A Nigeria-based startup is looking to bring decentralized finance (DeFi) to the world of credit unions. Built on the Binance Smart Chain, Xend Finance announced Monday its public launch and a $1.5 million strategic funding round.
“A major problem faced by these credit unions or cooperatives is a constant devaluation of the currency, because most of the time our economy is unstable,” Xend founder and CEO Aronu Ugochukwu told CoinDesk in an interview.
With backing from Binance Labs, Google Launchpad, AU21 Capital, TRG Capital, Matic co-founder Sandeep Nailwal and others, Xend aims for financial inclusion in the developing world by converting deposits into crypto and harvesting yield on DeFi platforms like Compound and Aave.
The protocol also allows users to create their own credit unions and cooperatives, eliminating traditional middlemen.
“Traditional credit unions have a number of limiting drawbacks,” said Ugochukwu, “including only 1% annual percentage yield returns and geographical limitations.” By contrast, a press statement touted as much as 15% APY on Xend users’ savings.
By tapping into DeFi, small savers can stake their local currency and earn compounded interest in a stable currency, Ugochukwu said, like the U.S. dollar.
The platform has already received $1,000 from one local cooperative to help onboard five of its members, including a group of doctors at the University of Nigeria Teaching Hospital (UNTH).
Xend, a traditional fintech company and parent company of Xend Finance, has already built a network of 55,000 users which Ugochukwu hopes to bring over to the new DeFi platform.
“Crypto is amazing in Nigeria,” he said.