Proposal to list NGNC/USDC pair and to incentivize the Pool

DFX Proposals
1

Overview

LINK - a web3 crossborder payment infrastructure for Africa issued a Naira-backed stablecoin ‘NGNC’ which is pegged 1:1 to the Nigerian Naira with reserves held in custody at regulated authorities in Nigeria. NGNC is transferable on the Polygon and Avalanche blockchain as an ERC-20 standard token.

This is a proposal to create and add a NGNC/USDC to the “Ethernet Pools” offered by DFX, and to incentivize that pool.

There are two options on which to vote:

Option 1: YES – Create a NGNC/USDC pool and allocate rewards to the pool.

Option 2: NO – Do not create a NGNC/USDC pool.

Because DFX’s mission is to bring stablecoins to the world, it is only appropriate that NGNC be available on the DFX protocol. NGNC is expected to quickly become one of the most traded foreign stablecoin in Africa and the world.

Motivation

• Nigerian Naira is the official currency of the Federal Republic of Nigeria.

• Nigerian Naira is abbreviated as NGN.

• The population of Nigeria Is an estimated 218.5 million with most of the population (55%) between 15 – 65years.

• Nearly 35% of the adult population have used or currently own crypto assets, bringing the total crypto users to an estimated 40 million Nigerians.

• In 2021, Nigeria was said to be the nation with the highest ownership of BTC, (32% of the adult population owned BTC) amidst harsh regulations from the government leaving the citizens with no direct bridge into DeFi.

• 8 months into 2022, Nigerians have traded $1B in Crypto with no access to on/off ramps and identity of their currency on the blockchain.

• The world is changing, non-USD stablecoins are on the rise, LINK intends to bridge our country to the market in the next wave of global finance by teaming up with DFX Finance, the leading crypto FX trading protocol.

• Although the number of crypto users is high, Nigeria operates a stringent p2p system to on/off ramp crypto, which has resulted in a hike in prices and exchange rates.

• The current traditional infrastructure and even crypto infrastructure that exists under such high demand are still very fragmented, resulting in low Fx liquidity, and self-prescribed multiple exchange rates.

• LINK offers the perfect on/off ramp platform to millions of crypto-friendly Nigerians to use NGNC.

• Building out the currency pairs on DFX supports and increases the utility of the protocol.

• NGNC is on its way to becoming the first regulated Naira-backed stablecoin

Specifications

Contract address:

Official Websites:
NGNC - NGN Coin (NGNC) | Fully Reserved Fiat-Backed Stablecoin

If Proposal Passes

• NGNC is a stablecoin pegged 1:1 to the highest crypto holders and user nation in africa.

• The utility of DFX increases as more asset pairs are tradeable.

• LINK is providing the major fiat on/off ramp solution offered to the fast-growing Nigerian market

• Will allow Nigerian users to access DFX directly and potentially onboard millions of users who wish to easily execute Forex transactions and access deep on-chain liquidity.

• The utility of DFX increases as more assets pairs are tradeable.

• NGNC will bring legitimacy to the field of foreign stablecoins. Being that DFX’s slogan is “Stablecoins for the World,” it is only fitting that the soon to-be Africa’s largest stablecoin has a proper home right here on the DFX protocol.

If Proposal Fails

• DFX will not get direct access to the largest crypto hub in Africa and globally.

• NGNC is a new stablecoin (supply is expected to 20x once on/off ramps go live on Polygon in late November/Early December)

• DFX will not have one of the fastest-growing non-USD stablecoins on its platform.

3 Likes
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  • Yes, this is the way.
  • No, this is not the way.

0 voters

2 Likes
3

Seems like a great opportunity. For me personally, I am glad to see that NGNC is backed one-to-one by the Nigerian Naira held in cash and cash equivalent assets, with regular reports.

4

NGN generally has a two tiered FX market. Generally there is a “black market” rate that is roughly 2x the bank rate. How does NGNC expect to resolve this issue and oracle providers will likely use the bank rate. How do we prevent arbitrage between the two different rates to ensure liquidity providers are not constantly getting arbitraged?

References:

2 Likes
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Updates

LINK is a fintech company building web3 cross border payments Infrastructure for Africa

Our proposal above remains the same, just wanted to add a few pointers that would seem relevant to the post

a. LINK provides the payment API for peer-to-peer on and off ramps for NGNC:
i. Minting NGNC on DFX would be simple, we would have our payment widget live on the dapp - Users click deposit on the frontend (we would have fetched their wallet addresses and network already via the endpoint) immediately a LINK dedicated vendor account appears to on ramp the NGN fiat, immediately that is received NGNC is minted from the treasury and sent to the user. This process should take somewhere around 3-10minutes max, Nigeria has a fast banking system

ii. Burning as well like minting would require the user to send NGNC to another vendor wallet by LINK, the user inputs a recipient bank account on the widget form, NGNC is burnt and NGN is redeemed in the account provided.

  • Users must send and receive money from an account that belongs to them

b. LINK has worked with DIA to launch the 1st and only parallel market price feed oracle in Africa to represent the real activity on the ground, if this proposal passes:
i. DFX Finance would be the 1st and currently only dApp that brings local african currencies on chain with giving retail customers wanting to engage in cross border payments, yields, and other defi capabilities direct access to scale the existing usecase already being established on the continent. (This parallel rate would help us curb arbitrage)

ii. DFX Finance would be well on the way of mirroring the kind of traction cex’s like binance have on such pairs NGN/USDT (averaging $740k - $1m in volume per day)

iii. Supply of NGNC would definitely increase on polygon as such value added use case like this is rolled out.

iv. Core reason behind using DIA instead of other popular oracle like Chainlink is simple, prices generated by this providers don’t reflect the true exchange rate on the ground and can cause pool depletion, because most countries in Africa including Nigeria have a multi-tier exchange rate system (ie the Official rate which 460 and then the popular parallel market rate at 740) that’s huge right!, the official rate is only accessed by the elites and so the reality is that price needs to be controlled at the parallel market rate and DIA are the only ones to do it today.

Further Clarifications:

  1. so you have dedicated vendors that guarantee minting and redemption? How does this work and who are these vendors?
    This are dedicated p2p accounts handled by LINK internally to facilitate on and off ramps. Once NGN hits this account from the API NGNC is minted and vice versa
1 Like