E185: Ethena CEO: This $7B Crypto Company Just Launched An App That Pays You To Spend Money

Guy Young discusses Ethena Pay's goal of creating a super app designed to simplify financial management for users, eliminating the need for them to understand cryptocurrency. The app aims to attract over 100 million users by offering a dollar with yield in a mobile format, positioning itself as a more sustainable alternative to traditional cash back programs.

Young asserts that the future growth of cryptocurrency will hinge on integrating crypto into existing user experiences rather than requiring users to engage with products in traditional ways. He highlights the volatility of cryptocurrency, which affects revenue generation, and notes that decentralized finance (DeFi) is becoming a more efficient backend for fintech applications.

He claims that stablecoins can enhance backend efficiency by 90 to 95% compared to current fintech solutions, emphasizing the appeal of instant, unrestricted stablecoin transactions. However, he warns that merely offering high yields is not enough; the overall user experience must be cohesive to attract and retain users.

Athena's strategy involves controlling the entire process of stablecoin issuance, yield generation, and user experience, thereby reducing reliance on external partners for product distribution. Young points out that the total value locked in DeFi has stagnated since 2021, indicating a contracting market, and he observes that existing crypto finance products have not yet tapped into their full user potential.

The app plans to initially target 20 countries, focusing on identifying the first hundred true fans in each region to catalyze growth. Young contrasts Athena's strategy with Tether's emphasis on emerging markets and critiques the current infrastructure for stablecoin on-ramps as inadequate for widespread adoption. He also mentions that Ethena has expanded its team by 25% in the past six months to bolster product development.

Ethena has launched an app that claims to offer the best cashback in the market, supported by a substantial budget. The company has rapidly scaled its assets under management to $15 billion in less than two years, providing users with a structural advantage in the multi-currency yield space, where competition remains limited.

The cashback program is distinctive because it has partnered with Scroll to finance cashback expenses, changing the financial dynamics of its offering. Unlike many cashback programs that operate at a loss, Ethena generates revenue primarily through interchange fees, foreign exchange fees, and the spread on deposits. However, the ability to lower FX fees can vary by jurisdiction, and many advertised yields may come with fine print that restricts actual user benefits.

The user experience with stablecoins for payments is described as seamless, although trust in crypto applications is generally lower than in established exchanges. Ethena has built a strong reputation, having avoided major issues in the crypto space, which enhances user trust. The founder emphasizes the importance of significant communications over frequent updates.

Currently, Ethena's USD supply is over 50% down from its peak last year, and its product is sensitive to market cycles, which can influence performance based on interest rates. Despite these challenges, Ethena aims to rank among the top three crypto-native providers within the next six to nine months and plans to grow its user base to over 10 million in three years. The key performance indicator for Ethena Pay is the volume of card spending, which currently averages around $3 million daily.