Nigerian decentralised finance startup Xend Finance is one startup which deserves some credits for innovating way before the country’s central bank slapped the whole cryptocurrency trading ecosystem with a mind-blowing ban. The central bank had in a statement last week commanded Nigerian banks to close all bank accounts linked to crypto. But Xend Finance may not have been caught in the net as it will allow credit union members and cooperatives convert their deposits to stablecoins and earn higher earnings. Xend Finance’s stablecoins will then be backed by traditional assets like the U.S. dollar, meaning it can domicile its funds anywhere in the world and can receive deposits from credit union and cooperatives irrespective of where they may be located.
“Traditional credit unions have a number of limiting drawbacks, including only one per cent annual percentage yield returns. Unlike credit unions, Xend Finance is not limited by geographic location, low liquidity, or absence of deposit insurance. Our groundbreaking technology fixes these problems and is safe, secure, open to all, and transparent,” said Chief Executive Officer (CEO) of the startup Aronu Ugochukwu, last year.
In 2020, the startup secured $1.5million in a funding round after its official launch with participation of investors such as Binance Labs, Google Developers Launchpad, AU21 Capital, Ampifi VC, JUN Capital, TRG Capital, and Sandeep Nailwal, among others. Now, the amount has been increased to $2m, following new investments led by NGC Ventures and HashKey.
The startup has also partnered with TechFusion Africa to make its services available to TechFusion’s 5,000 credit union members spread across Africa. This will represent the first time members on the TechFusion platform will leverage decentralised finance. Xend, the parent company of Xend Finance and a traditional fintech company, has 55,000 members that will also be integrated into the DeFi platform.
“Traditionally, credit unions offer an interest rate of 1% annual percentage yield compared to the possible 15% available through Xend Finance,” said Marilyn Modupe Jiwalde, head of sales and marketing at TechFusion Africa.
A Look At What Xend Finance Does
Launched last year, Xend Finance, is a Nigeria-based decentralized finance (DeFi) platform for credit unions and cooperatives. By decentralised, the startup will not be regulated by authorities in Nigeria or elsewhere. Through the Xend platform, credit unions cooperatives’ savings can be converted to stable currencies and staked — the process of actively participating in transaction validations on blockchains — on lending platforms so members can earn compound interest on their money. A Xend token will also be introduced to further ensure decentralised governance on the Xend Finance platform, while also incentivising members even more on their savings. The startup will be one of the first companies to build on Binance Smart Chain, and the first out of Africa.
“Along with Google, we were very impressed with the team at Xend Finance,” said Kenzi Wang, partner at AU21 said last year. “They’ve already built a network of 55,000 users and are tackling a trillion dollar industry that is perfectly suited for DeFi disruption. The Xend Finance product protects people’s savings in developing countries by giving them access to stable currencies on the global money market.”
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Part of Xend Finance’s goal is to protect the earnings of African citizens from local currency devaluations and unstable economies, Ugochukwu said, pointing to Nigeria, where people are using crypto as a hedge against inflation.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer