3 - 4 minute read
Decentralized Finance (DeFi) protocol Num Finance has raised $1.5 million in a pre-seed funding round to expand its stablecoin offerings in Latin America and the Middle East. The firm plans to release stablecoins pegged to the Brazilian real, Colombian peso, Mexican peso, and Bahrain dinar in the next month. The expansion will also focus on growing its real-world asset offering, starting with the tokenization of money market financial instruments.
Investors in the pre-seed round include stablecoin developer Reserve, digital asset investor H2O Scouter Fund, Argentine crypto firm’s investment arm Ripio Venture, decentralized venture fund VC3 DAO, and Auth0’s CTO, Matias Woloski.
The demand for stablecoins, a $130 billion subset of digital assets, is increasing in emerging regions with frail financial systems such as Latin America and Turkey. People use these tokens as a means of sending remittances and storing value, according to crypto research firm Chainanalytics.
Stablecoins anchor their price to an external asset, usually a government-issued fiat currency, and allow cheaper and faster transactions using blockchain technology. Despite their growing adoption in developing countries, U.S. dollar-denominated stablecoins dominate the market, representing roughly 99% of the combined supply, according to CoinGecko data.
Num Finance offers collateralized loans in local currency stablecoins to businesses in emerging markets, historically underserved by traditional financial institutions due to limited credit availability. The protocol currently issues Argentine peso and Peruvian sol stablecoins.
The expansion of Num Finance’s stablecoin offerings is significant as it targets emerging markets that lack access to traditional banking services and are in dire need of stable financial instruments. With the expansion of its offerings, the protocol is likely to attract more users and increase the adoption of stablecoins in these regions, creating a new market for traders to explore.
According to a report by Chainalysis, stablecoins are gaining traction as an inflationary shield in Latin America and Europe. The report argues that in these regions, where inflation is a concern, stablecoins are increasingly being used as a means of protecting the value of money and as a hedge against inflation.
The Bottom Line
Num Finance’s expansion into emerging markets with its stablecoin offerings is a significant development that could lead to greater adoption of stablecoins in these regions and create new opportunities for traders. As stablecoins gain in popularity, traders should keep an eye on the growth of these tokens in emerging markets and consider diversifying their portfolios to include stablecoins pegged to local currencies.