Affirm logo displayed on a phone screen
Photo: Jakub Porzycki/NurPhoto via Getty Images

Affirm's shoppers are stressed. So is Wall Street.

Protocol Fintech

Hello, and welcome to Protocol Fintech. This Friday: Affirm’s stress test, Coinbase goes to the polls and the top brand NFTs.

Off the chain

Coinbase doesn’t want its employees to talk politics at work. But it’s hoping its customers will go to the polls. “We don’t regularly talk about politics here at Coinbase, but we’ve always said that we will engage in the political process at moments when it relates to our mission of increasing economic freedom in the world,” chief policy officer Faryar Shirzad wrote in a blog post about its new voter-education initiative. More crypto-friendly candidates are running in 2022, and Coinbase and other companies are hoping to expand the size — and maybe tilt the tenor — of the Congressional Blockchain Caucus. That may be an uphill battle, since some crypto-friendly candidates like the Association for Digital Asset Markets’ Michelle Bond haven’t made it past the primary contests.

— Owen Thomas (email | twitter)

Affirm’s stress test

Affirm spooked Wall Street with a downbeat outlook, which confirmed what many already suspected: More consumers are hurting. CEO Max Levchin said the “buy now, pay later” company is seeing “early signs of consumer stress.” It’s likely to continue and could even get worse.

It’s a major test for Affirm — and for the emerging payment method. While Levchin still argues that “buy now, pay later” is a better financing option for consumers, especially during a crisis, his team is paying close attention to “signs of significantly more stress.”

“We are going to be cautious,” Levchin said on Affirm’s earnings call. The company reported a downbeat revenue outlook that sent its shares tanking late Thursday.

  • Affirm said it expects sales in the current quarter to come in at $345 million to $365 million. That’s significantly below Wall Street’s estimate for $386 million. Affirm’s stock fell more than 20% Friday morning.
  • The miss follows a pattern, analyst Alex Johnson, author of the Fintech Takes newsletter, told Protocol. Affirm and other companies like Shopify misread the “pandemic surge in ecommerce” by “assuming that it was more of a permanent jump forward,” he said.
  • And the market slump, marked by inflation, rising rates and layoffs, is clearly taking a toll on consumers. The economy “is more than likely in the beginning stages of a downturn,” Levchin said. “It's too early to tell how deep it will be and how long it will last.”

Is “buy now, pay later” good for stressed-out consumers? The short-term payment plans, critics have warned, could lead to an unhealthy rise in consumer debt.

  • Levchin says Affirm is watching the data closely for signs of trouble: “We have been keeping our eyes very, very open.” Affirm has been closely scrutinizing the data: “We have been finding pockets of interesting things that we care to correct before they metastasize into something greater,” Levchin said.
  • One example of a “canary in the coal mine,” he said, are early delinquencies where consumers “basically say, ‘Look, I'm kind of short right now, but I'll make good at it a little bit later than I was supposed to.’”
  • “If we see deterioration, we will pull extra levers,” chief financial officer Michael Linford told analysts. Levchin said these “levers” include “tightening [loan] durations, asking for down payment, asking for incremental income information.”

Despite the fuzzy path forward, Levchin is still a firm believer in “buy now, pay later,” a payment system his company helped pioneer before it even had that catchy moniker. Hard times are creating more challenges, but this may be the best opportunity to shine.

— Benjamin Pimentel (email | twitter)

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On the money

FTX has absorbed the venture capital operations of Alameda Research. The change was in the works at the two firms, which are both founded by Sam Bankman-Fried, before co-CEO Sam Trabucco announced he was stepping down Wednesday.

There are now more Visa tokens than cards, the company says. The company's chief product officer told Reuters that Visa has issued more than 4 billion tokens for digital payments, like Apple Pay.

Real estate startup Reali is shutting down. The company — which offered a "buy before you sell" product — said the combination of a difficult real estate market and slow capital-raising environment brought the decision. The firm raised $100 million roughly a year ago.

CBOE has a long list of partners for its crypto business. The options exchange is working on crypto products with a list of financial firms that includes market makers DRW, Jane Street and Virtu Financial.

NFTs are increasingly the target of scammers. More than 4,600 NFTs were stolen in July, according to a report from Elliptic — the most of any month since the firm began tracking the data in 2017.


With few conventional payments options for cannabis businesses, Bespoke Financial’s backers think the returns on a “buy now, pay later” service for the sector are going to be high. Get it? It’s a marijuana joke. Anyway, Casa Verde Capital’s Karan Wadhera, who has backed Bespoke, isn’t worried about the competition: "We're not seeing Affirm or Klarna, and definitely not Apple come into our space anytime soon."

Former SEC chair Jay Claytonwishes Washington and crypto would just get along: “Each group fears that yielding to the other would cost billions in either losses to innocent victims or missed opportunities for investors. In this environment, consensus is elusive.”

The chart

The NFT market, which exploded in 2021, now has an estimated value of roughly $19 billion even after the frenzy fizzled. While the NFT world initially featured offbeat digital art collections like CryptoPunks and the Bored Ape Yacht Club, major corporations have also embraced the trend as a way to enhance their brands while raking in meaningful revenue. Here are the top five consumer brands cashing in on the NFT craze, with Nike in a commanding lead.

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Thanks for reading — see you Monday!

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