The Next Frontier: Unlocking the Potential of Non-USD Stablecoins with OnChain FX

Pendulum
Pendulum-Chain
Published in
5 min readSep 16, 2024

The dominance of USD stablecoins in the DeFi world is obvious, but the crypto ecosystem is expanding, and non-USD stablecoins are beginning to take their place on center stage. As EVM-compatible chains, such as Ethereum and Avalanche, continue to grow, they offer a platform for the tokenization of off-chain assets, including foreign currencies. These developments mark the next step in blockchain’s maturity, presenting massive potential for global financial inclusion and efficiency.

Non-USD Stablecoins: A Growing Need

In the global financial landscape, USD continues to play a dominant role. However, for blockchain to become a truly global financial tool, it must accommodate the realities of the world’s varied currencies. Tokenizing non-USD currencies offers a significant opportunity to address the growing demand for cross-border financial services, reduce reliance on the USD, and provide better access for developing economies.

Data shows that while USD stablecoins still make up 99% of the market, this leaves significant room for growth in non-USD currencies. As developing countries adopt blockchain-based financial solutions, non-USD stablecoins offer a path forward for users and businesses looking for local currency stability in a globalized world.

The Role of EVM Chains in FX and Non-USD Stablecoin Adoption

EVM-compatible chains such as Ethereum, Polygon, Base Chain and more provide the infrastructure needed for global adoption of non-USD stablecoins. These chains are more accessible and flexible, thanks to their decentralized nature, scalability, and developer-friendly tools.

EVM chains enable the creation of dApps that facilitate cross-border payments, FX trading, and remittances. Projects like Curve, Aave, and others have leveraged the liquidity of USD stablecoins to build decentralized financial instruments. The next frontier is to integrate non-USD stablecoins and create more diverse FX markets.

By using automated market makers (AMMs) and concentrated liquidity market makers (CLMMs), on-chain protocols can provide a way to trade non-USD stablecoins, offering the possibility of better liquidity, tighter spreads, and faster settlement times compared to traditional financial systems.

Spacewalk & Vortex: Building the Bridge for Non-USD Stablecoins

Spacewalk, a bridge linking Polkadot and Stellar ecosystems, is opening the door for non-USD stablecoins to flow freely across blockchains. By connecting different blockchain networks, Spacewalk enhances liquidity and drives cross-border transactions.

Vortex is designed to simplify the conversion of crypto assets into fiat currencies, making it easier for users and businesses to interact with both traditional and decentralized financial systems. By integrating these tools with non-USD stablecoins, Vortex and Spacewalk present new opportunities for users to engage in cross-border commerce, hedge against currency volatility, and gain access to new DeFi applications.

These platforms aim to democratize access to financial tools, allowing users from different regions to benefit from the efficiencies of blockchain while maintaining the familiar use of local currencies.

Real-World Applications: Cross-Border Payments and Beyond

The promise of non-USD stablecoins lies not just in their ability to be a hedge against local currency instability but also in their potential to streamline cross-border transactions. Countries in Latin America, Africa, and Southeast Asia can use these stablecoins to conduct trade, send remittances, and stabilize local economies.

Several EVM-compatible dApps have begun leveraging these technologies to facilitate everything from cross-border payments to sophisticated trading mechanisms. For instance, dApps like Uniswap and SushiSwap on Ethereum have integrated non-USD stablecoins into their liquidity pools, allowing users worldwide to swap currencies with minimal slippage.

Non-USD stablecoins could help reduce transaction costs for small and medium-sized businesses engaged in international trade, providing them with better access to global markets. Additionally, individuals working abroad can use blockchain to remit funds home more efficiently, bypassing traditional banking systems that often charge exorbitant fees.

By reducing reliance on traditional FX markets, on-chain FX protocols and dApps on EVM-compatible chains can create competitive alternatives to systems like SWIFT and Western Union. This can significantly reduce remittance fees by as much as 80% compared with traditional instruments.

The Future of On-Chain FX and DeFi Integration

The future of on-chain FX will be driven by the development of more sophisticated financial instruments, including derivatives and synthetic assets that leverage the liquidity of non-USD stablecoins. These tools will enable individuals and institutions to hedge against currency risks and make it easier to engage in global trade.

As blockchains continue to evolve, more dApps will integrate FX and DeFi services, allowing users to tap into new liquidity pools, trade international currencies, and gain access to cross-border financial tools. The goal is to create a more inclusive financial ecosystem that empowers individuals and businesses, regardless of their geographical location.

Conclusion: A New Financial Landscape

The integration of non-USD stablecoins and FX markets on-chain represents a monumental step forward for blockchain technology. By leveraging EVM-compatible chains, Spacewalk, Vortex, and other platforms, the global financial system is becoming more accessible, efficient, and inclusive. As adoption continues to grow, these innovations promise to reshape the financial landscape, making it easier for individuals and businesses to engage in international trade, manage currency risks, and access the benefits of decentralized finance. The future is here, and it’s more connected than ever.

About Amplitude

Pioneering the internet of fiat. Amplitude is the sister network of Pendulum on Kusama. It will act as a testing ground for Pendulum applications and network parameters and be powered by the AMPE token.

About Pendulum

Building the missing link between fiat and DeFi through a fiat-optimized smart contract blockchain based on Polkadot’s Substrate. Allowing traditional finance fiat services to integrate with DeFi applications such as specialized forex AMMs, lending protocols, or yield farming opportunities. Developed by SatoshiPay.

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Pendulum
Pendulum-Chain

Traditional finance infrastructure blockchain. The missing link between fiat and DeFi. Limitless fiat. Decentralized future.