Flint provides the dual benefit of the tradable income and steady interest on idle cryptocurrencies in wallets
In India, the startup claims to have involuntarily targeted only the top 2-3% population with high disposable income
Flint has an AUM of less than $100 Mn and is targeting 60 Mn global crypto holders, before building a platform for P2P payments
Like many of us, Flint founders – Anshu Agarwal and Akshit Bordia – heard the term Bitcoin for the first time after watching the movie ‘The Social Network’ and learning about the Winklevoss Twins’ rise to the billionaire club. For the most part, the founder duo were fascinated by the efficiency of the blockchain phenomenon and the decentralisation that crypto as a currency provided — effacing any bias across gender, race, and borders, among others.
“What really excited us was people’s relationship with their money,” Agarwal tells Inc42. “And that’s why we always wanted to build Flint at the intersection of Web3 and financial services such as savings, investments, access to credit and payments to bring equal access to these services to everybody across the globe.”
Inc42 touched upon Flint’s basic working model when it was featured in the ‘30 Startups To Watch – March 2022 Edition’ – founded in 2021, a Bengaluru-based startup offering the crypto equivalent of a savings-cum-mutual fund account.
Users can link their crypto wallets with Flint to earn passive income on their assets. Alternatively, retail investors can deposit and convert their fiat money into stablecoins like USDT and USDC (blockchain products not prone to price fluctuations).
However, with competitor platforms such as Vauld and Terra making headlines for shaking the ecosystem, Flint’s working model is not as easy as it sounds.
While Inc42’s Fintech Summit answered many questions, it was necessary to take a deeper look at the startup playing a safe game in a highly volatile market.
According to Agarwal, the current crypto trading market has three problems — lack of access to easy-to-use products, regulation setbacks, and lack of education among consumers.
“But the industry will mature as users grow. These gaps will simultaneously get resolved. The best way today is to build robust and easy-to-use products for users, allowing their knowledge curve to evolve,” the Flint cofounder and CEO says.
That’s where Flint comes into play. It is building to solve problems such as lack of understanding and use of blockchain (the consumer problem) and easing the investment process in DeFi protocols with non-complex mobile applications (the product problem).
Hitting The Sentimental Value & Building An AUM Of $100 Mn
The founder duo are former CRED product managers and believe that solving for ‘need’ rather than technology is what entices a consumer from the Indian market. Agarwal says that Indians do not really care for Web3 or Web2 as long as their savings and investments grow and are safe.
The need for diversification among Indian consumers is far-reaching, and it is a core human need in terms of their relationship with money, he states.
Steady returns of 10% per annum, no lock-in period and easy liquidity are what makes startups such as Flint popular.
But what sets Flint apart from other mutual fund-style products that give similar returns is that the underlying asset is USDT, which enables users to diversify their earnings and investments in several asset classes.
Hitting the ultimate sentimental value with a good value proposition when the market sentiment was bullish, coupled with a good product experience and word of mouth, enabled the startup to reach an AUM (assets under management) of under $100 Mn within a year of launch.
Sequoia and Coinbase Ventures-backed Flint goes beyond just ‘buying and selling’ crypto tokens. It allows users to convert crypto or fiat currency into stablecoins such as USDT. Flint loans the amount to exchanges and hedge funds by over-collateralising them and generating returns via margin trading.
Maximising Gains From Margin Trading
For the uninitiated, margin trading is a well-known concept across global (and Indian) stock exchanges. When a user wants to bet a large amount on trade but has limited resources, she borrows it from the broker. Margin trading allows the user to trade with more capital than she has. The margin trade enabler/broker charges interest.
To enable the 10% steady returns, Flint enables exchanges (Crypto.com, FTX and FTX US, KuCoin, CoinDCX, Bitbns and Huobi Global) to provide loans to their retail traders.
For instance, Flint takes cryptocurrency, converts it into USDT or USDC and lends it to crypto exchanges that lend it to individuals. These borrowers use their holdings as collateral.
If the borrowers’ holding falls below the loan amount, the crypto exchanges sell the collateral. The borrower pays the complete principal plus interest to the lender (in this case, Flint), creating a no loss, no profit event.
Flint lends money to exchanges at an interest rate of more than 10%. It keeps a portion of the returns it generates and passes the rest to its users.
A Game For The Top 3% Indians & 60 Mn Global Crypto Investors
While the idea of earning passive income via cryptocurrencies looks lucrative, Flint’s target group is only a small set of users within the age group of 21-35 who are looking for diversification.
Most of the global crypto investment platform’s users come from 93 countries, including India, the US, the UK, Southeast Asia and Brazil. Further, a large portion of its Indian users come from Tier 1 cities with an income of over INR 12 Lakh per annum. But it has targeted (not by choice) only the top 2-3% of Indians (purchasing power-wise).
Now, Flint is targeting 60 Mn people globally who already hold cryptocurrencies and are at least intermediate in the knowledge curve and not beginners, Agarwal says. The plan for the short term is to grab a sizable portion of the $1 Tn worth of market.
In the long term, Flint’s founders intend to create a UPI-style cross-chain payments platform within its Android and iOS apps.
“P2P (peer-to-peer) will bring more crypto adoption in real-world use cases. It is just an interface problem,” Agarwal says, hinting that the current regulations are a stumbling block.
