Forex exchange layer demonstrates the possibility of DeFi cross-border payment use case

3 years ago

Remittance payments are essential to support vulnerable classes of society; unfortunately, high fees often limit their impact.

Forex exchange layer demonstrates the possibility of DeFi cross-border payment use caseSPONSORED

Remittance payments are at an all-time high due to the COVID-19 pandemic. To paint the picture, Mexico’s payments alone have 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 families back home are supported, the process favors the intermediary over the sender, with high fees of up to 6-7%. These fees represent a detrimental percentage, especially when considering that remittances are often a critical lifeline for those in need.

Reducing these fees then comes down to eliminating the multiple intermediaries involved in the transaction as well as reducing its duration, a process eased 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 remittance! In a few years, most of the global remittance companies and applications will be leveraging stablecoins and on-chain Forex.”

At present, fiat-backed stablecoins have proven their use for domestic payments; unfortunately, they often lack the liquidity necessary to fulfill the remittance use case. Consider that converting Tether (USDT) to U.S. dollar (USD) can essentially be done in a one-to-one ratio. However, when currencies must be exchanged for, say, the Japanese yen (JPY), transacting parties may run into stablecoins lacking liquidity.

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