There is no doubt that the $129 billion stablecoin market is bubbling, with hundreds of different projects, each with various features and functionality. However, despite the diversity, the stablecoin market is primarily dominated by the top five projects, which make up 94% of the total market capitalization and represent 99% of stablecoin trading volume, most of which are USD-stablecoins.
As a matter of fact, most of the stablecoin market revolves around the U.S. dollar, adding currency exchange risks and frictions for users who don't live in the U.S. Yet, non-USD stablecoins can play an essential role in onboarding billions of users to the crypto ecosystem and, more precisely, decentralized finance (DeFi), and, therefore, are often looked to as a key driver in user adoption. That said, non-USD stablecoins are struggling to: maintain stable pricing, liquidity and scalability, on top of being viable, preventing them from achieving the network effect needed to make them usable by everyone.
Unfortunately, due to the high costs to build liquid markets for stablecoins, they are typically hard to launch and scale. To solve this chicken and egg problem, leading experts are looking to the Forex market.
Jarvis Network is one of these platforms, operating with the aim to address these concerns with the launch of Synthereum, their first protocol. Synthereum is a collection of smart contracts that pioneers a capital-efficient and innovative manner to issue and exchange synthetic stablecoins, called jFIAT. Synthereum enables an on-chain Forex market, leveraging Chainlink Price Feeds for real-time currency exchange rates, which users reference when undergoing Forex trades without the necessary slippage, to help jFIATs solve the liquidity and peg issues for non-USD stablecoins, fostering worldwide inclusion of other global currencies and further increasing DeFi adoption.
In reference to their mission, a team member from Jarvis shares, "Eventually, our protocol enabling liquid and stable stablecoins with an on-chain Forex will be the back-end technology underpinning most wallets whose mission is to ease user experience."
An on-ramp to access liquidity
On Jarvis Exchange, users can perform Forex swaps without price impact on Ethereum (ETH) and Polygon (MATIC), although the platform has since shifted focus to Polygon. To do so, Jarvis leverages Synthereum's innovative issuance mechanism, which allows users to mint jFIAT with USDC or to burn jFIAT for redeeming USDC at the oracle price. From the user perspective, it is an on-chain Forex swap to exchange any jFIAT for USDC or for any other jFIAT without slippage.
Jarvis Exchange combines this on-chain Forex swap without price impact with an AMM swap in order to exchange any jFIAT for virtually any token. This feature, called the On-Chain Liquidity Router (OCLR), uses USDC to help jFIAT access the most liquid pools on Ethereum or Polygon. Since there is no slippage when exchanging jFIAT and USDC, an exchange between a jFIAT and another token has the same price impact as if it was exchanged directly with USDC.
To illustrate, consider this example. Imagine a user is buying ETH with jEUR. In this case, the jEUR would be swapped with USDC on the Synthereum protocol. And in the same transaction, the USDC would be swapped for ETH on an external AMM, leveraging the entire on-chain liquidity.
With this built-in on-chain Forex, jFIATs are connected to the entire crypto market liquidity idling on decentralized exchanges on any chain through USDC. This Forex market also guarantees jFIAT's redeemability for USDC at the oracle value, which helps maintain their asset backing or "peg."
The team is currently leveraging several partnerships, including one with Mt Pelerin, a Swiss financial entity that has entrusted Jarvis Network to launch a 1-to-1 fiat on and off-ramp for their synthetic asset on both Ethereum and Polygon. With their non-custodial wallet, users can buy and sell synthetic assets (jFIATs) for real fiat without spread or fees. The team aims to launch more jFIAT on different blockchains.
Launching new stablecoins with ease
The team behind Jarvis remains committed to facilitating a user's journey in the blockchain industry. Synthereum aims to be integrated within crypto wallets and crypto-cards projects to provide a Revolut-like experience. Here, users could deposit their fiat to blockchains through a fiat on-ramp, exchange them for other stablecoins, send, receive, or spend them, access liquidity and yield opportunities. This is in addition to exploring DeFi services such as lending or leverage trading as soon as jFIATs are more integrated within other protocols.
This is in addition to Synthereum's numerous other use cases, including its Forex features, such as remittance and building derivative markets on top of it to hedge currency risks. In the meantime, the team's focus remains on creating a network effect with liquidity yield and various integrations as their primary focus.
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