MoneySwitch’s DeFi-Driven Self-Custodial Approach
The macroeconomic downturn and crash in the valuation of digital assets have seen several major centralized crypto exchanges becoming insolvent. Months ago, exchanges such as Celsius and Zipmex filed for bankruptcy and froze withdrawals on the platform. More recently, the multi-billion dollar fraud perpetrated by Sam Bankman-Fried, CEO of the popular centralized exchange FTX, rocked the market.
In all of these cases, the assets were stored on exchanges, and third parties held the private keys. These events remain painful to the space and, more crucially, to investors, but on the bright side, flushing out bad actors will be beneficial long term. These events have keenly highlighted the need for a self-custody approach to asset ownership.
Unfortunately, this may not be the last time incidents like this befall the space, and it remains in the best interest of all investors and Web3 users to secure their funds by taking ownership of their private keys. Investors can insulate themselves from custodial risk through self-custody. These losses significantly damage the personal lives of investors who find their funds frozen or, worse, gone. But also damages the reputation of crypto and augments the general public’s perception regarding the safety and security of crypto.
MoneySwitch
MoneySwitch is an L-a-a-S (Liquidity as a Service) provider that supplements the shortcomings of TradFi (traditional finance) legacy systems by leveraging blockchain technology and stablecoins to make global liquidity flows more efficient. MoneySwitch allows CPPs (Cross-Border Payment Providers) to provide faster settlements by offering them non-collateralized loans: CPPs can access the liquidity they need, when they need it.
MoneySwitch facilitates the move away from the highly capital-inefficient pre-funding model, where huge sums of capital are left dormant and scattered across the globe, to an on-demand model where liquidity is directed to where it is needed when it is needed. By offering CPPs access to liquidity with pre-agreed loan terms, they can make settlements faster and free up capital for profitable ventures or business expansion.
DeFi Driven
MoneySwitch operates between DeFi, Fintech, and the legacy systems of TradFi. However, MoneySwitch operates with a fundamentally DeFi-driven approach and is self-custodial in nature. Investors who deposit stablecoins into MoneySwitch’s liquidity pools can only do so with a non-custodial wallet. A wallet where they maintain control of the private key and, therefore, their assets.
A core tenet of DeFi is the empowerment of the individual. Funds are owned by the individual and can be utilized in whatever manner they see fit. Digital assets stored in non-custodial wallets are the modern equivalent of owning cash, and MoneySwitch encourages all investors to take a self-custodial approach.
DAO Governance
As the platform develops, MoneySwitch will transition towards full decentralization and community governance. The MoneySwitch DAO will govern the protocol, and all MST token holders will have a say in the protocol’s direction. To begin with, MST holders will determine and vote on proposals regarding platform fees and potential burns of the MST tokens. Over time, this DAO will grow and strengthen and take decisions directly affecting the entire cross-border payments industry.
Conclusion
On the MoneySwitch platform, investors are always in control of their assets; MoneySwitch embodies the core principles of DeFi. Liquidity placed in smart contracts can only be withdrawn via the same private key with which it was deposited. Investors maintain control and ownership whilst powering the cross-border payments of tomorrow. MoneySwitch interconnects with the world of TradFi, but DeFi powers the platform and the values behind the protocol.
Want to learn more about MoneySwitch and the changing reality of global payments? Please join us here, and for further information on how to help power the cross-border payments of tomorrow whilst earning yield on your stablecoins, visit us here.
