As a researcher with a background in finance and experience living in Latin America, I’m excited to see El Dorado’s progress in the stablecoin space. The region has long suffered from inflation and underdeveloped banking systems, making traditional remittance methods expensive and inefficient.
Colombia’s El Dorado, a stablecoin protocol headquartered in Colombia, announced on Tuesday that they have successfully raised $3 million through a seed funding round. This investment will be used to develop a comprehensive cryptocurrency payment application, specifically tailored for the Latin American market.
Multicoin Capital took the lead role in investing, joined by Coinbase Ventures, the venture capital branch of the cryptocurrency exchange, as well as UC Berkeley Skydeck and Awesome People Ventures, who likewise contributed to the investment round.
Stablecoins represent a significant $160 billion segment in the crypto market. Their values are tied to external assets, mainly the US dollar, ensuring price stability. Gaining traction, particularly in developing areas like Latin America, where banking systems are underdeveloped and currency devaluation history is prevalent, stablecoins offer an attractive alternative.
As a researcher exploring the world of digital currencies, I’ve come across an intriguing alternative to traditional banking and remittance systems for sending money overseas – dollar-pegged stablecoins. These innovative financial tools offer several advantages, including lower transaction fees compared to conventional methods. In simpler terms, using a dollar-pegged stablecoin to transfer funds abroad can save you money.
“The economy in Latin America is struggling greatly due to prolonged inflation over several decades,” Guillermo Goncalvez, El Dorado’s co-founder and CEO, remarked in a statement. “Further complicating matters, high fees are imposed on local currency exchanges between borders – an unexpectedly steep 6% for routine currency swaps. These dual challenges significantly hinder the ability of Latin Americans to maintain or expand their financial resources,” he continued.
In Argentina, Brazil, Colombia, Panama, Peru, and Venezuela, El Dorado offers an affordable alternative for carrying out transactions such as sending money, exchanging currencies, and making payments using blockchain technology as the payment infrastructure. The service imposes a fee of only 0.6% for cross-border transactions, which is notably lower than the standard industry rate. Transactions within the app are completely free of charge.
The app processed about one million transactions over the past year, the company said.
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2024-06-04 17:58