Written by: Rhythm BlockBeats
On June 17, Infini announced the official cessation of its crypto card business for individual users. For many users, this decision was very sudden; however, for the Infini team, this was a decision after much contemplation.
The once highly anticipated crypto card is now increasingly labeled as 'difficult' and 'thankless'. Compliance barriers, cross-border clearing, risk control... these issues, which should belong to traditional financial institutions, have become harsh realities that these Web3 entrepreneurs must face. In terms of resource investment and business return, Infini ultimately chose to press the termination button on this business.
What exactly happened behind this? What specific difficulties did the U card business face in execution? Why are compliance costs so high? With these questions, Rhythm BlockBeats interviewed Infini co-founder Christine (Princess), through the narrative of a frontline operator, we can see the full picture of this business adjustment.
The following is the content of the interview.
The starting point of the U card story: when NFT players fell in love with 'simple DeFi'.
In May 2024, Blast launched the 'dividend' stablecoin USDB, where users only need to hold USDB to obtain capital gains from its underlying assets, attracting a large number of NFT community players to deposit assets on the Blast chain. 'Tieshun', a top entrepreneur in the NFT circle, brought many NFT players to experience the charm of 'simple DeFi' through a stablecoin product.
At the same time, Ethena opened up the arbitrage returns from Funding Rate Arbitrage to retail users through USDE, similarly making complex blockchain return opportunities available to ordinary people.
Coming from the NFT community, Princess and Christian saw the potential of stablecoins during this period, believing this was a startup direction that could allow ordinary people to enjoy blockchain returns and had great potential for breaking barriers, so they decided to do something in this field.
At that time, discussions in the industry about stablecoins were not lively, and Infini could be considered a pioneer. However, the difficulty of starting a stablecoin business exceeded their expectations. This field is completely different from the relaxed entrepreneurial atmosphere of Web3 in the past. What Princess and Christian had to face were the harsh realities of costs and the unshakeable 'old money world'.
The Origin of Infini
BlockBeats: What was Infini's initial entrepreneurial motivation and intention?
Princess: We started working on Infini in July last year when stablecoin financial management was quite popular. We saw that Blast had launched a stablecoin called USDB, which had an APY of about 5%-10%.
We found that there are indeed many GameFi and NFT users who would be interested in USDB. In fact, these people were previously unfamiliar with DeFi returns. Blast packaged complex and abstract DeFi returns into this stablecoin, allowing users to automatically receive dividends just by holding it.
The returns from DeFi actually come from many aspects, such as lending, RWA, etc. We found that many people would indeed be interested in a stablecoin like USDB, which is somewhat like a synthetic asset, meaning that 'simplifying complex on-chain returns and opening them up to the public' is in demand. This is actually the reason we wanted to start Infini.
In fact, we had this idea back in May of last year because I myself am a deep user of Blast. I think they did something very interesting by introducing DeFi products to the NFT and GameFi user group. It was around that time that I noticed suddenly many people around me started talking about stablecoins, and many institutions became interested in stablecoins.
This inspired me; I think we must engage in circle-expanding activities. NFTs became popular because they brought many novice users into the Crypto circle; Blast became popular because it brought NFT users into the DeFi circle. Blast indeed did something very meaningful; I saw many people starting to learn about DeFi through Blast, and it played a role in educating the market.
At that time, we actually wanted to make a stablecoin, but we found that this track was too competitive. Moreover, we did not think that we had the strength in terms of capital, team, and resources like Ethena. So we were considering how to engage in differentiated competition.
At that time, we were considering what the main use cases for stablecoins are, and thinking along its usage scenarios brought us back to a very primitive idea: we invented currency to use it.
So we thought, why not start with payment.
Our initial idea was to create a stablecoin ourselves, and all U card users of Infini would use our stablecoin for payments.
We also learned about the costs of USDC and USDE. The cost of USDC is very high, and they are already industry pioneers. I think USDE is a genius-level player, but Binance still does not support the trading pair for USDE, which shows that pushing a new stablecoin into mainstream exchanges is a very challenging task. So, why not start with small and beautiful scenarios, allowing everyday consumption to be usable? After all, the most important functions of stablecoins are either to support trading or to support payments.
BlockBeats: So after the research, you believe that making stablecoins requires very high costs. Why did you think that making U cards did not require such high costs?
Princess: Because we felt that the U card did not need too many resource costs, such as distribution channels. We thought we could promote this card through a C-end growth approach. It turned out that we indeed managed to promote the U card with very low costs. But making a stablecoin is different; you need strong resources for backing. We do not have a soul figure like Arthur Hayes.
We are a relatively grassroots startup. For a grassroots startup, lacking top resources is a significant shortcoming.
BlockBeats: It's actually quite interesting because, from a structural perspective, Infini has already launched its own stablecoin, just without packaging it under the name 'USDe'. What is displayed in the app is 'USD', but in reality, it is something very similar to a stablecoin.
Princess: Yes, I think the significance of packaging it under a shell is not great. Although packaging it can make the company's valuation higher, the valuation of a stablecoin will definitely be higher than that of a U card company, right? But if packaging it does not achieve PMF, I think it would waste time. Therefore, I prefer to first ensure that the business runs smoothly and achieves PMF before thinking about packaging.
U Card Business
BlockBeats: After the U card business was initiated, what preparations did Infini make?
Princess: After the project was initiated, we first conducted research because our company knew nothing about payments. The first person we asked was Yishi from OneKey; he is very nice and someone we know who has experience with U cards, so he has a lot of valuable experience.
Yishi also shared a lot, including the costs of this business, how to acquire customers, and why it was shut down, etc. Regarding the shutdown, he reasoned that it was due to high compliance requirements. At that time, I did not take it too seriously, but looking back now, he was quite precise. Because I had thought compliance was simple; I thought as long as we did not touch illegal things, there would be no problem. But in reality, there are many hidden costs associated with 'compliance'.
BlockBeats: At that time, you didn't realize that handling compliance issues would be so troublesome, right?
Princess: Yes, we were very clear from the beginning not to engage in illegal activities or cross the red line. During our business development process, we found that the compliance requirements for this business, as well as the licensing costs needed for compliance, are very high, not to mention many hidden compliance costs.
BlockBeats: What aspects does the compliance cost of U card companies mainly reflect?
Princess: First, a very professional legal team is needed, and a good legal team is expensive. Secondly, the cost of applying for licenses is also very high. If some licenses cannot be obtained, they need to be acquired through purchasing other companies. Taking Hong Kong as an example, the MSO license is currently quite strict, so it is best to obtain it through a shell acquisition. The specific cost depends on the offer from the other party. Acquiring a license this way currently costs about three to four million Hong Kong dollars.
Besides money, communication time is also a huge hidden cost. This varies depending on the situation; some can be resolved in a month or a few weeks, while others may take several years. Each region and each type of license is different. We hired a dedicated legal team to handle these matters from day one of the project.
We didn't expect the compliance costs to be so high at the beginning. Because we hoped to follow a compliant route, we wouldn't consider the return on investment but would incur costs to obtain licenses. In this regard, we are indeed very different from many Web3 projects. We gradually feel that we are actually a Fine Tech company; we are doing payments, not Crypto.
BlockBeats: Do you feel that you have put too much effort into the U card business? Have you ever regretted it?
Princess: This is a very good question. In fact, if you are doing something that has positive feedback, it is hard to realize that it is wrong, and you just want to keep doing it. Because our user growth was rapid, looking at the data increase every day was addictive.
Before our company does anything, we will first set an OKR. At the beginning, our entire commercial logic's underlying assumption was that as the number of U cards increased, our TVL would also necessarily increase. We thought that there should be a clear correlation between increasing card users and increasing TVL. Thus, we made increasing card user numbers a polar star indicator, so I abandoned the pursuit of TVL for a long time.
But later, we found that this was not the case. The user base was indeed growing rapidly, but the TVL did not increase significantly. We realized that although we were moving fast, we were heading in the wrong direction. Our initial business hypothesis was wrong; we thought that the more users liked using the cards, the more money they would deposit. But in reality, people's habits are such that they only deposit money when they want to spend.
BlockBeats: How much did you earn from the U card business?
Princess: A net loss; we didn't earn a penny.
BlockBeats: Do you mind becoming a Fintech company?
Princess: I don't mind us becoming any kind of company, even a yoga clothing company. The key is that this company must make money; we cannot deviate from the essence of business. The essence of business is to make money sustainably and effectively. Clearly, the U card business is purely consuming our manpower, material resources, financial resources, and energy. If a business continues to consume but cannot make money, it needs to be shut down.
BlockBeats: When did you start considering shutting down the U card business?
Princess: In May, I wanted to slowly stop this business, at least to no longer engage in related growth work. The core reason was that our card refunds were extremely slow; generally, normal international card refunds take about one to two weeks, but ours took four weeks, a month, or even a month and a half. We repeatedly urged upstream channels, but they still wouldn't process the refunds. We were bombarded with customer complaints every day, and we felt very helpless because we were at the downstream of the industry. Besides urging the channels, there was nothing we could do; we were powerless.
This caused me nearly two to three weeks of internal conflict.
Starting a U card company is not difficult; I think anyone with money, time, and patience can do it. The threshold is not high. If you want to do compliance, you will need to spend money; however, if you do not do compliance, then anyone can start one. Essentially, you only need a custodian company and to find an upstream provider for card APIs. After connecting to the API, you can issue cards.
Currently, almost all the cards on the market are doing this, but no one knows how many layers there are upstream. Some might work directly with card providers, while others may have layers of intermediaries, like an onion, which can even stack infinitely. For example, we could also create an API to open it to you, and you could then create another API to open it to others.
After doing the U card for several months, I increasingly feel that Infini is regressing in the U card business. Personally, I hope to break through traditional payment barriers, but the U card turns stablecoins into USD, processed through banks, and users swipe their bank cards, effectively returning to the old path of traditional financial payments. This is also why I am determined not to pursue it because I believe this approach is wrong.
For example, the refund issue mentioned earlier caused me a lot of internal conflict because I realized that the U card did not change any logic in this industry; it was just a traditional payment solution and not the final solution.
BlockBeats: Do you think the U card is a real demand, or is it just a reluctantly accepted solution?
Princess: If you can directly use USDT or USDC to pay for a hamburger, would you still have a need to cash out? It is precisely because this need cannot be met that everyone looks for an intermediary called 'U card' to fulfill this demand.
I think the U card is a real demand, but it is not a final solution. I believe that major products like ChatGPT, OnlyFans, and Twitter will definitely accept stablecoin payments in the future; this is the trend. And when they all accept stablecoin payments, the U card will actually have no use case.
Recalibrate, what will Infini do in the future?
Helping users simplify DeFi is the starting point of Infini's entrepreneurship. After fading out of the crypto circle and into users' daily consumption, the team has returned to this original intention. Now, Infini is preparing to refocus on on-chain returns and financial management. This is an entrepreneurial direction that differs from stablecoins and crypto payments, but the team still faces many new and old problems to solve. For example, how should the Infini brand be positioned? After experiencing theft and business shutdown, how can Infini rebuild trust with users?
But Princess and the team's determination to turn towards a new direction is firm: Infini must not regress historically; stablecoins and crypto payments cannot return to the traditional banking system. 'Use Stable Coins Directly; this is the future.'
BlockBeats: After shutting down the U card service, what is Infini's current positioning?
Princess: We need to do two things now. The first is to do well in what we initially planned to focus on at the beginning of our startup, which is financial management. Currently, our financial management income mainly comes from on-chain lending. With the arrival of the bear market and the decrease in on-chain activity, its returns will definitely decrease. In a bull market, there may often be days with 40%+ APR, while in a bear market, it might only be 2%. Therefore, we need to integrate some CeFi to make the returns more resilient and diversify risks, becoming a more comprehensive fund of funds, a balance treasure that allows users to use it with peace of mind.
This is actually something we wanted to do from the beginning, to simplify complex returns and open it up to the public. However, this matter has been pushed further and further away by 'payment', so much so that we haven't spent any time on our core business for the past few months, and it is this core business that can bring us income. Therefore, we decided to cut off the 'payment' aspect, which took the most time but was not profitable.
BlockBeats: So you are not shifting to a new direction, but rather returning to what you initially wanted to do?
Princess: Last August and September, we were already integrating financial management products. At that time, we wanted to bring in a variety of CeFi products because CeFi is not easy for most people. Good CeFi strategies don't lack funding, and poor CeFi strategies raise funds everywhere but can lead to losses.
So our initial idea was to leverage scale advantages to obtain some relatively low-frequency yet stable income financial products. An annualized return of around 10% would be very appealing to ordinary users. From Blast simplifying complex DeFi returns to our current desire to open financial management returns to retail users, this thought has not changed; it's just that the U card issue indeed diverted us for a long time and took up a lot of time.
So the first thing we need to do next is to do well in financial management, making it very safe and very resilient.
BlockBeats: Do you think this track will be very crowded?
Princess: I think it will be crowded, but it also depends on everyone's needs, because money will definitely flow to places with higher returns or, in the long run, safer and more stable. Therefore, we will categorize our financial products into different levels based on different needs.
BlockBeats: You have previously mentioned multiple times that Infini has no plans to issue coins and does not want to use coin issuance expectations for growth. Now that the business has transformed, are there any adjustments in this regard? Or have you considered going public or reverse listing?
Princess: Whether it's issuing coins or going public, it's essentially issuing assets. Once the assets are issued, they will become a liability. You need to be responsible to the Token/Share Holder. If our business does not have stable cash flow or cannot achieve perfect PMF, hastily choosing to issue coins is irresponsible to ourselves and the community.
So I want to officially answer this question: In my opinion, issuing coins and going public are means of financing and customer acquisition. We must use these means effectively and correctly at the right time. It is a financial tool; I won't say Yes or No. We will consider using it when needed, but it is still too early for everything. We must solidify our business, improve our products, and meet user needs in a productized manner. After achieving good cash flow and income, we can consider these financial operations. After all, products and PMF are the foundation of everything.
BlockBeats: As C-end users transformed from the U card business, what can we participate in after your transformation? If you completely shift to a B2B business, it would be a pity to leave so many users you've accumulated before.
Princess: Looking back on this journey, I believe the biggest gains are three points.
The first point is that we have built a very good team. The team is always the first priority. I believe that as long as we have a shared vision and our abilities, energy, and stamina are aligned, we will make good progress after the transformation. Building and nurturing the team has been our most important gain over the past six months.
The second point is branding. In this circle, you must have a good reputation; this is the foundation for doing anything in the future. If a person does not have a good reputation, it is difficult to achieve substantial growth. We are not interested in short-term customer acquisition or cashing out; we hope this can become a long-term business, a career that lasts decades or even hundreds of years.
The third point is awareness. We still need to fully embrace decentralized payment solutions and avoid centralized solutions. We must not reverse historical progress. Suppose we deploy in MegaETH or BNB in the future. In that case, users can directly open their wallets, scan to pay for ChatGPT subscriptions, and use stablecoins directly from their wallets. That would be a very cool scenario.
We should spend your stablecoins this way instead of through a U card form. I think this kind of payment is valuable, rather than returning to the traditional banking system.
We need a decentralized payment solution like this: your transactions are confirmed on-chain, your payments are made directly through wallets, and you use stablecoins directly when making payments.
I think this is the future.
