EtherFi’s Next Act: Stocks, Loans, and Global Banking | Mike Silagadze

EtherFi started as a staking yield layer and expanded through DeFi strategy vaults and a crypto credit card before arriving at what founder Mike Silagadze calls a third generational step. The new version adds investing and borrowing to the existing saving and spending functions, letting users hold tokenized stocks via xStocks, tokenized metals including gold and silver, and major crypto tokens inside a non-custodial smart contract safe. Asset selection is tied directly to what is enabled as collateral on an integrated Aave V4 market, with EtherFi acting as risk curator and setting liquidation parameters. The revenue split from that market is 80 percent to EtherFi and 20 percent to Aave, established through an Aave governance proposal, and the market runs on Optimism using a hub-and-spoke architecture.

Stablecoins deposited into EtherFi automatically earn approximately two to three percent interest through the Aave V4 market if users opt in, and users can borrow against their entire portfolio including stablecoins, crypto, and tokenized assets at a dynamic DeFi rate Silagadze expects to beat any traditional finance loan. He gave the example of looping tokenized S&P 500 tokens by borrowing against them and buying more within the app. The lending market uses two thresholds rather than the single threshold common in other DeFi protocols: a borrowing limit designed so that even a 40 percent price move will not trigger liquidation, and a separate higher threshold where liquidation actually occurs. Silagadze said that out of approximately 200 million dollars in EtherFi vaults, only a few thousand dollars worth of assets have ever been liquidated. Borrowing is restricted to EtherFi Cash users while depositing is permissionless, including for financial institutions and treasury partners.

EtherFi plans to support approximately 70 fiat currencies including Indian Rupees and Colombian Pesos, with deposits from Tron, Solana, and other networks, and aims to offer fiat on and off ramps with no fees or the lowest fees available. Users will be able to deposit salary directly into a named EtherFi account and access all banking functions non-custodially. Silagadze noted that on-ramp fees have already fallen from roughly three to four percent two years ago to around 25 basis points today, though he said packaging third-party aggregators remains expensive and creates poor user experience through layered fees and KYC friction.

Silagadze described the current product as too crypto-forward for mainstream users, saying the first version was suitable for perhaps a few hundred thousand crypto-native users, the current version could reach tens of millions, and a future version could reach one billion. A brand refresh planned for summer is intended to make the product feel less like a DeFi tool. An autumn release will add a social layer including a feature where sending money to someone creates a fully functional account they can immediately spend from.

EtherFi's long-term goal is full vertical integration of the payments stack including obtaining a bank charter in one or more regions. The stated end game is a crypto-to-crypto payment rail where merchants use point-of-sale terminals and transactions settle directly in stablecoins or crypto assets. Silagadze acknowledged that Wallet Connect and Circle have attempted this without sufficient adoption and that compliant execution is very hard. He said pure crypto-to-crypto payments replacing on-ramps is at least a couple of years away and requires near-complete crypto ubiquity, noting that even Amex with approximately 100 million accounts barely has enough scale for merchant terminal integration.

EtherFi has shifted from discretionary monthly buybacks to programmatic buybacks where every product action automatically allocates a portion of revenue to purchasing the ETHFI token, citing Hyperliquid and Pump.fun as models where this works because it is built into the product rather than decided by committee. Silagadze acknowledged the ETHFI token has underperformed despite the business being, in his words, a hundred times better than when the token launched, and said improving that is something they are working on. EtherFi is also working with Optimism on a privacy layer to hide balances and transactions by default, since anyone who knows a wallet address can currently see all on-chain activity. Silagadze said a native privacy layer is the single most valuable thing Ethereum could add at the network level.

Silagadze put the neobank industry at 300 billion dollars in annual revenue, roughly 300 times the size of DeFi, and described that gap as the core opportunity EtherFi is pursuing. He dismissed most existing crypto consumer products including centralized exchanges, prediction markets, and memecoins as variations of casino products, and argued that building a genuine personal finance product is significantly harder than launching speculative ones.