How should we view the Neobanks era after Crypto's decline?

Author: @0xfishylosopher; Translator: Peggy, BlockBeatsTen years ago, fintech-based new banks improved the user experience of banks through mobile applications, but did not change the underlying system of fund operation. Today, crypto technology is attempting to touch a deeper level of change, reconstructing "how money flows."This article examines the development path and competitive landscape of crypto-based new banks from four dimensions: "saving, spending, increasing, and borrowing," from self-custodied wallets and stablecoin payments to on-chain transactions, lending, and yield mechanisms. Author Jay Yu (a member of the research and investment team at Pantera Capital) suggests that, based on the speed of fund flow, the breakthrough point for crypto-based new banks may first appear in high-frequency, high-turnover value-added and lending scenarios, and then gradually extend to payments and storage.Until privacy, compliance, real-world connectivity, and credit systems are fully resolved, crypto-based new banks are still in the early exploratory stage. But what is certain is that these are not just new financial applications, but attempts to establish a completely new track for the operation of funds. The following is the original text: Introduction No matter which bank or fintech app you open today—whether it's Bank of America, Revolut, Chase, or SoFi—you'll feel a sense of déjà vu as you swipe down the screen: Accounts, Pay & Transfer, Earn Yield. These interfaces are almost interchangeable. This highly similar design reveals the commonality in the underlying logic of banking: banks are essentially a graphical representation of the four core relationships we establish with "money": Store: A place to store and hold assets; Spend: A mechanism for daily expenses and transfers; Grow: A set of tools for passive or active wealth management; Borrow: A channel for obtaining external funds and leveraging. Over the past decade, the widespread adoption of mobile technology has driven the rise of "neobank" applications such as SoFi, Revolut, and Wise. They have made financial services more inclusive and redefined the meaning of "going bankless"—replacing physical branches with intuitive, always-online digital interfaces. Today, as crypto technology enters its second decade, a new paradigm is emerging. From self-custodial wallets and stablecoins to on-chain lending and yield mechanisms, the permissionless and programmable nature of blockchain enables a global, instant, and composable banking experience. If the mobile internet gave rise to new types of banks, then crypto technology is nurturing permissionless neobanks: a unified, interoperable, self-custodial-centric interface that allows users to store, pay, increase, and lend funds within the on-chain economy. The History of Fintech Neobanks Similar to the crypto industry, the rise of new banks also occurred after the 2008 financial crisis. Unlike traditional banks that replicate physical branch networks, new banks are more like technology platforms, providing banking services to users through mobile interfaces. Most new banks collaborate with traditional banks in the back office, with the latter providing deposit insurance and compliance infrastructure, while the new banks themselves control the front-end user relationships. With rapid account opening processes, transparent fee structures, and digital experience-centric designs, many new banks have gradually become the preferred entry point for users to save, spend, and manage their wealth. Looking back at the growth paths of these new bank startups with market capitalizations reaching billions of dollars, a common thread emerges: they leverage unique digital product formats to cultivate user relationships. Whether it's refinancing services, early payroll, transparent foreign exchange rates, or other differentiated features, they first initiate a user-centric transaction flywheel, then gradually expand their product matrix to add value and monetize existing users. In short, the victory of fintech-based new banks lies in their control of the "gateway to money": by reshaping the medium through which users save, spend, manage, and borrow money, they have firmly occupied the interface layer for financial interactions. Today, the crypto industry is at a similar juncture to that of new banks 5–10 years ago. Over the past decade, crypto has spawned a series of its own "wedge products": censorship-resistant asset storage through self-custodial wallets; low-barrier digital dollars provided by stablecoins; permissionless credit markets represented by protocols like Aave; and a 24/7 global capital market, even capable of transforming internet memes into wealth vehicles. Just as mobile internet infrastructure ushered in a new era of banking, programmable blockchain is providing a permissionless financial infrastructure. The next logical step is to combine these permissionless backend capabilities with a user-friendly, new-bank-like frontend. The first generation of new-type banks moved the front end of banking from physical branches to mobile interfaces while retaining the traditional banking system as the back end. Today's crypto-banks, however, are doing the opposite—they retain the convenient mobile experience but are beginning to change the underlying path of fund flows: shifting from traditional banking tracks to stablecoins and public blockchains. In other words, if new-type banks rebuilt the front end of banking on top of the mobile internet, then crypto technology is offering an opportunity to rebuild the back end of banking on a permissionless track. The landscape of Crypto NeobanksThe landscape of Crypto NeobanksThe landscape of crypto neobanksToday, more and more projects are gradually converging under the vision of "crypto neobanks".Today, more and more projects are gradually converging under the vision of "crypto neobanks". We have already seen that, on a permissionless, crypto-based track, the fundamental capabilities surrounding the four financial relationships of saving, spending, increasing, and borrowing are gradually taking shape: Self-custodial asset storage via hardware wallets like Ledger; everyday payments via Etherfi cards or Bitget QR codes; asset appreciation through trading on platforms like Hyperliquid; and on-chain lending via protocols like Morpho. Simultaneously, a large number of supporting participants are underpinning the underlying infrastructure, including: Wallet-as-a-Service, stablecoin clearing systems, compliance licensing services, localized deposit and withdrawal channel partners, and cross-protocol orchestration routers. Furthermore, in some cases, crypto exchanges themselves, such as Binance and Coinbase, are already moving closer to becoming fintech banks, attempting to further control the core relationship between users and their assets. For example, Binance Pay already supports payments at over 20 million merchants globally; while Coinbase allows users to automatically earn up to 4% in rewards simply by holding USDC on the platform. In such a complex and multi-layered crypto banking ecosystem, it's necessary to systematically analyze this landscape: How are different crypto platforms competing to become the user's "primary financial relationship interface"? And which specific aspects of users' lives—saving, spending, managing finances, and borrowing—are they targeting? Depositing Money in CryptoTo truly achieve self-custody of crypto assets and interaction with the blockchain, users must first possess some form of crypto wallet. Roughly speaking, the crypto wallet ecosystem can be divided along two dimensions: one is the axis of security ↔ usability, and the other is the axis of consumer-level applications ↔ enterprise-level infrastructure.Depositing Money in CryptoEnterprise Side: Stablecoin Infrastructure and "Stablecoin Chains"The second type of recently emerging "new banking" application consists of stablecoin infrastructure projects built for enterprises, including Stable, Plasma, Tempo, Arc, etc., often referred to as "stablecoin chains."A key factor in their rise is the increasing demand from institutional players—traditional banks, fintech companies like Stripe, and existing payment networks—for more efficient funding channels. These "stablecoin chains" often share similar characteristics: They use stablecoins as gas tokens to avoid fee instability caused by price fluctuations of custom gas tokens; they streamline consensus mechanisms to accelerate high-frequency, large-value payments from A to B; they enhance transaction privacy through Trusted Execution Environments (TEEs); and they customize data fields to comply with international payment standards such as ISO 20022. However, technological improvements alone do not guarantee adoption. For payment-oriented public chains, the real moat is merchants. The key question is how many merchants and businesses are willing to migrate their operations to a specific chain. For example, Tempo is trying to leverage Stripe’s large merchant base and payment network to drive transaction volume and adoption [12], bringing a whole new group of merchants into the crypto space. Other chains, such as Plasma and Stable, are trying to become “first-class citizens” of Tether USDT, strengthening the role of stablecoins in inter-institutional transactions. The most inspiring case in this area is Tron. It handles about 25–30% of global stablecoin transactions. Tron’s rise is largely due to its advantages in emerging markets such as Nigeria, Argentina, Brazil and Southeast Asia. With its low fees, fast confirmation and global coverage, Tron has become a common settlement layer for merchant payments, cross-border remittances and USD-denominated savings accounts. For all emerging payment public chains, Tron is an existing competitor that must be faced. To challenge this requires a 10x improvement on an already "cheap, fast, and global" foundation—which often means focusing on merchant expansion and network scaling rather than marginal technological optimization. The third relationship established between "crypto-banks" and users is helping users grow their money. This is one of the most innovative sectors in the crypto space, giving rise to various financial primitives from scratch—from staking vaults and perpetual contract trading to token issuance platforms and prediction markets. Similar to the previous discussion, we can also categorize "capital appreciation" applications along two dimensions: from passive returns to active trading, and from front-end interface to back-end liquidity. A classic example of a "capital appreciation" application evolving into a fully functional new type of bank comes from centralized cryptocurrency exchanges (CEXs), such as Binance or Coinbase. Initially, exchanges offered a simple yet effective value proposition—"This is where you grow your wealth by trading crypto assets." As trading volume continued to climb, exchanges gradually became core venues not only for wealth appreciation but also for storing and managing assets. Both Coinbase and Binance have launched their own blockchains, wallets, institutional-grade products, and crypto cards, using new products and network effects to monetize their core user base. For example, Binance Pay adoption continues to rise, with more and more merchants using it to accept crypto payments for everyday goods. The same path has also been validated in DeFi projects. Take EtherFi as an example: it initially started as an Ethereum liquidity staking protocol, providing passive returns for users who re-staking ETH to EigenLayer. Subsequently, EtherFi launched a DeFi strategy vault called "Liquid," allocating user funds within the DeFi ecosystem to pursue higher returns under controlled risk. Next, the project expanded to EtherFi Cash—a groundbreaking credit card product that allows users to directly spend their EtherFi balance in the real world. This expansion path is highly similar to that of new fintech banks: establishing a foothold through unique product entry points (passive staking and returns), developing a "best solution" in a niche market to gain scale, and then horizontally expanding the product matrix to add value and monetize existing users (such as the EtherFi card). To date, the crypto space has witnessed numerous 0→1 innovations supporting users' "money growth": perpetual contract platforms like Hyperliquid have grown into some of the most profitable crypto companies; prediction markets like Polymarket are also gradually gaining mainstream attention. It's highly likely that the next step for these platforms will also be to monetize through new product forms—allowing users to save and spend more on the platform, leveraging network scale to amplify their gains. Starting with "money growth platforms," especially active trading platforms, offers a significant advantage: high trading frequency and large transaction volume. For example, Hyperliquid has processed $3 trillion in transactions over the past 18 months. Compared to "savings platforms" and "payment platforms," "money growth platforms" possess a stronger user flywheel and stickiness, meaning they have a larger "captured user pool" that can be converted and added to in subsequent expansions. However, these platforms are also highly dependent on market cycles and are often labeled as "financial casinos." This reputation may limit their reach to a truly global mass user base—after all, people's psychological expectations of "banks" and "casinos" are ultimately quite different. Borrowing Money Crypto Just as in traditional economic systems, lending capacity is a crucial engine driving on-chain economic growth. For new crypto banks, lending is also one of the most critical and sustainable sources of revenue. In traditional financial systems, lending is a highly permissioned activity, requiring multiple checks such as KYC, credit scoring, and lending history. In the crypto world, however, lending systems exist in both permissioned and permissionless models, each with different collateral requirements. The current mainstream model in the crypto space is a permissionless, on-chain lending system requiring over-collateralization. DeFi giants like Aave, Morpho, and Sky (formerly MakerDAO) embody the core spirit of crypto's "code is law": because blockchains inherently cannot access users' FICO credit scores or social reputation information, they can only ensure solvency through over-collateralization, sacrificing capital efficiency for broader accessibility and security against default risk. Morpho is considered the next generation of this model. It improves capital efficiency while maintaining security by introducing a more modular, permissionless system design and employing a more refined risk pricing mechanism. At the other end of the spectrum is permissioned lending. This model is gaining adoption as more institutional capital allocators enter DeFi through market making and other methods. Protocols like Maple Finance, Goldfinch, and Clearpool, primarily targeting institutional users, essentially build "traditional credit counters" on-chain. They enable institutional borrowers to obtain non-overcollateralized loans through strict KYC and off-chain legal agreements. The competitive advantage of these protocols comes not only from liquidity (such as permissionless lending pools) but also from their compliance framework and B2B business development capabilities. Furthermore, some projects in the permissioned lending space—such as Figure Markets, Nexo, and Coinbase's lending products—primarily target retail borrowers and take a compliance-first approach. They require borrowers to complete KYC and also require overcollateralization, and in some cases, they are "packaged" as upper-layer products on protocols like Morpho, as Coinbase Lending does. In these scenarios, the core appeal often lies in the faster settlement speed and greater availability of funds compared to traditional bank loans. However, the true "holy grail" of crypto lending is uncollateralized consumer credit—this is precisely the breakthrough point that a generation of fintech products like SoFi and Chime excelled at, enabling them to reach the "unbanked population." To date, the crypto industry has not achieved a substantial breakthrough in this area, failing to replicate the "consumer credit flywheel" established by fintech-based new banks. The fundamental reason is that the crypto world lacks a robust, Sybil-resistant identity system and sufficiently strong real-world constraints on default. The only exception is "flash loans"—an instantaneous form of uncollateralized lending entirely driven by the characteristics of blockchain mechanisms, but these primarily serve arbitrage bots and complex DeFi strategies, rather than everyday consumers. For the next generation of crypto banks, the key to competition may lie in moving into the "middle ground" of this landscape: retaining the speed and transparency of permissionless DeFi while introducing the capital efficiency of traditional lending. The ultimate winner will likely be a platform that can solve the problem of decentralized identity or commoditize it, thereby unlocking consumer credit and allowing crypto to truly rebuild the "credit card" financial mechanism. Until then, crypto banks will likely still primarily rely on over-collateralized lending as the core means of supporting DeFi yields. Making Money Flow Faster Fundamentally, the core value proposition of crypto banks lies in making money flow faster—as SoFi, Chime, and other fintech banks have achieved through mobile applications over the past decade. The blockchain essentially "flattens" the distance between any two accounts: value transfer can be completed in a single transaction, eliminating the need to jump between international banks, the SWIFT system, and countless complex and outdated intermediary systems. Although the four types of financial relationships—"saving money, spending money, increasing value, and borrowing money"—utilize the "flattening effect" brought about by blockchain in different ways and correspond to different trade-offs and monetization models, I believe they can ultimately be understood as a pyramid structure defined by the **velocity of money**.At the top of the pyramid is money growth (growing money), which has the highest capital turnover speed (e.g., Hyperliquid's transaction fees); followed by lending (monetized through interest); then payments (monetized through transaction fees and foreign exchange rate differences); and at the bottom is storage (monetized mainly through deposit and withdrawal fees and B2B integration).At the top of the pyramid is money growth (growing money), which has the highest capital turnover speed (e.g., Hyperliquid's transaction fees); next is lending (monetized through interest); then payments (monetized through transaction fees and foreign exchange rate differences); and at the bottom is storage (monetized mainly through deposit and withdrawal fees and B2B integration).From this perspective, the easiest path to building new crypto banks might be to start with the capital appreciation and lending layers—because these layers have the highest capital flow rate and user engagement. Protocols that first capture "value in circulation" can often extend downwards along the pyramid, gradually converting existing users into full-stack financial users. So, what might be the next step for new crypto banks? Where exactly does the opportunity lie in building the next generation of permissionless banks? I believe there are still several (interrelated) directions worth exploring further: 1) Privacy vs. Compliance Equivalence 2) Real-world Composability 3) Full Utilization of Permissionless Access 4) Localization vs. Globalization 5) Uncollateralized Lending and Consumer Credit 1 | Privacy vs. Compliance Equivalence Stablecoins and crypto-orbits have significant advantages in speed and ease of use compared to traditional financial systems. However, to truly compete head-on with fintech banks and existing banking systems, crypto-banks must achieve functional equivalence in two key dimensions: privacy and compliance. While privacy isn't universally considered a necessity in retail consumer scenarios, and stablecoins have achieved large-scale adoption despite a lack of strong privacy guarantees, privacy becomes crucial as more enterprise applications—such as payroll, supply chain financing, and cross-border clearing—migrate on-chain. This is because the public visibility of B2B transfers can potentially leak trade secrets and sensitive information. I believe this is one of the key reasons why many recently launched stablecoin chains highly emphasize privacy capabilities in their roadmaps. Conversely, new crypto banks also need to consider how to achieve compliance parity with their predecessors. This includes gradually building a global regulatory moat and licensing system, and proving to consumers and merchants that crypto solutions are no less compliant than traditional finance—perhaps through new technological paths such as zero-knowledge proofs. Only by simultaneously addressing the two major issues of enterprise-level privacy and compliance credibility can new crypto banks truly achieve scalability that surpasses their fintech predecessors. 2 | Composability in the Real World "Composability" is often considered a core advantage of the crypto space—relying on unified standards, frameworks, and smart contracts. However, in reality, this composability is often limited to within the crypto world: between DeFi primitives, between yield protocols, and between (primarily EVM) blockchains. The real challenge of composability lies in how to bridge blockchain standards with legacy standards in the real world: for example, international banking systems like SWIFT, merchant POS systems and standards like ISO 20022, and local payment networks like ACH and Pix. With the increasing adoption of crypto cards and the growing use of stablecoins in cross-border payments, this direction has seen positive progress. Furthermore, most current crypto card products still primarily serve native crypto users, essentially acting as withdrawal tools for "crypto whales." However, the real challenge facing new crypto banks is to break through the crypto native population and introduce a completely new user base through real-world composability and truly innovative financial primitives. Platforms that solve the composability problem will have a significant lead in deposit and withdrawal experience, thus more efficiently supporting a large user base. 3 | Fully Leveraging "Permissionless" Fundamentally, the goal of new crypto banks is to reshape a more efficient monetary standard: instant settlement, global liquidity, unlimited programmability, and freedom from the bottlenecks of a single entity or government. Today, anyone with a crypto wallet can trade, transfer funds, or earn returns without the intermediary of the fiat currency system. New crypto banks should fully leverage this permissionless nature to accelerate the flow of funds and build a more efficient financial system. On the crypto track, global capital flows at internet speed, and its coordination mechanism is no longer administrative order, but incentives and games. The next generation of new banks will leverage the permissionless nature of blockchain to enable new primitives such as perpetual contracts, prediction markets, staking, and token issuance to be rapidly integrated with existing financial systems. In economies with high stablecoin penetration, there is even an opportunity to build a permissionless bank card network—a system similar to Visa or Mastercard, but in the opposite direction: instead of exchanging stablecoins for fiat currency at the consumer end, settlements will default to on-chain transactions; and to maintain compatibility with traditional payment methods, fiat currency will be "on-chain" as stablecoins. Furthermore, "permissionlessness" applies not only to human users but may also give rise to an agency economy. For AI agents, obtaining a crypto wallet is far easier than opening a bank account; with stablecoins, AI agents can autonomously initiate on-chain transactions with user authorization or pre-defined rules. This permissionless new type of bank forms the underlying foundation and interface of this "human-agent economy." 4 | Localization vs. Globalization Crypto banks also face a strategic choice: depth vs. breadth. Some may choose a path similar to Nubank, establishing dominance in a single region through deep localization, cultural fit, and regulatory understanding before expanding outwards; others may adopt a global-first strategy, launching permissionless products globally and increasing investment in regions with the strongest network effects. Both paths are viable: the former relies on local trust and distribution, while the latter relies on scale and composability. Stablecoins may be the "highway" for international payments, but crypto banks still need a "local exit"—deep integration with regional systems such as Pix, UPI, Alipay, and VietQR—to achieve true local usability. In particular, new crypto banks have a unique opportunity to serve the unbanked population, providing USD or crypto-denominated capital access to regions with weak financial infrastructure or unstable currencies. In the future, regional "super apps" and globally composable new banks may coexist for a long time. 5 | Uncollateralized Lending and Consumer Credit Finally, uncollateralized lending and consumer credit may be the true "holy grail" of new crypto banks. This issue brings together multiple challenges: it requires a robust, Sybil-resistant identity system; it needs to bridge off-chain credit records with on-chain accounts; it needs to address the differences in credit models across regions and be compatible with traditional systems. For this reason, uncollateralized lending in DeFi is currently mainly concentrated in institutional private lending rather than consumer credit—although the latter is much larger in traditional finance. Part of the answer may lie in innovative mechanism design. Flash loans are a native form of unsecured lending born from the characteristics of blockchain. Similarly, smart revolving credit lines built around stablecoins and interest-bearing assets, real-time LTV management, automatic liquidation buffers, and automatic repayment of returns may gradually reduce collateral requirements. Once successful, on-chain consumer credit will significantly increase the velocity of funds, providing a strong incentive for the unbanked population to go on-chain, and driving overall economic growth, just like credit expansion in the real world. Conclusion Just as the rise of fintech banks reshaped the banking industry a decade ago, crypto banks are also attempting to redefine how we save, spend, increase, and borrow money in the digital age. However, the difference is that fintech banks mainly innovate the front-end interface, while crypto banks are trying to update the back-end of the banking system itself—building a global, composable, and censorship-resistant value transfer method through stablecoins and public blockchains. Therefore, the new type of encrypted bank is not just an application interface, but may be the gateway to a programmable financial system. Of course, this path has only just begun. Building a truly "full-stack encrypted new bank" is far more than launching an encrypted card or a wallet protocol with a UI. It requires a clear target audience, rapid expansion along a product matrix, and establishing an advantage in areas with high cash flow. If the new type of encrypted bank can continue to make breakthroughs in areas such as privacy and compliance, real-world composability, permissionless operation, local and global strategies, and consumer credit, it has the potential to evolve from a peripheral entry point for digital assets into the default operating system of the global economy. Just as the first generation of new banks changed the "interface" of banks with the mobile internet, this generation may rewrite the underlying logic of currency itself with encryption technology.