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Global remittance is a multibillion-dollar industry. However, because of the complexities of the money transfer chain from one country to another, the industry still has a low number of money transfer operators (MTOs), making it uncompetitive and fragmented and resulting in high transaction fees.
Moreover, the global digital payment network is flooded with different mediums and systems, complicating the process of confirming and settling payments. Due to the friction of coordinating the different digital payment providers involved in a transaction, completing a digital payment may take days.
But what if there were a way to speed up this process, while simultaneously keeping costs low and transactions secure?
Velo believes it has built an ecosystem to achieve this end. The project is looking to consolidate the financial payment system in Southeast Asia by creating a blockchain-based payment gateway that consists of a widespread network of "Trusted Partners" who can operate in a trustless and frictionless way.
Let’s learn more about how Velo is working to supercharge the velocity of money via web3.
Key Takeaways:
Velo provides a supercharged, “Web3+” architecture to power fast, secure and cost-effective cross-border payments and remittances.
The project has expanded beyond remittance to offer a suite of CeDeFi products that include a decentralized exchange (DEX) and a multi-chain bridge.
Velo Labs has also introduced the USDV stablecoin, which gives its native token, VELO, more functionalities.
Velo is a blockchain-enabled financial system and decentralized settlement network designed to allow the safe, secure, fast and transparent transfer of value between one country to another.
The company’s initial focus is on providing the Southeast Asia region with a digital finance platform that provides fast and cheap transactions. It aims to complement the existing banking infrastructure by providing users with a blockchain-powered infrastructure that facilitates the limitless and frictionless flow of money.
As a cross-border remittance network, Velo acts as an open protocol, comprising a pool of Trusted Partners who use digital credits to facilitate day-to-day transactions through the use of smart contracts. These Partners can use Velo’s technology to process cross-border payments quickly and in a cost-effective way.
Another focus for Velo is institutional finance partners via its Federated Credit Exchange (FCX) network. FCX is a digital asset trading platform for institutional traders that connects centralized and decentralized finance (DeFi) partners through a concept Velo has dubbed CeDeFi.
The concept combines the efficiencies of DeFi with the more established and mature practices of CeFi (centralized finance) systems to collateralize digital credits for increased liquidity.
To enhance the platform's CeDeFi ecosystem, Velo has incorporated a DEX known as VeloFinance, which combines the usual DeFi automated market maker (AMM) and the dynamic market maker (DMM) developed by Kyber Network. It enables dynamic fee adjustment that reduces the risk of impermanent loss. In addition, VeloFinance allows users to swap tokens and earn passive income through yield farming and staking.
To facilitate cross-border remittance, Velo uses a digital credit issuance mechanism fully backed by VELO tokens. Unlike traditional remittance platforms such as SWIFT, which take days to process money transfers, crypto networks offer a near-instant point-to-point confirmation and settlement at a fraction of the cost.
The two most popular blockchains suitable for remittances and cross-border payments are Ripple and Stellar. Velo opted to build on Stellar, since it’s considered to be the fastest and most efficient blockchain in the market for micropayments, with the ability to process 1,000 transactions per second (TPS).
While Stellar shares a few similarities with Ripple, the former is easily scalable, has one of the lowest eco-footprints and focuses on the unbanked, rather than on improving traditional banking systems. As a result, the Velo protocol benefits from the high liquidity and security offered by Stellar.
How Stellar’s transaction speed compares to that of other blockchains. Source: Velo
The following is a brief overview of how Velo uses a token-based system to facilitate the trustless and limitless transfer of value.
Any vetted business (known as a Trusted Partner) can deposit VELO tokens on Velo. Once they deposit the tokens, they’re issued digital credits equivalent to the amount deposited.
Velo then initiates a smart contract that locks the VELO tokens and ties them to a fiat deposit, equivalent to digital credits. The locked tokens act as collateral, allowing the Trusted Partners to settle transactions quickly and cost-effectively.
Velo’s Digital Reserve System (DRS) is designed to manage token supply and ensure that digital credits are backed by the right amount of collateral. It uses a rebalancing mechanism to balance the Reserve and Collateral Pool based on the current VELO price.
Velo Token (VELO) is the utility token for the Velo network. Initially, VELO tokens were issued on Stellar’s network, but they’re now also available on the BNB chain. VELO tokens are used as collateral for the digital credits involved in value transfers.
The VELO token is also used as an entrance requirement into the Velo ecosystem, as Trusted Partners need to acquire or borrow these tokens in order to receive digital credits. Holding VELO confers the power to shape the future of the Velo ecosystem through voting on projects on the Velo Chain and in fees and referral commissions.
Furthermore, VELO is used in the minting of the USDV stablecoin, which is fully backed by both fiat and crypto reserves. It’s also used to provide any additional collateral required by the treasury reserve. In addition, you can stake VELO on VeloFinance for rewards, or to get a fee reduction when trading on Universe, Velo's multi-chain hybrid DEX for individual traders.
VELO has a total supply of 23.99 billion tokens. The figure was achieved after a token burn of 6 billion tokens (20% of the total supply), which began in Mar 2022 at a rate of one billion tokens per month. Furthermore, in May 2023, VELO updated its circulating supply to 7,390,475,595.6 tokens.
As of Jun 20, 2023, VELO was trading at $0.0028, which is a 99.88% drop from its ATH of $2.29 in March 2021, and an increase of 167.58% from its ATL of $0.0010 in December 2022.
According to price forecasting experts at PricePrediction, VELO may hit a price of $0.009 in 2025 and rise to $0.055 in 2030. On the other hand, Bitnation predicts a moderately low increase for VELO to $0.010 in 2025 and $0.0235 in 2030.
Nothing is guaranteed in the crypto space, and this isn’t financial advice. Always remember to do your own research before investing in VELO or any other digital assets.
Velo has grown tremendously from its initial focus as a cross-border remittance network. As a finance protocol, Velo has increased its scope of products to accommodate the ever-changing web3 landscape. With what they call a Web3+ ecosystem, Velo's expansion into CeDeFi enhances its commitment to growing in the crypto niche.
Velo’s recent rebranding and improvement indicate a revamping of the project. Following the rebranding, the project team has promised enhancements to various platforms in its ecosystem.
Notably, Velo has been introducing diverse products into the market, such as its stablecoin, USDV, which enhances VELO’s token utility. The project is also working on completing various products like Orbit, an easy-to-use mobile app for P2P payments, and Quantum, a financial remittance network targeting institutions.
Considering the ramping up of activity on the project, Velo’s future looks bright and its current price could be a good entry point for an investor with a long-term mindset.
You can now buy VELO on the Bybit crypto exchange’s Spot trading platform (VELO/USDT). Following the listing on Bybit, you can now deposit funds and start trading VELO. All you need is to sign up and start trading.
Velo has provided a fast and cost-effective infrastructure to bridge the gap between physical and digital cross-border payment platforms.
Its budding ecosystem encompasses DeFi via its DEX, and apps to enhance financial inclusivity for its users.
As the Velo project continues to constantly update its functionalities, it seems to be on the right trajectory toward achieving its mission of leveraging blockchain technology to supercharge the velocity of money around the globe.
#Bybit #TheCryptoArk