While crypto adoption has been drastically growing among users and Web3 businesses, traditional businesses are still running a bit slow in adopting the new financial sector. There have been some exceptions, as certain global businesses have adopted cryptocurrencies to ensure they are tapping into the digital financial market. Businesses such as PayPal and Visa have adopted stablecoins to offer their users an alternative mode of payment.
This is due to certain limitations of the traditional financial infrastructure that has significant room for improvement. Many businesses that aim to operate globally are hindered by high cross-border transaction fees and slower times, limited real-time settlement, and low transparency in transactions. Stablecoins, on the other hand, offer a plethora of advantages and remove many bottlenecks that the traditional banking system offers. However, while transactions powered by stablecoins are faster, cheaper, and more secure, the market currently has problems of its own too.
A factor that still hinders adoption is the incoherent regulatory ecosystem for these tokens. While there are still some uncertainties, the Markets in Crypto-Assets Regulation (MiCA) aims to stabilize the EU region. It represents one of the world’s first comprehensive regulatory frameworks for crypto-assets, including stablecoins, utility tokens, and asset-referenced tokens. Its primary objectives are to protect investors, maintain financial stability, and establish clear rules for the operation of crypto-asset services across the EU.
This is sure to increase adoption in the EU region, preventing market abuse, and thereby fostering trust and legitimacy in the market.
The Current Stablecoins Market For Businesses
For businesses, stablecoins serve as a transformative bridge, facilitating a seamless interaction of the traditional financial world with the growing digital economy. By enabling efficient global transactions, stablecoins significantly lower the barriers to international commerce, offering a cost-effective alternative to conventional banking systems. This enables businesses to bypass hefty cross-border transaction fees. Access to the decentralized finance sector further empowers businesses by providing an array of financial services—such as lending, borrowing, and earning interest on assets—without the need for traditional financial intermediaries. Additionally, currency diversification through stablecoins mitigates risks associated with foreign exchange fluctuations, providing businesses with a strategic tool for financial stability.
This is fueled by a strong stablecoin market, which, with a market cap of over $137 billion, makes up for nearly 8% of the total cryptocurrency market. Although the market fluctuations saw demand for stablecoins decrease in 2022, the volumes and market capitalization have returned to healthy levels. The expansion has also been fueled by increased digital currency adoption, enhanced access to exchanges, and their relative stability compared to traditional cryptocurrencies.
For cross-border transactions, stablecoins are highly convenient when compared to traditional fiat currency. With stablecoins, businesses can seamlessly process payments and salaries across the world in near-instant transactions with minimal fees. On the other hand, traditional transactions require bank accounts that need extensive documentation. Moreover, transactions take up multiple business days and high fees to confirm, which requires the correct details that are not verifiable in many cases. Stablecoins, and blockchain in general, offer variable addresses and fast transactions. So, a business in France can pay its employees in Singapore with stablecoins without needing banking intermediaries and paying extensive fees.
However, contrary to the traditional finance environment, the stablecoin market paints a different picture when it comes to the market capture of different currencies. While it is no surprise that USE-based stablecoins are leading the charts, they are doing so with a mammoth share of 97% of the whole stablecoin market. The remaining 2% is spread across commodities and currencies such as the Euro, Japanese Yen, and Chinese Yuan among others. While the euro is the second most used currency after the USD in traditional markets, with over 40% share, it caps out at just a market cap of around $270 million, a negligible fraction of the $133 billion market cap USD stablecoins have captured.
So even though global businesses (and a large chunk of crypto users) are situated in Europe, have European customers, have European expenses, and earn European profits, they are still bound by the limited EUR stablecoin market. It is true that the EUR stablecoins currently in the market outperform other currencies apart from USD, but they are still an extremely niche market. Therefore, European businesses have to go through USD-pegged stablecoins, which increases transaction fees and complexity.
Although the market is still small, the introduction of EUR stablecoins has been particularly well-received in the European market, offering businesses and projects an effective tool for various applications. Utilizing stablecoins referencing EUR can drastically lower the expenses associated with cross-border transactions and reliance on USD-based stablecoins. For entities targeting European markets, adopting Euro-pegged stablecoins simplifies pricing and expense management by eliminating concerns over exchange rate volatility between the Euro and other currencies. Moreover, institutions within the Eurozone can leverage EUR stablecoins to mitigate currency risk.
Patrick Hansen, EU policy expert and Crypto Venture Advisor at Presight Capital said in an interview that “A widely-used and liquid euro stablecoin can enable and improve a wide range of interesting use cases for European investors and businesses: from a more efficient on/off ramp to crypto/DeFi, to remittance and B2B payments, a frictionless crypto FX market and much more.”
Exploring EUR & CHF Stablecoins By VNX Commodities
A prominent name in the growing European stablecoin market is VEUR, a stablecoin referencing EUR, supported by reserves and generated by VNX commodities. Apart from VEUR, VNX also generates VCHF stablecoins, referencing the Swiss Franc, and tokenized physical gold VNXAU, opening up a plethora of opportunities for both retail and corporate investors. While these tokens are being adopted across Europe for their accessibility, there exists a market for these tokens in DeFi.
The company currently holds multiple licenses from the Financial Market Authority (FMA) in Liechtenstein, setting them apart in a market predominantly regulated within the United States and Canada. It will also be in compliance with upcoming EU Markets in Crypto-Assets (MiCA) regulations. Backed and supported by Woori Technology Investment, who is the largest investor in UpBit, 2be.le and other VCs , Avalanche, Stellar, Ripple, Polygon, Solana, ICP and Tezos, along with many others, VNX is the largest stablecoin issuer in Europe with licenses to generate two major European currencies.
The stablecoins have already received acclaim and adoption from both institutional and retail investors, with a presence across major exchanges and DeFi platforms such as Balancer, Orca, Curve and others. This widespread acceptance not only validates their market relevance but also provides users with avenues to engage in yield-generating activities, thereby enhancing the utility and value of holding VNX stablecoins.
While the VNX Commodities issues the CHF & EUR stablecoins, the upcoming VNX Community Hub will make its DeFi adoption accessible and rewarding for users and businesses. This will be supplemented with the VNX token, the backbone of the VNX ecosystem. In summary, VNX Commodities is the licensed stablecoin generator, while the independent and community-driven VNX Community Hub decides how the VNX stablecoin markets should develop.
Introducing the VNX Community Hub
The VNX Community Hub, powered by its native application, will offer a variety of yield-generating opportunities to its participants. The community application will include liquidity pools, vaults, and other avenues for both businesses and traditional investors to maximize the potential of their assets. Notably, the governance of this hub is democratized, allowing the community to vote on significant protocol directives, signifying a more inclusive and participatory community.
The backbone of the community hub will be the VNX token, which can be used to stake, provide liquidity, and traded to generate yield and utility. When staking the VNX tokens in the VNX community application, stakers will receive veVNX (voting escrow VNX tokens) tokens in return. These tokens, which can neither be traded nor sold, will denote the stake in the user’s wallet. However, using the veVNX tokens, participants can significantly boost their yields to up to 120%, and also vote on key protocol decisions. Through the veVNX tokens, participants can decide how to disperse rewards, use community storage, add new pools to the application, and much more.
This will enable investors and partners to collaboratively shape the DeFi market landscape alongside VNX, leveraging incentive mechanisms and governance capabilities provided by the veVNX token. This initiative facilitates the potential for harmonious development, fostering a cooperative environment for market expansion within the community application.
Power of VNX & veVNX Tokens
The upcoming VNX token will be launched through a Liquidity Bootstrapping Pool (LBP) (read more below — hyperlinked to the following section). The VNX token will be the foundation of the VNX Community Hub, through which users can receive veVNX tokens. As mentioned above, holders of the veVNX tokens receive voting power to manage key protocol decisions and boost their yield returns significantly when providing liquidity in the community pools and vaults.
Here’s how the VXN Community Hub’s tokens will enable comprehensive DeFi utilities for the VXN stablecoins.
This enables strategic partners to propose new initiatives or changes that benefit both their ecosystem and the community hub, thereby incentivizing participation and increasing the utility of their own tokens. Moreover, partners can work with the community hub to create and uplift pools that utilize the VNX tokens, stablecoins, and their own tokens to strengthen the DeFi utility while offering the community customized yield-generating opportunities.
This is highly complimented by a community-centric tokenomics of the VNX token. Out of a total supply of 300 million, 70% of the tokens will be used for incentivizing liquidity programs. Moreover, 5% of the tokens will be added to the project treasury, which is fully controlled by the community. Users will vote and decide how the treasury is distributed. Here’s more about the tokenomics and vesting period for the VNX token (hyperlinked to the vesting doc).
VNX Token LBP at Fjord Foundry
We are planning the VNX token’s fair launch at the end of April 2024 on the Fjord Foundry platform.
The VNX token will be launched via a Liquidity Bootstrapping Pool (LBP), which enables fair and transparent token distribution. With the LBP, investors get a fair and equitable distribution, enabling them to discover the fair market value of the tokens. Simply put, the LBP limits bots and whales from hoarding tokens at lower prices and dumping them once the price rises. In most cases, the price of the token starts off high and gradually decreases and/or increases as per the buying pressure from the LBP participants.
The VNX Community Hub believes that the LBP launch will ensure a fair launch of the much-awaited VNX token, allowing anyone to invest, no matter how big or small. We know that the hub has awesome community members and the LBP gives everyone a similar chance to be a part of this fair launch. Moreover, the LBP will be held on the Fjord Foundry platform, which is one of the leading community-based LBP platforms. With high-tier partnerships and an impressive track record of helping hundreds of projects raise millions of dollars, it was a no-brainer to choose Fjord Foundry as the preferred launch partner.
To participate in the LBP, all you need is to set up a wallet (like Metamask), fund it with the amount you wish to spend, and voila! You are ready to go. Here’s a step-by-step guide on how you can participate in the VNX token LBP .
Be A Part Of The VNX Community
While these stablecoins have already received massive adoption powered by a pool of partners, the VNX Community Hub takes a step ahead and enables users to deposit their stablecoins into liquidity pools and boost their yield with veVNX tokens to generate spectacular APRs. Participants will also decide how the community moves forward — choose how the pools are rewarded, which pools are added to the mix, and vote on other protocol decisions.
Apart from enjoying a higher yield, projects can use their VNX tokens and make critical decisions that shape the DeFi future of the community hub and the VXN stablecoins, while co-building with the community hub.
All this can be done with the VNX token, which will be available first in the LBP fair launch. Register for the upcoming VNX LBP for more details.
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Author: Abhishek Purushotham
