Tobias Van Amstel: 0:00

What I love about DeFi at the moment is that there can be a big a big liquid fund putting 10, 20, 30 million dollars into a lending opportunity. And at the same time, an average person with a hundred dollars or a thousand dollars can do exactly the same thing.

Joeri Billast: 0:19

Hello everyone and welcome to the Web3 CMO Stories podcast. My name is Joeri Billast, I'm your podcast host. And today I'm in Sintra and I'm joined by Tobias. Hi Tobias, how are you? Hi, yeah, all good. Thanks for having me. Guys, it's amazing that we can record a podcast outside. If you don't know Tobias, Tobias van Amstel is a co-founder and CEO at Altitudes. And we will talk about how DeFi is redefining the future of borrowing. Yeah, so Tobias, let's go for the walk. Sounds good. Tobias, you've built and used DeFi before it was fashionable. So when you look at traditional lending today, what feels fundamentally broken from a user's point of view?

Tobias Van Amstel: 1:06

Yeah, that's a great question. So I think I think it's interesting that in traditional finance it's very easy to get a loan based on your salary or your income. But it's much harder to get a loan against an asset. And so the bank is very happy to let you borrow against your future salary. So basically your future income lets you spend that today. But if you already own assets, then it's much more difficult for them to lend against those. So mortgage is obviously an exception where you can get a mortgage against your house. But other than that, it's very hard to get them to lend against your assets.

Joeri Billast: 1:50

Many people still see DeFi lending as speculative finance, yet your user stories are about homes, land, everyday life goals. So, what shifted your own thinking from yield chasing to real-world impact?

Tobias Van Amstel: 2:07

Yeah, my own journey in DeFi also started speculative. So I had accumulated ET and started borrowing stables against it to deploy during DeFi summer and kind of earn the high incentive yield. And then when I needed funds for myself, I needed to off-ramp some funds. What I realized because I borrowed against my ETH is I didn't need to sell my ETH anymore. I could just use the funds that I borrowed and off-ramp those. So that's when kind of my thinking started started to shift. When I needed funds in the real world and I had funds in crypto.

Joeri Billast: 2:43

Okay, and then if we zoom out, how does borrowing against assets like BTC change psychology of money compared to selling assets to life to front life decisions?

Tobias Van Amstel: 3:00

So I think one of the psychological implications of borrowing against your assets instead of selling them is that you are you there's less of a need to sell your asset. So let's say you bought Bitcoin at $5,000 and then you see it run up all the way to $100,000. That's still a paper profit. And you might be thinking, okay, like I've I've ran it all the way up to $100,000. What do I do now? Do I sell it? Do I keep it? And so if there's a third alternative, which is borrowing against it, then it allows you to kind of use some of that realized profit or unrealized profit without having to sell the asset. And so that means that you can hold on to your BTC, you can keep keep holding on to it as it as it grows, as it appreciates, and you can keep unlocking liquidity against it. So selling becomes a choice.

Joeri Billast: 4:01

Yeah, for me it makes it makes a lot of sense. Now, the the listeners to my podcast, it's a mixed audience. There are also a lot of listeners are marketers and founders, maybe not DeFi natives. So, what is the simplest mental model to understand how a salary-paying loan really works?

Tobias Van Amstel: 4:23

Yeah, that's a good question. So let me compare it to something in the traditional finance world. So let me compare it to a mortgage. So let's say you own a house and you've owned that house for a while, and your mortgage is now about half of your the value of your house. So let's say your house is worth a million dollars, and your mortgage is worth your mortgage, your open mortgage is still half a million. Now, you can just let that situation sit, or you can go to the bank and say, can I borrow some more money against my house? Well, the bank will look at that and say, Okay, my your house is worth a million, your mortgage is half a million. Okay, we're happy to lend you up to 80%. So here you go, here's $300,000 that you can borrow. Now, now you've borrowed at $300,000, then instead of spending it, what you do is you invest it. So let uh so you invested at let's say 8%. Then you're generating 8% on that 300,000. You owe the bank the interest, which let's say it's 3%, so you're earning 8% on your $300,000, and you're paying 3% on your $300,000. So that means that you're now every year you're earning $15,000. And that $15,000 you can use to reduce your original mortgage. So then your original mortgage is going down. And then a few years later, you can do the same thing, and hopefully your house will keep going up in value, your mortgage will keep going down, and the the gap gets bigger and bigger, and you can do this all over again.

Joeri Billast: 6:05

Yeah, actually, sounds really like a no-brainer to me. Now, DeFi promises financial empowerment, but trust is still the biggest barrier. So, what are the key trust signals users look for before they dare to borrow on chain?

Tobias Van Amstel: 6:24

I think in in DeFi, my number one is transparency. If the platform or the protocol is not transparent about its rules or about the assets or where the assets come from or where the assets are, that's a big red flag for me. So transparency is number one. And then the second thing is kind of the security of the code. And you can look at audits that have been done on the code, you can look at how long the code has been live without having been exploited. So those are the two biggest factors I look at. And then the third factor, which I think is still very important in DeFi, is the team behind it. Yeah. So is the team anonymous? Then I would be very, very careful. If the team is not anonymous, look at their backgrounds, look at how long they've been in DeFi, do a simple Google search to see what their background is. And then though I think those three elements are key for trust.

Joeri Billast: 7:28

We are almost arriving in the center of Sintra Old Town. So if you're now watching the video, you will see where we end up. Yes, I totally agree with trust, and certainly because people they hear a lot about scams in Web3 and they are really, really careful, certainly now these days with AI. So really knowing the team really matters. So I also work with other companies, like for instance, the sponsor of my podcast, Ryo, it is a Japanese ecosystem, but I know the founders, I met them like I met you now, right now, which makes a whole difference. So important. It's so important. Now, let's talk about the company altitude, looking at altitude's growth and user behavior. Where do first-time borrowers struggle most? And how do those insights shape your product decisions?

Tobias Van Amstel: 8:22

I think first-time borrowers. The biggest hurdle in DeFi is still the very steep learning curve when you start using DeFi for the first time. So figuring out which wallet to use, then moving your assets from your centralized exchange onto your wallet, and then dealing with gas fees, dealing with all the security around it. I think that's the first big hurdle that people have to go through. And then the second big hurdle is to understand the concept of borrowing against your assets and understanding the platform or the protocol they want to use, and yeah, figuring out what is the best for their needs. And so how that affects our product roadmap is that we've we now have we've now built a loan optimizer that's with very simple UI UX where we where people can take a loan and we finance the loan at the lowest rate. So we make it very easy for people, you don't have to look at lots of different protocols, just come just borrow from our platform, our protocol, and then you're at the best rates. How it affects our future roadmap is that we are trying to simplify the on-board experience. So by integrating wallet infrastructure, by building on-ramps and off-ramps into the product to make it easier for people that have never used DeFi before to start in DeFi.

Joeri Billast: 9:51

And here we are, Tobias in Sintra Old Town. By the way, maybe you heard that I'm doing a retreat, an AI marketing retreat here in Sintra. So if now listening to the show, check out the video, then you see what Cintra is all about. Now, my next question. We have seen hype-driven yield come and go. So, how do you personally distinguish sustainable real yield from marketing-driven incentives in DeFi?

Tobias Van Amstel: 10:19

So I think it's important to realize that in the in the current state of DeFi, I see four distinctive types of yield. So, yield number one is the yield that borrowers are willing to pay, because that's yield for the lenders. Then the second source of yield is yield that comes from trading activity. So that flows usually to liquidity providers, trading fees. Then the third type of yield at the moment is the yield from RWAs. So where the yield is actually generated off-chain, but is funneled, is basically moved from off-chain to on-chain. And then the fourth is still incentives. And so I think all four of them have their pros and cons. And when you're trying to earn yield, you just have to understand which type of yield are you earning, and if that suits your kind of risk appetite. Incentives are still very much real. Just be careful with incentives that obviously when they're not liquid, so when you can't trade them, you don't know how much they're worth. And so that's that's always an interesting one. So you might think you're earning a certain amount, certain yield, but then when a token starts to trade, that yield might be much higher or much lower. And in recent times it's usually been much lower. Yeah. That's why at altitude we try and focus on the yield that we know is real, and you know exactly how much you're earning, which is a combination of the RWA yield, the trading yield, and the borrow yield.

Joeri Billast: 11:56

Makes sense. Indeed. Liquidity is really important. I've seen already a lot of things happening, or accidents even happening in the crypto world. Now, Tobias, as someone who has built multiple companies, how did your role as a CEO change once you started building financial infrastructure instead of software for marketplaces?

Tobias Van Amstel: 12:19

Yeah, I think the biggest difference is in the quality of the software, the reliability of the software, uh potential bugs in the software. I mean, in my previous companies, there were the impact of a bug in the system was a user that wasn't particularly happy, that maybe was a little bit frustrated because something didn't work. In DeFi, the result of a bug can be loss of user funds, which is unacceptable. And so it's comparable to building software for the medical industry or building software for the airline industry. Your the quality of the software needs to be top-notch. You need to spend a lot more time not just building the software but then testing, improving, running multiple audits, and making sure that the software has no critical bugs.

Joeri Billast: 13:13

Yeah, absolutely. Financial transactions is different than creating some marketing content like we're doing here right now.

Tobias Van Amstel: 13:20

But there's there's also a beauty in so those are two different worlds, right? In one you can move fast and iterate and learn, which is great. The other one, you can't make mistakes because you lose people's money. So they're they're just different ways of operating.

Joeri Billast: 13:34

Yeah, indeed. Like what I do, I like to shop authentically. So I'm not an English-nate speaker, so I can make mistakes, but it's me. You finance, you don't make mistakes, right? Yeah, so it should be correct. What I was wondering, Tobias, when you imagine conversations like the ones I will be doing and driving here at Sintra at my retreat, where marketers and founders reflect on AI and finance, what kinds of questions should leaders be asking now about DeFi's role, let's say, in the next decade?

Tobias Van Amstel: 14:07

The interesting thing is that obviously with AI agents, AI working autonomously, it needs information and it needs to be able to take actions. And if you compare ThreadFi and DeFi, in TratFi, all the information is behind closed doors. It's in investor portals behind passwords, it's your private banker that has maybe a department of analysts that's only clients get to see the reports. Account balances are all hidden, you need to log in to see your accounts. And in DeFi, everything is transparent by default. The information is the account balances are public, how the systems work is public, all the information is out there, all the transactions on the blockchain are public. So I think that's for my for me the first bit that the information is public versus private. An AI can't do much with private information, but they can do a lot with public information. And the second bit I think is the action. If you wanted an AI agent to take action in the TrapFi world, you probably need to give it your login details, I'm not sure the bank would allow, like basically impersonating you. Whereas in DeFi, you just give it your private key and it can go off and do things. Now, obviously, you need to have kind of safeguards against AI making mistakes or or going rogue. So don't just give it your private keys of your main wallet, for example. Be careful with that. But I think that's that will be a big shift, and that I think where where DeFi is really, really valuable.

Joeri Billast: 15:50

And finally, fast forward, let's say five years, ten years, so there are lots in web tree. But what would need what would have to be true for you to say that DeFi lending has generally delivered on its promise of leveling financial playing fields for everyday people?

Tobias Van Amstel: 16:11

At the moment, VFI is accessible to everyone. But in ThreadFi, the the best opportunities to invest are hugely restricted. So there's minimum investment amounts, usually driven by regulation or regulatory requirements. I really, really hope that over the next five to ten years we can keep DeFi as democratic and as open as it is today and not have gatekeepers everywhere and minimum investments amount everywhere. What I love about DeFi at the moment is that there can be a big a big liquid fund putting 10, 20, 30 million dollars into a lending opportunity, and at the same time, an average person with a hundred dollars or a thousand dollars can do exactly the same thing. And I think that's how I see how DeFi is democra democratizing finance. If we go more to the threat-fi world, there it's just two separate things. You have product offering for retail, you have to have a product offering for the the high net worth and the institutions. So if we can keep if we can avoid creating that divide in DeFi, then I think it's delivered on its promise to make it accessible.

Joeri Billast: 17:30

Amazing. We are now arriving at Quinta Dre Galera. I don't know if you've ever been there. It's a really beautiful palace here in Sintra. You have the Pana Palace, of course, but that one is also really beautiful. They have like a tower that goes into the ground. So it's oh wow. Thank you so much for sharing everything about Altitude and where DeFi is going. If people that are now listening they want to know more about you and what you are building, where would you like me to send them?

Tobias Van Amstel: 18:01

The best place to start is our homepage, www.altitude.fi, and that has all the links to our Twitter X account to everything else. So the best place to start is our homepage. Amazing.

Joeri Billast: 18:14

So as my listeners know Tobias always show notes, everything that you mentioned will be found in there. I will also put a snippet of the video in there. So go and check the book article. If you think that this episode is useful for people around you, be sure to share this episode with them. If you haven't given me a review yet, now is a good moment to go then giving it five stars. I want to reach an even bigger audience. And of course, I would love to see you back next time. Take care. Thanks, Yuli. Bye.