Applications and Use Cases

Nigeria's Xend Finance Rolls Out DeFi Blockchain Platform for Credit Unions

March 26, 2021

Pioneering Nigerian startup company Xend Finance has announced its mainnet launch, enabling credit unions to access decentralized finance (DeFi) for their members. The company aims to tackle problems with currency devaluation, and uses DeFi to bridge the gap between decentralized blockchains and financial services.

The mainnet launch will enable credit union members to use decentralized stablecoins like DAI and BUSD to create a more level economic playing field. Currency devaluation is an ongoing problem in developing countries, forcing credit unions to scramble to protect their collective funds against local currency devaluation.

Currency devaluation has created particularly volatile economic conditions in Nigeria, which led Xend Finance founders Aronu Ugochukwu and Abafor Chima to launch the company in 2019.

“We’ve experienced three massive currency devaluations in the last three years in Nigeria, and this is similar to different economies in the world with unstable economies,” Ugochukwu told TechCrunch. “My mother and I belong to different cooperatives where we save and make monthly contributions to help one another in the cooperative. Realizing that despite saving regularly, we were losing more value for our money. This gave birth to Xend Finance.”

The company is using blockchain to effectively change how credit unions operate as well as protect unions and their members from currency devaluation. Traditional credit unions face a number of challenges including size. A small group of individuals typically participate, contributing their savings to benefit themselves and the union.

Most credit unions in developing countries also lack insurance, which means less individuals have confidence in contributing their hard-earned money. Credit unions also have specific rules about paying default payments, which impacts how much is eventually paid out.

Blockchain is the key to addressing these issues, and Xend Finance's platform makes use of it. The solution enables credit unions to maintain more than 1,000 members in different geographical locations. It also uses smart contracts to lock members' contributions as well as enable flexible payouts when a payment cycle is due, reducing default payment rates.

Finally, the solution offers decentralized insurance, protecting members from asset loss resulting from contract failures. Members may also earn interest through the solution by exchanging crypto or fiat currency for stable cryptocurrencies and locking in their crypto assets on lending platforms. Xend Finance believes members may earn up to 15 percent annual percentage yield on the platform through this method.

The Xend platform is build on the Binance Smart Chain (BSC), a blockchain designed for high-performance decentralized applications. The company claims the solution is the first DeFi credit union platform in the world, and Xend is the first DeFi company to launch out of Africa.

“Africa is one of the most important continents, representing the future and emergence of DeFi and blockchain capabilities,” said Changpeng “CZ” Zhao, CEO of Binance. “We are very excited about the mainnet launch of Xend Finance, with a team we backed early on that has a strong foothold in Africa and have been strong advocates for what Binance Smart Chain can accomplish. With their platform, they can bring stable currency and DeFi investment opportunities to those who normally wouldn’t have them.”

Edited by Maurice Nagle



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