In brief.

  • Software wallet Argent aims to make crypto and decentralized finance (DeFi) as simple as using a conventional banking app.
  • It’s built upon an architecture of smart contracts that abstract away complex crypto concepts like seed phrases and wallet addresses.
  • DeFi needs to work towards providing value beyond speculation to scale, says Argent founder Itamar Lesuisse.

Cryptocurrency is complicated. There’s no getting away from it; to even get your hands on some crypto, you need to familiarize yourself with concepts like private keys and seed phrases, which can be a daunting prospect. And that’s before you even start navigating the waters of decentralized finance (DeFi). If crypto really is the future of currency, it needs to be as simple to use as regular currency.

That’s the future Argent is aiming for. It’s an Ethereum smartphone wallet that founder Itamar Lesuisse bills as the “simplest and safest place for your crypto.” To date, Argent has raised $16m in funding, releasing a closed beta with 5,000 loaded wallets holding an average of $2,000. A full public launch is planned in the coming weeks.

Argent’s big innovation is to use smart contracts to replicate the features of a conventional banking app like Revolut. “We’ve abstracted all the complexity that comes with a noncustodial wallet,” Lesuisse explains. “So you don't have to backup a seed phrase, you don't have to worry about gas, you can use a decentralized finance (DeFi) protocol like Compound in one tap.”

With crypto fraud and theft hitting $4.5 billion last year, Argent is also leaning heavily on user security; large transfers are delayed and subject to verification, while users can set daily transfer limits on their wallets.

Guardian Angels

Argent’s unique approach to wallet security makes use of networks of trust. Users appoint “Guardians” to their account—which can include hardware wallets, MetaMask accounts, other Ethereum accounts held by trusted friends or family members, or Argent’s own two-factor authentication tool, Argent Guard. Significant actions, like verifying a large transaction or recovering a wallet, need the approval of one or more Guardians.

It’s a nice idea, though in practice the challenge of finding close associates who are both crypto-savvy and sufficiently trustworthy to act as Guardians means that most people will probably resort to using Argent Guard or a hardware wallet as their Guardians. 

Bringing DeFi to a billion people

At this week’s Ethereal Summit, Lesuisse will be taking to the virtual stage to discuss “Bringing DeFi to a billion people.” It’s a lofty ambition, and he freely admits that “Argent is only part of the solution.” 

“We’re starting to see pockets of users and areas where crypto solves problems, but I think we're at the very start of the journey,” says Lesuisse. “We see a lot of demand for stablecoins; there are entire regions that are very eager to move their money into dollars, and I think DeFi brings something very interesting there.”

The first stage in the process of bringing DeFi to a billion people was, as Lesuisse explains, “making [a wallet] simple, but in a way that’s secure and non custodial.” The next step was to bring DeFi “a tap away from the user.” For Argent, that meant integrating DeFi platforms like Compound and Maker’s Dai Savings Rate within the app. “It's easier to move money in Compound to Argent than it is to open a savings account with a high street bank in the UK,” Lesuisse says. 

The next stage, and arguably the most important, is to scale DeFi. “To reach a billion, I think we need to acknowledge that not every person in the world should have something that looks and feels like Argent; we might not solve every problem for everyone,” Lesuisse concedes. He adds that DeFi is inherently built on network effects. “Often it's about liquidity and volume making it stronger and more useful for people,” he says. “That doesn't mean that it goes viral, and suddenly we have billions of people using it, obviously.” 

Payments and remittances will be a key driver of growth for DeFi, Lesuisse adds. He argues it’s unlikely that growth in DeFi will come from established markets. “It won’t happen straight away in the US or UK, or Europe, where payment networks are very advanced,” he says. “But I think there are markets where payment through crypto can provide a lot of value, and that’s an area that can grow quite quickly.”

Crypto and the financial crisis

The world is currently gripped by a financial crisis, with the coronavirus pandemic and subsequent lockdown shrinking economies and driving governments to unprecedented stimulus measures. For some crypto advocates, it’s a sign that cryptocurrencies’ moment in the sun has come, with widespread adoption sure to follow. Not necessarily, cautions Lesuisse. 

“I don't think we'll see some giant sudden mass adoption because of the financial crisis,” he says. “Some assets could move to crypto, because it might be an asset that can grow inside the situation. But I wouldn't call that mass adoption—that's talking about the minority of people who can afford to have savings and investments, not the majority.” 

“We do see a huge demand for the dollar,” he adds, “so I think that will increase with the current situation in some markets; we hear that mostly from markets like South America.” Ultimately, he argues, the financial crisis could help drive crypto adoption, “but I think in the end we as an ecosystem, as developers, need to build strong enough and compelling enough use cases.”

That means “generating value besides speculation,” Lesuisse says, adding that DeFi is still predominantly used by traders looking to leverage. “Lending with interest rate on the dollar is a bit more of a mass market use case; that's why we've been very bullish integrating it into Argent early on,” he says. “But overall the majority of DeFi is still mostly used by professionals, by traders. It's a good use case for them. It's just not yet a mass market use case.”

The majority of DeFi is still mostly used by professionals, by traders. It's not yet a mass market use case.

Itamar Lesuisse

With Argent’s user base currently sitting at 5,000, versus the 515 million people worldwide who opened bank accounts between 2014 and 2017, there’s clearly plenty of room for growth. It is, Lesuisse says, “a very long journey” to mass adoption, and the ecosystem needs to work together to gradually add value. “We can’t just wait five or 10 years to delineate value, we need to find ways to add value to pockets of users on the way,” he says. “Expand that pocket bit by bit, rather than just reinvent the entire financial system over a 10 year period and hope that one day we turn it on and suddenly it works.”