The world of decentralized finance (DeFi) is booming and growing every day with new players and new DeFi solutions making their way into the space. One such player in this space is PlutoPe, a new crypto neobank that recently raised $500k in pre-seed funding. This investment demonstrates an increasing enthusiasm for the crypto neobanks and their ability to shake up the legacy financial institutions we know today. DreamingCrypto is here to explore PlutoPe's funding in the context of the growing crypto neobank market, examining the potential benefits and risks of non-custodial crypto banking, and discussing how PlutoPe's approach might differentiate it from competitors. Listen to the call, follow the signs, read the runes and join us as we ride the rise of the decentralized age.

The Rise of Crypto Neobanks

DeFi has seen a meteoric rise starting in the middle of 2020 that’s showcased the power and promise of decentralizing financial services at scale. The amount of total value locked in DeFi protocols skyrocketed from just $100 million in 2017. Today, it’s at a whopping $100 billion! This rapid expansion highlights just how great the demand is for financial services that are accessible, permissionless, and more efficient. DeFi revolutionizes the way all service providers live and work, making them affordable, accessible, and safe for everyone. It removes the dependence on trusted third parties, namely banks and other financial institutions.

Blockchain technology makes this possible in DeFi by creating a transparent, permissionless market. This openness invites a unique, diverse, and hugely popular set of users. The same benefits that DeFi brings to users, like lower costs and faster speed, are predicated on this lack of intermediaries. Some of those platforms, like Solana, are now handling 4500 transactions per second with an average transaction time of 3 seconds. Decentralized application (dApp) growth is at an all-time high. Liquidity pools, decentralized exchanges (DEXs), and creator marketplaces that allow creators to produce and vend their creations in cryptographic shape are extending the DeFi ecosystem. The expansion of DeFi continues.

Crypto neobanks such as PlutoPe are at the forefront of this revolution. They offer users an easy-to-understand interface that bridges the gap between traditional finance and the DeFi ecosystem. These platforms are building non-custodial crypto banking services. This enables users to have more control over their capital and explore a wide range of financial opportunities.

Non-Custodial Crypto Banking: Benefits and Risks

While non-custodial crypto banking has many benefits for users, it poses unique risks. Understanding these benefits and risks is key for anyone thinking about using such services.

Benefits of Non-Custodial Crypto Banking

  • Full control over funds: Users have complete control over their funds and can access them at any time, unlike traditional banking models where users are dependent on third-party institutions.
  • Enhanced financial flexibility and opportunities: Non-custodial wallets allow users to participate in a wide range of financial activities, such as lending, borrowing, and interacting with decentralized finance (DeFi) protocols.
  • Low-cost transactions: Non-custodial banking enables low-cost transactions on Layer 2 networks, making blockchain-based services more viable.
  • Decentralized identity creation: Non-custodial wallets enable users to create a decentralized identity (DID) that can be used across various Web3 applications.
  • Security: Users can manage and store cryptocurrencies securely, with the responsibility of key management solely on the user.

Risks of Non-Custodial Crypto Banking

  • Risk of Losing Private Keys: Users are solely responsible for the security of their private keys. Losing these keys means losing access to their funds, with no central authority to recover them.
  • Phishing and Social Engineering: Fraudsters may use phishing attacks to trick users into revealing sensitive information, such as login credentials or one-time passcodes (OTPs).
  • Cybersecurity Threats: Neobanks, including crypto neobanks, are vulnerable to cybersecurity threats, which can result in the loss of user funds.
  • Limited Access to Data: Crypto neobanks may not have access to the same level of customer data as traditional banks, making it difficult to verify customer identities and detect suspicious activity.
  • KYC/AML Compliance Risks: Crypto neobanks must comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations, but may face challenges in implementing these measures due to their online-only nature and limited resources.
  • High-Volume Transaction Risks: Crypto neobanks process a high volume of transactions, which can make it difficult to identify suspicious activity among legitimate transactions.

PlutoPe's Approach and Future Prospects

With intense competition for crypto neobanks, PlutoPe plans to stand out from the crowd through a few key strategies. Foodtech startup PlutoPe raises ₹50 million in Pre-Seed funding Read More » This new capital will accelerate its development, enabling the company to innovate even faster and further expand its global user base while solidifying its foothold in emerging and under-connected markets. Additionally, the funding will enable PlutoPe to launch new products, including crypto debit cards across MENA, SEA, and LATAM, a merchant app for crypto acceptance, and a one-tap on-ramp for Indian users, thereby enhancing its offerings in the DeFi space.

PlutoPe, led by investors such as Manit Gupta, is positioning itself to develop these alliances. With this in mind, they want to work with stablecoin issuers, Layer-1 blockchain networks, and creative banking institutions to promote responsible growth and stimulate innovation. Armed with this funding, PlutoPe is cutting the red tape to rapidly advance the development of smart, easy-to-use crypto financial tools. These tools expand direct asset ownership and democratize financial access for those historically locked out from traditional systems. The funding will expand PlutoPe’s reach across the globe. It will focus on those emerging and under-connected markets even as it expands its own user base.

PlutoPe's focus on non-custodial solutions, combined with its strategic partnerships and product roadmap, positions it as a promising player in the crypto neobank space. With the DeFi market maturing faster than many could have anticipated, platforms such as PlutoPe have the potential to influence the direction of finance in future. They can empower their constituents with more financial control and access to groundbreaking new financial services. While PlutoPe has a lot of exciting challenges and opportunities ahead, just look at how far they’ve come already. WSB’s success in their recent funding round is a hopeful sign, not only for the company but for the emerging crypto neobank industry.