5 Use Cases for On-chain Forex
The financial landscape is undergoing a remarkable transformation, driven by the integration of blockchain technology and DeFi principles. In this era of rapid change, on-chain Forex emerges as a unifying force that amalgamates various benefits within the realm of cryptocurrency stablecoins. In this article, we’ll highlight 5 use cases for on-chain Forex, demonstrating its ability to enhance the cryptocurrency ecosystem.
1. Cross-Border Remittances
Cross-border remittances have long been associated with high fees and slow processing times. This situation poses a significant challenge for individuals seeking to send money to their families back home, particularly in the context of emerging economies, such as in Africa where remittances account for as much as 20% of their GDP. These remittances represent a vital lifeline for these economies. Although Fintech’s like Wise, Moneygram and Western Union have been able to help with solutions, problems with high fees, transfer limits and currency limits are still rife. Which is likely why all three are continuing to integrate with and explore blockchain alternatives.
On-chain Forex can solve these problems and more, providing a fast and cost-effective solution. Kotani is aiming to do just that by helping millions of African workers to send money back home. Utilization of the on-ramp off-ramp system that Pendulum is building can empower millions of migrants and expatriates who depend on remittances to support their families back home.
2. Supply Chains
Making faster payments with Forex swaps can also mean a lot for companies seeking to enhance their supply chains. By condensing a typical two-day settlement process to just 15 seconds, it introduces a near-instantaneous settlement capability that’s pivotal for their operations. This rapid settlement capability facilitates the smoother flow of goods and capital within the supply chain, alleviating liquidity challenges and empowering companies to operate more seamlessly and adaptively in the global market.
We know that at least 86% of large businesses seek instant payment services, and also many large companies are using foreign exchange brokers like OANDA and FXCM in their operations. Onchain Forex meets both of these needs simultaneously, making the integration of Onchain Forex into company operations an appealing and practical choice.
3. MFI (Micro Financing)
Microfinance institutions (MFIs) play a crucial role in providing financial services to underserved communities and small businesses. As early as 2008, MFIs showed a preference for local currency lending over using hard currencies like the US dollar or the euro as a means to mitigate currency risks. This trend has only gained momentum over time. On-chain Forex solutions can enable this preference to be met. By utilizing blockchain and DeFi technology, MFIs can efficiently provide microloans in local currencies, offering enhanced accessibility to financial services for underserved communities.
Utilizing on-chain Forex represents the swiftest path to replicate success stories akin to Najah’s, who catapulted herself out of poverty through a $2,000 loan contributed by individuals with diverse currencies from across the globe. This use case exemplifies the potential of on-chain Forex to revolutionize microfinance and foster financial inclusion.
4. DeFi Applications
On-chain Forex can be integrated into DeFi protocols, enabling users to use Forex services as part of their decentralized financial activities. The trend towards providing many services in one place in the fintech space is only increasing. We are sure to see Forex access incorporated into many crypto services. One notable example of this integrated future in motion is Pendulum’s blockchain infrastructure built on top of Polkadot smart contracts and connecting to other blockchains through Spacewalk bridge. Pendulum is building stablecoin hub where dApps can seamlessly connect a multitude of fiat stablecoins to DeFi services such as lending and borrowing, Forex swaps, yield farming and more.
5. Yield farming
Permissionless on-chain Forex makes it possible for everyone to participate in the crypto economy while providing liquidity. Its advantages, such as a low capital requirement, flexible trading hours, reduced transaction fees, and direct peer-to-peer trading, position online Forex trading platforms as a highly efficient and censorship resistant choice for individuals looking to contribute to the Forex market and provide liquidity.
Nabla: Smart Forex Liquidity
Nabla is well positioned to be the tool of choice for those looking to participate in the on-chain Forex market. As an Automated Market Maker (AMM) set to specialize in Forex trading on the Pendulum network. Nabla utilizes Proactive Market Maker (PMM) mechanisms, facilitating single-sided liquidity provision and eradicating impermanent loss. Nabla aspires to become the central on-chain liquidity hub for fiat stablecoins. Access the Nabla Whitepaper for further details.
Summary
To conclude, on-chain Forex offers a range of compelling use cases across the financial landscape. It streamlines cross-border remittances, enhances supply chain efficiency, empowers microfinance institutions, integrates with DeFi protocols, and facilitates participation in the crypto economy. Notably, dApps like Nabla building on infrastructure blockchains like Pendulum exemplify the potential for on-chain Forex to reshape the financial industry.
About Amplitude
Pioneering the internet of fiat. Amplitude is the sister network of Pendulum on Kusama. It will act as a testing ground for Pendulum applications and network parameters and be powered by the AMPE token.
About Pendulum
Building the missing link between fiat and DeFi through a fiat-optimized smart contract blockchain based on Polkadot’s Substrate. Allowing traditional finance fiat services to integrate with DeFi applications such as specialized forex AMMs, lending protocols, or yield farming opportunities. Developed by SatoshiPay.
Keep your eyes on the Pendulum!
Website | Twitter | Telegram Announcements | Telegram Community | Discord | Docs
