Nigerian startup Xend Finance uses decentralized finance (DeFi) to address currency devaluation. DeFi aims to bridge the gap between decentralized blockchains and financial services.
Currency devaluation is a common economic nightmare faced in most African countries and other developing countries worldwide. It has become imperative for organisations like credit unions to hedge their collective funds against their local currency’s devaluation.
“We’ve experienced three massive currency devaluations in the last three years in Nigeria, and this is similar to different economies in the world with unstable economies,” Ugochukwu said to TechCrunch. “My mother and I belong to different cooperatives where we save and make monthly contributions to help one another in the cooperative. Realizing that despite saving regularly, we were losing more value for our money. This gave birth to Xend Finance.”
Today, the company announced its mainnet launch, opening up the ability for credit unions to access DeFi for their members by using decentralized stablecoins such as DAI and BUSD.
Not only is Xend Finance trying to protect credit unions from fluctuation, but it is also changing how they operate. In these unions, groups of individuals contribute to informal savings for their different mutual benefits.
However, they are often limited by three factors. One is in its size — only a small knit of people in a particular locale can access the service. The second is lack of insurance which means people don’t have the confidence to join saving cycles. The third has to do with how credit union members default in payments, affecting how much is paid down the line.
Xend Finance is plugging these gaps using blockchain technology. The platform allows credit unions to have over 1,000 members who don’t stay in the same geographical location. It also employs smart contracts to lock each member’s contribution and enable flexible payouts when a payment cycle is due, which reduces default payment rates. The company also says it offers decentralized insurance to protect members against any form of asset loss that results from contract failures. However, this isn’t a traditional insurance contract from an insurance company.
Besides, the company says credit union members can earn interests in their savings by exchanging their crypto or fiat currency for stable cryptocurrencies and locking crypto assets on lending platforms. According to the company, there’s a possible 15% available annual percentage yield on the platform.
The company claims to be the world’s first decentralized finance (DeFi) credit union platform and the first DeFi company to launch out of Africa. Its technology is built on Binance Smart Chain (BSC), a blockchain for developing high-performance decentralized applications.
In 2019, the startup based in Enugu, Nigeria, took part in the Google Launchpad Africa accelerator and the Binance Incubation Programme. It has since secured $2.2 million from Binance, Google Launchpad, NGC Ventures, Hashkey, and AU21 Capital, amongst others.
From December 2020 to January 2021, Xend Finance executed a testnet with over 1,500 participants in 75 countries. This helped them find product-market fit, and last week, the company did a beta launch of its mainnet where it received over $500,000 in deposits. They also signed a credit union partnership with a software service provider, TechFusion Africa and its 5,000 members.
The company intends to onboard a lot of customers now and focus on revenue later, Ugochukwu says. And when it does, the play will be to charge a commission (not more than 5%) on the return on investment when members of cooperatives or regular individuals save or perform contributions on the platform.
Having run some tests and passed several iterations, Xend Finance is fully going public today, and Changpeng “CZ” Zhao, CEO of Binance, expects the platform to show what can be built on BSC.
“Africa is one of the most important continents, representing the future and emergence of DeFi and blockchain capabilities,” said Zhao. “We are very excited about the mainnet launch of Xend Finance, with a team we backed early on that has a strong foothold in Africa and have been strong advocates for what Binance Smart Chain can accomplish. With their platform, they can bring stable currency and DeFi investment opportunities to those who normally wouldn’t have them.”
Along with the mainnet launch, Xend Finance will introduce the $XEND token through a Token Generation Event (TGE) on Balancer. The company says the token will reward users for performing different operations in “the protocol, as well as allows a decentralized governance of the Xend Finance ecosystem.”
For Ugochukwu, Xend Finance presents people with the opportunity to channel their savings into stablecoins without worry that their money will devalue overnight and earn higher interest rates through DeFi. “We are very excited that blockchain will have a positive impact on the people of Africa,” he said.
Total Market Value of Top Three Stablecoins More than Tripled YTD and Hit $110B
In the wake of growing interest in the crypto market, stablecoins or cryptocurrencies linked to an asset have seen their market capitalization surge this year.
According to data presented by MejoresApuestas, the combined market cap of Tether, USD Coin, and Binance USD, as the world’s top three stablecoins, more than tripled since the beginning of 2021 and hit over $110bn this week.
Tether`s Market Cap Jumped Over $68B, a 158% Increase YTD
Unlike other cryptocurrencies, stablecoins are relatively less volatile, and their value is determined differently. For example, the price of Bitcoin mainly follows demand and supply, or how many coins are being mined and how many investors want to buy the crypto. On the other hand, stablecoins are connected to the price of an altogether different asset.
Tether’s USDT, for instance, is connected to the price development of the US dollar. If the US dollar falls in the FX market, so does the USDT. However, the price of the fourth-largest crypto by market cap spiked in 2021.
The CoinMarketCap data revealed that Tether’s market cap jumped by 158% year-to-date, rising from $26.5bn in January to $68.3bn this week. Also, as the world’s most traded cryptocurrency, Tether saw its trading volume increase by 35% last month. In July, the world’s most used stable coin hit $1.48trn in monthly trading volume. Statistics show this figure hit over $2trn in August.
Binance USD Market Cap Soared by 742% YTD, the Biggest Increase Among Top Three Stablecoins
Stablecoins are essential for two areas in digital payments that do not prefer volatility. One of them is the Decentralized Finance or DeFi market that relies on cryptocurrencies for payments and loans.
Also, they are seen as the inspiration for so-called CBDC or Central Bank Digital Currencies, like China’s e-CNY currency or the digital euro, an electronic form of money issued by the Eurosystem.
Although far behind Tether as the world’s leading stablecoin, USD Coin has seen much more significant market cap growth this year. Statistics show the market capitalization of the second-largest stablecoin surged by nearly 400% over the past nine months, reaching $29.2bn this week.
Still, that was nearly twice less compared to Binance USD growth this year. In January, the combined value of all Binance USD coins stood at $1.48bn or almost 18 times less than the leading Tether. However, this figure soared to $12.5bn, showing an impressive 742% growth year-to-date.
Ethereum Adds Over 38 Million New Addresses in 2021, 22% of All Ever Created
The Ethereum network has recorded a surge in popularity, with more investors aiming to own part of the second-ranked cryptocurrency. The interest is highlighted by the number of unique new addresses created in 2021 alone.
Data acquired by cryptocurrency trading simulator Crypto Parrot indicates that an average of 149,843 new unique Ethereum addresses has been created daily in 2021 on a year-to-date basis. The highest number of new addresses was created on June 5th at 332,094. So far, in September, a total of 1,389,999 new unique addresses have been created.
Elsewhere, by September 2021, 38,256,193 new Ethereum addresses were created in 2021, accounting for 22.59% of all ETH addresses ever created to date. In general, the cumulative number of Ethereum addresses to be created since inception stands at 169,296,775.
Impact of Ethereum network upgrades on new addresses
Currently, the Ethereum network is undergoing upgrades geared towards transitioning from the proof-of-work protocol to the proof-of-stake system that is energy efficient.
The upgrades play a key role in determining the number of new Ethereum addresses created, and the report takes note of this factor. According to the research report:
“The drop in new addresses comes at a point the Ethereum network upgrade is expected to create a deflation over time as it modifies the auction process. Furthermore, with Ethereum transitioning to the proof-of-stake protocol, the network will likely experience an influx of new users who want to cash in on the staking.”
The new address follows the recent cryptocurrency bull market that saw Ethereum surge in value to a new all-time high price. However, the addresses have plunged in correlation with the general crypto market.
MicroStrategy Acquires Additional 5,050 Bitcoins
Business intelligence outfit and corporate Bitcoin (BTC) whale MicroStrategy has increased its BTC ownership with the additional purchase announced on Monday.
MicroStrategy CEO Michael Saylor announced the purchase of 5,050 BTC for about $242.9 million at an average of $48,099 per coin.
In a Form 8-K filing with the United States Securities and Exchange Commission published on Monday, MicroStrategy stated that it had added 8,957 BTC to its corporate Bitcoin treasury in Q3 2021.
As previously reported, MicroStrategy recently bought 3,907 BTC at the cost of about $177 million between July 1 and Aug. 23.
Following the latest Bitcoin acquisition, the company now holds about 114,042 BTC acquired at an aggregate purchase cost of $3.16 billion. Given the current BTC spot price, the company’s Bitcoin holdings are valued at over $5 billion.
According to the Form 8-K document, MicroStrategy’s Bitcoin cost comes down to about $27,713 per BTC, including fees and sundry expenses.
The additional 5,050 BTC purchase is yet another indication of its intention to expand its Bitcoin position. Despite paper losses on its Bitcoin investment in Q2, MicroStrategy has stated its Bitcoin appetite remained unaffected.
Since announcing its maiden BTC purchase back in August 2020, the business intelligence company has bought more Bitcoin becoming the largest corporate holder of the largest crypto by market capitalization among publicly traded firms in the United States.
Saylor has also become a prominent Bitcoin proponent, regularly encouraging other U.S. firms to add BTC to their balance sheets.
Monday’s purchase announcement comes amid a price decline for Bitcoin, with BTC down almost 3% in the last 24-hour trading period.
The total cryptocurrency market capitalization is down more than 4% as token prices slipped on Monday.
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