Lava launches Bitcoin-backed USD yield product offering 7.5% returns

We'll talk to you soon. Have a good one. Amen. Um, up next we have Shaison from Lava coming into the studio with some exciting news. He's in the reream waiting room. We will bring him in to the TB pin Ultra Dome right now. Play some sound cues. How you doing? Good to see you. It's been too long. Great to catch up.

Yeah, I'm great to see you. Give us the latest news. I got to warm this mallet up. What you got for us? Camera is always pretty horrible when I'm on TVPN for some reason. Yeah. What's uh Yeah. We'll we'll we'll get we'll get Ben and the production crew to give you the guide to your first TV.

It's especially rough Carl Pay. We had a pretty cinematic setup wired in. So, you're in you're in 1980s mode, but you're too locked in. You're too locked in. You know, there's nothing wrong with a laptop call in. We love it. Yeah. I'll have to get something better next time.

Um, so today we announced the race, but even more importantly, we announced the first way for people to earn yield on their USD backed by Bitcoin.

So basically, historically in crypto, you've been able to earn yield on your cash, your stable coins, but you've had to engage, if you really wanted to do it, you had to engage in all these complex crypto financial engineering schemes.

you know, Terra Luna, which was a big blow up that happened a couple years ago, or you have to lend your money on these platforms where the collateral is a basket of altcoins that you know could get they're not as liquid. They're very volatile.

Lava is the first way for you to earn yield on your cash backed only by bitcoin. So the way it works is you can deposit USD from fiat from stable coins to Lava and you earn yield by Lava then making Bitcoin back loans on the other side of that. And unlike banks basically this is what banks do with your money, right?

You give them cash, they make loans. Uh Lava's loans are all over collateralized by Bitcoin. Bitcoin is the most liquid asset in the world. It trades 247. It's very safe. Um all loans can be instantly liquidated in the case of default so that you as a lender are always protected and safe. Uh banks basically take 99.

7% of the returns they get for themselves. Lava just gives that back to you. So that's why our yield is so high. It's double the next best savings account that you can get right now. Um and the nice thing about Lava is that it's available all around the world.

So even if you're someone in Brazil for example, you can use Lava, get cash and earn 7 and a half% yield on it.

Obviously Lava has a lot of products for Bitcoiners, but this is mostly for people on the other side who have dollars and are not all exposed to Bitcoin, but want to earn a safe um and high return on their dollars. What's uh what's push back? Have you gotten any push back from from users yet?

I think when people see yield that's higher than the than the than you know the Fed's funds rate they're starting to get a little wary you know intuitively when I see 7 and a half% I think 7 and a half% risk I think seven and a half% gain but also seven seven and a half% risk I feel like risk and and return should be directly correlated in a functioning system but uh how do you think about it yeah I mean that's why I'm here there's a lot of education that we need to do and there will a lot of um trust that we'll need to build with users over time, right?

So I I don't think that exactly just because it's seven and a half% that means it's a lot more risk than the Fed funds, right? I think it also shows that on the other side the Bitcoiners are willing to pay a higher yield for borrowing against the Bitcoin in the market. So fully efficient right now. Yeah.

Um you know the yield might compress over time as well.

yield you know um might but here are some things I can talk about the safety right like one the loan book has never had any losses when you lend your when you deposit your money into cash there's some level of FDIC insurance but if you get past that then you know you're also just taking on the risk with the bank right the bank is making under collateralized loans with lava you're making fully over collateralized loans double collateralized and because Bitcoin is so liquid as a lender you know that you know the Bitcoin can be sold at any time so that for the cash that you're lending, it will never go underwater.

So, there's a lot of things that we're also going to reveal um release over time that can help people feel way more comfortable with the safety. So, on one side, we've had a lot of Bitcoiners that recently saw this product that are not all in on Bitcoin. They totally get it.

You know, Bitcoiners have been saying for a long time that the best risk adjusted rate of return you should be able to get on your cash is by lending against Bitcoin. So for a lot of these people, these are our early adopter user bases. They've already just been like, you know, we've had a ton of signups.

They've been coming into this product. They already get it. They already understand the security. They understand uh Bitcoin's liquidity and how, you know, Bitcoin market structure works, how selling Bitcoin works, how liquidation works.

So they've been really excited because there are Bitcoiners that understand Bitcoin that might have, you know, 60% of their net worth in Bitcoin, but the other 40% in cash. Um, and it's almost like this like barbell strategy, right? where your long-term assets are in Bitcoin.

It's like the best long-term savings asset, but then with Lava now, you have this shortterm, you know, liquid way to deposit and earn yield on cash. Um, and you can always instantly withdraw as well. So, I think is your business Yeah.

I is your business uh helped by a lack of volatility in Bitcoin or are you are you hurt if Bitcoin becomes really volatile? It's been really stable this year. feels like it's just kind of hanging out around 110 or so, I think. Um, and it certainly has felt like a like a lot less volatile time with Bitcoin specifically.

Um, is is is that is that good for your business or does it not really matter? Walk me through the relationship of volatility to your business? I mean, our business changes in different maybe I can just explain how our business looks in in different worlds of Bitcoin, right?

Right now, I think if Bitcoin were to go down in price over the next, let's say, few months, we actually might see a lot of increased borrow demand because when Bitcoin is down, people don't want to sell their Bitcoin because they're like, "Well, it's kind of down. I I predict that it will appreciate over time, right?

So, they actually will borrow against their Bitcoin. " And when Bitcoin is up, maybe in a couple of years if Bitcoin really gets to where I think there might be a time where people might actually I mean I'll never sell my Bitcoin. A lot of our users never want to sell their Bitcoin.

So they'll probably still borrow against their Bitcoin. But there might be some people who might say let me take some you know let me let me sell some of my Bitcoin.

Then some of those people instead of borrowing against their Bitcoin, they might actually sell their Bitcoin and then maybe even use that extra cash they have and deposit it into this this yield product. Right? So we've kind of built a system where no matter how you feel about Bitcoin, Lava is a place for you.

You know, if you're if you're more cash heavy, you can use our yield product to earn yield on your cash. If you're more Bitcoin heavy, you can use Lava to hold your Bitcoin and borrow against it. So that we have, you know, a feature for both views that people have about the world and about Bitcoin. Okay.

Anything else, Jordy? How's uh how's how's kind of the growth of the loan book been overall over the last few m few months? I know last time we talked it sounded like it was pretty insane.

I mean, yeah, it's been growing exponentially and I think over um the next few months we this this next month for us is going to be big. We're making a big uh loan upgrade as well and lowering rates.

So, anyone who borrows against their Bitcoin today will see a substantial decrease in their interest rate this month automatically. Um, so we're about to release a a big announcement. Maybe I'll come on back on TVPN for that as well. Love it. But it's been great.

I think there's been a lot of people who have borrowed against their Bitcoin to uh do a lot of things that I didn't expect. You know, buy houses, buy cars. The the home buying use case has been one that I was particularly surprised to see. Yeah.

Is there more uh is there a rough way to think about the interest rate and uh over collateralization requirements? Is there sort of a back of a back of the envelope that you give people who are thinking about onboarding? So I tell people to start their loan with 50% LTV.

So if they're borrowing a million, put up $2 million of Bitcoin. Yeah. Right. And um with Lava, you will we guarantee you the best rate. So if you come to Lava, you know you're getting the best rate across any other platform on the market. So confident on that.

One thing is if you actually really look at the rates on lava today and kind of consider like capital gains tax to you really have to believe that Bitcoin will just appreciate 5% compounded for it to make more sense for you to borrow against your Bitcoin versus selling your Bitcoin which I think anyone holding Bitcoin uh probably believes it's going to appreciate more than 5% or compounded.

That makes a ton of sense. Well, congratulations on the progress so much for stopping by. We'll talk to you soon. Cheers, dude. Have a good rest of your day. Up next, we have Victor from Synthesia, another AI video generation company. First AI company we've ever spoken to.