (TVL) in DeFi is down from $165 billion to $47 billion, a fall of 72%, over the last 16 months, as yields have fallen while interest rates in trad-fi have increased. How do you attract people back into the space?
EP: It’s important to note that unsustainable DeFi yields have fallen while the fundamentally sound projects remain strong. One million percent annual yield was never sustainable, which is why the smartest DeFi users today are seeking “real yield”, in other words, sustainable business models built on the blockchain. Users can still earn incredible yields on the blockchain while maintaining exposure to the best assets, such as USDC, Ethereum, Matic, and Bitcoin.
IZ: Many criticise wallet experiences in crypto for being unintuitive to use. Why do you think so many providers have had trouble in this area and what specific features or attributes do you offer that makes for a better user experience?
EP: We’re still so, so early. It’s like having to program your own modem to connect to the internet in the early 80’s, then moving to services like AOL, then Netscape, and so on. I think today in the crypto space we’re just starting to move into more user friendly technology abstractions. And it’s only going to get better from here. Giddy was created specifically to tackle this issue, and we’ve developed brand-new technology to do so.
We already hinted at our private key tech, which is fundamentally a better experience for users, but there’s also our one-tap staking into DeFi earning protocols plus the ability to pay for gas with USDC or our Giddy Token. Quality of life improvements such as these mean people don’t have to worry about losing their seed phrase, don’t have to worry about running out of gas, and don’t have to worry about signing a malicious smart contract or leaving infinite approvals open on the blockchain. And that’s just the start.
IZ: There are many self-custody wallets available for consumers on the market. Is it difficult to gain traction with so many competitors?
EP: It’s definitely a noisy space, but we’ve got some unique advantages. First, our private key solution is best in class; it’s a secure, recoverable self-custody wallet with no seed phrase, making it easier than ever to own your crypto. Nobody else is integrating directly with DeFi protocols, making DeFi yield as easy as a single tap. We’ve integrated with the best fiat ramps available for fast, convenient bank transfers.
IZ: You last announced a raise in January 2022, not long after the crypto market peak. How challenging was it to raise funds this time around in comparison? Can you comment on your future fundraising plans?
EP: There’s no question that the fervour of 2021 has died down, largely due to the repeated catastrophic failures of centralised custodians in the crypto space that sent shockwaves around the industry.
But web3 funding deals are still happening, investors with conviction are still pouring capital into the space. The innovators who are building lasting, scalable, valuable technology are still being supported, and we’re glad to be among them.
Investors are still out there, they’re just being much more selective with their portfolios compared to the cash-rich days of 2021. The best companies, meaning those that demonstrate sound business fundamentals, who deliver real value to the marketplace, and who show a pathway toward sustainable growth, are the ones that get attention from investors. I think a better way to phrase today’s fundraising environment is that growth and hype alone are no longer enough to attract investors – you have to prove you deserve to still be in business.
IZ: Giddy recently integrated with Robinhood Connect. How did this partnership come about and what impact do you think it can have on your business outlook/valuation.
EP: We sat down with the Robinhood Connect team at ETH Denver and immediately hit it off. Robinhood Connect fits perfectly in our platform because we’re obsessed with user experience, and so are they. We’re happy to be one of the earliest wallets to integrate Robinhood Connect and see it being a major channel for onboarding going forward.