Forex Exchange Layer Demonstrates Possibility of DeFi Cross-Border Payment Use Case

Remittances are at an all-time high due to the COVID-19 pandemic. To paint the picture, payments from Mexico alone amounted to more than $50 billion, surpassing all other sources of foreign income. This value represents only a subset of the estimated $540 billion reported in 2021.

While remittances are essential to ensure support for families back home, the process favors the middleman over the sender, with high fees of up to 6-7%. These fees represent a detrimental percentage, especially considering that remittances are often an essential lifeline for those in need.

Reducing these fees then amounts to eliminating the multiple intermediaries involved in the transaction as well as reducing its duration, a process facilitated by decentralized finance (DeFi). In response to this potential use case, Jarvis Network shares, “Decentralized finance has matured so much that it can now be used as a back-end to power real-world applications like remittances! In a few years, most global remittance companies and apps will leverage stablecoins and on-chain Forex.

Currently, fiat-backed stablecoins have proven their use for domestic payments; unfortunately, they often lack the cash needed to fulfill the remittance use case. Consider that the conversion from Tether (USDT) to US Dollar (USD) can essentially be done at a one-to-one ratio. However, when currencies need to be traded against, for example, Japanese Yen (JPY), trading parties may encounter stablecoins lacking liquidity.

Since its creation, Jarvis Network took advantage of a stable and liquid on-chain fiat to increase the number of users onboarded to DeFi. Their efforts resulted in a solution to the remittances use case, a working product alongside Curve and fiat-backed stablecoins.

With Curve, Jarvis effectively bridges this gap as a Forex exchange layer as the glue that connects all fiat-backed stablecoins that have an efficient in-and-out ramp, transferring funds internationally with instant settlement. The model can then be extended to a wider range of stablecoins, thus addressing the remittances use case.

Cross-border payments

In practice, Jarvis Network relies on its stablecoins, jFIAT, such as jEUR, jCAD or jBRL, respectively the euro, the Canadian dollar and the Brazilian stablecoins.

jFIATs have a strong peg and on-chain liquidity as they are over-collateralized with USD coins (USDC, BUSD on Binance Smart Chain) and can be converted to underlying collateral without slippage. By combining two conversions, jFIATs can be converted into other jFIATs, using USDC as a bridge, enabling a slip-free on-chain Forex market.

These jFIATs are paired in Curve’s pool with their equivalent fiat-based stablecoins, linking the latter through this on-chain Forex market.

For example, EURS from Stasis, paired with jEUR, can be exchanged for CADC from Paytrie, paired with jCAD, by converting jEUR to jCAD.

Therefore, Curve pools can help to switch, for example, from BRL to EUR. Ultimately, the transfer would bring BRL to BRZ, a BRL stablecoin issued by Brazilian Digital Token, exchange its equivalent to jFIAT (jBRL) in an Ellipsis pool, fork Curve on the Binance Smart Chain, convert it to jEUR on Jarvis Exchange -it and resell it for euros using Mt Pelerin, a fiat-crypto over-the-counter (OTC) office based in Switzerland.

These pools have allowed Jarvis Network to open the remittance corridor cheaper than what traditional players offer. As a result, their solution has already been used on Polygon and BNB Chain. There were users sending money from Switzerland to Canada and from Switzerland to France on Polygon, and several transactions recorded from France to Nigeria and from Brazil to France on the BNB channel.

To date, it takes an experienced DeFi user to take advantage of this remittance corridor, but one day soon, it is expected that apps will start being built on top of it to provide a seamless remittance experience. .

Launch more stablecoins

Since October of last year, Jarvis Network is now grossing over $130 million in Forex spot swaps in its primary market, $90 million in its secondary markets, and an additional $12 million in fiat on and off-ramps. Their team continues to work closely with Mt. Peletrin, an OTC trading desk, to conduct fiat-to-crypto trades as well as crypto-to-fiat trades across multiple networks to facilitate access to on-chain and lane liquidity. remittances to their community.

Over the next year, Jarvis aims to launch more stablecoins on more chains while rolling out the second version of their protocol to enable the scaling and launch of baskets of currencies and derivatives like options. and Forex futures.