🥷 Stealth no more

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Coinbase CEO Brian Armstrong is not thrilled with the lack of support for yield-bearing stablecoins, which would earn users interest. 

He wants stablecoins to get something akin to “onchain interest,” which he likened to earning interest in a checking account (though that’s practically nonexistent for the most part nowadays). 

Armstrong’s argument is to incentivize banks and crypto to share interest accrued with users. 

Sounds good to me. 

Meanwhile:

• Bitcoin’s up 2.3% this morning, topping $83,000. ETH’s up 2.7% to $1,800. 

• DeFi TVL sits at $96B, a 3.9% increase over the past day, per Blockworks Research.

• DEX volume sits at $6.2B, a 29% increase in the past 24 hours.

⚙️ Shifting gears

There’s a new institutional-grade DeFi yield platform in town, we’ve exclusively learned. 

Upshift, which aims to give retail access to yield opportunities typically available for hedge funds, is being spun out of prime brokerage firm August and is coming out of stealth. 

The platform already has around $250 million in deposits, the team told me.

“If you look at the value prop today, DeFi’s super complicated,” Upshift CEO and August co-founder Alexandre Elkrief explained to me. 

“It's across three main axes: It's fragmented, it's hard to access, and it's a lot more complex to manage fragments, obviously, because we've gone from one chain to a gazillion chains. It's clear that it's not gonna stop today. [August supports] 15 chains, right? And so the retail user is not gonna rebalance their position across that many different opportunities, and it's becoming a full-time job,” Elkrief continued.

Elkrief and fellow co-founder and CEO of August, Aya Kantorovich, are no strangers to this space. Kantorovich was part of the founding team for brokerage firm FalconX, and Elkrief spent some time running the books for a DeFi hedge fund. The two initially started working on Fractal, later rebranded as August, and began fundraising right before the FTX collapse and closed the deal “the week that FTX collapsed,” Kantorovich told me.

She admitted both founders felt like they lost a couple of years off their lives after that, but it also solidified their belief in the need for both an August and an Upshift in crypto.

And so far, their work has paid off. August raised $10 million in a round led by Dragonfly earlier this month. It focuses on giving institutions DeFi access by connecting them to networks like Aave or Uniswap, and facilitates roughly $7 billion in monthly volume. 

Upshift, which has been in beta since last September, is focused on the retail side of things. That was a focal point for me given that we haven’t seen retail activity levels return just yet.

“Our hypothesis is that it’s a question of complexity,” Elkrief said. Retail’s really been forced to focus on things like memecoins, which are obviously out of style now. 

And this market is focused on “rewarding simple products,” Kantorovich noted.

“If you just zoom out for a second, the value proposition of yield is generally the onboarding mechanism for all types of new financial products. Crypto aside, Marcus by Goldman Sachs started attracting users by having a 4% savings account, right? … We're giving every asset issuer the opportunity to augment their product with a yield-bearing option.”

Essentially, asset issuers can then partner with hedge funds or managers to curate and package the product to offer yield. Hopefully, on the flip side, also driving onboarding to said product. 

While the August roadmap is about integrating a custodian, Elkrief said, Upshift’s going to become a product by itself. The team is “working through” the motions to split the August and Upshift teams apart currently, with Elkrief taking the helm. 

Thanks to the lack of regulation currently, Upshift isn’t something that can be offered to US users, though both Kantorovich and Elkrief are eager for the day that path opens up.

But for now, Upshift’s focused on “making some noise” and getting to $1 billion in deposits. Then, in the next 18 months, the plan is to hit $2 billion or $3 billion. 

Easy peasy.

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• Circle’s IPO is full-steam ahead, and the stablecoin issuer is eyeing late April, Fortune reported.

• Multiple states have dropped their staking suits against Coinbase in the wake of the changing regulatory tide. 

• A new Reuters report claims that a Trump family-linked entity replaced two of World Liberty Financial’s co-founders as the controlling parties.

🧠 Understanding the enemy

There’s no denying that North Korea’s Lazarus Group is a threat, especially as crypto works overtime to be seen as a safe and acceptable industry (sorry degens, there are still corners for you). 

Paradigm’s samczsun highlighted the good, the bad and the ugly in the month since the Lazarus Group pulled off the biggest digital heist in history. Oof, that hurt to write. 

The upside is that only one bad actor (which, I guess on the downside, is North Korea) has been so successful in stealing funds. 

Unfortunately, the team would later find out that the group had managed to compromise SafeWallet’s own infrastructure, deploying “a malicious payload specifically targeting Bybit. This was a level of sophistication that no one had considered or been prepared for, and it was a major update to many of our threat models.”

But there are ways to stay safe, samczsun noted. He urges caution across the board for individual folks like us. And organizations should “install Mobile Device Management (MDM) and Endpoint Detection and Response (EDR) software” on work devices for security prior to any hack and visibility afterwards. 

Samczsun’s tune was slightly more optimistic than Paradigm advisor ZachXBT, who earlier this month said the effort to try to freeze funds tracked to the Bybit attack had been an “eye-opening” experience. 

“The industry is unbelievably cooked when it comes to exploits/hacks,” he wrote. 

Samczsun’s holding out hope that the FBI’s unit dedicated to both tracking and preventing DPRK attacks is strong, an encouraging sign given his recent work with them.

Whether or not the FBI paired with super sleuths such as ZachXBT and samczsun — alongside members of Seal 911 — is enough remains to be seen.

It’s a builders market. It will always be a builders market. 

Permissionless IV is for the ones deep in the code — building infra, launching new systems, and reshaping how this space runs.

🎤 Speaker apps are open — got something that matters? Say it on stage.

💻 Hackathon is live — $100K+ in bounties. Builders get in free.

June 22–26 | Brooklyn

On our minds: Solana Policy Institute