Kairos, Vault, Vennre, & Buy Now Pay Maybe
Happy Wednesday, Fintech Listeners!
I hope your week is going well so far. And I hope that your Year of the Fire Horse is off to a great start.
The current regulatory environment makes for strange bedfellows. I’m not the biggest fan of federalism and the dual banking system. However, recent comments from Mike Selig, the new Chair of the Commodity Futures Trading Commission, have me reconsidering!
I don’t know how you can defend prediction markets by saying that they allow people to “hedge commercial risks” without ever acknowledging the reality that these platforms make a vast majority of their revenue from sports betting, which has basically zero utility as a risk hedge for ordinary Americans.
Apparently, the Governor of Utah can’t understand it either, and it sounds like Mike Selig is going to have quite a fight on his hands (a fight that will be more difficult in a post-Loper Bright world).
Anyway … I have a great podcast to share with you today!
— Alex
3 BIG IDEAS FROM THE PODCAST
In this week's episode of Not Fintech Investment Advice, Simon Taylor and I did what we do: wandered around a few startups we found interesting (for reasons that remain completely unrelated to investment advice).
We recorded fresh off the Fintech Xchange in Salt Lake City, which turned out to be an unexpectedly fitting backdrop since Utah sits at the center of a lot of what’s happening right now in banking and fintech …
And that energy carried us straight into this episode.
Simon and I kicked things off with prediction markets. Then we moved into crypto as collateral. Then, private markets for HENRYs. And we ended with a product that felt like a joke (Buy Now Pay Maybe) until, well, it didn’t. You’ll see.
Tune in for the full conversation here
And read below for my three big ideas...
#1: The Boring Crypto Use Case Copy anchor linkCopied
As I have been writing for years, fintech works best when it embraces its destiny to be boring as hell.
Vault initially sounds like a familiar crypto story: crypto-collateralized lending (loans where a borrower pledges cryptocurrency they already own as security, the same way a house backs a mortgage or a car backs an auto loan).
That phrase alone is usually enough to trigger my sense of skepticism, and for good reason.
Most crypto-collateralized lending to date has been about leverage. Over-collateralized loans designed to let people borrow money to buy more of the same volatile asset they’re pledging, in a closed loop (hence its name, looping).
But Vault is doing something different. Its idea is to use crypto as collateral to improve pricing or unlock access for loans that have nothing to do with crypto.
A growing number of people simply own crypto as one asset among many on their personal balance sheets. Crypto’s advantage here is programmability. Custody, valuation, monitoring, and liquidation are far easier to automate than with physical assets or even digital TradFi assets like stocks (Fidelity makes a lot of money doing this, but doesn’t always play nicely with others).
Banks may actually like this. If a borrower can pledge crypto, that collateral could buy down rates or make a loan viable that otherwise wouldn’t be. The problem, though, is infrastructure.
Crypto lives in a completely different universe from banking systems. Most banks have no way to take custody of it, monitor its value in real-time, or operationalize it within their lending systems.
That’s where the second-order implication comes in. A lot of crypto volatility comes from people borrowing to buy more crypto (we’re seeing this play itself right now, in dramatic fashion, with the current crash in crypto prices). Using crypto as collateral for ordinary loans flips that dynamic. It treats crypto as something to manage risk with, not something to pile risk on top of …
Useful and boring, in exactly the way fintech is supposed to be.
#2: Turning Crypto OutwardCopy anchor linkCopied
The other reason Vault feels different is the people building it, which is worth a double click.
I forgot to mention this when Simon and I were recording, but another notable thing about Vault is that the founding team has a strong background in fintech and in lending specifically. The CEO was one of the co-founders at CommonBond (a fintech lender focused on student loan refi), and the COO was general counsel at CommonBond.
This is interesting because a lot of the problems I see in the crypto space have to do with the fact that crypto people can’t stop building for … other crypto people. Even the best builders in crypto tend to assume the internal logic of crypto is universal.
I’ve seen this most clearly in crypto lending. The default pitch is basically: who wouldn’t want overcollateralized crypto lending?
Well, most people! Most people think the idea of using crypto to buy more crypto (and exposing themselves to more downside risk in the process) is super stupid. I’ve tried to explain overcollateralized crypto lending to my family half a dozen times, and each time they look at me like I’ve lost my damn mind.
And they’re right to do so!
The crypto industry isn’t going to get anywhere until it starts building for people who aren’t degenerates, technolibertarians, or open-source tinkerers. The crypto industry accidentally stumbled into that with stablecoins, and it’s what the folks at Vault are doing more intentionally.
The neat thing about this mindset is that it allows for a more clear-eyed view of where crypto and blockchain technology can uniquely add value. Vault is building the infrastructure for next-generation collateralized lending. It’s starting with crypto, not for ideological reasons, but for practical ones.
The industry could use a lot more of that!
#3: The Infrastructure Bet Copy anchor linkCopied
The startup Kairos is a multi-prediction market trading platform that gives traders a single terminal to buy and sell event contracts across Kalshi, Polymarket, and beyond.
Their pitch: what the Bloomberg terminal did for Wall Street, Kairos does for prediction market traders.
At one level, that framing makes perfect sense. If prediction markets are going to exist, they will need professional infrastructure. Traders operating across multiple venues want consolidated data, low-latency execution, and real analytics.
Infrastructure always follows activity.
The harder question is where that activity comes from.
As I already mentioned, right now, much of the liquidity flowing into prediction markets is tied to sports betting. That shapes who participates, how risk is understood, and what kinds of behavior the market rewards.
Sports betting may bootstrap the flywheel and help these markets scale, but there are tradeoffs here. Liquidity tends to arrive before consumer protections, and markets often expand faster than the rules meant to contain them.
Kairos is interesting precisely because it points toward a different possible end state. One where prediction markets look less like consumer entertainment and more like capital markets infrastructure. Built for participants who understand risk better than the users currently being nudged into it.
The open question is whether prediction markets can evolve toward that end state without being permanently shaped by how they’ve scaled up.
Prediction markets may mature and find real social utility (I actually find prediction markets, sans sports betting, to be pretty interesting!). But the path they take to get there will determine what kind of market they become.
🎬 DIRECTOR'S COMMENTARY
Hearing the name “Kairos” was a blast from the past for me.
In my first job in fintech, one million years ago, one of our products was named Kairos, from the ancient Greek word meaning the "opportune moment," "right time," or a decisive, qualitative moment for action.
We weren’t building infrastructure for prediction markets (we would have been way too early!), but still. It goes to show you. There are no truly unique names in fintech.
WHAT I'M LISTENING TO
#1: New CFTC Chairman Michael Selig on How to Regulate Prediction Markets (Odd Lots) 🎧 Copy anchor linkCopied
Joe and Tracy did their level best to pin down Chair Selig on some of the difficult questions about regulating prediction markets, but they didn’t have much luck. Probably not their fault. Given how different his actions at the CFTC have been from what he told the U.S. Senate, I doubt anyone would have been able to.
#2: Leading Voices in Fintech: Hot Takes is Back! (Breaking Banks 🎧Copy anchor linkCopied
This was the panel that I did with Simon at the Fintech Xchange event in Utah. We were joined by Jason Henrichs and Peter Renton for a spirited discussion on AI, stablecoins, and my personal favorite topic — financial nihilism.
I’m honored that Breaking Banks (recently mentioned on the TV show Industry!) recorded and published our conversation!
Bonus: Collections Conversations* 🎧 (by me, with C&R Software)Copy anchor linkCopied
What happens to debt collections when generative AI changes how the work gets done? In episode 3 of my new miniseries Collections Conversations, I sit down with John McNamara (Chief Growth Officer at Avtal) to unpack what the industry misunderstood about Regulation F, the CFPB’s internal logic, and the incentives shaping modern collections policy.
*this rec is brought to you by one of our fantastic brand partners
Thanks for the read! Let me know what you thought by replying back to this email.
— Alex
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