Monolith Reflects: why we’re launching token.com in Brazil

Earlier this month, we announced that we would be launching our next product in Brazil. We’ll be building a DeFi app that anyone can use, and we’re excited to unveil it in Latin America’s biggest economy. It’s set to go live at token.com. Although our current offering provides an easy entry into the magical world of DeFi, the expense of using Ethereum mainnet has priced out many users in recent months. Popular among crypto natives, it’s also a fairly complex product for less experienced users. For our next product, we’ll be simplifying the experience to make DeFi easy and accessible to all. Full details on what the new app will entail will be revealed soon, but in the meantime, we wanted to explain why we’re launching in Brazil.

Brazil’s demographics

Brazil is the sixth most populated country in the world. Home to roughly 214 million people today, it accounts for almost half of South America’s inhabitants.

Over 60% of Brazil’s population fall under the millennial or Gen Z bracket, with youths aged 15–24 accounting for more than ⅓ of the total population.

Of the whole population, around 70% have regular Internet access and own a smartphone.

We believe that this is a favourable climate to launch a DeFi product. The target market is huge, including millions of young people that use the Internet on a daily basis.

Crypto is known for its popularity among younger, tech-savvy audiences. It’s sometimes described as “Internet money”.

Though we intend to build a product that appeals to everyone, it makes sense that young Internet users should be the first to embrace it. Brazil’s large population of digital natives will be the perfect group to share DeFi with.

Brazil as a fintech hub

Brazil is South America’s largest fintech hub.

The country’s fintech industry has grown at a rapid rate in recent years, too. According to data from Statista, the number of fintech startups jumped from 244 in early 2017 to 771 in mid-2020 — an increase of over 200%.

Brazil is home to many successful fintech companies, including Nubank. Since launching in 2013, the popular neobank has attracted 34 million customers and hit a valuation of $25 billion. That’s a higher valuation than UK companies Revolut, Monzo, Transferwise and Starling combined.

The success of companies like Nubank highlights Brazil’s appetite for innovation, particularly concerning their own personal finances.

However, the cryptocurrency space currently represents only a fraction of this market today. This has presented us with an opportunity to bring a product to the Brazilian market, combining our expertise in both the crypto and fintech worlds.

Brazil’s economic climate

Brazil is the largest economy in South America and 13th largest in the world, according to the International Monetary Fund.

The country’s Gross Domestic Product is estimated to be around $1.5 trillion.

Nonetheless, Brazil is classified as a developing country. While the GDP is high, it ranks only 83rd in the world on GDP per capita.

Many parts of South America have endured a debt crisis at various points in history, with Venezuela currently experiencing a long-running hyperinflation problem. Though Brazil’s situation isn’t as severe, national debt hit a record high of 90% of GDP in February.

Brazil went through a recession from 2014 to 2016, and the economy has plunged further over the last year as a result of the Coronavirus pandemic.

Inflation is almost 3% today, while lending rates are among the highest in the world. Meanwhile, real interest rates are now negative; several Latin American banks started charging to borrow money amid the pandemic last year.

While Brazil has one of the world’s largest economies, it’s currently facing many economic challenges. The impact of Coronavirus has intensified the situation, with negative interest rates now a harsh reality for Brazilian citizens.

There could be a solution in DeFi. A new economy is growing on Ethereum today, where DeFi users can earn generous yields for interacting with protocols. In DeFi, you can earn interest in the form of tokens and watch your money grow. We intend to introduce Brazil to the magic of DeFi in an easy, safe and fun way.

Brazil’s crypto scene

While Brazil has had economic difficulties in recent years, the cryptocurrency space has seen enormous growth.

Mercado Bitcoin, Brazil’s biggest cryptocurrency exchange, has over 1.5 million users today. Mercado Bitcoin was Brazil’s first major exchange to launch in 2011, but other companies have emerged over the last few years as demand for digital assets grows. Major industry players such as Binance and Huobi also have a local presence.

However, of the fintech startups based in Brazil, crypto accounts for only 2%.

Moreover, the current landscape focuses on only a few crypto assets. Other than Bitcoin and Ethereum, exchanges typically favour assets like Litecoin, Bitcoin Cash and Ripple, which exploded during crypto’s moment in the mainstream in 2017.

To date, Brazil has offered little exposure to projects like Aave, Synthetix or Yearn Finance. Our research indicates that “DeFi” is largely unknown in the country. That means even crypto-inclined Brazilians are likely unaware of the possibilities of the technology, notably the opportunity to capture yields.

With crypto beginning to return to mainstream interest, we predict that the number of crypto projects in Brazil will increase over the next decade. We plan to be the first to make DeFi accessible to everyone.

Our ties to Brazil

While the market conditions are favourable for a DeFi startup such as ours, there’s another less obvious factor that has influenced our path. Monolith has a connection to Brazil. Will Ou, our longstanding Chief Commercial Officer, is from São Paulo. Our Senior Design Producer Tiago Möller lives in Curitiba and has seen the growth of the fintech sector over the last few years first hand. And former and future team members also come from the Terra do Brasil.

In summary, we have always had close ties to Brazil. It feels natural that our next step involves launching a product there.

Final thoughts

We’d like to conclude by reiterating our belief in this opportunity. Our token.com project will make growing your money in DeFi easy and simple, starting in Brazil. We’ve spent months researching the local market, and we feel that now is the right time to bring DeFi to the country’s swathes of digital natives. The economic situation of recent months has only strengthened our belief. If our efforts in Brazil are a success, we will look to expand our offering to other countries.

But we are not alone in this mission.

Monolith is a shared vision between the people working on the project and our loyal supporters. Our goal is simple: we want to make decentralized finance on Ethereum easy, safe and fun for anyone to use. Our first Monolith product has a loyal customer base of Ethereum natives, recently hitting $12.5 million in total card top-ups (most of which came from ETH). Our next product will initially focus on earning yield through stable assets — limiting risks such as price volatility. We think this is how DeFi will hit mass adoption over the next few years. The space is growing at lightning speed. Over the next decade, millions of peoples’ lives will be improved as they unlock DeFi’s potential. We are excited to help them get there as we embark on the next stage of our journey. We hope that you will join us too.

Learn more at token.com