EtherFi: Banking on Growth

Key takeaways

• EtherFi is the leading self-custodial neobank. EtherFi Cash processed $134M of card spend in the last 30 days, about 4.5x Plasma One ($30M) and nearly 50x Ethena Pay ($3M). It has grown about 10% a month this year, and EtherFi has started cross-selling into subscriptions, credit and trading.
• ETHFI’s programmatic buyback is live, but it isn’t a typical buy-and-burn. EtherFi has bought back 2.15M ETHFI since September, a pace of roughly 1.7% of total supply annualized. For now, the buyback works as reinvestment in growth rather than net buy pressure, with all of it going out as user cashback.
• DeFi legos let EtherFi add higher-margin products quickly. Loans on Cash’s Aave V4 instance have nearly doubled to $45M since August, and swaps earn about $6k a week. Borrows and swaps bring in $1.9M a year and memberships $1.1M. Together that’s about $3M, or 25% of Cash’s $11.9M annual revenue net of cashback.
• The next lever is idle balances. Converting the $48M of idle stablecoins in Cash accounts to ether.fi USD, issued through Ethena’s whitelabel, could add up to $2.2M a year, 18% on top of Cash’s $11.9M revenue net of cashback.
• The onchain banking sector is still small, and localization is key to expanding beyond crypto-native users. EtherFi already supports local on- and off-ramps in eight currencies, but that is table stakes. To win users in new markets, it must deliver a better product, such as yield in local currency (an idea Ethena has floated) or multi-currency cards like the ones Plasma is building with Stripe.
• ETHFI is the cheapest neobank token in the cohort despite leading the sector. On neobank sales it trades at 21x, against 109x for XPL, and our scenario analysis points to $1.16, about 79% upside from $0.65. The risk is that Plasma One and Ethena Pay are growing faster from a smaller base, supported by higher cashback rewards.