Erebor Raises $350M After FDIC Approval

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Good Morning.

Erebor just closed a major funding round at a $4.35B valuation, shortly after receiving FDIC approval to become a national bank. The timing highlights growing confidence in new banks designed for crypto and frontier technology.

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In Today's Email:

• What Matters: Erebor Raises $350M After FDIC Approval 💰️ 

• Case Study: Why DeFi Lending Has a Bigger Moat Than It Looks 🔎

• Governance & Features: Aave DAO Governance Rift Over Brand Rights Vote 👻 

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WHAT MATTERS

Erebor Raises $350M After FDIC Approval

State of play: Erebor, a banking startup co founded by Palmer Luckey and Joe Lonsdale, has raised $350M at a $4.35B valuation. The funding follows recent approval from the FDIC to establish Erebor as a newly chartered national bank.

• The round was led by Lux Capital, with existing backers including Founders Fund, 8VC, and Haun Ventures. Erebor is expected to launch next year.

• According to its banking application, Erebor plans to offer both traditional banking and crypto related services.

• Its target customers include technology firms focused on virtual currencies, AI, defense, manufacturing, and financial market infrastructure.

Why it matters: Regulators are warming up to new banks built for crypto and frontier tech.

Our take: Erebor is betting that regulated rails plus crypto native services can coexist at scale.

For builders and investors: This points to a future where access to compliant banking becomes easier for innovation driven companies. At the same time, it highlights how regulatory approval itself is turning into a durable competitive advantage.

CASE STUDY

Why DeFi Lending Has a Bigger Moat Than It Looks

Credits to Silvio for the original article

Despite thin margins and growing attention on vaults and curators, DeFi lending protocols capture more value than any other layer in the onchain credit stack. Data from Aave and SparkLend shows that interest fees paid by vaults exceed the revenues those vaults generate themselves.

• This directly challenges the idea that distribution is the main moat in DeFi lending.

• Across major strategies run by Ether.fi, Fluid, Mellow, and Treehouse, lending protocols earn more per unit of deployed TVL than the vaults built on top of them.

• Even upstream asset issuers like Lido capture less value once net interest margins from borrowing are included.

• The advantage is structural rather than cyclical. Lending protocols monetize notional borrowed instead of user-facing distribution.

• This allows them to capture value across strategies, issuers, and market conditions, making lending the most defensible layer in the DeFi credit stack.

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INSIGHTS

JPMorgan Launches $100M Tokenized Money Market Fund on Ethereum

State of play: JPMorgan Chase is deepening its push into onchain finance with the launch of a tokenized money market fund called My OnChain Net Yield Fund, or MONY.

• The fund will run on the Ethereum blockchain and is supported by JPMorgan’s Kinexys Digital Assets platform.

• MONY mirrors traditional money market funds by investing in short term debt instruments and paying daily accrued interest.

• The key difference is that fund shares are issued as blockchain based tokens.

• Investors can subscribe and redeem using either cash or USDC, allowing assets to remain fully onchain while earning yield.

• JPMorgan is seeding the private fund with $100M of its own capital ahead of opening it to qualified investors.

• Eligibility includes high net worth individuals and institutions, with a minimum investment of $1M.

• Access will be provided through the bank’s Morgan Money platform, with holdings represented in crypto wallets.

FEATURES & GOVERNANCE UPDATE

Aave DAO Governance Rift Over Brand Rights Vote

Governance tensions in the Aave DAO escalated after Aave Labs pushed a brand asset proposal to Snapshot, drawing backlash from its author and key delegates who say the move bypassed process and rushed an unresolved debate.

• The proposal seeks to give $AAVE holders formal control over brand assets such as domains, socials, and repositories currently managed by Aave Labs.

• Critics argue the vote was pushed without author consent, during a low participation holiday period, and risks undermining governance legitimacy.

• Some delegates labeled the escalation a “hostile takeover attempt.”

• Aave Labs defended the action, stating it followed governance rules that allow a Snapshot vote after a five day review period.

• The firm rejected claims of bad faith, arguing that extending debate beyond written requirements would itself violate process.

Other notable feature updates:

• Katana launched its App v1.

• DEIN has launched mainnet.

• Predict went live on BNB Chain.

• PayPal and USD.AI announced a partnership.

• Sky bought back 34.1M SKY over the past week.

• MegaETH is launching its Frontier mainnet beta.

• Pyth Network launched a token buyback program.

QUICK BITES

• Russia considers relaxed crypto rules.

• Aave DAO governance rift over brand rights vote.

• Justin Sun's locked WLFI tokens down $60M since September.

• Erebor raises $350M at over $4B valuation following FDIC approval.

• Clarity Act delays trigger $952M in weekly global crypto ETP outflows.

• Coinbase to acquire prediction markets startup The Clearing Company.

• Ethena’s USDe loses $8.3B since October crash amid ‘loss of confidence.’

• ETHZilla sells $74.5M of ETH to pay debt as it shifts away from DAT strategy.

NOTEWORTHY READS & MEME

• Sid Powell’s take on DeFi is Dead.

• Jake Chervinsky’s read on Tokens vs Equity.

• Sysls’s read on Why People Are (Mostly) Wrong About Hedge Fund Returns.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.