Our Growth Strategy
Introduction
Bluejay Finance is a fundamental enabler for the next evolution of DeFi, by providing local stablecoins to onboard the next billion users and businesses. Our recent article focused on the product results of our testnet launch, which tested out a couple of key hypotheses around protocol’s ability to maintain peg of stablecoin, protocol revenue generation, and more.
However, an equally important part of a stablecoin’s success is a sound growth strategy to drive adoption through different phases. As a business model, Bluejay is like a wholesaler of local stablecoins, working with an ecosystem of different protocols, companies as distributors of these stablecoins for various use cases like payments and lending.
In this article, we’ll discuss how we think about our long-term growth strategy.
Real World Applications as the Next Wave in DeFi
With Bluejay’s stablecoins, we care about supporting use cases that will drive real long-term economic value. Since the mid-2020s, DeFi has been very successful at bringing in capital and technological innovation, with many investors and builders coming into the space because of the sky-high yields.
However, since the downturn in Q2 2022, DeFi has reached a pivotal moment, where questions around sustainable yields have become more prominent. While there could still be yields coming from the development of new DeFi primitives, a big part of the yields needs to come from value-generating activities that are created from better and more efficient capital allocation.
For instance, real world asset lending players like Goldfinch and Credix are decentralized credit protocols that make DeFi loans available to businesses in emerging markets. The “real yield” is coming from actual businesses that are borrowing capital, deploying to revenue-generating activities, and using that revenue to pay back the loans to creditors. These protocols exist because in the traditional finance world, businesses struggle to get access to credit, especially in emerging markets.
DeFi can shine as a better and more efficient backend infrastructure for these types of financial services, and improve the way that money works today — either in speeding up the cost & time of transaction or improving efficiency in capital allocation. And the role that Bluejay plays — as the stablecoin issuer and currency money market — is the monetary layer in that DeFi backend infrastructure.
Why Local Stablecoins Matter as We Move From Speculation Capital to Sustainable Capital
As we move beyond just speculation capital on DeFi yield farms into more sustainable capital for real world utilities, we will need local stablecoins beyond just USD.
Dollar stablecoins found their product-market fit during DeFi summer because they allowed for users around the world to tap into DeFi yields as an asset management strategy. Whether or not the stablecoins were denominated in USD or local currency mattered a little bit less, because:
- Foreign exchange risk between the dollar and local currency mattered less with retail money and higher risk/return profile (e.g., 5% foreign exchange risk on 10,000% yield farming returns seems more like a drop in the bucket). This equation changes when you talk about institutional money, multi-million dollars at stake, and more middle-of-the-ground risk/return profiles.
- Capital invested into the protocols tend to stay within crypto, so less of a need to create on/off-ramps and connect it more closely with local wealth
- Stablecoins were used far more for investments and for store of value reasons, than for payments & transactions for real financial services. The dollar satisfies the former well, and not so much the latter, which didn’t matter as much during the last cycle since those use cases were small in comparison.
However, as the more real world financial services and local wealth move on-chain, the more there is a growing need for local stablecoins as a medium-of-exchange and bedrock for these financial applications.
Structure of our Growth Strategy
To get to this long-term vision, we think about our growth strategy in a few different stages:
- Infrastructure: the payment rails and liquidity needed to facilitate the movement of our stablecoins, from liquidity pools on DEXes to on/off-ramps for converting our stablecoins to fiat and vice versa.
- Partnerships: ecosystem partners we would work with to enable the stablecoins in payments or money market use cases, from fintechs doing payroll to DeFi protocols doing real world asset lending.
- Products: beyond the spot market, the additional products like swaps, forwards, and contracts, that we would build in order to deepen our suite of FX products.
- Platforms: we envision that at scale there are ways that we will be able to multiply our impact, by using Bluejay as a platform for other protocols to tap into FX market liquidity and expand into new markets like APAC, with our market specific expertise.
Infrastructure
Infrastructure will allow users to effectively move from Bluejay stablecoins in and out of other currencies like USD stablecoins (e.g., DAI), and local fiat for on/off-ramps.
DeFi distribution
Most of the basis for our decisions for pool allocation in DeFi will revolve around the places where we anticipate the highest volumes and most useful trading pairs. We will not be looking to distribute anywhere and everywhere across every chain and DEX, but be intentional around where we want to take bets without excessively fragmenting our liquidity. We are starting with using Uniswap as our primary pool and will be looking into alternative AMMs that drive the cost of swaps low, while generating a sustainable amount of revenue for the protocol.
On/off-ramps
Local fiat on/off-ramps are still a huge barrier outside of the US, and if overcome, can be a large opportunity for global players to launch in Asia markets The conversion of USD stablecoin to local fiat in different countries is not as efficient at scale. Therefore, Bluejay stablecoins can help with last-mile delivery by creating a liquid pair between the local stablecoin and local fiat, and make it much more seamless for global players enable their users to move their funds between crypto and fiat.
Partnerships
Our infrastructure will enable the money flow for our stablecoins, but our ecosystem of partners will drive the real demand. Partnerships will be one of the primary ways we see our business growth within the first year. We see our partners fitting in one of two main categories — payment rails or money markets (e.g., local stablecoins in lending pools). While these two categories are broad, we will be focusing on the niches that have the largest pain-points and readiness for adoption today
Payments
For payments, this includes cross-border payments, which is one of the biggest areas that traditional finance has not fully solved for. Traditional finance requires the coordination of many different players to facilitate a single transaction from one country to another, whereas stablecoin payments across the blockchain can undercut the time and cost by fractions.
Additionally, this includes payroll, especially for remote-first companies and/or companies that have a balance sheet that is mixed between crypto and fiat. Bluejay wants to help its partners easily convert in bulk their crypto into fiat-based currencies that they could use to pay their staff, with Bluejay stablecoins as the intermediary.
Real World Asset Lending
For real world asset lending (to learn more, read our article here), we have an opportunity to a) bring in more lender capital by diversifying the stablecoin currency in the loan pool, b) make on/off-ramps more efficient for loan disbursements and paybacks. For a), having bluSGD or bluPHP available for lenders can help protocols tap into more traditional financial institutions (e.g., specialized local private debt funds) and move beyond just relying on crypto-native capital. Local stablecoins allow these investors to mitigate foreign exchange — especially when loan sizes are in the multiples of millions — and operate in a unit of account that they are familiar with.
For these opportunities within payments and real world asset lending, we have already started working with few of these players within the space, like Silta Finance, Goldfinch, Request Finance and more.
Products
The next area of growth will be our product expansion, including derivatives contracts. As DeFi becomes more and more connected to the real world, there is going to be greater demand for financial instruments for foreign exchange, and different players may want different levels of exposure when it comes to currency risk. In the real world, the foreign exchange market is worth $6.6 trillion daily, and much of that volume is coming from trading on the derivatives vs. the spot market.
Platforms
In the later stages, we want to be able to scale our impact by becoming a platform that allows others to build and integrate on top. These include programs and platforms like: :
- Ecosystem grant program for developers: providing grants for developers to build projects on top of Bluejay’s stablecoins — for instance, borrowing & lending protocol for FX stablecoins.
- Asia launchpad program: helping global projects create a presence in Asia, given its large population of potential crypto users. We provide the local expertise (e.g., connection to other fintechs and players in the ecosystem, market research) and the projects utilitize Bluejay’s stablecoins as part of its entry strategy in the region.
- Stablecoin-as-a-service: providing a platformized way for any protocol to mint a new stablecoin currency (e.g., Cambodian riel) if enough liquidity is put up and there is an available price oracle to peg the stablecoin.
Bluejay Finance has ambitions to become the gold standard stablecoin market for APAC. The journey starts with enabling an ecosystem of strong partners and continues with expanding to new products and platforms that accelerate access to finance and DeFi for APAC.
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The information provided in this Medium Post pertaining to Bluejay Finance, its crypto-assets, business assets, strategy, and operations, is for general informational purposes only and is not a formal offer to sell or a solicitation of an offer to buy any securities, options, futures, or other derivatives related to securities in any jurisdiction and its content is not prescribed by securities laws. Information contained in this Medium Post should not be relied upon as advice to buy or sell or hold such securities or as an offer to sell such securities. This Medium Post does not take into account nor does it provide any tax, legal, or investment advice or opinion regarding the specific investment objectives or financial situation of any person. Bluejay Finance and its agents, advisors, directors, officers, employees, and shareholders make no representation or warranties, expressed or implied, as to the accuracy of such information and Bluejay Finance expressly disclaims any and all liability that may be based on such information or errors or omissions thereof. Bluejay Finance reserves the right to amend or replace the information contained herein, in part or entirely, at any time, and undertakes no obligation to provide the recipient with access to the amended information or to notify the recipient thereof. The information contained in this Medium Post supersedes any prior Medium Post or conversation concerning the same, similar, or related information. Any information, representations, or statements not contained herein shall not be relied upon for any purpose. Neither Bluejay Finance nor any of its representatives shall have any liability whatsoever, under contract, tort, trust, or otherwise, to you or any person resulting from the use of the information in this Medium Post by you or any of your representatives or for omissions from the information in this Medium Post. Additionally, the Company undertakes no obligation to comment on the expectations of, or statements made by, third parties in respect of the matters discussed in this Medium Post.
