Highlights from Carbon DeFi’s Simulator Showcase
November 14 2024
by Behice Uzun
Highlights from CarbonDeFi’s Simulator Showcase with Markus Franke, CEO at Mento Labs, hosted by Jen from Blockchain Banter
Markus: My name is Markus. I'm working on Mento. Mento is a platform for local currency stablecoins. I've been building in the space for the past 7 years, and I started building on Celo from day one. With Mento, we now have a dedicated platform for decentralized local currency stablecoins. We have a range of different currencies, including the recently added Kenya Shilling (cKES) and Philippine Peso (PUSO) stablecoins. We’re in the process of adding more, like the Ghanaian Cedi (cGHS) and the Colombian Peso (cCOP). These new currencies open up some exciting trading opportunities, which is something we’re here to discuss today.
Jen: The last time we had you on was right after Mento had released the Philippine Peso (PUSO). So it seems like things are moving along quite nicely if you're already working on introducing 2 more stablecoins. It hasn't been that long since you've been with us.
Markus: Absolutely. We are actually shipping quite fast. In the end, there is a big need for many different use cases for local currency stablecoins. For example, people in many countries want to get a loan in local currency stablecoins. So micro-lending, micro-credit, and also micro-funding are important use cases where people can use local currency stablecoins. It’s helpful for users if they want to go from their local currency into, for example, a dollar stablecoin like cUSD back and forth, on the same platform with Mento. We are pretty excited that we will be able to add more currencies soon.
Jen: I know when the simulator was first introduced, it was the Kenya Shilling stablecoin, cKES that was highlighted in that announcement. So if you can speak a little bit more about the Mento stablecoins and explain how holders and communities can utilize them and the significance of these different trading pairs, that would be great.
Markus: The simulator is a really exciting tool for traders. If you look at traditional FX markets, they are large markets. There’s massive volume off-chain in these currency pairs. And the most exciting trading strategies are those that we, for example, just saw here—like, range-based trading in FX. It is a huge trading strategy in traditional FX markets. Hedging, arbitrage trading, trend following, news-based trading—these are all big strategies in FX markets, and what we've seen here, like this range-based trading, I think, is an important strategy for these types of assets. Now bringing this on-chain on Celo, using the Carbon DeFi markets and the simulator, is really exciting because it expands the range of tools that traders have at hand to engage in the FX markets. I'm really excited to see this here. Celo has become a place for stablecoins more and more. There are many different features of the Celo blockchain that enable this. Fast transactions and low gas fees are some of these features. And this is why you see Mento local currency stablecoins on Celo now starting to grow, like the Kenya Shilling (cKES) or the Philippine Peso (PUSO) stablecoins. But this is also why the large, dollar-based stablecoins, like USDT, launched on Celo. The exciting thing here is: holders can now do all of these trades, and they can simulate all of these trades in between various assets that are live on-chain. I think on Celo, when it comes to stablecoins, you probably have the broadest range of stablecoins that are live and that you can trade. So, it is an exciting addition for traders. The cool thing here is, when we launched the Kenya Shilling (cKES), we were in Kenya on the ground. And, what you can see there is that there are phases of high volatility against the dollar is the reason why local people would prefer to get a loan in Kenya Shilling. Because if you need to get a loan to build your business, you don't want to bear the FX risk, and therefore, you want to get the loan in local currency. But for a trader, this volatility is exciting because you can actually go into exactly these use cases. And now there are definite pairs you could check out. You could check out what is, for example, the Kenya Shilling (cKES) against the Brazilian Real (cREAL). I learned in Kenya that there's quite a trading corridor between Brazil and Kenya—also between South Africa and Brazil and, between South Africa and Kenya. When there's active trading, the FX market is active in these corridors. So it’s exciting that traders can now back-test and see what the strategy would yield, and then they can engage.
Mento’s stablecoins are launched both in high inflationary areas where it makes sense to get a loan in local currency because people have revenues in local currency, and in areas where there’s really active remittance corridors. We launched in the Philippines, where there’s a lot of remittances going to and from the Philippines—to and from the U.S., to and from Europe. And, for example, Euro (cEUR) to Philippine Peso (PUSO) is an interesting FX corridor, and U.S. dollar (cUSD) to Philippine Peso (PUSO) is an interesting FX corridor because there’s a lot of money going back and forth. So, you can now check out all of these strategies A bunch of new currencies are launching soon on the Mento Platform. The Ghanaian Cedi (cGHS) and the Colombian Peso (cCOP) are coming very soon. The community is also looking into adding the Swiss Franc, the Mexican Peso, the South African Rand and more. The whole community is working to give you more assets to add to the simulator.
Jen: Markus, will you guys be at Devcon?
Markus: Yes, we will be at Devcon. You can meet the Mento Labs team there. You can follow us on Twitter X. Our CTO, Bogdan Dumitru, and a bunch of folks from the engineering team will be there. I’ll be there too. Happy to chat with the community there as well.
To start back-testing trading strategies with Bancor’s Simulator, check it out here: https://app.carbondefi.xyz/simulate Watch the full video of the session here.
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