Hello everyone, I wanted to address a few questions we have been getting about the Kudi Exchange, namely, what is it, how is it related to Ferrum Network, and how will it add value to the Ferrum Network ecosystem.
Here are the basics: the Kudi Exchange is a fiat gateway based in Nigeria, which runs on Ferrum Network technology. Why Nigeria? Nigeria has a population of approximately 200 million people, has one of the highest rates of cryptocurrency usage, and has no local incumbent competition. Kudi is owned and operated by the Nigerian blockchain VC TLG Ventures, in partnership with Ferrum Network. Since Kudi is powered by the Ferrum Network, transactions are extremely fast and inexpensive, and users must spend Ferrum Network tokens for every transaction. Therefore, Kudi.Exchange provides direct utility and value to Ferrum Network itself, and will be a source of users and revenue for both companies. Now for the details.
Since its inception, Ferrum Network — a fast interoperability network for decentralized financial applications — intended to launch a fiat gateway. The challenge was not so much technical (for a recitation on how tokenizing fiat is possible within the Ferrum Network, please refer to the whitepaper), but legal and financial. Depending on the jurisdiction, obtaining the licenses to operate a fiat exchange and building relationships with banks, could take years and millions of dollars in capital. While such a plan was in our long term roadmap, it did seem feasible to immediately execute on it because of our position as an early stage fin tech start up with limited funding.
But sometimes life has different ideas. In May 2018, Ferrum Network was invited to Consensus 2018 to the Proof of Work Pitch, where we met the guys at TLG Ventures. For those who don’t know, TLG Ventures is comprised of business professionals with deep and personal connections to Nigeria (and are Nigerian citizens themselves). When they learned of our intention to launch a fiat gateway exchange, they realized with their connections to banks and regulators, it would not be difficult to secure the licenses and relationships necessary to make the fiat exchange a reality. We’ve been working together to make Kudi.Exchange happen ever since.
Kudi Exchange Basics
So what exactly is the Kudi Exchange? Simply put, is a digital asset exchange incorporated and operated in Nigeria with fiat to digital asset exchange pairs, along with a digital wallet for users to manage their assets. For the pilot launch (details below) it will have Bitcoin/Naira pairs. Later, Kudi will introduce Ethereum/Naira pairs (for those that do not know, the Naira is Nigeria’s local fiat currency).
Like any fiat gateway, users will have to connect their bank account to the exchange, and undergo KYC/AML procedures consistent with Nigerian regulations. Reasonable fees will be imposed for making a BTC/ETH/NGN exchanges.
Kudi’s Relation to Ferrum Network
So how is Kudi related to Ferrum Network? Essentially, transactions will be executed on the Ferrum Network, and the Kudi wallet will use Ferrum Network wallet technology, which in turn enables extremely fast and low cost transactions. Essentially, you can view Kudi like any fiat gateway (e.g. Coinbase), but the backend technology is built on the Ferrum Network. The result for customer is that once they have purchased BTC or ETH on the Kudi Exchange, and they wish to send those assets to another Kudi user, the transaction will be as fast, easy and inexpensive as any transaction on the Ferrum Network. We believe it is the speed and low costs of the Ferrum Network that will make Kudi Exchange so special.
Kudi Exchange and the Ferrum Network Token
As stated above, every single transaction on the Kudi.Exchange is actually using the Ferrum Network to run that transaction. Therefore, all Kudi users will be spending Ferrum Network tokens as they purchase BTC/ETH, pay someone using the Kudi wallet, or execute any other transaction on the Kudi Exchange.
Why is this important for holders of the Ferrum Network token? Here is a primer on the Ferrum Network utility token, but to refresh your recollection, every time a Ferrum token is spent, it is burned. Therefore, the Ferrum Network ecosystem benefits from the the Kudi.Exchange, not only in terms of additional utility, but also in terms of tokenonmics.
Strategy to Bring Users to Kudi.Exchange
Of course none of this matters if we can’t execute and bring users to the exchange. This is where our professionals on the ground in Nigeria come into play. But first, some statistics.
Nigeria is a country of approximately 200 million people. It has some of the highest volumes of bitcoin usage in the world (7th highest according to this data). It is also a country with a real need for peer-to-peer financial instruments, in part because the credit card system is not very developed and the local currency is prone to inflation. The crypto users in Nigeria are less interested in speculation, and instead tend to use digital assets for simple payments and remittances. Most importantly, to our knowledge, there is no local incumbent competitors doing a fiat gateway exchange in Nigeria. The few companies that offer similar services are not based in Nigeria, and charge high fees, and impose large spreads. We believe this market is prime for a local competitor that offers better services at lower costs and higher speeds.
Of course having a superior product at lower cost is only half the battle. To bring users to the platform and see month-over-month growth, we need a smart marketing strategy. Fortunately, our professionals on the ground have experience building retail-facing financial companies in Nigeria, and we have a clear and achievable strategy for reaching millions of potential customers. Included in our marketing plan is the following: brand awareness through local celebrities; You Tube exposure; local meet-ups; and blog partnerships. Of course marketing is never static, and we will always re-evaluate our strategy for maximum effect. But the bottom line is that we have professionals on the ground ready to execute on an aggressive user acquisition plan.
What’s Next For Kudi.Exchange
On December 19, 2018, Ferrum Network and TLG Ventures will be joining Ian Balina at the Nigeria stop of his crypto world tour. We are excited to have the opportunity to share our story, and that of the Kudi.Exchange, with thousands of attendees. Shortly after our presentation, we will be launching a pilot of the Kudi.Exchange to a select group of users. This will allow us to test the platform and acquire critical data before we bring Kudi.Exchange to the masses. Expect more updates on the development of the Kudi.Exchange in the near future.
Ferrum Network is first and foremost a fin tech start-up. We are committed to consistent growth and long term success. A cornerstone of our success will be the acquisition of regular users, and the Kudi Exchange is a critical component of that strategy. By taking advantage of favorable market conditions, and by offering a superior product paired with smart marketing, we are confident that Kudi Exchange can become West Africa’s go-to fiat to crypto exchange. This in turn will grow the Ferrum Network ecosystem and positively impact the utility of the token.
Before I sign off, I want to thank our community for helping us get this far, and welcome all who wish to join the Ferrum Network community.
Very truly yours,