Smart contracts in banking activities — Fiat24
The banking narrative moved towards digitalization through e-banking and mobile apps. Yet, the underlying infrastructure hasn’t been updated or enhanced for a long time.
Thanks to the higher level of transparency, blockchain solutions can bring new income models while reducing risks. This will transform the sector, encouraging a more open and accessible financial environment. The financial services will take advantage thanks to the increased cooperation with regulators.
Indeed, it isn’t surprising that a well-regulated country like Switzerland already has 3 licensed banks working with blockchain & crypto.
Among these, it is worth noting Fiat24.
Banking & Metaverse
Fiat24 is a FINMA-licensed Web3-native banking infrastructure. Fiat24 links centralized and decentralized financial systems with its metaverse.
The platform focuses itself on retail and merchant clients. Through the dApp, customers get complete control of their funds, accessing a multi-currency cash account.
Fiat24 founders have extensive expertise in both computer science and banking activities. Yet, even with their background in traditional finance, they were early users of Bitcoin. As crypto matured, Fiat24’s creators began thinking about a new banking method.
In this platform, the NFT is your bank ID and e-banking access key, like a login & password in conventional e-banking.
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International cryptocurrency payments will settle in real-time at any time of day, unlike traditional correspondent banking networks, which can take much longer. The potential to eliminate third parties such as payment processors from the transaction process can help banks stay competitive by offering lower fees.
From a technical point of view, the platform leverages the Ethereum network. You will get access to it from Arbitrum, one of the optimistic rollups.
The decision around Arbitrum is in line with the Fiat24 purposes. Driven by retail activities, they cannot expect significant exchange volume. In this regard, Arbitrum brings lower costs than ETH, a key aspect to consider when dealing with thousands of txs daily.
Moreover, Arbitrum, leveraging the ETH chain, can scale without sacrificing decentralization and security. Something that other layer1 solutions cannot guarantee for this type of product.
This brings a big plus for banking activities for which hacks and cyber-attacks remain a concern.
At the time of writing, Arbitrum has the lead in terms of TVL compared to the other layer 2 solutions. This brings a competitive advantage for Fiat24, as they rely on a growing ecosystem.
Most importantly, users increased their usage of Arbitrum, locking +110% more ETH compared to the beginning of 2022.
Arbitrum comes with some drawbacks for the final users. If you wish to withdraw your ETH from it, there are seven days of waiting time. That’s why the interest for further implementation arises with the new zkEVM solutions.
Still, the team is enhancing additional development in their roadmap. They will enable users to operate on the Ethereum chain once the merge is complete.
Comparing alternatives
An entire smart contract bank in Web3 is still a fresh concept. However, the platform can be compared to the relevant centralized exchanges like Binance and Coinbase. Even though their objectives are quite different, Binance is taking banking licenses in several countries. It clearly shows how the market is maturing toward the crypto movement.
One of the critical aspects Fiat24 will have to consider is user fees, as they present 1 CHF / 1 EUR / 25 GBP / 35 USD for the withdrawal. For EUR, the value is in line with Binance, while Fiat24 is way more convenient for CHF. But, for GBP and USD, there is no game as Binance provides 1 GBP and 15 USD, respectively.
Testing Fiat24
Like newcomers in the space, we decided to use the platform from scratch.
After buying some ETH on Metamask with the credit card, we bridged the funds to Arbitrum. It took a few minutes.
Once you connect your wallet to Fiat24, you must pick an NFT, which will be your gateway for entry.
The UI and UX are pretty user-friendly. You can swap your ETH for fiat currencies or USDT and USDC. Without making the KYC, your profile will be limited in withdrawal, while you can top up.
The platform is still in its infancy, with 10'000 users at the time of writing, with a total deposit of $405'000.
So far, there is no possibility of using your money for payment. Still, there is an ongoing release of an electronic card associated with your account.
Smart contracts can unlock features for users, offering quick and cost-effective services. Now, regulators and the old banking system must catch up and give customers what they want.
For more information check out their Medium with all the latest updates.
Disclaimer
This is not, in any case, financial advice; the goal of our research will always be to dive deep into projects and study them from different angles; We do include personal opinions based on our experience with similar projects that I have recently learned.
We are and will always be open to discussion.
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Please always do your research before investing in anything.
