“Re-staking is just the next generation of staking, I don’t think they are separate categories. We are the next-generation version of Lido.” Interview and article by Wendy, Foresight News. Interviewee: Mike Silagadze, founder of ether.fi.
In less than six months, the TVL of ether.fi has grown rapidly from around $100 million at the beginning of the year to over $4 billion, leaving founder Mike Silagadze amazed. “The pace of development in the re-staking market has exceeded everyone’s expectations, including my own.” Mike Silagadze admitted to Foresight News that such growth has brought both excitement and pressure to their small team of 12, and they plan to double the size of the team within six months.
In the past few months, the crypto community has witnessed the boom of the re-staking market. At the same time, the risks associated with re-staking have been widely discussed, and airdrops from related projects have sparked controversy.
At this special moment, Mike Silagadze sat down for an interview with Foresight News in the Cayman Islands.
After more than ten years in the field of edtech, Mike Silagadze transitioned into the Web3 field, but for him, it was not a sudden change but a natural progression. From buying Bitcoin for the first time in 2011 to selling his first startup company in 2021 and starting a new entrepreneurial journey in the Web3 field, Mike Silagadze, with his entrepreneurial, venture capital, and crypto fund management experience, believes that the current Web3 field, despite being filled with hype from capital inflows, is also “much more interesting.”
Through the three main products offered by ether.fi, he hopes to keep more people in the crypto field, eliminating the need for them to return to traditional finance.
The “crazy” re-staking market and the vigilance for systemic risks.
Foresight News: In a recent interview, you said, “99% of people should not start a business, or even join a startup company,” unless they have a great passion for something. But you have been on the entrepreneurial path for over a decade, continuously starting new ventures. What kind of passion led you to choose to transition from Web2 to Web3? Why did you think re-staking would be the next big thing when you launched ether.fi?
Mike Silagadze: Entrepreneurship is indeed very difficult and comes with a lot of pressure. For most people, entrepreneurship may not be a suitable career path because it consumes your entire life and the chances of success are very low. So I think most people may prefer a more normal and secure career that gives them more predictability. In my opinion, this may also be a good thing because if everyone is a bit crazy and takes huge risks, it may not be good for society as a whole. So I think it’s a good thing that there are relatively few people who have the risk tolerance for entrepreneurship.
I have been involved in the crypto field since 2011, either investing or doing something. I read the Bitcoin whitepaper and was very excited about the concept of Bitcoin as a sovereign currency that allows individuals to have full control over their wealth, rather than being subject to a government that can seize or control their assets. So I think it is a very important positive force for the world.
At the same time, I was also running a startup company called Top Hat, an edtech company that I started right after graduating from university. During that time, I was exploring and experimenting in the crypto field while running the company. I operated that company for about 10 years, growing it to around 500 employees and generating good revenue, and then sold it in 2021.
When I sold the company and decided to enter the crypto field full-time, I saw that staking was the largest category in DeFi, with companies like Lido, Rocketpool, and Stakewise being very active in this field. Staking was clearly the largest category, and I saw an opportunity to build the next-generation staking protocol with built-in re-staking functionality (thus, ether.fi was founded).
But honestly, I did not predict that things would become so crazy, and I did not expect this category to grow so fast. I think it took everyone by surprise, including ourselves. I believe it is an opportunity to reshape this huge category in DeFi, but the speed of change is astonishing to everyone.
Foresight News: You used the word “crazy.” I checked the data before the interview, and your TVL has exceeded $4 billion. As a team of 12 people, do you feel more excitement or pressure?
Mike Silagadze: Both exist.
What I mean is that we feel a great sense of responsibility towards the hundreds of thousands of users who trust us and entrust their assets to us. This is a responsibility that we genuinely feel. But at the same time, we are also very excited about being able to build such an important venture with such a small team.
I would say that what excites us the most is the next phase of development for ether.fi. For us, this means becoming a more consumer-oriented crypto company.
We want to create an integrated suite of applications where multiple products work together to make DeFi more accessible to the general public. DeFi is currently very complex and difficult for ordinary people to use. Even doing basic things in DeFi requires too many steps and knowledge. What we want to do is make it simple and ultimately enable people to stake, invest, and spend their cryptocurrencies in real life through three integrated products.
Foresight News: Based on your previous public statements, it seems that ether.fi will focus solely on the Ethereum ecosystem. Although theoretically re-staking can be applied to all PoS chain mechanisms, do you have plans to expand your business to other chains?
Mike Silagadze: We have recently expanded, or rather announced that we will expand to SAFE, which is another L1. It is an EVM-compatible L1. But it is still Ether, and we are just bridging Ether to SAFE. I don’t think it goes against our principles to bridge our staked tokens to Solana or other chains, but we won’t stake SOL tokens or similar things.
What I mean is that we are called ether.fi, so we are very committed and bullish on the Ethereum ecosystem. At the moment, that is still something I firmly believe in because Ethereum is still where most economic activity happens.
I think we will be very focused on Ethereum.
Foresight News: In terms of users, what expansion strategies will you adopt? I noticed the prominent keyword “institution” on your website, but you just mentioned that you aim to become a more consumer-oriented company. So, in terms of future business expansion, will you focus more on institutions or retail investors? And once more institutions participate, what impact will it have on the entire re-staking market?
Mike Silagadze: Both retail and institutions are very important. I don’t think you can only serve one or the other. In fact, I think they complement each other. So for us, it is very important to be able to serve both types of customers.
That’s why we have a self-serve retail business, which is part of our staking protocol. Most of the participants in this market are individuals, with thousands of participants being smaller retail investors, but most of the ETH comes from a few large stakers. This includes individuals like Justin Sun, who has invested $500 million in ether.fi, which is great. We believe that individuals like him can also be considered institutional investors to some extent.
As a professional translator, I would like to provide an accurate and fluent translation of this news article, while preserving the proper nouns and all references. Here is the translation:
Title: Mike Silagadze: Staking and Re-staking Are the Next Generation of Staking
In terms of risk, I believe that the participation of institutional investors can indeed pose a challenge in some aspects because re-staking is much more complex than staking. Running re-staking nodes, validator nodes, and managing different re-staking services is quite complicated. Compared to the traditional small individual stakers, there is much more work to be done to provide these services for institutional investors.
Furthermore, from a risk management perspective, it is also complex. In other words, it is complicated for the people deploying ETH to understand the risks they are taking. It often leads to ETH being held by a small number of holders, making everything more centralized.
Therefore, I believe that re-staking does bring this danger. This is something we are very concerned about, and we have been running a project called “Operation Solo Staker” from the beginning, which allows small stakers to participate in the Ethereum ecosystem. We plan to invest more in this area in the future.
Foresight News: In both the staking and re-staking fields, there are many popular projects, such as Lido and EigenLayer, as you mentioned. How would you describe your relationship with them? How do you differentiate yourself in this market?
Mike Silagadze: I actually think that re-staking is just the next generation of staking. I don’t think they are separate categories. Ultimately, all staking will be re-staking. So, in a way, I think we are the next version of Lido.
I think the Lido team and project have done an excellent job in driving the development and growth of the staking field. They have set high-quality standards for this ecosystem. I think they will continue to play a role in this field. The choices Lido has made allow others to use their staked tokens to build re-staking projects. For example, I think projects like Kelp or Eigenpie or some re-staking projects basically adopt Lido’s staked tokens, re-stake them, and create a re-staking project around them. We chose to start from scratch and only do native re-staking. So that’s why I would describe us as a next-generation staking protocol because we offer both staking and re-staking services.
So why would users choose us over Lido? I don’t think using Lido is a bad decision. As I said, I think Lido is a great product, but by using ether.fi, they take on additional risks. They take on the risk of re-staking, but in exchange, they get more rewards from staking and re-staking.
So that’s the trade-off with Lido. Objectively speaking, Lido has lower risks and lower rewards, while ether.fi has higher risks and higher rewards.
Foresight News: Staking and re-staking are just a part of your business, although they seem to be the core business at the moment. Can you introduce other products you are currently focusing on or planning to launch? You have publicly stated that your mission is to help 100 million people enter the crypto field. How do your products contribute to achieving this mission?
Mike Silagadze: Our recent focus is on three products: ether.fi Staking, ether.fi Liquidity, and ether.fi Cash. Staking is the best way to hold ETH. You hold your ETH, deposit it, and earn rewards from staking and re-staking. Ether.fi Liquidity is a DeFi yield aggregator. It is a great way to invest your ETH in DeFi and earn higher returns. The product has already been launched, and there are over $550 million in deposits. It is currently the largest DeFi yield aggregator in the crypto field. The third product is ether.fi Cash, which is essentially a spending account. Similar to a Visa credit card, it allows you to spend your cryptocurrency in real life. With these three products, you can save, invest, and spend your cryptocurrency without the need to cash out, such as buying coffee.
Our idea is that you can stay in the crypto field and never have to go back to traditional banks. You can do everything you need to do in your real life in a crypto-native way.
Airdrops – The “Art” of Balance
Foresight News: I would like to ask a question that the community is concerned about, regarding airdrops. Recently, some airdrops in the re-staking field have sparked controversies about fairness. This is a challenge that almost all airdrops may face, which is the “art” of setting the minimum reward. In the community, debates like “re-staking is a game for big players” and “setting the minimum too high benefits whales” always arise. How do you balance this issue from the perspective of project teams? “Regular users” who neither have large deposits nor a significant amount of funds tend to be the most affected. Is this issue unsolvable?
Mike Silagadze: There is no perfect way to do airdrops, and the reality is that it is impossible to satisfy everyone. However, we have set a minimum threshold. In our airdrop, I remember the minimum was 175 tokens, which was worth about $500 to $600 at the time. This felt like a reasonable amount because it could be a substantial income for some people.
We set a minimum activity level, which actually filters out about 25,000 Sybil wallets (Sybil refers to users controlling multiple wallets to get airdrop rewards). This was mainly done to airdrop to actual users of ether.fi. We chose to do a linear airdrop above the minimum threshold, meaning the more points you have, the more tokens you get. We believe this is fair and necessary because some of our DeFi integration partners’ settings require us to do a linear airdrop. Otherwise, many markets would become unstable.
We kept (the airdrop rules) simple. Honestly, I think that is one thing we did right, not trying to make it too complicated. Because attention spans in the crypto world are very short. It becomes hard for you (to get users) to do anything that requires thinking.
From Web2 to Web3 – Racing Against Time
Foresight News: Next, let’s go back to you. Your career is very interesting. Now you are an entrepreneur, but at the same time, you manage a fund and serve as a partner in the venture capital firm Ripple. In the crypto ecosystem, you are not only building new products but also managing funds and investing in startups. How does this multi-role help you build better products or operate startups? After all, you have perspectives from different positions.
Mike Silagadze: I think (these roles) are closely related, and the fund has actually transformed into ether.fi. The hedge fund we operate, Godsey Finance, is an ETH staking fund. So it naturally transformed into ether.fi. We are still operating the fund, but it is essentially just a pass-through to get into ether.fi. I mean, it’s just a simple way for us to get into ether.fi.
In terms of venture capital funds, I, like most people who have had startups and achieved some success, do angel investing. I have been doing this, and I have probably invested in 20 to 30 different random projects. I almost see it as a way to give back to the community.
Honestly, I think the skills that can be translated are related to building organizations. In my view, having the experience and skills to build companies is very valuable. Unfortunately, it is a rare skill in the crypto field. Many people in the crypto field do not have the experience of scaling or building organizations.
Foresight News: It took you over a decade to sell Top Hat, and now, in the Web3 field, your company ether.fi has achieved over $4 billion in total value locked (TVL) in just over a year. As a founder, what is the biggest difference in building something new in Web2 and Web3? Can you share some personal feelings?
Mike Silagadze: Much of it has to do with the industry differences.
I think every industry has its challenges, and the challenge in the education industry is that it changes very, very slowly. There are very inconsistent incentives between students, teachers, and administrators, like a very broken system that nobody wants to be in. For example, professors don’t really want to teach; they just want to do research. Students don’t really want to learn; they just want to party. Administrators just want to collect a paycheck and build their empires. It’s like this strange system that nobody wants to be in, but somehow everyone is in it. It makes it not so fun.
In the crypto field, it’s almost the opposite. Everyone is very passionate and excited. There is so much money pouring into it, which is very volatile, but honestly, I find it much more interesting and the pace is very fast.
I think there is a lot of luck involved in our (ether.fi’s rapid growth). We were very lucky with the timing. We are very grateful to EigenLayer because they really pushed the development of the re-staking field, which benefited us. In terms of growth speed, it is largely luck. But (aside from timing), building a good product, executing well (on development plans), and continuing to release and deliver are things that I think we can take responsibility for.
So I think, like everything, it’s a combination of luck and hard work. But if I were to describe the difference (in entrepreneurship in Web2 and Web3) from a relatively higher level, I would say it is much more interesting, and I enjoy it more than in the higher education field (entrepreneurship). We need to keep up at a very, very fast pace and always be conscious of time.
Foresight News: To keep up at a fast pace, what aspects will the team focus on in terms of recruitment?
Mike Silagadze: Mainly engineering. But we have also hired some people in business development and operations. In terms of location, primarily in the Cayman Islands, as most of the team will be based there. Of course, we have some people in the United States, some in Canada, and one person in Korea, and we may recruit a few more people there. So our team is distributed.
Foresight News: Is the main team being located in the Cayman Islands also due to regulatory considerations?
Mike Silagadze: First of all, the Cayman Islands is a great place to operate a crypto company. I think almost every crypto foundation chooses the Cayman Islands, and there are probably thousands of them here. It’s a good base. Honestly, considering the regulatory environment in the United States and even Canada, trying to build a crypto company there is really crazy. I mean, I wouldn’t, because (regulations) lack clarity, and it doesn’t make any sense to do so.
Secondly, another advantage of the Cayman Islands compared to places like Singapore or Dubai is that it is in the same time zone as Toronto and New York, where I used to live. So far, I have enjoyed living here.
Regarding regulations, it’s hard to predict. I think we are doing our best to be as compliant as possible. We have geofencing, we have terms of service, and we are working very hard to prevent Americans from participating. We are doing our best, but you never know (what will happen), some things seem very random.
I think the United States has done a very poor job in creating a clear regulatory framework for crypto, and in my opinion, it’s a missed opportunity. I hope they can address this issue to allow people to conduct crypto businesses more safely in the United States.
Tags:
DeFi
Lido
WEB3
Other
Bitcoin
Airdrop
United States
Source link:
https://foresightnews.pro/article/detail/60691
Note: The translation provided above solely represents the author’s perspective and does not constitute investment advice.
Original article link:
https://www.bitpush.news/articles/6784075
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