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Leveraging the Potential of Decentralized Finance

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March 16th, 2022




Alexander Antic

Since its inception in 2017, the crypto platform BlockFi has received accolade after accolade. From being named one of Forbes’ 50 fintechs to watch in 2021[1] to generating just shy of USD 100 million in revenue in 2020,[2] its rise has been stratospheric. But what is behind BlockFi’s success? And how does it stack up against its competitors? With rumblings of an IPO on the horizon for 2024, now’s a good time to learn more about the opportunity offered by investing in this mature, high-quality startup before the scramble of an oversubscribed IPO. After all, investing in a company with an established concept before they list publicly could not only deliver exciting results but also provide a boost to an existing investment portfolio.

From Wallets To Credit – BlockFi’s Offering Revolves Around Crypto

One of BlockFi’s primary products is a zero-fee crypto wallet enabling users to store various cryptocurrencies and stablecoins – and yet, with the company’s express mission being to “redefine banking”, this is but one of the services on offer.[3] There’s also a rewards credit card, a trading account, loans, and an interest-bearing savings account – all connected to crypto in one way or another. For example, the credit card offers its rewards in Bitcoin, and customers taking out loans with BlockFi can collateralize them against their existing crypto holdings. Its portfolio of services has seen strong take-up, with more than one million customers at the end of 2021.[4] These customers appear to be hungry for innovation, too – even though the credit card was only launched in June 2021, it has already garnered more than 70,000 customers in the past 6 months.[5]

DeFi Is Replacing Traditional Banking As Crypto Continues To Boom

BlockFi is consciously positioning itself as an alternative to traditional banking providers by integrating cryptocurrencies into all its products. As crypto has a total global market cap north of USD 1.7 billion as of February 2022,[6] there’s an enormous market to tap into – hence the enormous amount of interest from prospective customers and investors alike. Moreover, this number is only set to grow, with the crypto market forecast to see a compound annual growth rate (CAGR) of 30.2% from 2021 to 2030.[7] This comes against a backdrop of increased interest in “DeFi”, “decentralized finance”, or, in other words, financial services offered via the blockchain rather than conventional intermediaries.[8]

BlockFi Leaves Coinbase, Its Main Competitor, In The Dust

With the crypto finance space attracting so much attention, it’s no surprise that BlockFi has various competitors, including Abra, Ledn, and, most notably, Coinbase.[9] Coinbase focuses on buying, selling, and trading crypto without offering the broader banking products that BlockFi provides,[10] and yet BlockFi’s minimal fees give it the clear edge over Coinbase in terms of its crypto trading services.[11] This is reflected in its revenues, with BlockFi outpacing Coinbase’s turnover by around three-quarters of a million dollars over 12 months (as at February 2022).[12] Coinbase went public in April 2021 and, after an initial spike in value, has experienced its fair share of price volatility.[13] Contrast this to participating in a company before its IPO (such as BlockFi). The latter means that investors are less likely to experience a pricing rollercoaster often seen in the early stages of a firm’s listing.

BlockFi’s Financials – Multi-million Revenues And A Billion Usd Of VC Funding

BlockFi’s solid customer base has driven strong revenues for the firm, estimated at USD 475 million for 2021, up from a paltry USD 5 million in 2019 and USD 120 million in 2020.[14] The venture capital community, too, has been keen to throw its support behind BlockFi’s answer to traditional banking. The company raised more than USD 1 billion to date across 15 funding rounds, from backers including CoinBase Ventures and TigerGlobal.[15] With whispers of an IPO on the horizon for 2024, BlockFi looks to be on a sound financial footing moving forward.

Five Ingredients In BlockFi’s Recipe For Investment Success

BlockFi appears to have hit on a recipe for success – and it’s one with five critical ingredients for future investors. Three of them lie in its robust business model (1), cutting-edge technology platform (2), and large customer base (3), which have fueled its spectacular growth to date. In fact, thanks to backing from top-tier investors (4), BlockFi’s financial and strategic course looks set to hold firm going forward, with the company predicted to hit USD 1.4 billion in revenue by 2024.[16] Finally, investors will be able to enter at a last-twelve-month multiple which is a good deal lower than the current peer median of 12.6x – despite BlockFi’s growth rate being faster than that of its competitors.

Investing In The Future Of Banking

Whether DeFi (a.k.a. decentralized finance) eventually replaces conventional finance altogether or ends up acting as a counterpart to it, companies in this space will play a role in shaping the future of banking – and BlockFi is one of them. Thanks to Stableton, investors could potentially add themselves to a circle of elite backers, sharing in BlockFi’s success while avoiding the risks of an early-stage black-box investment.

Contact Stableton Or Sign Up To Explore Our Investment Opportunities

In the past, accessing the opportunities such as BlockFi meant seeking early access through venture capital funds (which, once well-established, might not even be interested in your commitment). In addition, it involved high investment minimums, cumbersome paperwork, scarce information (often not even knowing what you will be investing in), and long holding periods. Today, there is an alternative. Accessing promising businesses via late-stage investment and pre-IPO investments is increasingly popular. For one, investors know the name of the company they are investing in. Secondly, as in the case of BlockFi as the market leader in the crypto-based DeFi space, the product-market fit has already been established, and the path to profitability is clear. To hop on an investment at this stage means a lot of upside potential, while the risk level stays relatively moderate. Stableton is Switzerland’s leading provider for access to late-stage venture capital & pre-IPO Investments to smaller qualified investors. Our mission is to help investors get access to the otherwise secluded private investment market. With a minimum of CHF 10’000, this type of investing should be considered as part of a portfolio. This article only scratches the surface of the opportunities late-stage VC and pre-IPO investing present. Contact your Stableton representative now to learn more and find out about opportunities that exist right now.

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