ADD.xyz Bridges the gap Between DeFi and Africa’s Mobile Money

ADD.xyz Bridges the gap Between DeFi and Africa’s Mobile Money

By Edward Moon | Analysis From Moon | 24 Nov 2020


Bridging the gap between mobile money and decentralized finance is one of the hurdles to overcome. Collaboration between key service providers in both segments may prove beneficial in the long run. Africa is a content that can benefit from broader access to financial services and products. 

Combining DeFi With Mobile Money

On paper, decentralized finance - or DeFi - removes barriers from entering the financial ecosystem. It is something that can be experienced by anyone with an internet-connected device, and access to cryptocurrencies. While officials have warned against involvement with Bitcoin, the current is legal in the country. The same goes for alternative currencies, including Ethereum.

This semi-open-minded approach to cryptocurrencies allows companies such as ADD.xyz to enter the African market. The project is partnering the Nigeria Inter-Bank Settlement System Plc and MTN Nigeria as a first step. This entails an integration and logistical partnership with providers in Kenya and Nigeria.  With the help of several other MTN mobile money providers, it will become possible to send local currency into leading DeFi protocols.

Providing this onramp to platforms such as Compound, dYdX, Curve, Yearn.finance , and others has not been attempted before. In taking this approach, the need to obtain cryptocurrency first is taken out of the equation entirely. Tens of millions of Africans will gain access to these DeFi protocols through ADD.xyz’s local mobile money accounts. 

The Current State of Mobile Money in Africa

When people think of mobile money in Africa, they will automatically think of  regions such as Kenya and Nigeria. This concept has proven to be successful in regions where mobile penetration has reached a very high level. At the same time, financial innovation often comes at a cost, and may face delays along the way. 

Taking Nigeria as an example, its focus on mobile money innovation may grind to a halt soon. In September of 2020, regulatory requirements have become more strict for service providers. More specifically, obtaining the license required to provide mobile money services is becoming a lot more difficult.

636045bb91fe6d25dbe353920cf9d82edb53124e5c8d87d03f9af01aa404f021.png

Source: Weetracker

While the Central Bank of Nigeria wants to grant more licenses, all firms need to have a minimum capital base of $13 million. That is a rather steep amount for entering a space that is already incredibly competitive today. Newcomers won’t just go up against established providers, but also fintech firms and telecommunication providers. 

Due to these new requirements, partnering with other players in the industry seems to be a necessity. Leveraging a partner’s license allows other companies to focus on offering financial innovation and new products. This will, in turn, provide much broader access to financial services across African countries. 

Finding the Right Partner

As a company looking to enter the mobile market market, finding the right partners is the first order of business. Joining forces with other mobile money providers is not something to be overlooked either. Having multiple partnerships in place will provide service providers with a bigger presence across the regions they are actively interested in. 

Keeping in mind how the mobile money transaction volume in Africa continues to rise year over year, this industry should not be stifled. Although the new regulations make things a bit more difficult for newcomers,  there are no restrictions in terms of partnering with other companies, Exploring all available options paves the way for exploring some unique approaches, including exposure to decentralized finance.

DeFi TVL Keeps Skyrocketing

While decentralized finance seems cryptocurrency-oriented today, the introduction of local African currencies can make a difference. As DeFi platforms continue to note an influx of money - measured by the Total Value Locked - providing access to these services can set companies - and their partners-  on the radar.

4e08ead08f914d28e2d5dda0486a654fde52ded62af652732aec5ff485753397.png

Source: DeFi Pulse

Maker, Compound, Curve, and others have billions of US dollars in combined Total Value Locked. Once local fiat currencies can be used to access these platforms, the DeFi industry can note significant growth. A lot of the potential growth will depend on how frictionless this integration turns out to be. 

Conclusion

Bridging the gap between mobile money and DeFi may not seem all that strange, all things considered. Mobile money is designed to provide financial access to those who can’t or won't access traditional products and services. As such, one can look at decentralized finance as a potential extension of the current services and products accessible on the market. 

Making banking services easier to access across Africa remains a key challenge. Projects such as ADD.xyz show this can be done by tapping into the power of blockchain technology and decentralized finance.

Not only is this approach viable for the end users, but ADD.xyz also managed to sign partnerships with core players in the African mobile money market. That goes to show the company’s approach to financial inclusion is a welcome change of pace. 

Users of this service will gain direct access to lending with privacy. at competitive interest rates and without having to download anything, as well as payroll solutions and derivatives trading. These DeFi-as-a-service solutions can put ADD.xyz at the forefront of Africa’s next financial revolution. 


Edward Moon
Edward Moon

Crypto trader and analyst.


Analysis From Moon
Analysis From Moon

Analysis From Moon

Send a $0.01 microtip in crypto to the author, and earn yourself as you read!

20% to author / 80% to me.
We pay the tips from our rewards pool.