This is a segment from the Empire newsletter. To read full editions, subscribe.
There’s a new institutional-grade DeFi yield platform in town, we’ve exclusively learned.
Upshift, which aims to give retail access to yield opportunities typically available for hedge funds, is being spun out of prime brokerage firm August and is coming out of stealth.
The platform already has around $250 million in deposits, the team told me.
“If you look at the value prop today, DeFi’s super complicated,” Upshift CEO and August co-founder Alexandre Elkrief explained to me.
“It’s across three main axes: It’s fragmented, it’s hard to access, and it’s a lot more complex to manage fragments, obviously, because we’ve gone from one chain to a gazillion chains. It’s clear that it’s not gonna stop today. [August supports] 15 chains, right? And so the retail user is not gonna rebalance their position across that many different opportunities, and it’s becoming a full-time job,” Elkrief continued.
Elkrief and fellow co-founder and CEO of August, Aya Kantorovich, are no strangers to this space. Kantorovich was part of the founding team for brokerage firm FalconX, and Elkrief spent some time running the books for a DeFi hedge fund. The two initially started working on Fractal, later rebranded as August, and began fundraising right before the FTX collapse and closed the deal “the week that FTX collapsed,” Kantorovich told me.
She admitted both founders felt like they lost a couple of years off their lives after that, but it also solidified their belief in the need for both an August and an Upshift in crypto.
And so far, their work has paid off. August raised $10 million in a round led by Dragonfly earlier this month. It focuses on giving institutions DeFi access by connecting them to networks like Aave or Uniswap, and facilitates roughly $7 billion in monthly volume.
Upshift, which has been in beta since last September, is focused on the retail side of things. That was a focal point for me given that we haven’t seen retail activity levels return just yet.
“Our hypothesis is that it’s a question of complexity,” Elkrief said. Retail’s really been forced to focus on things like memecoins, which are obviously out of style now.
And this market is focused on “rewarding simple products,” Kantorovich noted.
“If you just zoom out for a second, the value proposition of yield is generally the onboarding mechanism for all types of new financial products. Crypto aside, Marcus by Goldman Sachs started attracting users by having a 4% savings account, right? … We’re giving every asset issuer the opportunity to augment their product with a yield-bearing option.”
Essentially, asset issuers can then partner with hedge funds or managers to curate and package the product to offer yield. Hopefully, on the flip side, also driving onboarding to said product.
While the August roadmap is about integrating a custodian, Elkrief said, Upshift’s going to become a product by itself. The team is “working through” the motions to split the August and Upshift teams apart currently, with Elkrief taking the helm.
