Forex exchange layer demonstrates the possibility of DeFi cross-border payment use case
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.
Since its inception, Jarvis Network has taken advantage of stable and liquid on-chain fiat to increase the number of users onboarding into DeFi. Their efforts have resulted in a solution to the remittance use case, a product of
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