Pantera Partner: Interpretation of the Vauld Operation Mechanism of Encrypted Native Bank


Vauld provides methods for managing digital assets and traditional assets, and users can more easily use legal currency and cryptocurrency for lending, trading and payment.

Author: Paul Veradittakit, Partner of Pantera Capital Author: Lu Jiangfei

Earlier this year, Pantera Capital led the seed round of Vauld, a cryptocurrency native bank focused on the Asia-Pacific market. Other top investors participating in the investment include: Coinbase Ventures, CMT Digital, Gumi Cryptos Capital, LuneX Ventures, Robert Leshnar (Compound Finance CEO), CoinShares, and Robot Ventures, a venture capital firm under Tarun Chitra. In the current macroeconomic environment of quantitative easing, interest-bearing accounts are very necessary. Vauld uses its advantages in the cryptocurrency and blockchain industries to provide consumers and developers with friendly products, so that people have the opportunity to acquire more Income and better financial services.

  • At this stage, nearly one-fifth of the people in the world still cannot access banking services, although there are already some solutions on the market that try to solve the problems of inefficiency and inequality in banks-such as Neobank and decentralized financial agreements that favor technology. However, these solutions still have many limitations. For example, legal currency holders cannot use financial services on poor infrastructure, and cryptocurrency has not achieved mainstream universal adoption. (Chain note: Neobank is a new-generation bank, and also a bank that uses pure digital or pure mobile terminal operations.)
  • Vauld is an encrypted native bank that can provide users with banking services in multiple currencies (such as holding assets, transactions, credit, payment, etc.), just like different international currencies and digital tokens. Vauld hopes to span all banking networks, currencies and blockchains to help users access and participate in fund transactions in various forms.
  • The core infrastructure of Vauld is a centralized liquidity pool. Users can choose fiat currencies, stable coins or other tokens to support their assets. They can also choose any cryptocurrency they are interested in to invest in, and some assets have annual returns. The rate can even reach 12%. Then, Vauld divides liquidity into two types, one is funds used to provide loans, and the other is floating funds for user transactions. The loan funds will be lent to the borrower in the form of a risk-free loan, because Vauld’s loan mortgage rate requirement is 150%, and the fund needs to be repaid within 30 days; if the borrower wants to obtain loan funds, he must provide collateral, but Vauld The range of acceptable mortgage assets is very wide, including fiat currency, stocks/ETF, or other tokens. Trading liquidity will be stored on the Vauld Exchange partner Binance (Binance) platform, which allows Vauld customers to trade more conveniently. In addition, Vauld also plans to further expand its business services, including the provision of exchanges of different international currencies, international payment solutions, index funds and SIP access, credit cards, etc.
  • In the Indian market, the services provided by Vauld are very popular. At the beginning of 2020, Indian regulators lifted the two-year ban on cryptocurrency transactions. As a result, compared to 2019, the average daily cryptocurrency trading volume in India in 2020 Increased five times to reach 100 million US dollars. Vauld has advanced infrastructure and also supports the Indian legal currency rupee. Therefore, Vauld is a good choice for Indian consumers who want to obtain both legal currency and cryptocurrency services. In fact, there are many other reasons why the Indian cryptocurrency market embraces Vauld, including: ordinary consumers’ confidence in the banking industry has declined, traditional banking businesses are often unable to complete smoothly, the legal currency policy is “ineffective”, and so on.
  • It should be noted that although Vauld has achieved some success in the Indian market, the Indian government may recently re-implement the cryptocurrency investment ban, which may affect the overall development of the country’s cryptocurrency market. It is reported that India’s implementation of the cryptocurrency ban is likely to pave the way for the Central Bank of India, the Reserve Bank of India (RBI) to issue a centralized central bank digital currency. However, restricting cryptocurrency investment may have an impact on India’s economic development, because decentralized finance has become a trend, and it accounts for an increasing proportion of the global financial industry.
  • Vauld proposes a “user first” method to manage digital assets and traditional assets, making it easier for users to use legal and encrypted currencies for lending, trading, and payment transactions. Vauld also provides users with a variety of payment methods, different currencies and asset types of service support, bringing users a seamless, low-cost currency processing experience, and supports various forms of currencies.

Allow people without bank accounts to access financial services

Globally, there are still nearly 1.7 billion adults (approximately 22% of the global population) unable to establish stable connections with financial institutions such as banks or credit unions. Traditional banking services mainly provide services for Western customers, but banks usually require complicated KYC policies and remittance processes, which leads to inefficient bank transactions and various service barriers, and prevents thousands of people from successfully obtaining the funds they need.

In the past decade, there have been some solutions in the market that attempt to expand the scope of financial services beyond banks, including:

  1. Neobank, which provides more competitive loan products;
  2. Decentralized finance (DeFi) protocol for borrowing and lending supported by digital assets and decentralized computing.

Most centralized solutions still rely on the infrastructure supported by traditional banks. In particular, ordinary consumers will still encounter many obstacles in terms of how and where to send funds. There are other solutions, such as the DeFi protocol, which can provide decentralized loan services, but most people are not familiar with this field, and these solutions are technically complex and cannot be quickly adopted by the mainstream.

Cryptocurrency can reshape the way money is held and how money is transferred, and it can alleviate many inefficiencies and unfairness in the traditional banking system. However, it is equally important to gain mainstream adoption and promote these decentralized financial institutions in a way that users are familiar with and easy to use.

Encrypted native bank: Vauld

Vauld is a cryptocurrency native bank that can provide users with banking services in various forms of funds (including legal tender, stocks, digital assets, tokens, etc.), such as holding funds and remittances. Vauld plans to cover all international currencies and blockchains, helping users to seamlessly hold and transfer funds in multiple forms.

The main difference from Neobank’s other encryption-based banking services is that Vauld covers almost all banking networks. Most Neobanks only operate fiat currencies or other traditional financial assets, while most decentralized agreements have restrictions on the exchange of US dollars in fiat currencies, and there is less support for other fiat currencies. The inability to easily exchange between different currencies will bring huge friction to the financial system, thus preventing the widespread adoption of innovative financial services on a global scale. Relatively speaking, Vauld can easily exchange international currencies and can access various use cases in the financial field.

In addition, unlike most Neobank and centralized lending methods, Vauld natively supports the holding and distribution of cryptocurrency assets in various forms. The lender who provides loan funds to the agreement can earn interest in the form of tokens, while the borrower can use other digital assets as collateral for token or legal tender loans. Compared with investing and holding assets, Vauld allows users to use encrypted assets for a wider range of financial use cases, as well as access to differentiated financial products, such as algorithmic stable tokens based on the rebasing mechanism. These products default or Volatility risk is usually relatively low.

How it works

Vauld’s functions are mainly organized around a centralized liquidity pool, in which bank users can “lend” or hold assets. Users can deposit fiat currencies, stablecoins, and even cryptocurrencies such as Bitcoin and Ethereum, and then earn stablecoins or tokens such as XRP. So far, the value of assets in the Vauld liquidity pool has exceeded 50 million U.S. dollars, and these assets exist in the form of various tokens and legal currencies (such as U.S. dollars and Indian rupee).

Then, Vauld will allocate liquidity to two “branch”:

  1. Funds used to provide loans;
  2. Floating funds used for user transactions.

Borrowers can obtain loans from the funds allocated to loans. This type of funds is usually risk-free, because Vauld’s loan mortgage rate requirement is 150%, and the funds need to be repaid within 30 days; if the borrower wants to obtain loan funds , Collateral must be provided, but Vauld can accept a wide range of collateral assets, including legal tender, stocks/ETF, or other tokens. In addition, because Vauld has multiple forms of currency, it can provide competitive loan products. For example, the lender of certain assets can get an annual return on investment of up to 12%, and the borrower of certain assets can get a 1% spread .

Pantera Partner: Interpretation of the operation mechanism of the crypto-native bank Vauld

Trading liquidity will be stored on the Vauld Exchange partner Binance (Binance) platform, which allows Vauld customers to conduct transactions more conveniently. Users can also use Indian rupee, U.S. dollars and cryptocurrencies held for various asset transactions.

Pantera Partner: Interpretation of the operation mechanism of the crypto-native bank VauldAbove: How Vauld works, source:

Not only that, Vauld also provides an application programming interface (API) to allow users to connect to multiple cryptocurrency wallets with different tokens and use these tokens for lending. In addition, Vauld supports U.S. dollars, Indian rupees and other legal currencies, which can help companies integrate legal currency/cryptocurrency payments into the infrastructure and provide exchange channel services for different currency holding forms, including bank accounts. , Unified Payment Interface (UPI), cash, etc.

In the next step, Vauld also plans to provide more features, including:

  1. Cross-token payment services;
  2. Cryptocurrency margin trading with up to 5 times leverage;
  3. Debit and credit cards;
  4. Functions such as bank accounts held by individuals.

In the future, Vauld also plans to provide support for more international currencies, such as the British pound, the euro, and the Singapore dollar.

Asia-Pacific market case

One of Vauld’s main target markets is South Asia and Southeast Asia, with a large number of users in India, Singapore and Hong Kong. As Asia-Pacific financial centers, Singapore and Hong Kong have adopted cryptocurrencies as “other security assets”, aiming to strengthen the trading market and attract institutional investment. However, it is necessary to obtain regulatory approval and comply with licensing laws and regulations before trading cryptocurrencies in these regions.

In May 2020, the Supreme Court of India overturned the previous cryptocurrency trading ban imposed by the Reserve Bank of India (RBI), the central bank of India. This “good” has greatly stimulated the country’s cryptocurrency industry. In 2019, the average daily transaction volume of crypto users in India was approximately US$20 million, but in 2020, this indicator number has increased fivefold to US$100 million. However, due to the lack of convenient currency exchange channels and support for independent tokens, the quality of many local encryption services in India is not in place.

However, India has a large population, so it is a very potential market for the cryptocurrency and digital asset industry. With the support of telecom giants like Reliance Jio, 400 million Indians can now access the Internet. Even if many Indians do not have access to banking services, they can access various cryptocurrency services through the Internet. In addition, the scale of the Indian diaspora is also very large, with an annual transfer of funds of up to 80 billion U.S. dollars to the local area, and cryptocurrency can also provide cross-border transfer services similar to banks, and remittances are faster and cheaper.

Vauld intends to launch the first encrypted credit and debit card in the Indian market, where users can directly settle debts in fiat currency or encrypted currency. In addition, they also plan to establish payment platforms in the United States, the European Union, the United Kingdom, Singapore, Japan, Australia, Hong Kong and other places to conduct legal currency exchange, transactions, and cross-border transfers, so that global users can easily access legal currency, encrypted assets, And other high-end assets, such as SIP, index funds, etc.

Vauld has a mature infrastructure that supports the processing of various cryptocurrencies and traditional financial assets, so it is very attractive to cryptocurrency enthusiasts. In addition, Vauld can provide fiat currency exchanges between Indian rupees and US dollars, so many users in the Asia Pacific market Entering the cryptocurrency market has also become easier.

But it should be noted that there may be variables in the development of Vauld in the Indian market, mainly depending on the regulatory stance of the local government. Recently, the Indian Ministry of Finance announced that it would completely ban cryptocurrency investment and only allow cryptocurrency holders to set aside 3 to 6 months to liquidate their crypto assets. In addition, the ban also stipulates that the government can issue digital Indian rupees through the Central Bank of India. This means that it will not be easy for Vauld to succeed in the Indian market in the future, but the problem is that restricting cryptocurrency investment may have a negative impact on the economic development of India, because cryptocurrency has become a trend, and it will be global in the next few years. The proportion of the financial industry will also become higher and higher.

Final thoughts

The operation efficiency of traditional banking institutions is very low. At the same time, digital assets have not been accepted by most people, and the operation is more complicated. These shackles restrict people all over the world from holding encrypted financial assets and traditional financial assets. Most solutions that expand the scope of financial access focus on specific issues, such as bank user experience, interest rates, or enabling cryptocurrency ownership. Few solutions can bring users a complete financial experience. As cryptocurrency gradually becomes mainstream, people urgently need an easy-to-use platform to accommodate traditional financial assets and digital financial assets, and to easily borrow/loan, trade, and transfer funds around the world.

Vauld is a very promising solution that allows ordinary users to seamlessly access fiat currencies and digital financial assets. As an encrypted native bank, Vauld supports:

  • Borrowing and lending;
  • Asset transaction
  • Asset holding
  • Credit and payment in various currencies;
  • Exchange between different international legal currencies and different cryptocurrencies.

For those holding fiat currencies and encrypted assets, Vauld supports docking with multiple banking networks, and also has a certain influence in the blockchain and currency industry. These advantages make Vauld the most convenient financial solution. one. In the Indian cryptocurrency market, Vauld has an Indian rupee/cryptocurrency exchange channel and various other financial products, making it the most popular cryptocurrency partner for local consumers. Unless the Indian government implements further supervision of cryptocurrencies, the country’s interest in cryptocurrencies will continue to rise, which in turn will promote the substantial growth of Vauld’s business in South and Southeast Asia. In the final analysis, Vauld has effectively simplified various forms of capital transaction processing, and has become one of the most promising financial solutions to reshape the global banking industry.

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